[Federal Register Volume 66, Number 11 (Wednesday, January 17, 2001)]
[Rules and Regulations]
[Pages 4380-4435]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 01-512]



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Part VI





Department of Education





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34 CFR Part 361



State Vocational Rehabilitation Services Program; Final Rule

Federal Register / Vol. 66, No. 11 / Wednesday, January 17, 2001 / 
Rules and Regulations

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DEPARTMENT OF EDUCATION

34 CFR Part 361

RIN 1820-AB50


State Vocational Rehabilitation Services Program

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

ACTION: Final regulations.

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SUMMARY: The Secretary amends the regulations governing the State 
Vocational Rehabilitation Services Program. These amendments implement 
changes to the Rehabilitation Act of 1973 made by the Rehabilitation 
Act Amendments of 1998 that were contained in Title IV of the Workforce 
Investment Act of 1998 (WIA), enacted on August 7, 1998, and as further 
amended in 1998 by technical amendments in the Reading Excellence Act 
and the Carl D. Perkins Vocational and Applied Technology Education Act 
Amendments of 1998 (hereinafter collectively referred to as the 1998 
Amendments).

DATES: These regulations are effective February 16, 2001. However, 
affected parties do not have to comply with the information collection 
requirements in Secs. 361.10, 361.12, 361.13, 361.14, 361.15, 361.16, 
361.17, 361.18, 361.19, 361.20, 361.21, 361.22, 361.23, 361.24, 361.25, 
361.26, 361.27, 361.28, 361.29, 361.30, 361.31, 361.32, 361.34, 361.35, 
361.36, 361.37, 361.38, 361.40, 361.41, 361.46, 361.47, 361.48, 361.49, 
361.50, 361.51, 361.52, 361.53, 361.54, 361.55, 361.57, 361.60 and 
361.62 until the Department of Education publishes in the Federal 
Register the control numbers assigned by the Office of Management and 
Budget (OMB) to these information collection requirements. Publication 
of the control numbers notifies the public that OMB has approved these 
information collection requirements under the Paperwork Reduction Act 
of 1995.

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

SUPPLEMENTARY INFORMATION: The State Vocational Rehabilitation Services 
Program (VR program) is authorized by Title I of the Rehabilitation Act 
of 1973, as amended (Act) (29 U.S.C. 701-744). The VR program provides 
support to each State to assist it in operating a statewide 
comprehensive, coordinated, effective, efficient, and accountable State 
program, as an integral part of a statewide workforce investment 
system, to assess, plan, develop, and provide vocational rehabilitation 
(VR) services for individuals with disabilities so that those 
individuals may prepare for and engage in gainful employment consistent 
with their strengths, priorities, concerns, abilities, capabilities, 
interests, and informed choice.
    On February 28, 2000, we published a notice of proposed rulemaking 
(NPRM) for this part in the Federal Register (65 FR 10620). In the 
preamble to the NPRM, we discussed on pages 10620 through 10630 the 
major changes proposed to the regulations in 34 CFR part 361 as a 
result of the 1998 Amendments. These included the following:
    <bullet> Streamlining the regulatory requirements pertaining to the 
State plan for the VR program by changing several State plan 
descriptions or assurances to program requirements that need not be 
addressed in the State plan. These proposed changes were intended to 
reduce the paperwork burden associated with the development of the 
State plan.
    <bullet> Amending the regulations to reflect the responsibilities 
of the designated state unit (DSU or State unit) as a required partner 
in the One-Stop service delivery system (One-Stop system) established 
under Title I of the WIA, Pub. L. 105-22. For example, we proposed 
amending Sec. 361.4 to include among the regulations applicable to the 
VR program the One-Stop system requirements in 20 CFR part 662 and the 
civil rights requirements in 29 CFR part 37. In addition to these 
changes and, as noted later, amending other sections of the current 
regulations to reflect requirements in WIA, we discuss in some detail 
in the preamble to the NPRM (65 FR 10620 and 10621) the relationship 
between the VR program, the One-Stop system in general, and persons 
with disabilities. We suggest that you refer to that discussion for 
additional guidance in coordinating between One-Stop system components.
    <bullet> Amending Sec. 361.5 to include a new definition of the 
term ``fair hearing board,'' a revised definition of ``physical or 
mental impairment,'' a new definition of the term ``qualified and 
impartial mediator,'' and several new statutory definitions found in 
WIA, including ``local workforce investment board,'' ``State workforce 
investment board,'' and ``Statewide workforce investment system.''
    <bullet> Amending Sec. 361.10 to require that each State submit its 
State plan for the VR program on the same date that it submits either a 
State plan under section 112 of WIA or a State unified plan under 
section 501 of that Act.
    <bullet> Amending Sec. 361.13 to expand the list of activities that 
are the responsibility of the DSU.
    <bullet> Amending Sec. 361.18(c) to require, as appropriate, DSUs 
to address in a written plan their retraining, recruitment, hiring, and 
other strategies to ensure that their personnel meet the statutory 
standards related to the comprehensive system of personnel development.
    <bullet> Amending Sec. 361.22 to reflect new statutory requirements 
that foster the transition of students from educational to VR services.
    <bullet> Amending Sec. 361.23 to reflect both the VR program's 
responsibilities as a partner of the One-Stop system under WIA and the 
requirements in the 1988 Amendments related to interagency coordination 
between the VR program and other components of the statewide workforce 
investment system under WIA.
    <bullet> Amending Sec. 361.26 to reflect the authority of States to 
use geographically earmarked funds without requesting a waiver of 
statewideness.
    <bullet> Amending Sec. 361.29 to guide States in developing a 
required comprehensive, forward-thinking plan for administering and 
improving their VR programs.
    <bullet> Conforming Sec. 361.30 solely to the requirement in the 
Act that DSUs provide VR services to eligible American Indians to the 
same extent as other significant populations of individuals with 
disabilities.
    <bullet> Amending Sec. 361.31 to conform to the requirement in the 
Act that the DSU establish cooperative agreements with private 
nonprofit VR service providers.
    <bullet> Removing Sec. 361.33 of the current regulations (regarding 
the use, assessment, and support of community rehabilitation programs) 
since these requirements are addressed in other

[[Page 4381]]

regulatory sections and reserving this section for future use.
    <bullet> Amending Sec. 361.35 to reflect the requirement in section 
101(a)(18) of the Act that the State reserve a portion of its allotment 
under section 110 of the Act to further innovation and expansion of its 
VR program.
    <bullet> Amending Sec. 361.36 to incorporate the requirement in the 
1998 Amendments that individuals who do not meet the State's order of 
selection criteria for receiving services be provided access to the 
DSU's information and referral system under Sec. 361.37.
    <bullet> Amending Sec. 361.37 to reflect new requirements in the 
Act for referring individuals, including eligible individuals who do 
not meet the State's order of selection criteria for receiving 
services, to those components of the statewide workforce investment 
system best suited to meet an individual's employment needs.
    <bullet> Amending Sec. 361.42 to implement new requirements in the 
Act regarding presumptive eligibility for Social Security recipients 
and beneficiaries and the use of trial work experiences as part of the 
assessment for determining eligibility, to revise regulatory 
requirements concerning extended evaluations, and to identify the type 
of personnel who must conduct eligibility determinations.
    <bullet> Amending Sec. 361.45 to implement new requirements in the 
Act that expand an eligible individual's options for developing the 
Individualized Plan for Employment (IPE), enable individuals to receive 
technical assistance in developing their IPEs, specify the information 
that the DSU must provide to the eligible individual during IPE 
development, and detail applicable procedural requirements.
    <bullet> Amending Sec. 361.47 to require the States to determine, 
with input from the State Rehabilitation Councils, the type of 
documentation that they will maintain for each applicant and eligible 
individual to meet the content items that must be included in each 
individual's record of services.
    <bullet> Amending Sec. 361.52 to implement the expanded authority 
in the Act requiring that applicants and eligible individuals be able 
to exercise informed choice throughout the rehabilitation process.
    <bullet> Amending Sec. 361.53 to require interagency agreements 
between the DSU and other appropriate public entities to ensure that 
eligible individuals with disabilities receive, in a timely manner, 
necessary services to which each party to the agreement has an 
obligation, or the authority, to contribute.
    <bullet> Amending Sec. 361.54 to expand the list of VR services 
exempt from State financial needs tests to include interpreter services 
for individuals who are deaf or hard of hearing, reader services for 
individuals who are blind, and personal assistant services. Also, this 
section was amended to prohibit States from applying financial needs 
tests to individuals receiving Supplemental Security Income (SSI) or 
Social Security Disability Insurance (SSDI).
    <bullet> Re-titling and Amending Sec. 361.56 to better reflect the 
requirements that must be met before the State unit can close the 
record of services for an individual who has achieved an employment 
outcome.
    <bullet> Amending Sec. 361.57 to implement new requirements in the 
1998 Amendments regarding mediation and administrative review of 
disputes regarding the provision of VR services to applicants or 
eligible individuals.
    <bullet> Amending Sec. 361.60 to reflect the elimination of 
statutory authority for the innovation and expansion grant program and 
to implement new statutory provisions regarding the use of 
geographically limited earmarked funds as part of the State's non-
Federal share.
    These final regulations contain several significant changes from 
the NPRM. We fully explain each of these changes in the Analysis of 
Comments and Changes in the appendix at the end of these final 
regulations.

Analysis of Comments and Changes

    In response to our invitation in the NPRM, 109 parties submitted 
comments on the proposed regulations. An analysis of the comments and 
of the changes in the regulations since publication of the NPRM is 
published as an appendix at the end of these final regulations.
    We discuss substantive issues under the sections of the regulations 
to which they pertain. Generally, we do not address technical and other 
minor changes--and suggested changes that the law does not authorize 
the Secretary to make.

National Education Goals

    The eight National Education Goals focus the Nation's education 
reform efforts and provide a framework for improving teaching and 
learning.
    These regulations address the National Education Goal that every 
adult American, including individuals with disabilities, will possess 
the knowledge and skills necessary to compete in a global economy and 
exercise the rights and responsibilities of citizenship.

Executive Order 12866

    We have reviewed these final regulations in accordance with 
Executive Order 12866. Under the terms of the order, we have assessed 
the potential costs and benefits of this regulatory action.
    The potential costs associated with the final regulations are those 
resulting from statutory requirements and those we have determined to 
be necessary for administering this program effectively and 
efficiently.
    In assessing the potential costs and benefits--both quantitative 
and qualitative--of these final regulations, we have determined that 
the benefits of the final regulations justify the costs.
    We also have determined that this regulatory action does not unduly 
interfere with State, local, and tribal governments in the exercise of 
their governmental functions.

Summary of Potential Costs and Benefits

    We discussed the potential costs and benefits of these final 
regulations in the preamble to the NPRM (65 FR 10630 and 10631) and 
throughout the section-by-section analysis (65 FR 10621 through 10630). 
Our analysis of potential costs and benefits generally remains the same 
as in the NPRM, although we include additional discussion of potential 
costs and benefits in the Appendix to these final regulations titled 
Analysis of Comments and Changes.

Intergovernmental Review

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

Federalism

    Executive Order 13132 requires us to ensure meaningful and timely 
input by State and local elected officials in the development of 
regulatory policies that have federalism implications. ``Federalism 
implications'' means substantial direct effects on the States, on the 
relationship between the National Government and the States, or on the 
distribution of power and

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responsibilities among the various levels of government.
    These regulations implement various statutory changes to the State 
Vocational Rehabilitation Services Program. We do not believe that 
these regulations have federalism implications as defined in Executive 
Order 13132 or that they preempt State law. Accordingly, the Secretary 
has determined that these regulations do not contain policies that have 
federalism implications.

Assessment of Educational Impact

    In the NPRM we requested comments on whether the proposed 
regulations would require transmission of information that any other 
agency or authority of the United States gathers or makes available.
    Based on the response to the NPRM and our review, we have 
determined that these final regulations do not require transmission of 
information that any other agency or authority of the United States 
gathers or makes available.

Electronic Access to This Document

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

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

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

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

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

List of Subjects in 34 CFR Part 361

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

    Dated: December 7, 2000.
Richard W. Riley,
Secretary of Education.
    For the reasons discussed in the preamble, the Secretary amends 
title 34 of the Code of Federal Regulations by revising part 361 to 
read as follows:

PART 361--STATE VOCATIONAL REHABILITATION SERVICES PROGRAM

Subpart A--General
Sec.
361.1  Purpose.
361.2  Eligibility for a grant.
361.3  Authorized activities.
361.4  Applicable regulations.
361.5  Applicable definitions.
Subpart B--State Plan and Other Requirements for Vocational 
Rehabilitation Services
361.10  Submission, approval, and disapproval of the State plan.
361.11  Withholding of funds.

Administration

361.12  Methods of administration.
361.13  State agency for administration.
361.14  Substitute State agency.
361.15  Local administration.
361.16  Establishment of an independent commission or a State 
Rehabilitation Council.
361.17  Requirements for a State Rehabilitation Council.
361.18  Comprehensive system of personnel development.
361.19  Affirmative action for individuals with disabilities.
361.20  Public participation requirements.
361.21  Consultations regarding the administration of the State 
plan.
361.22  Coordination with education officials.
361.23  Requirements related to the statewide workforce investment 
system.
361.24  Cooperation and coordination with other entities.
361.25  Statewideness.
361.26  Waiver of statewideness.
361.27  Shared funding and administration of joint programs.
361.28  Third-party cooperative arrangements involving funds from 
other public agencies.
361.29  Statewide assessment; annual estimates; annual State goals 
and priorities; strategies; and progress reports.
361.30  Services to American Indians.
361.31  Cooperative agreements with private nonprofit organizations.
361.32  Use of profitmaking organizations for on-the-job training in 
connection with selected projects.
361.33  [Reserved.]
361.34  Supported employment State plan supplement.
361.35  Innovation and expansion activities.
361.36  Ability to serve all eligible individuals; order of 
selection for services.
361.37  Information and referral services.
361.38  Protection, use, and release of personal information.
361.39  State-imposed requirements.
361.40  Reports.

Provision and Scope of Services

361.41  Processing referrals and applications.
361.42   Assessment for determining eligibility and priority for 
services.
361.43   Procedures for ineligibility determination.
361.44   Closure without eligibility determination.
361.45  Development of the individualized plan for employment.
361.46  Content of the individualized plan for employment.
361.47  Record of services.
361.48  Scope of vocational rehabilitation services for individuals 
with disabilities.
361.49  Scope of vocational rehabilitation services for groups of 
individuals with disabilities.
361.50  Written policies governing the provision of services for 
individuals with disabilities.
361.51  Standards for facilities and providers of services.
361.52  Informed choice.
361.53  Comparable services and benefits.
361.54  Participation of individuals in cost of services based on 
financial need.
361.55  Annual review of individuals in extended employment or other 
employment under special certificate provisions of the Fair Labor 
Standards Act.
361.56  Requirements for closing the record of services of an 
individual who has achieved an employment outcome.
361.57  Review of determinations made by designated State unit 
personnel.
Subpart C--Financing of State Vocational Rehabilitation Programs
361.60  Matching requirements.
361.61  Limitation on use of funds for construction expenditures.
361.62  Maintenance of effort requirements.
361.63  Program income.
361.64  Obligation of Federal funds and program income.
361.65  Allotment and payment of Federal funds for vocational 
rehabilitation services.
Subpart D--[Reserved]
Subpart E--Evaluation Standards and Performance Indicators
361.80  Purpose.
361.81  Applicable definitions.
361.82  Evaluation standards.
361.84  Performance indicators.
361.86  Performance levels.
361.88  Reporting requirements.
361.89  Enforcement procedures.

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

Subpart A--General


Sec. 361.1  Purpose.

    Under the State Vocational Rehabilitation Services Program 
(Program), the Secretary provides grants to assist States in operating 
statewide comprehensive, coordinated, effective, efficient, and 
accountable programs, each of which is--
    (a) An integral part of a statewide workforce investment system; 
and
    (b) Designed to assess, plan, develop, and provide vocational 
rehabilitation

[[Page 4383]]

services for individuals with disabilities, consistent with their 
strengths, resources, priorities, concerns, abilities, capabilities, 
interests, and informed choice, so that they may prepare for and engage 
in gainful employment.

(Authority: Section 100(a)(2) of the Act; 29 U.S.C. 720(a)(2))


Sec. 361.2  Eligibility for a grant.

    Any State that submits to the Secretary a State plan that meets the 
requirements of section 101(a) of the Act and this part is eligible for 
a grant under this Program.

(Authority: Section 101(a) of the Act; 29 U.S.C. 721(a))


Sec. 361.3  Authorized activities.

    The Secretary makes payments to a State to assist in--
    (a) The costs of providing vocational rehabilitation services under 
the State plan; and
    (b) Administrative costs under the State plan.

(Authority: Section 111(a)(1) of the Act; 29 U.S.C. 731(a)(1))


Sec. 361.4  Applicable regulations.

    The following regulations apply to this Program:
    (a) The Education Department General Administrative Regulations 
(EDGAR) as follows:
    (1) 34 CFR part 74 (Administration of Grants and Agreements with 
Institutions of Higher Education, Hospitals, and other Non-profit 
Organizations), with respect to subgrants to entities that are not 
State or local governments or Indian tribal organizations.
    (2) 34 CFR part 76 (State-Administered Programs).
    (3) 34 CFR part 77 (Definitions that Apply to Department 
Regulations).
    (4) 34 CFR part 79 (Intergovernmental Review of Department of 
Education Programs and Activities).
    (5) 34 CFR part 80 (Uniform Administrative Requirements for Grants 
and Cooperative Agreements to State and Local Governments), except for 
Sec. 80.24(a)(2).
    (6) 34 CFR part 81 (General Education Provisions Act--Enforcement).
    (7) 34 CFR part 82 (New Restrictions on Lobbying).
    (8) 34 CFR part 85 (Governmentwide Debarment and Suspension 
(Nonprocurement) and Governmentwide Requirements for Drug-Free 
Workplace (Grants)).
    (9) 34 CFR part 86 (Drug and Alcohol Abuse Prevention).
    (b) The regulations in this part 361.
    (c) 20 CFR part 662 (Description of One-Stop Service Delivery 
System under Title I of the Workforce Investment Act of 1998).
    (d) 29 CFR part 37, to the extent programs and activities are being 
conducted as part of the One-Stop service delivery system under section 
121(b) of the Workforce Investment Act of 1998.

(Authority: Section 12(c) of the Act; 29 U.S.C. 709(c))


Sec. 361.5  Applicable definitions.

    (a) Definitions in EDGAR. The following terms used in this part are 
defined in 34 CFR 77.1:


Department

EDGAR

Fiscal year

Nonprofit

Private

Public

Secretary

    (b) Other definitions. The following definitions also apply to this 
part:
    (1) Act means the Rehabilitation Act of 1973, as amended (29 U.S.C. 
701 et seq.).
    (2) Administrative costs under the State plan means expenditures 
incurred in the performance of administrative functions under the 
vocational rehabilitation program carried out under this part, 
including expenses related to program planning, development, 
monitoring, and evaluation, including, but not limited to, expenses 
for--
    (i) Quality assurance;
    (ii) Budgeting, accounting, financial management, information 
systems, and related data processing;
    (iii) Providing information about the program to the public;
    (iv) Technical assistance and support services to other State 
agencies, private nonprofit organizations, and businesses and 
industries, except for technical assistance and support services 
described in Sec. 361.49(a)(4);
    (v) The State Rehabilitation Council and other advisory committees;
    (vi) Professional organization membership dues for designated State 
unit employees;
    (vii) The removal of architectural barriers in State vocational 
rehabilitation agency offices and State-operated rehabilitation 
facilities;
    (viii) Operating and maintaining designated State unit facilities, 
equipment, and grounds;
    (ix) Supplies;
    (x) Administration of the comprehensive system of personnel 
development described in Sec. 361.18, including personnel 
administration, administration of affirmative action plans, and 
training and staff development;
    (xi) Administrative salaries, including clerical and other support 
staff salaries, in support of these administrative functions;
    (xii) Travel costs related to carrying out the program, other than 
travel costs related to the provision of services;
    (xiii) Costs incurred in conducting reviews of determinations made 
by personnel of the designated State unit, including costs associated 
with mediation and impartial due process hearings under Sec. 361.57; 
and
    (xiv) Legal expenses required in the administration of the program.

(Authority: Section 7(1) of the Act; 29 U.S.C. 705(1))

    (3) American Indian means an individual who is a member of an 
Indian tribe.

(Authority: Section 7(19)(A) of the Act; 29 U.S.C. 705(19)(A))

    (4) Applicant means an individual who submits an application for 
vocational rehabilitation services in accordance with 
Sec. 361.41(b)(2).

(Authority: Section 12(c) of the Act; 29 U.S.C. 709(c))

    (5) Appropriate modes of communication means specialized aids and 
supports that enable an individual with a disability to comprehend and 
respond to information that is being communicated. Appropriate modes of 
communication include, but are not limited to, the use of interpreters, 
open and closed captioned videos, specialized telecommunications 
services and audio recordings, Brailled and large print materials, 
materials in electronic formats, augmentative communication devices, 
graphic presentations, and simple language materials.

(Authority: Section 12(c) of the Act; 29 U.S.C. 709(c))

    (6) Assessment for determining eligibility and vocational 
rehabilitation needs means, as appropriate in each case--
    (i)(A) A review of existing data--
    (1) To determine if an individual is eligible for vocational 
rehabilitation services; and
    (2) To assign priority for an order of selection described in 
Sec. 361.36 in the States that use an order of selection; and
    (B) To the extent necessary, the provision of appropriate 
assessment activities to obtain necessary additional data to make the 
eligibility determination and assignment;
    (ii) To the extent additional data are necessary to make a 
determination of the employment outcomes and the nature and scope of 
vocational

[[Page 4384]]

rehabilitation services to be included in the individualized plan for 
employment of an eligible individual, a comprehensive assessment to 
determine the unique strengths, resources, priorities, concerns, 
abilities, capabilities, interests, and informed choice, including the 
need for supported employment, of the eligible individual. This 
comprehensive assessment--
    (A) Is limited to information that is necessary to identify the 
rehabilitation needs of the individual and to develop the 
individualized plan of employment of the eligible individual;
    (B) Uses as a primary source of information, to the maximum extent 
possible and appropriate and in accordance with confidentiality 
requirements--
    (1) Existing information obtained for the purposes of determining 
the eligibility of the individual and assigning priority for an order 
of selection described in Sec. 361.36 for the individual; and
    (2) Information that can be provided by the individual and, if 
appropriate, by the family of the individual;
    (C) May include, to the degree needed to make such a determination, 
an assessment of the personality, interests, interpersonal skills, 
intelligence and related functional capacities, educational 
achievements, work experience, vocational aptitudes, personal and 
social adjustments, and employment opportunities of the individual and 
the medical, psychiatric, psychological, and other pertinent 
vocational, educational, cultural, social, recreational, and 
environmental factors that affect the employment and rehabilitation 
needs of the individual; and
    (D) May include, to the degree needed, an appraisal of the patterns 
of work behavior of the individual and services needed for the 
individual to acquire occupational skills and to develop work 
attitudes, work habits, work tolerance, and social and behavior 
patterns necessary for successful job performance, including the use of 
work in real job situations to assess and develop the capacities of the 
individual to perform adequately in a work environment;
    (iii) Referral, for the provision of rehabilitation technology 
services to the individual, to assess and develop the capacities of the 
individual to perform in a work environment; and
    (iv) An exploration of the individual's abilities, capabilities, 
and capacity to perform in work situations, which must be assessed 
periodically during trial work experiences, including experiences in 
which the individual is provided appropriate supports and training.

(Authority: Section 7(2) of the Act; 29 U.S.C. 705(2))

    (7) Assistive technology device means any item, piece of equipment, 
or product system, whether acquired commercially off the shelf, 
modified, or customized, that is used to increase, maintain, or improve 
the functional capabilities of an individual with a disability.

(Authority: Section 7(3) of the Act; 29 U.S.C. 705(3))

    (8) Assistive technology service means any service that directly 
assists an individual with a disability in the selection, acquisition, 
or use of an assistive technology device, including--
    (i) The evaluation of the needs of an individual with a disability, 
including a functional evaluation of the individual in his or her 
customary environment;
    (ii) Purchasing, leasing, or otherwise providing for the 
acquisition by an individual with a disability of an assistive 
technology device;
    (iii) Selecting, designing, fitting, customizing, adapting, 
applying, maintaining, repairing, or replacing assistive technology 
devices;
    (iv) Coordinating and using other therapies, interventions, or 
services with assistive technology devices, such as those associated 
with existing education and rehabilitation plans and programs;
    (v) Training or technical assistance for an individual with a 
disability or, if appropriate, the family members, guardians, 
advocates, or authorized representatives of the individual; and
    (vi) Training or technical assistance for professionals (including 
individuals providing education and rehabilitation services), 
employers, or others who provide services to, employ, or are otherwise 
substantially involved in the major life functions of individuals with 
disabilities, to the extent that training or technical assistance is 
necessary to the achievement of an employment outcome by an individual 
with a disability.

(Authority: Sections 7(4) and 12(c) of the Act; 29 U.S.C. 705(4) and 
709(c))

    (9) Community rehabilitation program.
    (i) Community rehabilitation program means a program that provides 
directly or facilitates the provision of one or more of the following 
vocational rehabilitation services to individuals with disabilities to 
enable those individuals to maximize their opportunities for 
employment, including career advancement:
    (A) Medical, psychiatric, psychological, social, and vocational 
services that are provided under one management.
    (B) Testing, fitting, or training in the use of prosthetic and 
orthotic devices.
    (C) Recreational therapy.
    (D) Physical and occupational therapy.
    (E) Speech, language, and hearing therapy.
    (F) Psychiatric, psychological, and social services, including 
positive behavior management.
    (G) Assessment for determining eligibility and vocational 
rehabilitation needs.
    (H) Rehabilitation technology.
    (I) Job development, placement, and retention services.
    (J) Evaluation or control of specific disabilities.
    (K) Orientation and mobility services for individuals who are 
blind.
    (L) Extended employment.
    (M) Psychosocial rehabilitation services.
    (N) Supported employment services and extended services.
    (O) Services to family members if necessary to enable the applicant 
or eligible individual to achieve an employment outcome.
    (P) Personal assistance services.
    (Q) Services similar to the services described in paragraphs (A) 
through (P) of this definition.
    (ii) For the purposes of this definition, the word program means an 
agency, organization, or institution, or unit of an agency, 
organization, or institution, that provides directly or facilitates the 
provision of vocational rehabilitation services as one of its major 
functions.
    (10) Comparable services and benefits means--
    (i) Services and benefits that are--
    (A) Provided or paid for, in whole or in part, by other Federal, 
State, or local public agencies, by health insurance, or by employee 
benefits;
    (B) Available to the individual at the time needed to ensure the 
progress of the individual toward achieving the employment outcome in 
the individual's individualized plan for employment in accordance with 
Sec. 361.53; and
    (C) Commensurate to the services that the individual would 
otherwise receive from the designated State vocational rehabilitation 
agency.
    (ii) For the purposes of this definition, comparable benefits do 
not include awards and scholarships based on merit.

(Authority: Sections 12(c) and 101(a)(8) of the Act; 29 U.S.C. 
709(c) and 721(a)(8))

    (11) Competitive employment means work--

[[Page 4385]]

    (i) In the competitive labor market that is performed on a full-
time or part-time basis in an integrated setting; and
    (ii) For which an individual is compensated at or above the minimum 
wage, but not less than the customary wage and level of benefits paid 
by the employer for the same or similar work performed by individuals 
who are not disabled.

(Authority: Sections 7(11) and 12(c) of the Act; 29 U.S.C. 705(11) 
and 709(c))

    (12) Construction of a facility for a public or nonprofit community 
rehabilitation program means--
    (i) The acquisition of land in connection with the construction of 
a new building for a community rehabilitation program;
    (ii) The construction of new buildings;
    (iii) The acquisition of existing buildings;
    (iv) The expansion, remodeling, alteration, or renovation of 
existing buildings;
    (v) Architect's fees, site surveys, and soil investigation, if 
necessary, in connection with the construction project;
    (vi) The acquisition of initial fixed or movable equipment of any 
new, newly acquired, newly expanded, newly remodeled, newly altered, or 
newly renovated buildings that are to be used for community 
rehabilitation program purposes; and
    (vii) Other direct expenditures appropriate to the construction 
project, except costs of off-site improvements.

(Authority: Sections 7(6) and 12(c) of the Act; 29 U.S.C. 705(6) and 
709(c))

    (13) Designated State agency or State agency means the sole State 
agency, designated in accordance with Sec. 361.13(a), to administer, or 
supervise the local administration of, the State plan for vocational 
rehabilitation services. The term includes the State agency for 
individuals who are blind, if designated as the sole State agency with 
respect to that part of the plan relating to the vocational 
rehabilitation of individuals who are blind.

(Authority: Sections 7(8)(A) and 101(a)(2)(A) of the Act; 29 U.S.C. 
705(8)(A) and 721(a)(2)(A))

    (14) Designated State unit or State unit means either--
    (i) The State vocational rehabilitation bureau, division, or other 
organizational unit that is primarily concerned with vocational 
rehabilitation or vocational and other rehabilitation of individuals 
with disabilities and that is responsible for the administration of the 
vocational rehabilitation program of the State agency, as required 
under Sec. 361.13(b); or
    (ii) The State agency that is primarily concerned with vocational 
rehabilitation or vocational and other rehabilitation of individuals 
with disabilities.

(Authority: Sections 7(8)(B) and 101(a)(2)(B) of the Act; 29 U.S.C. 
705(8)(B) and 721(a)(2)(B))

    (15) Eligible individual means an applicant for vocational 
rehabilitation services who meets the eligibility requirements of 
Sec. 361.42(a).

(Authority: Sections 7(20)(A) and 102(a)(1) of the Act; 29 U.S.C. 
705(20)(A) and 722(a)(1))

    (16) Employment outcome means, with respect to an individual, 
entering or retaining full-time or, if appropriate, part-time 
competitive employment in the integrated labor market to the greatest 
extent practicable; supported employment; or any other type of 
employment, including self-employment, telecommuting, or business 
ownership, that is consistent with an individual's strengths, 
resources, priorities, concerns, abilities, capabilities, interests, 
and informed choice.
(Authority: Sections 7(11), 12(c), 100(a)(2), and 102(b)(3)(A) of 
the Act; 29 U.S.C. 705(11), 709(c), 720(a)(2), and 722(b)(3)(A))
    (17) Establishment, development, or improvement of a public or 
nonprofit community rehabilitation program means--
    (i) The establishment of a facility for a public or nonprofit 
community rehabilitation program as defined in paragraph (b)(18) of 
this section to provide vocational rehabilitation services to 
applicants or eligible individuals;
    (ii) Staffing, if necessary to establish, develop, or improve a 
community rehabilitation program for the purpose of providing 
vocational rehabilitation services to applicants or eligible 
individuals, for a maximum period of 4 years, with Federal financial 
participation available at the applicable matching rate for the 
following levels of staffing costs:
    (A) 100 percent of staffing costs for the first year.
    (B) 75 percent of staffing costs for the second year.
    (C) 60 percent of staffing costs for the third year.
    (D) 45 percent of staffing costs for the fourth year; and
    (iii) Other expenditures related to the establishment, development, 
or improvement of a community rehabilitation program that are necessary 
to make the program functional or increase its effectiveness in 
providing vocational rehabilitation services to applicants or eligible 
individuals, but are not ongoing operating expenses of the program.

(Authority: Sections 7(12) and 12(c) of the Act; 29 U.S.C. 705(12) 
and 709(c))

    (18) Establishment of a facility for a public or nonprofit 
community rehabilitation program means--
    (i) The acquisition of an existing building and, if necessary, the 
land in connection with the acquisition, if the building has been 
completed in all respects for at least 1 year prior to the date of 
acquisition and the Federal share of the cost of acquisition is not 
more than $300,000;
    (ii) The remodeling or alteration of an existing building, provided 
the estimated cost of remodeling or alteration does not exceed the 
appraised value of the existing building;
    (iii) The expansion of an existing building, provided that--
    (A) The existing building is complete in all respects;
    (B) The total size in square footage of the expanded building, 
notwithstanding the number of expansions, is not greater than twice the 
size of the existing building;
    (C) The expansion is joined structurally to the existing building 
and does not constitute a separate building; and
    (D) The costs of the expansion do not exceed the appraised value of 
the existing building;
    (iv) Architect's fees, site survey, and soil investigation, if 
necessary in connection with the acquisition, remodeling, alteration, 
or expansion of an existing building; and
    (v) The acquisition of fixed or movable equipment, including the 
costs of installation of the equipment, if necessary to establish, 
develop, or improve a community rehabilitation program.

(Authority: Sections 7(12) and 12(c) of the Act; 29 U.S.C. 705(12) 
and 709(c))

    (19) Extended employment means work in a non-integrated or 
sheltered setting for a public or private nonprofit agency or 
organization that provides compensation in accordance with the Fair 
Labor Standards Act and any needed support services to an individual 
with a disability to enable the individual to continue to train or 
otherwise prepare for competitive employment, unless the individual 
through informed choice chooses to remain in extended employment.

(Authority: Section 12(c) of the Act; 29 U.S.C. 709(c))

    (20) Extended services means ongoing support services and other 
appropriate services that are needed to support and

[[Page 4386]]

maintain an individual with a most significant disability in supported 
employment and that are provided by a State agency, a private nonprofit 
organization, employer, or any other appropriate resource, from funds 
other than funds received under this part and 34 CFR part 363 after an 
individual with a most significant disability has made the transition 
from support provided by the designated State unit.

(Authority: Sections 7(13) and 623 of the Act; 29 U.S.C. 705(13) and 
795i)

    (21) Extreme medical risk means a probability of substantially 
increasing functional impairment or death if medical services, 
including mental health services, are not provided expeditiously.

(Authority: Sections 12(c) and 101(a)(8)(A)(i)(III) of the Act; 29 
U.S.C. 709(c) and 721(a)(8)(A)(i)(III))

    (22) Fair hearing board means a committee, body, or group of 
persons established by a State prior to January 1, 1985 that--
    (i) Is authorized under State law to review determinations made by 
personnel of the designated State unit that affect the provision of 
vocational rehabilitation services; and
    (ii) Carries out the responsibilities of the impartial hearing 
officer in accordance with the requirements in Sec. 361.57(j).

(Authority: Section 12(c) of the Act; 29 U.S.C. 709(c))

    (23) Family member, for purposes of receiving vocational 
rehabilitation services in accordance with Sec. 361.48(i), means an 
individual--
    (i) Who either--
    (A) Is a relative or guardian of an applicant or eligible 
individual; or
    (B) Lives in the same household as an applicant or eligible 
individual;
    (ii) Who has a substantial interest in the well-being of that 
individual; and
    (iii) Whose receipt of vocational rehabilitation services is 
necessary to enable the applicant or eligible individual to achieve an 
employment outcome.

(Authority: Sections 12(c) and 103(a)(17) of the Act; 29 U.S.C. 
709(c) and 723(a)(17))

    (24) Governor means a chief executive officer of a State.

(Authority: Section 7(15) of the Act; 29 U.S.C. 705(15))

    (25) Impartial hearing officer.
    (i) Impartial hearing officer means an individual who--
    (A) Is not an employee of a public agency (other than an 
administrative law judge, hearing examiner, or employee of an 
institution of higher education);
    (B) Is not a member of the State Rehabilitation Council for the 
designated State unit;
    (C) Has not been involved previously in the vocational 
rehabilitation of the applicant or eligible individual;
    (D) Has knowledge of the delivery of vocational rehabilitation 
services, the State plan, and the Federal and State regulations 
governing the provision of services;
    (E) Has received training with respect to the performance of 
official duties; and
    (F) Has no personal, professional, or financial interest that would 
be in conflict with the objectivity of the individual.
    (ii) An individual is not considered to be an employee of a public 
agency for the purposes of this definition solely because the 
individual is paid by the agency to serve as a hearing officer.

(Authority: Section 7(16) of the Act; 29 U.S.C. 705(16))

    (26) Indian tribe means any Federal or State Indian tribe, band, 
rancheria, pueblo, colony, or community, including any Alaskan native 
village or regional village corporation (as defined in or established 
pursuant to the Alaska Native Claims Settlement Act).

(Authority: Section 7(19)(B) of the Act; 29 U.S.C. 705(19)(B))

    (27) Individual who is blind means a person who is blind within the 
meaning of applicable State law. (Authority: Section 12(c) of the Act; 
29 U.S.C. 709(c))
    (28) Individual with a disability, except as provided in 
Sec. 361.5(b)(29), means an individual--
    (i) Who has a physical or mental impairment;
    (ii) Whose impairment constitutes or results in a substantial 
impediment to employment; and
    (iii) Who can benefit in terms of an employment outcome from the 
provision of vocational rehabilitation services.

(Authority: Section 7(20)(A) of the Act; 29 U.S.C. 705(20)(A))

    (29) Individual with a disability, for purposes of 
Secs. 361.5(b)(14), 361.13(a), 361.13(b)(1), 361.17(a), (b), (c), and 
(j), 361.18(b), 361.19, 361.20, 361.23(b)(2), 361.29(a) and (d)(5), and 
361.51(b), means an individual--
    (i) Who has a physical or mental impairment that substantially 
limits one or more major life activities;
    (ii) Who has a record of such an impairment; or
    (iii) Who is regarded as having such an impairment.

(Authority: Section 7(20)(B) of the Act; 29 U.S.C. 705(20)(B))

    (30) Individual with a most significant disability means an 
individual with a significant disability who meets the designated State 
unit's criteria for an individual with a most significant disability. 
These criteria must be consistent with the requirements in 
Sec. 361.36(d)(1) and (2).

(Authority: Sections 7(21)(E)(i) and 101(a)(5)(C) of the Act; 29 
U.S.C. 705(21)(E)(i) and 721(a)(5)(C))

    (31) Individual with a significant disability means an individual 
with a disability--
    (i) Who has a severe physical or mental impairment that seriously 
limits one or more functional capacities (such as mobility, 
communication, self-care, self-direction, interpersonal skills, work 
tolerance, or work skills) in terms of an employment outcome;
    (ii) Whose vocational rehabilitation can be expected to require 
multiple vocational rehabilitation services over an extended period of 
time; and
    (iii) Who has one or more physical or mental disabilities resulting 
from amputation, arthritis, autism, blindness, burn injury, cancer, 
cerebral palsy, cystic fibrosis, deafness, head injury, heart disease, 
hemiplegia, hemophilia, respiratory or pulmonary dysfunction, mental 
retardation, mental illness, multiple sclerosis, muscular dystrophy, 
musculo-skeletal disorders, neurological disorders (including stroke 
and epilepsy), spinal cord conditions (including paraplegia and 
quadriplegia), sickle cell anemia, specific learning disability, end-
stage renal disease, or another disability or combination of 
disabilities determined on the basis of an assessment for determining 
eligibility and vocational rehabilitation needs to cause comparable 
substantial functional limitation.


(Authority: Section 7(21)(A) of the Act; 29 U.S.C. 705(21)(A))

    (32) Individual's representative means any representative chosen by 
an applicant or eligible individual, as appropriate, including a 
parent, guardian, other family member, or advocate, unless a 
representative has been appointed by a court to represent the 
individual, in which case the court-appointed representative is the 
individual's representative.

(Authority: Sections 7(22) and 12(c) of the Act; 29 U.S.C. 705(22) 
and 709(c))

    (33) Integrated setting,--
    (i) With respect to the provision of services, means a setting 
typically found in the community in which applicants or eligible 
individuals interact with non-disabled individuals other than non-
disabled individuals who are

[[Page 4387]]

providing services to those applicants or eligible individuals;
    (ii) With respect to an employment outcome, means a setting 
typically found in the community in which applicants or eligible 
individuals interact with non-disabled individuals, other than non-
disabled individuals who are providing services to those applicants or 
eligible individuals, to the same extent that non-disabled individuals 
in comparable positions interact with other persons.

(Authority: Section 12(c) of the Act; 29 U.S.C. 709(c))

    (34) Local workforce investment board means a local workforce 
investment board established under section 117 of the Workforce 
Investment Act of 1998.

(Authority: Section 7(25) of the Act; 29 U.S.C. 705(25))

    (35) Maintenance means monetary support provided to an individual 
for expenses, such as food, shelter, and clothing, that are in excess 
of the normal expenses of the individual and that are necessitated by 
the individual's participation in an assessment for determining 
eligibility and vocational rehabilitation needs or the individual's 
receipt of vocational rehabilitation services under an individualized 
plan for employment.

(Authority: Sections 12(c) and 103(a)(7) of the Act; 29 U.S.C. 
709(c) and 723(a)(7))

    (i) Examples: The following are examples of expenses that would 
meet the definition of maintenance. The examples are illustrative, do 
not address all possible circumstances, and are not intended to 
substitute for individual counselor judgment.
    Example 1: The cost of a uniform or other suitable clothing that 
is required for an individual's job placement or job-seeking 
activities.
    Example 2: The cost of short-term shelter that is required in 
order for an individual to participate in assessment activities or 
vocational training at a site that is not within commuting distance 
of an individual's home.
    Example 3: The initial one-time costs, such as a security 
deposit or charges for the initiation of utilities, that are 
required in order for an individual to relocate for a job placement.
    Example 4: The costs of an individual's participation in 
enrichment activities related to that individual's training program.

    (ii) [Reserved]
    (36) Mediation means the act or process of using an independent 
third party to act as a mediator, intermediary, or conciliator to 
assist persons or parties in settling differences or disputes prior to 
pursuing formal administrative or other legal remedies. Mediation under 
the program must be conducted in accordance with the requirements in 
Sec. 361.57(d) by a qualified and impartial mediator as defined in 
Sec. 361.5(b)(43).

(Authority: Section 12(c) of the Act; 29 U.S.C. 709(c))

    (37) Nonprofit, with respect to a community rehabilitation program, 
means a community rehabilitation program carried out by a corporation 
or association, no part of the net earnings of which inures, or may 
lawfully inure, to the benefit of any private shareholder or individual 
and the income of which is exempt from taxation under section 501(c)(3) 
of the Internal Revenue Code of 1986.

(Authority: Section 7(26) of the Act; 29 U.S.C. 705(26))

    (38) Ongoing support services, as used in the definition of 
``Supported employment''
    (i) Means services that are--
    (A) Needed to support and maintain an individual with a most 
significant disability in supported employment;
    (B) Identified based on a determination by the designated State 
unit of the individual's need as specified in an individualized plan 
for employment; and
    (C) Furnished by the designated State unit from the time of job 
placement until transition to extended services, unless post-employment 
services are provided following transition, and thereafter by one or 
more extended services providers throughout the individual's term of 
employment in a particular job placement or multiple placements if 
those placements are being provided under a program of transitional 
employment;
    (ii) Must include an assessment of employment stability and 
provision of specific services or the coordination of services at or 
away from the worksite that are needed to maintain stability based on--
    (A) At a minimum, twice-monthly monitoring at the worksite of each 
individual in supported employment; or
    (B) If under specific circumstances, especially at the request of 
the individual, the individualized plan for employment provides for 
off-site monitoring, twice monthly meetings with the individual;
    (iii) Consist of--
    (A) Any particularized assessment supplementary to the 
comprehensive assessment of rehabilitation needs described in paragraph 
(b)(6)(ii) of this section;
    (B) The provision of skilled job trainers who accompany the 
individual for intensive job skill training at the work site;
    (C) Job development and training;
    (D) Social skills training;
    (E) Regular observation or supervision of the individual;
    (F) Follow-up services including regular contact with the 
employers, the individuals, the parents, family members, guardians, 
advocates or authorized representatives of the individuals, and other 
suitable professional and informed advisors, in order to reinforce and 
stabilize the job placement;
    (G) Facilitation of natural supports at the worksite;
    (H) Any other service identified in the scope of vocational 
rehabilitation services for individuals, described in Sec. 361.48; or
    (I) Any service similar to the foregoing services.

(Authority: Sections 7(27) and 12(c) of the Act; 29 U.S.C. 705(27) 
and 709(c))

    (39) Personal assistance services means a range of services 
provided by one or more persons designed to assist an individual with a 
disability to perform daily living activities on or off the job that 
the individual would typically perform without assistance if the 
individual did not have a disability. The services must be designed to 
increase the individual's control in life and ability to perform 
everyday activities on or off the job. The services must be necessary 
to the achievement of an employment outcome and may be provided only 
while the individual is receiving other vocational rehabilitation 
services. The services may include training in managing, supervising, 
and directing personal assistance services.

(Authority: Sections 7(28), 102(b)(3)(B)(i)(I), and 103(a)(9) of the 
Act; 29 U.S.C. 705(28), 722(b)(3)(B)(i)(I), and 723(a)(9))

    (40) Physical and mental restoration services means--
    (i) Corrective surgery or therapeutic treatment that is likely, 
within a reasonable period of time, to correct or modify substantially 
a stable or slowly progressive physical or mental impairment that 
constitutes a substantial impediment to employment;
    (ii) Diagnosis of and treatment for mental or emotional disorders 
by qualified personnel in accordance with State licensure laws;
    (iii) Dentistry;
    (iv) Nursing services;
    (v) Necessary hospitalization (either inpatient or outpatient care) 
in connection with surgery or treatment and clinic services;
    (vi) Drugs and supplies;
    (vii) Prosthetic and orthotic devices;
    (viii) Eyeglasses and visual services, including visual training, 
and the

[[Page 4388]]

examination and services necessary for the prescription and provision 
of eyeglasses, contact lenses, microscopic lenses, telescopic lenses, 
and other special visual aids prescribed by personnel that are 
qualified in accordance with State licensure laws;
    (ix) Podiatry;
    (x) Physical therapy;
    (xi) Occupational therapy;
    (xii) Speech or hearing therapy;
    (xiii) Mental health services;
    (xiv) Treatment of either acute or chronic medical complications 
and emergencies that are associated with or arise out of the provision 
of physical and mental restoration services, or that are inherent in 
the condition under treatment;
    (xv) Special services for the treatment of individuals with end-
stage renal disease, including transplantation, dialysis, artificial 
kidneys, and supplies; and
    (xvi) Other medical or medically related rehabilitation services.

(Authority: Sections 12(c) and 103(a)(6) of the Act; 29 U.S.C. 
709(c) and 723(a)(6))

    (41) Physical or mental impairment means--
    (i) Any physiological disorder or condition, cosmetic 
disfigurement, or anatomical loss affecting one or more of the 
following body systems: neurological, musculo-skeletal, special sense 
organs, respiratory (including speech organs), cardiovascular, 
reproductive, digestive, genitourinary, hemic and lymphatic, skin, and 
endocrine; or
    (ii) Any mental or psychological disorder such as mental 
retardation, organic brain syndrome, emotional or mental illness, and 
specific learning disabilities.

(Authority: Sections 7(20)(A) and 12(c) of the Act; 29 U.S.C. 
705(20)(A) and 709(c))

    (42) Post-employment services means one or more of the services 
identified in Sec. 361.48 that are provided subsequent to the 
achievement of an employment outcome and that are necessary for an 
individual to maintain, regain, or advance in employment, consistent 
with the individual's strengths, resources, priorities, concerns, 
abilities, capabilities, interests, and informed choice.

(Authority: Sections 12(c) and 103(a)(18) of the Act; 29 U.S.C. 
709(c)) and 723(a)(18))

    Note to paragraph (b)(42): Post-employment services are intended 
to ensure that the employment outcome remains consistent with the 
individual's strengths, resources, priorities, concerns, abilities, 
capabilities, interests, and informed choice. These services are 
available to meet rehabilitation needs that do not require a complex 
and comprehensive provision of services and, thus, should be limited 
in scope and duration. If more comprehensive services are required, 
then a new rehabilitation effort should be considered. Post-
employment services are to be provided under an amended 
individualized plan for employment; thus, a re-determination of 
eligibility is not required. The provision of post-employment 
services is subject to the same requirements in this part as the 
provision of any other vocational rehabilitation service. Post-
employment services are available to assist an individual to 
maintain employment, e.g., the individual's employment is 
jeopardized because of conflicts with supervisors or co-workers, and 
the individual needs mental health services and counseling to 
maintain the employment; to regain employment, e.g., the 
individual's job is eliminated through reorganization and new 
placement services are needed; and to advance in employment, e.g., 
the employment is no longer consistent with the individual's 
strengths, resources, priorities, concerns, abilities, capabilities, 
interests, and informed choice.

    (43) Qualified and impartial mediator.
    (i) Qualified and impartial mediator means an individual who--
    (A) Is not an employee of a public agency (other than an 
administrative law judge, hearing examiner, employee of a State office 
of mediators, or employee of an institution of higher education);
    (B) Is not a member of the State Rehabilitation Council for the 
designated State unit;
    (C) Has not been involved previously in the vocational 
rehabilitation of the applicant or eligible individual;
    (D) Is knowledgeable of the vocational rehabilitation program and 
the applicable Federal and State laws, regulations, and policies 
governing the provision of vocational rehabilitation services;
    (E) Has been trained in effective mediation techniques consistent 
with any State-approved or -recognized certification, licensing, 
registration, or other requirements; and
    (F) Has no personal, professional, or financial interest that would 
be in conflict with the objectivity of the individual during the 
mediation proceedings.
    (ii) An individual serving as a mediator is not considered to be an 
employee of the designated State agency or designated State unit for 
the purposes of this definition solely because the individual is paid 
by the designated State agency or designated State unit to serve as a 
mediator.

(Authority: Sections 12(c) and 102(c)(4) of the Act; 29 U.S.C. 
709(c) and 722(c)(4))

    (44) Rehabilitation engineering means the systematic application of 
engineering sciences to design, develop, adapt, test, evaluate, apply, 
and distribute technological solutions to problems confronted by 
individuals with disabilities in functional areas, such as mobility, 
communications, hearing, vision, and cognition, and in activities 
associated with employment, independent living, education, and 
integration into the community.

(Authority: Section 7(12)(c) of the Act; 29 U.S.C. 709(c))

    (45) Rehabilitation technology means the systematic application of 
technologies, engineering methodologies, or scientific principles to 
meet the needs of, and address the barriers confronted by, individuals 
with disabilities in areas that include education, rehabilitation, 
employment, transportation, independent living, and recreation. The 
term includes rehabilitation engineering, assistive technology devices, 
and assistive technology services.

(Authority: Section 7(30) of the Act; 29 U.S.C. 705(30))

    (46) Reservation means a Federal or State Indian reservation, 
public domain Indian allotment, former Indian reservation in Oklahoma, 
and land held by incorporated Native groups, regional corporations, and 
village corporations under the provisions of the Alaska Native Claims 
Settlement Act.

(Authority: Section 121(c) of the Act; 29 U.S.C. 741(c))

    (47) Sole local agency means a unit or combination of units of 
general local government or one or more Indian tribes that has the sole 
responsibility under an agreement with, and the supervision of, the 
State agency to conduct a local or tribal vocational rehabilitation 
program, in accordance with the State plan.

(Authority: Section 7(24) of the Act; 29 U.S.C. 705(24))

    (48) State means any of the 50 States, the District of Columbia, 
the Commonwealth of Puerto Rico, the United States Virgin Islands, 
Guam, American Samoa, and the Commonwealth of the Northern Mariana 
Islands.

(Authority: Section 7(32) of the Act; 29 U.S.C. 705(32))

    (49) State workforce investment board means a State workforce 
investment board established under section 111 of the Workforce 
Investment Act of 1998.

(Authority: Section 7(33) of the Act; 29 U.S.C. 705(33))

    (50) Statewide workforce investment system means a system described 
in

[[Page 4389]]

section 111(d)(2) of the Workforce Investment Act of 1998.

(Authority: Section 7(34) of the Act; 29 U.S.C. 705(34))

    (51) State plan means the State plan for vocational rehabilitation 
services submitted under Sec. 361.10.

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

    (52) Substantial impediment to employment means that a physical or 
mental impairment (in light of attendant medical, psychological, 
vocational, educational, communication, and other related factors) 
hinders an individual from preparing for, entering into, engaging in, 
or retaining employment consistent with the individual's abilities and 
capabilities.

(Authority: Sections 7(20)(A) and 12(c) of the Act; 29 U.S.C. 
705(20)(A) and 709(c))

    (53) Supported employment means--
    (i) Competitive employment in an integrated setting, or employment 
in integrated work settings in which individuals are working toward 
competitive employment, consistent with the strengths, resources, 
priorities, concerns, abilities, capabilities, interests, and informed 
choice of the individuals with ongoing support services for individuals 
with the most significant disabilities--
    (A) For whom competitive employment has not traditionally occurred 
or for whom competitive employment has been interrupted or intermittent 
as a result of a significant disability; and
    (B) Who, because of the nature and severity of their disabilities, 
need intensive supported employment services from the designated State 
unit and extended services after transition as described in paragraph 
(b)(20) of this section to perform this work; or
    (ii) Transitional employment, as defined in paragraph (b)(54) of 
this section, for individuals with the most significant disabilities 
due to mental illness.

(Authority: Section 7(35) of the Act; 29 U.S.C. 705(35))

    (54) Supported employment services means ongoing support services 
and other appropriate services needed to support and maintain an 
individual with a most significant disability in supported employment 
that are provided by the designated State unit--
    (i) For a period of time not to exceed 18 months, unless under 
special circumstances the eligible individual and the rehabilitation 
counselor or coordinator jointly agree to extend the time to achieve 
the employment outcome identified in the individualized plan for 
employment; and
    (ii) Following transition, as post-employment services that are 
unavailable from an extended services provider and that are necessary 
to maintain or regain the job placement or advance in employment.

(Authority: Sections 7(36) and 12(c) of the Act; 29 U.S.C. 705(36) 
and 709(c))

    (55) Transition services means a coordinated set of activities for 
a student designed within an outcome-oriented process that promotes 
movement from school to post-school activities, including postsecondary 
education, vocational training, integrated employment (including 
supported employment), continuing and adult education, adult services, 
independent living, or community participation. The coordinated set of 
activities must be based upon the individual student's needs, taking 
into account the student's preferences and interests, and must include 
instruction, community experiences, the development of employment and 
other post-school adult living objectives, and, if appropriate, 
acquisition of daily living skills and functional vocational 
evaluation. Transition services must promote or facilitate the 
achievement of the employment outcome identified in the student's 
individualized plan for employment.

(Authority: Section 7(37) and 103(a)(15) of the Act; 29 U.S.C. 
705(37) and 723(a)(15))

    (56) Transitional employment, as used in the definition of 
``Supported employment,'' means a series of temporary job placements in 
competitive work in integrated settings with ongoing support services 
for individuals with the most significant disabilities due to mental 
illness. In transitional employment, the provision of ongoing support 
services must include continuing sequential job placements until job 
permanency is achieved.

(Authority: Sections 7(35)(B) and 12(c) of the Act; 29 U.S.C. 
705(35)(B) and 709(c)

    (57) Transportation means travel and related expenses that are 
necessary to enable an applicant or eligible individual to participate 
in a vocational rehabilitation service, including expenses for training 
in the use of public transportation vehicles and systems.

(Authority: 103(a)(8) of the Act; 29 U.S.C. 723(a)(8))
    (i) Examples: The following are examples of expenses that would 
meet the definition of transportation. The examples are purely 
illustrative, do not address all possible circumstances, and are not 
intended to substitute for individual counselor judgment.
    Example 1:  Travel and related expenses for a personal care 
attendant or aide if the services of that person are necessary to 
enable the applicant or eligible individual to travel to participate 
in any vocational rehabilitation service.
    Example 2:  The purchase and repair of vehicles, including vans, 
but not the modification of these vehicles, as modification would be 
considered a rehabilitation technology service.
    Example 3:  Relocation expenses incurred by an eligible 
individual in connection with a job placement that is a significant 
distance from the eligible individual's current residence.

    (ii) [Reserved]
    (58) Vocational rehabilitation services--
    (i) If provided to an individual, means those services listed in 
Sec. 361.48; and
    (ii) If provided for the benefit of groups of individuals, also 
means those services listed in Sec. 361.49.

(Authority: Sections 7(38) and 103(a) and (b) of the Act; 29 U.S.C. 
705(38), 723(a) and (b))

Subpart B--State Plan and Other Requirements for Vocational 
Rehabilitation Services


Sec. 361.10  Submission, approval, and disapproval of the State plan.

    (a) Purpose. For a State to receive a grant under this part, the 
designated State agency must submit to the Secretary, and obtain 
approval of, a State plan that contains a description of the State's 
vocational rehabilitation services program, the plans and policies to 
be followed in carrying out the program, and other information 
requested by the Secretary, in accordance with the requirements of this 
part.
    (b) Separate part relating to the vocational rehabilitation of 
individuals who are blind. If a separate State agency administers or 
supervises the administration of a separate part of the State plan 
relating to the vocational rehabilitation of individuals who are blind, 
that part of the State plan must separately conform to all requirements 
under this part that are applicable to a State plan.
    (c) State unified plan. The State may choose to submit the State 
plan for vocational rehabilitation services as part of the State 
unified plan under section 501 of the Workforce Investment Act of 1998. 
The portion of the State unified plan that includes the State plan for 
vocational rehabilitation services must meet the State plan 
requirements in this part.

[[Page 4390]]

    (d) Public participation. Prior to the adoption of any substantive 
policies or procedures governing the provision of vocational 
rehabilitation services under the State plan, including making any 
substantive amendment to those policies and procedures, the designated 
State agency must conduct public meetings throughout the State, in 
accordance with the requirements of Sec. 361.20.
    (e) Duration. The State plan remains in effect subject to the 
submission of modifications the State determines to be necessary or the 
Secretary may require based on a change in State policy, a change in 
Federal law, including regulations, an interpretation of the Act by a 
Federal court or the highest court of the State, or a finding by the 
Secretary of State noncompliance with the requirements of the Act or 
this part.
    (f) Submission of the State plan. The State must submit the State 
plan for approval--
    (1) To the Secretary on the same date that the State submits a 
State plan relating to the statewide workforce investment system under 
section 112 of the Workforce Investment Act of 1998;
    (2) As part of the State unified plan submitted under section 501 
of that Act; or
    (3) To the Secretary on the same date that the State submits a 
State unified plan under section 501 of that Act that does not include 
the State plan under this part.
    (g) Annual submission. (1) The State must submit to the Secretary 
for approval revisions to the State plan in accordance with paragraph 
(e) of this section and 34 CFR 76.140.
    (2) The State must submit to the Secretary reports containing 
annual updates of the information required under Secs. 361.18, 361.29, 
and 361.35 and any other updates of the information required under this 
part that are requested by the Secretary.
    (3) The State is not required to submit policies, procedures, or 
descriptions required under this part that have been previously 
submitted to the Secretary and that demonstrate that the State meets 
the requirements of this part, including any policies, procedures, or 
descriptions submitted under this part that are in effect on August 6, 
1998.
    (h) Approval. The Secretary approves any State plan and any 
revisions to the State plan that conform to the requirements of this 
part and section 101(a) of the Act.
    (i) Disapproval. The Secretary disapproves any State plan that does 
not conform to the requirements of this part and section 101(a) of the 
Act, in accordance with the following procedures:
    (1) Informal resolution. Prior to disapproving any State plan, the 
Secretary attempts to resolve disputes informally with State officials.
    (2) Notice. If, after reasonable effort has been made to resolve 
the dispute, no resolution has been reached, the Secretary provides 
notice to the State agency of the intention to disapprove the State 
plan and of the opportunity for a hearing.
    (3) State plan hearing. If the State agency requests a hearing, the 
Secretary designates one or more individuals, either from the 
Department or elsewhere, not responsible for or connected with the 
administration of this Program, to conduct a hearing in accordance with 
the provisions of 34 CFR part 81, subpart A.
    (4) Initial decision. The hearing officer issues an initial 
decision in accordance with 34 CFR 81.41.
    (5) Petition for review of an initial decision. The State agency 
may seek the Secretary's review of the initial decision in accordance 
with 34 CFR part 81.
    (6) Review by the Secretary. The Secretary reviews the initial 
decision in accordance with 34 CFR 81.43.
    (7) Final decision of the Department. The final decision of the 
Department is made in accordance with 34 CFR 81.44.
    (8) Judicial review. A State may appeal the Secretary's decision to 
disapprove the State plan by filing a petition for review with the 
United States Court of Appeals for the circuit in which the State is 
located, in accordance with section 107(d) of the Act.

(Authority: Sections 101(a) and (b), and 107(d) of the Act; 20 
U.S.C. 1231g(a); and 29 U.S.C. 721(a) and (b), and 727(d))


Sec. 361.11  Withholding of funds.

    (a) Basis for withholding. The Secretary may withhold or limit 
payments under section 111 or 622(a) of the Act, as provided by section 
107(c) and (d) of the Act, if the Secretary determines that--
    (1) The State plan, including the supported employment supplement, 
has been so changed that it no longer conforms with the requirements of 
this part or 34 CFR part 363; or
    (2) In the administration of the State plan, there has been a 
failure to comply substantially with any provision of that plan or a 
program improvement plan established in accordance with section 
106(b)(2) of the Act.
    (b) Informal resolution. Prior to withholding or limiting payments 
in accordance with this section, the Secretary attempts to resolve 
disputed issues informally with State officials.
    (c) Notice. If, after reasonable effort has been made to resolve 
the dispute, no resolution has been reached, the Secretary provides 
notice to the State agency of the intention to withhold or limit 
payments and of the opportunity for a hearing.
    (d) Withholding hearing. If the State agency requests a hearing, 
the Secretary designates one or more individuals, either from the 
Department or elsewhere, not responsible for or connected with the 
administration of this Program, to conduct a hearing in accordance with 
the provisions of 34 CFR part 81, subpart A.
    (e) Initial decision. The hearing officer issues an initial 
decision in accordance with 34 CFR 81.41.
    (f) Petition for review of an initial decision. The State agency 
may seek the Secretary's review of the initial decision in accordance 
with 34 CFR 81.42.
    (g) Review by the Secretary. The Secretary reviews the initial 
decision in accordance with 34 CFR 81.43.
    (h) Final decision of the Department. The final decision of the 
Department is made in accordance with 34 CFR 81.44.
    (i) Judicial review. A State may appeal the Secretary's decision to 
withhold or limit payments by filing a petition for review with the 
U.S. Court of Appeals for the circuit in which the State is located, in 
accordance with section 107(d) of the Act.

(Authority: Sections 101(b), 107(c), and 107(d) of the Act; 29 
U.S.C. 721(b), 727(c)(1) and (2), and 727(d))

Administration


Sec. 361.12  Methods of administration.

    The State plan must assure that the State agency, and the 
designated State unit if applicable, employs methods of administration 
found necessary by the Secretary for the proper and efficient 
administration of the plan and for carrying out all functions for which 
the State is responsible under the plan and this part. These methods 
must include procedures to ensure accurate data collection and 
financial accountability.

(Authority: Sections 101(a)(6) and (a)(10)(A) of the Act; 29 U.S.C. 
721(a)(6) and (a)(10)(A))


Sec. 361.13  State agency for administration.

    (a) Designation of State agency. The State plan must designate a 
State agency as the sole State agency to administer the State plan, or 
to supervise its administration in a political subdivision of the State 
by a sole local agency, in accordance with the following requirements:
    (1) General. Except as provided in paragraphs (a)(2) and (3) of 
this section,

[[Page 4391]]

the State plan must provide that the designated State agency is one of 
the following types of agencies:
    (i) A State agency that is primarily concerned with vocational 
rehabilitation or vocational and other rehabilitation of individuals 
with disabilities; or
    (ii) A State agency that includes a vocational rehabilitation unit 
as provided in paragraph (b) of this section.
    (2) American Samoa. In the case of American Samoa, the State plan 
must designate the Governor.
    (3) Designated State agency for individuals who are blind. If a 
State commission or other agency that provides assistance or services 
to individuals who are blind is authorized under State law to provide 
vocational rehabilitation services to individuals who are blind, and 
this commission or agency is primarily concerned with vocational 
rehabilitation or includes a vocational rehabilitation unit as provided 
in paragraph (b) of this section, the State plan may designate that 
agency as the sole State agency to administer the part of the plan 
under which vocational rehabilitation services are provided for 
individuals who are blind or to supervise its administration in a 
political subdivision of the State by a sole local agency.
    (b) Designation of State unit.
    (1) If the designated State agency is not of the type specified in 
paragraph (a)(1)(i) of this section or if the designated State agency 
specified in paragraph (a)(3) of this section is not primarily 
concerned with vocational rehabilitation or vocational and other 
rehabilitation of individuals with disabilities, the State plan must 
assure that the agency (or each agency if two agencies are designated) 
includes a vocational rehabilitation bureau, division, or unit that--
    (i) Is primarily concerned with vocational rehabilitation or 
vocational and other rehabilitation of individuals with disabilities 
and is responsible for the administration of the State agency's 
vocational rehabilitation program under the State plan;
    (ii) Has a full-time director;
    (iii) Has a staff, at least 90 percent of whom are employed full 
time on the rehabilitation work of the organizational unit; and
    (iv) Is located at an organizational level and has an 
organizational status within the State agency comparable to that of 
other major organizational units of the agency.
    (2) In the case of a State that has not designated a separate State 
agency for individuals who are blind, as provided for in paragraph 
(a)(3) of this section, the State may assign responsibility for the 
part of the plan under which vocational rehabilitation services are 
provided to individuals who are blind to one organizational unit of the 
designated State agency and may assign responsibility for the rest of 
the plan to another organizational unit of the designated State agency, 
with the provisions of paragraph (b)(1) of this section applying 
separately to each of these units.
    (c) Responsibility for administration.
    (1) At a minimum, the following activities are the responsibility 
of the designated State unit or the sole local agency under the 
supervision of the State unit:
    (i) All decisions affecting eligibility for vocational 
rehabilitation services, the nature and scope of available services, 
and the provision of these services.
    (ii) The determination to close the record of services of an 
individual who has achieved an employment outcome in accordance with 
Sec. 361.56.
    (iii) Policy formulation and implementation.
    (iv) The allocation and expenditure of vocational rehabilitation 
funds.
    (v) Participation as a partner in the One-Stop service delivery 
system under Title I of the Workforce Investment Act of 1998, in 
accordance with 20 CFR part 662.
    (2) The responsibility for the functions described in paragraph 
(c)(1) of this section may not be delegated to any other agency or 
individual.

(Authority: Section 101(a)(2) of the Act; 29 U.S.C. 721(a)(2))


Sec. 361.14  Substitute State agency.

    (a) General provisions.
    (1) If the Secretary has withheld all funding from a State under 
Sec. 361.11, the State may designate another agency to substitute for 
the designated State agency in carrying out the State's program of 
vocational rehabilitation services.
    (2) Any public or nonprofit private organization or agency within 
the State or any political subdivision of the State is eligible to be a 
substitute agency.
    (3) The substitute agency must submit a State plan that meets the 
requirements of this part.
    (4) The Secretary makes no grant to a substitute agency until the 
Secretary approves its plan.
    (b) Substitute agency matching share. The Secretary does not make 
any payment to a substitute agency unless it has provided assurances 
that it will contribute the same matching share as the State would have 
been required to contribute if the State agency were carrying out the 
vocational rehabilitation program.

(Authority: Section 107(c)(3) of the Act; 29 U.S.C. 727(c)(3))


Sec. 361.15  Local administration.

    (a) If the State plan provides for the administration of the plan 
by a local agency, the designated State agency must--
    (1) Ensure that each local agency is under the supervision of the 
designated State unit and is the sole local agency as defined in 
Sec. 361.5(b)(47) that is responsible for the administration of the 
program within the political subdivision that it serves; and
    (2) Develop methods that each local agency will use to administer 
the vocational rehabilitation program, in accordance with the State 
plan.
    (b) A separate local agency serving individuals who are blind may 
administer that part of the plan relating to vocational rehabilitation 
of individuals who are blind, under the supervision of the designated 
State unit for individuals who are blind.

(Authority: Sections 7(24) and 101(a)(2)(A) of the Act; 29 U.S.C. 
705(24) and 721(a)(2)(A))

Sec. 361.16  Establishment of an independent commission or a state 
rehabilitation council.

    (a) General requirement. Except as provided in paragraph (b) of 
this section, the State plan must contain one of the following two 
assurances:
    (1) An assurance that the designated State agency is an independent 
State commission that--
    (i) Is responsible under State law for operating, or overseeing the 
operation of, the vocational rehabilitation program in the State and is 
primarily concerned with vocational rehabilitation or vocational and 
other rehabilitation services, in accordance with Sec. 361.13(a)(1)(i);
    (ii) Is consumer-controlled by persons who--
    (A) Are individuals with physical or mental impairments that 
substantially limit major life activities; and
    (B) Represent individuals with a broad range of disabilities, 
unless the designated State unit under the direction of the commission 
is the State agency for individuals who are blind;
    (iii) Includes family members, advocates, or other representatives 
of individuals with mental impairments; and
    (iv) Conducts the functions identified in Sec. 361.17(h)(4).
    (2) An assurance that--

[[Page 4392]]

    (i) The State has established a State Rehabilitation Council 
(Council) that meets the requirements of Sec. 361.17;
    (ii) The designated State unit, in accordance with Sec. 361.29, 
jointly develops, agrees to, and reviews annually State goals and 
priorities and jointly submits to the Secretary annual reports of 
progress with the Council;
    (iii) The designated State unit regularly consults with the Council 
regarding the development, implementation, and revision of State 
policies and procedures of general applicability pertaining to the 
provision of vocational rehabilitation services;
    (iv) The designated State unit transmits to the Council--
    (A) All plans, reports, and other information required under this 
part to be submitted to the Secretary;
    (B) All policies and information on all practices and procedures of 
general applicability provided to or used by rehabilitation personnel 
providing vocational rehabilitation services under this part; and
    (C) Copies of due process hearing decisions issued under this part 
and transmitted in a manner to ensure that the identity of the 
participants in the hearings is kept confidential; and
    (v) The State plan, and any revision to the State plan, includes a 
summary of input provided by the Council, including recommendations 
from the annual report of the Council, the review and analysis of 
consumer satisfaction described in Sec. 361.17(h)(4), and other reports 
prepared by the Council, and the designated State unit's response to 
the input and recommendations, including explanations of reasons for 
rejecting any input or recommendation of the Council.
    (b) Exception for separate State agency for individuals who are 
blind. In the case of a State that designates a separate State agency 
under Sec. 361.13(a)(3) to administer the part of the State plan under 
which vocational rehabilitation services are provided to individuals 
who are blind, the State must either establish a separate State 
Rehabilitation Council for each agency that does not meet the 
requirements in paragraph (a)(1) of this section or establish one State 
Rehabilitation Council for both agencies if neither agency meets the 
requirements of paragraph (a)(1) of this section.

(Authority: Sections 101(a)(21) of the Act; 29 U.S.C. 721(a)(21))


Sec. 361.17  Requirements for a state rehabilitation council.

    If the State has established a Council under Sec. 361.16(a)(2) or 
(b), the Council must meet the following requirements:
    (a) Appointment.
    (1) The members of the Council must be appointed by the Governor 
or, in the case of a State that, under State law, vests authority for 
the administration of the activities carried out under this part in an 
entity other than the Governor (such as one or more houses of the State 
legislature or an independent board), the chief officer of that entity.
    (2) The appointing authority must select members of the Council 
after soliciting recommendations from representatives of organizations 
representing a broad range of individuals with disabilities and 
organizations interested in individuals with disabilities. In selecting 
members, the appointing authority must consider, to the greatest extent 
practicable, the extent to which minority populations are represented 
on the Council.
    (b) Composition.
    (1) General. Except as provided in paragraph (b)(3) of this 
section, the Council must be composed of at least 15 members, 
including--
    (i) At least one representative of the Statewide Independent Living 
Council, who must be the chairperson or other designee of the Statewide 
Independent Living Council;
    (ii) At least one representative of a parent training and 
information center established pursuant to section 682(a) of the 
Individuals with Disabilities Education Act;
    (iii) At least one representative of the Client Assistance Program 
established under 34 CFR part 370, who must be the director of or other 
individual recommended by the Client Assistance Program;
    (iv) At least one qualified vocational rehabilitation counselor 
with knowledge of and experience with vocational rehabilitation 
programs who serves as an ex officio, nonvoting member of the Council 
if employed by the designated State agency;
    (v) At least one representative of community rehabilitation program 
service providers;
    (vi) Four representatives of business, industry, and labor;
    (vii) Representatives of disability groups that include a cross 
section of--
    (A) Individuals with physical, cognitive, sensory, and mental 
disabilities; and
    (B) Representatives of individuals with disabilities who have 
difficulty representing themselves or are unable due to their 
disabilities to represent themselves;
    (viii) Current or former applicants for, or recipients of, 
vocational rehabilitation services;
    (ix) In a State in which one or more projects are carried out under 
section 121 of the Act (American Indian Vocational Rehabilitation 
Services), at least one representative of the directors of the 
projects;
    (x) At least one representative of the State educational agency 
responsible for the public education of students with disabilities who 
are eligible to receive services under this part and part B of the 
Individuals with Disabilities Education Act;
    (xi) At least one representative of the State workforce investment 
board; and
    (xii) The director of the designated State unit as an ex officio, 
nonvoting member of the Council.
    (2) Employees of the designated State agency. Employees of the 
designated State agency may serve only as nonvoting members of the 
Council. This provision does not apply to the representative appointed 
pursuant to paragraph (b)(1)(iii) of this section.
    (3) Composition of a separate Council for a separate State agency 
for individuals who are blind. Except as provided in paragraph (b)(4) 
of this section, if the State establishes a separate Council for a 
separate State agency for individuals who are blind, that Council 
must--
    (i) Conform with all of the composition requirements for a Council 
under paragraph (b)(1) of this section, except the requirements in 
paragraph (b)(1)(vii), unless the exception in paragraph (b)(4) of this 
section applies; and
    (ii) Include--
    (A) At least one representative of a disability advocacy group 
representing individuals who are blind; and
    (B) At least one representative of an individual who is blind, has 
multiple disabilities, and has difficulty representing himself or 
herself or is unable due to disabilities to represent himself or 
herself.
    (4) Exception. If State law in effect on October 29, 1992 requires 
a separate Council under paragraph (b)(3) of this section to have fewer 
than 15 members, the separate Council is in compliance with the 
composition requirements in paragraphs (b)(1)(vi) and (b)(1)(viii) of 
this section if it includes at least one representative who meets the 
requirements for each of those paragraphs.
    (c) Majority.
    (1) A majority of the Council members must be individuals with 
disabilities who meet the requirements of Sec. 361.5(b)(29) and are not 
employed by the designated State unit.
    (2) In the case of a separate Council established under 
Sec. 361.16(b), a majority

[[Page 4393]]

of the Council members must be individuals who are blind and are not 
employed by the designated State unit.
    (d) Chairperson. The chairperson must be--
    (1) Selected by the members of the Council from among the voting 
members of the Council, subject to the veto power of the Governor; or
    (2) In States in which the Governor does not have veto power 
pursuant to State law, the appointing authority described in paragraph 
(a)(1) of this section must designate a member of the Council to serve 
as the chairperson of the Council or must require the Council to 
designate a member to serve as chairperson.
    (e) Terms of appointment.
    (1) Each member of the Council must be appointed for a term of no 
more than 3 years, and each member of the Council, other than a 
representative identified in paragraph (b)(1)(iii) or (ix) of this 
section, may serve for no more than two consecutive full terms.
    (2) A member appointed to fill a vacancy occurring prior to the end 
of the term for which the predecessor was appointed must be appointed 
for the remainder of the predecessor's term.
    (3) The terms of service of the members initially appointed must 
be, as specified by the appointing authority as described in paragraph 
(a)(1) of this section, for varied numbers of years to ensure that 
terms expire on a staggered basis.
    (f) Vacancies.
    (1) A vacancy in the membership of the Council must be filled in 
the same manner as the original appointment, except the appointing 
authority as described in paragraph (a)(1) of this section may delegate 
the authority to fill that vacancy to the remaining members of the 
Council after making the original appointment.
    (2) No vacancy affects the power of the remaining members to 
execute the duties of the Council.
    (g) Conflict of interest. No member of the Council shall cast a 
vote on any matter that would provide direct financial benefit to the 
member or the member's organization or otherwise give the appearance of 
a conflict of interest under State law.
    (h) Functions. The Council must, after consulting with the State 
workforce investment board--
    (1) Review, analyze, and advise the designated State unit regarding 
the performance of the State unit's responsibilities under this part, 
particularly responsibilities related to--
    (i) Eligibility, including order of selection;
    (ii) The extent, scope, and effectiveness of services provided; and
    (iii) Functions performed by State agencies that affect or 
potentially affect the ability of individuals with disabilities in 
achieving employment outcomes under this part;
    (2) In partnership with the designated State unit--
    (i) Develop, agree to, and review State goals and priorities in 
accordance with Sec. 361.29(c); and
    (ii) Evaluate the effectiveness of the vocational rehabilitation 
program and submit reports of progress to the Secretary in accordance 
with Sec. 361.29(e);
    (3) Advise the designated State agency and the designated State 
unit regarding activities carried out under this part and assist in the 
preparation of the State plan and amendments to the plan, applications, 
reports, needs assessments, and evaluations required by this part;
    (4) To the extent feasible, conduct a review and analysis of the 
effectiveness of, and consumer satisfaction with--
    (i) The functions performed by the designated State agency;
    (ii) The vocational rehabilitation services provided by State 
agencies and other public and private entities responsible for 
providing vocational rehabilitation services to individuals with 
disabilities under the Act; and
    (iii) The employment outcomes achieved by eligible individuals 
receiving services under this part, including the availability of 
health and other employment benefits in connection with those 
employment outcomes;
    (5) Prepare and submit to the Governor and to the Secretary no 
later than 90 days after the end of the Federal fiscal year an annual 
report on the status of vocational rehabilitation programs operated 
within the State and make the report available to the public through 
appropriate modes of communication;
    (6) To avoid duplication of efforts and enhance the number of 
individuals served, coordinate activities with the activities of other 
councils within the State, including the Statewide Independent Living 
Council established under 34 CFR part 364, the advisory panel 
established under section 612(a)(21) of the Individuals with 
Disabilities Education Act, the State Developmental Disabilities 
Planning Council described in section 124 of the Developmental 
Disabilities Assistance and Bill of Rights Act, the State mental health 
planning council established under section 1914(a) of the Public Health 
Service Act, and the State workforce investment board;
    (7) Provide for coordination and the establishment of working 
relationships between the designated State agency and the Statewide 
Independent Living Council and centers for independent living within 
the State; and
    (8) Perform other comparable functions, consistent with the purpose 
of this part, as the Council determines to be appropriate, that are 
comparable to the other functions performed by the Council.
    (i) Resources.
    (1) The Council, in conjunction with the designated State unit, 
must prepare a plan for the provision of resources, including staff and 
other personnel, that may be necessary and sufficient for the Council 
to carry out its functions under this part.
    (2) The resource plan must, to the maximum extent possible, rely on 
the use of resources in existence during the period of implementation 
of the plan.
    (3) Any disagreements between the designated State unit and the 
Council regarding the amount of resources necessary to carry out the 
functions of the Council must be resolved by the Governor, consistent 
with paragraphs (i)(1) and (2) of this section.
    (4) The Council must, consistent with State law, supervise and 
evaluate the staff and personnel that are necessary to carry out its 
functions.
    (5) Those staff and personnel that are assisting the Council in 
carrying out its functions may not be assigned duties by the designated 
State unit or any other agency or office of the State that would create 
a conflict of interest.
    (j) Meetings. The Council must--
    (1) Convene at least four meetings a year in locations determined 
by the Council to be necessary to conduct Council business. The 
meetings must be publicly announced, open, and accessible to the 
general public, including individuals with disabilities, unless there 
is a valid reason for an executive session; and
    (2) Conduct forums or hearings, as appropriate, that are publicly 
announced, open, and accessible to the public, including individuals 
with disabilities.
    (k) Compensation. Funds appropriated under Title I of the Act, 
except funds to carry out sections 112 and 121 of the Act, may be used 
to compensate and reimburse the expenses of Council members in 
accordance with section 105(g) of the Act.

(Authority: Section 105 of the Act; 29 U.S.C. 725)

[[Page 4394]]

Sec. 361.18  Comprehensive system of personnel development.

    The State plan must describe the procedures and activities the 
State agency will undertake to establish and maintain a comprehensive 
system of personnel development designed to ensure an adequate supply 
of qualified rehabilitation personnel, including professionals and 
paraprofessionals, for the designated State unit. If the State agency 
has a State Rehabilitation Council, this description must, at a 
minimum, specify that the Council has an opportunity to review and 
comment on the development of plans, policies, and procedures necessary 
to meet the requirements of paragraphs (b) through (d) of this section. 
This description must also conform with the following requirements:
    (a) Data system on personnel and personnel development. The State 
plan must describe the development and maintenance of a system by the 
State agency for collecting and analyzing on an annual basis data on 
qualified personnel needs and personnel development, in accordance with 
the following requirements:
    (1) Data on qualified personnel needs must include--
    (i) The number of personnel who are employed by the State agency in 
the provision of vocational rehabilitation services in relation to the 
number of individuals served, broken down by personnel category;
    (ii) The number of personnel currently needed by the State agency 
to provide vocational rehabilitation services, broken down by personnel 
category; and
    (iii) Projections of the number of personnel, broken down by 
personnel category, who will be needed by the State agency to provide 
vocational rehabilitation services in the State in 5 years based on 
projections of the number of individuals to be served, including 
individuals with significant disabilities, the number of personnel 
expected to retire or leave the field, and other relevant factors.
    (2) Data on personnel development must include--
    (i) A list of the institutions of higher education in the State 
that are preparing vocational rehabilitation professionals, by type of 
program;
    (ii) The number of students enrolled at each of those institutions, 
broken down by type of program; and
    (iii) The number of students who graduated during the prior year 
from each of those institutions with certification or licensure, or 
with the credentials for certification or licensure, broken down by the 
personnel category for which they have received, or have the 
credentials to receive, certification or licensure.
    (b) Plan for recruitment, preparation, and retention of qualified 
personnel. The State plan must describe the development, updating, and 
implementation of a plan to address the current and projected needs for 
personnel who are qualified in accordance with paragraph (c) of this 
section. The plan must identify the personnel needs based on the data 
collection and analysis system described in paragraph (a) of this 
section and must provide for the coordination and facilitation of 
efforts between the designated State unit and institutions of higher 
education and professional associations to recruit, prepare, and retain 
personnel who are qualified in accordance with paragraph (c) of this 
section, including personnel from minority backgrounds and personnel 
who are individuals with disabilities.
    (c) Personnel standards.
    (1) The State plan must include the State agency's policies and 
describe the procedures the State agency will undertake to establish 
and maintain standards to ensure that all professional and 
paraprofessional personnel needed within the designated State unit to 
carry out this part are appropriately and adequately prepared and 
trained, including--
    (i) Standards that are consistent with any national or State-
approved or -recognized certification, licensing, or registration 
requirements, or, in the absence of these requirements, other 
comparable requirements (including State personnel requirements) that 
apply to the profession or discipline in which that category of 
personnel is providing vocational rehabilitation services; and
    (ii) To the extent that existing standards are not based on the 
highest requirements in the State, the steps the State is currently 
taking and the steps the State plans to take to retrain or hire 
personnel to meet standards that are based on the highest requirements 
in the State, including measures to notify State unit personnel, the 
institutions of higher education identified under paragraph (a)(2)(i) 
of this section, and other public agencies of these steps and the 
timelines for taking each step. The steps taken by the State unit under 
this paragraph must be described in a written plan that includes--
    (A) Specific strategies for retraining, recruiting, and hiring 
personnel;
    (B) The specific time period by which all State unit personnel will 
meet the standards described in paragraph (c)(1)(i) of this section;
    (C) Procedures for evaluating the State unit's progress in hiring 
or retraining personnel to meet applicable personnel standards within 
the time period established under paragraph (c)(1)(ii)(B) of this 
section; and
    (D) In instances in which the State unit is unable to immediately 
hire new personnel who meet the requirements in paragraph (c)(1)(i) of 
this section, the initial minimum qualifications that the designated 
State unit will require of newly hired personnel and a plan for 
training those individuals to meet applicable requirements within the 
time period established under paragraph (c)(1)(ii)(B) of this section.
    (2) As used in this section--
    (i) Highest requirements in the State applicable to that profession 
or discipline means the highest entry-level academic degree needed for 
any national or State-approved or -recognized certification, licensing, 
registration, or, in the absence of these requirements, other 
comparable requirements that apply to that profession or discipline. 
The current requirements of all State statutes and regulations of other 
agencies in the State applicable to that profession or discipline must 
be considered and must be kept on file by the designated State unit and 
available to the public.
    (ii) Profession or discipline means a specific occupational 
category, including any paraprofessional occupational category, that--
    (A) Provides rehabilitation services to individuals with 
disabilities;
    (B) Has been established or designated by the State unit; and
    (C) Has a specified scope of responsibility.
    (d) Staff development.
    (1) The State plan must include the State agency's policies and 
describe the procedures and activities the State agency will undertake 
to ensure that all personnel employed by the State unit receive 
appropriate and adequate training, including a description of--
    (i) A system of staff development for rehabilitation professionals 
and paraprofessionals within the State unit, particularly with respect 
to assessment, vocational counseling, job placement, and rehabilitation 
technology; and
    (ii) Procedures for acquiring and disseminating to rehabilitation 
professionals and paraprofessionals within the designated State unit 
significant knowledge from research and other sources.
    (2) The specific training areas for staff development must be based 
on the

[[Page 4395]]

needs of each State unit and may include, but are not limited to--
    (i) Training regarding the Workforce Investment Act of 1998 and the 
amendments to the Rehabilitation Act of 1973 made by the Rehabilitation 
Act Amendments of 1998;
    (ii) Training with respect to the requirements of the Americans 
with Disabilities Act, the Individuals with Disabilities Education Act, 
and Social Security work incentive programs, including programs under 
the Ticket to Work and Work Incentives Improvement Act of 1999, 
training to facilitate informed choice under this program, and training 
to improve the provision of services to culturally diverse populations; 
and
    (iii) Activities related to--
    (A) Recruitment and retention of qualified rehabilitation 
personnel;
    (B) Succession planning; and
    (C) Leadership development and capacity building.
    (e) Personnel to address individual communication needs. The State 
plan must describe how the State unit--
    (1) Includes among its personnel, or obtains the services of, 
individuals able to communicate in the native languages of applicants 
and eligible individuals who have limited English speaking ability; and
    (2) Includes among its personnel, or obtains the services of, 
individuals able to communicate with applicants and eligible 
individuals in appropriate modes of communication.
    (f) Coordination with personnel development under the Individuals 
with Disabilities Education Act. The State plan must describe the 
procedures and activities the State agency will undertake to coordinate 
its comprehensive system of personnel development under the Act with 
personnel development under the Individuals with Disabilities Education 
Act.

(Authority: Section 101(a)(7) of the Act; 29 U.S.C. 721(a)(7))


Sec. 361.19  Affirmative action for individuals with disabilities.

    The State plan must assure that the State agency takes affirmative 
action to employ and advance in employment qualified individuals with 
disabilities covered under and on the same terms and conditions as 
stated in section 503 of the Act.

(Authority: Section 101(a)(6)(B) of the Act; 29 U.S.C. 721(a)(6)(B))


Sec. 361.20  Public participation requirements.

    (a) Conduct of public meetings. The State plan must assure that 
prior to the adoption of any substantive policies or procedures 
governing the provision of vocational rehabilitation services under the 
State plan, including making any substantive amendments to the policies 
and procedures, the designated State agency conducts public meetings 
throughout the State to provide the public, including individuals with 
disabilities, an opportunity to comment on the policies or procedures.
    (b) Notice requirements. The State plan must assure that the 
designated State agency, prior to conducting the public meetings, 
provides appropriate and sufficient notice throughout the State of the 
meetings in accordance with--
    (1) State law governing public meetings; or
    (2) In the absence of State law governing public meetings, 
procedures developed by the designated State agency in consultation 
with the State Rehabilitation Council.
    (c) Summary of input of the State Rehabilitation Council. The State 
plan must provide a summary of the input of the State Rehabilitation 
Council, if the State agency has a Council, into the State plan and any 
amendment to the plan, in accordance with Sec. 361.16(a)(2)(v).
    (d) Special consultation requirements. The State plan must assure 
that the State agency actively consults with the director of the Client 
Assistance Program, the State Rehabilitation Council, if the State 
agency has a Council, and, as appropriate, Indian tribes, tribal 
organizations, and native Hawaiian organizations on its policies and 
procedures governing the provision of vocational rehabilitation 
services under the State plan.
    (e) Appropriate modes of communication. The State unit must provide 
to the public, through appropriate modes of communication, notices of 
the public meetings, any materials furnished prior to or during the 
public meetings, and the policies and procedures governing the 
provision of vocational rehabilitation services under the State plan.

(Authority: Sections 101(a)(16)(A) and 105(c)(3) of the Act; 29 
U.S.C. 721(a)(16)(A), and 725(c)(3))


Sec. 361.21  Consultations regarding the administration of the state 
plan.

    The State plan must assure that, in connection with matters of 
general policy arising in the administration of the State plan, the 
designated State agency takes into account the views of--
    (a) Individuals and groups of individuals who are recipients of 
vocational rehabilitation services or, as appropriate, the individuals' 
representatives;
    (b) Personnel working in programs that provide vocational 
rehabilitation services to individuals with disabilities;
    (c) Providers of vocational rehabilitation services to individuals 
with disabilities;
    (d) The director of the Client Assistance Program; and
    (e) The State Rehabilitation Council, if the State has a Council.

(Authority: Sections 101(a)(16)(B) of the Act; 29 U.S.C. 
721(a)(16)(B))

Sec. 361.22  Coordination with education officials.

    (a) Plans, policies, and procedures. (1) The State plan must 
contain plans, policies, and procedures for coordination between the 
designated State agency and education officials responsible for the 
public education of students with disabilities that are designed to 
facilitate the transition of students with disabilities from the 
receipt of educational services in school to the receipt of vocational 
rehabilitation services under the responsibility of the designated 
State agency.
    (2) These plans, policies, and procedures in paragraph (a)(1) of 
this section must provide for the development and approval of an 
individualized plan for employment in accordance with Sec. 361.45 as 
early as possible during the transition planning process but, at the 
latest, by the time each student determined to be eligible for 
vocational rehabilitation services leaves the school setting or, if the 
designated State unit is operating under an order of selection, before 
each eligible student able to be served under the order leaves the 
school setting.
    (b) Formal interagency agreement. The State plan must include 
information on a formal interagency agreement with the State 
educational agency that, at a minimum, provides for--
    (1) Consultation and technical assistance to assist educational 
agencies in planning for the transition of students with disabilities 
from school to post-school activities, including vocational 
rehabilitation services;
    (2) Transition planning by personnel of the designated State agency 
and educational agency personnel for students with disabilities that 
facilitates the development and completion of their individualized 
education programs (IEPs) under section 614(d) of the Individuals with 
Disabilities Education Act;
    (3) The roles and responsibilities, including financial 
responsibilities, of

[[Page 4396]]

each agency, including provisions for determining State lead agencies 
and qualified personnel responsible for transition services; and
    (4) Procedures for outreach to and identification of students with 
disabilities who are in need of transition services. Outreach to these 
students should occur as early as possible during the transition 
planning process and must include, at a minimum, a description of the 
purpose of the vocational rehabilitation program, eligibility 
requirements, application procedures, and scope of services that may be 
provided to eligible individuals.

(Authority: Section 101(a)(11)(D) of the Act; 29 U.S.C. 721 
(a)(11)(D))


Sec. 361.23  Requirements related to the statewide workforce investment 
system.

    (a) Responsibilities as a partner of the One-Stop service delivery 
system. As a required partner in the One-Stop service delivery system 
(which is part of the statewide workforce investment system under Title 
I of the Workforce Investment Act of 1998), the designated State unit 
must carry out the following functions consistent with the Act, this 
part, Title I of the Workforce Investment Act of 1998, and the 
regulations in 20 CFR part 662:
    (1) Make available to participants through the One-Stop service 
delivery system the core services (as described in 20 CFR 662.240) that 
are applicable to the Program administered by the designated State unit 
under this part.
    (2) Use a portion of funds made available to the Program 
administered by the designated State unit under this part, consistent 
with the Act and this part, to--
    (i) Create and maintain the One-Stop service delivery system; and
    (ii) Provide core services (as described in 20 CFR 662.240).
    (3) Enter into a memorandum of understanding (MOU) with the Local 
Workforce Investment Board under section 117 of the Workforce 
Investment Act of 1998 relating to the operation of the One-Stop 
service delivery system that meets the requirements of section 121(c) 
of the Workforce Investment Act and 20 CFR 662.300, including a 
description of services, how the cost of the identified services and 
operating costs of the system will be funded, and methods for 
referrals.
    (4) Participate in the operation of the One-Stop service delivery 
system consistent with the terms of the MOU and the requirements of the 
Act and this part.
    (5) Provide representation on the Local Workforce Investment Board 
under section 117 of the Workforce Investment Act of 1998.
    (b) Cooperative agreements with One-Stop partners. (1) The State 
plan must assure that the designated State unit or the designated State 
agency enters into cooperative agreements with the other entities that 
are partners under the One-Stop service delivery system under Title I 
of the Workforce Investment Act of 1998 and replicates those agreements 
at the local level between individual offices of the designated State 
unit and local entities carrying out the One-Stop service delivery 
system or other activities through the statewide workforce investment 
system.
    (2) Cooperative agreements developed under paragraph (b)(1) of this 
section may provide for--
    (i) Intercomponent training and technical assistance regarding--
    (A) The availability and benefits of, and information on 
eligibility standards for, vocational rehabilitation services; and
    (B) The promotion of equal, effective and meaningful participation 
by individuals with disabilities in the One-Stop service delivery 
system and other workforce investment activities through the promotion 
of program accessibility consistent with the requirements of the 
Americans with Disabilities Act of 1990 and section 504 of the Act, the 
use of nondiscriminatory policies and procedures, and the provision of 
reasonable accommodations, auxiliary aids and services, and 
rehabilitation technology for individuals with disabilities;
    (ii) The use of information and financial management systems that 
link all of the partners of the One-Stop service delivery system to one 
another and to other electronic networks, including nonvisual 
electronic networks, and that relate to subjects such as employment 
statistics, job vacancies, career planning, and workforce investment 
activities;
    (iii) The use of customer service features such as common intake 
and referral procedures, customer databases, resource information, and 
human services hotlines;
    (iv) The establishment of cooperative efforts with employers to 
facilitate job placement and carry out other activities that the 
designated State unit and the employers determine to be appropriate;
    (v) The identification of staff roles, responsibilities, and 
available resources and specification of the financial responsibility 
of each partner of the One-Stop service delivery system with respect to 
providing and paying for necessary services, consistent with the 
requirements of the Act, this part, other Federal requirements, and 
State law; and
    (vi) The specification of procedures for resolving disputes among 
partners of the One-Stop service delivery system.

(Authority: Section 101(a)(11)(A) of the Act; 29 U.S.C. 
721(a)(11)(A); Sections 121 and 134 of the Workforce Investment Act 
of 1998; 29 U.S.C. 2841 and 2864)


Sec. 361.24  Cooperation and coordination with other entities.

    (a) Interagency cooperation. The State plan must describe the 
designated State agency's cooperation with and use of the services and 
facilities of Federal, State, and local agencies and programs, 
including programs carried out by the Under Secretary for Rural 
Development of the Department of Agriculture and State use contracting 
programs, to the extent that those agencies and programs are not 
carrying out activities through the statewide workforce investment 
system.
    (b) Coordination with the Statewide Independent Living Council and 
independent living centers. The State plan must assure that the 
designated State unit, the Statewide Independent Living Council 
established under 34 CFR part 364, and the independent living centers 
established under 34 CFR part 366 have developed working relationships 
and coordinate their activities.
    (c) Cooperative agreement with recipients of grants for services to 
American Indians.
    (1) General. In applicable cases, the State plan must assure that 
the designated State agency has entered into a formal cooperative 
agreement with each grant recipient in the State that receives funds 
under part C of the Act (American Indian Vocational Rehabilitation 
Services).
    (2) Contents of formal cooperative agreement. The agreement 
required under paragraph (a)(1) of this section must describe 
strategies for collaboration and coordination in providing vocational 
rehabilitation services to American Indians who are individuals with 
disabilities, including--
    (i) Strategies for interagency referral and information sharing 
that will assist in eligibility determinations and the development of 
individualized plans for employment;
    (ii) Procedures for ensuring that American Indians who are 
individuals with disabilities and are living near a reservation or 
tribal service area are provided vocational rehabilitation services; 
and
    (iii) Provisions for sharing resources in cooperative studies and 
assessments,

[[Page 4397]]

joint training activities, and other collaborative activities designed 
to improve the provision of services to American Indians who are 
individuals with disabilities.
    (d) Reciprocal referral services between two designated State units 
in the same State. If there is a separate designated State unit for 
individuals who are blind, the two designated State units must 
establish reciprocal referral services, use each other's services and 
facilities to the extent feasible, jointly plan activities to improve 
services in the State for individuals with multiple impairments, 
including visual impairments, and otherwise cooperate to provide more 
effective services, including, if appropriate, entering into a written 
cooperative agreement.

(Authority: Sections 12(c) and 101(a)(11)(C), (E), and (F) of the 
Act; 29 U.S.C. 709(c) and 721(a)(11) (C), (E), and (F))


Sec. 361.25  Statewideness.

    The State plan must assure that services provided under the State 
plan will be available in all political subdivisions of the State, 
unless a waiver of statewideness is requested and approved in 
accordance with Sec. 361.26.

(Authority: Section 101(a)(4) of the Act; 29 U.S.C. 721(a)(4))


Sec. 361.26  Waiver of statewideness.

    (a) Availability. The State unit may provide services in one or 
more political subdivisions of the State that increase services or 
expand the scope of services that are available statewide under the 
State plan if--
    (1) The non-Federal share of the cost of these services is met from 
funds provided by a local public agency, including funds contributed to 
a local public agency by a private agency, organization, or individual;
    (2) The services are likely to promote the vocational 
rehabilitation of substantially larger numbers of individuals with 
disabilities or of individuals with disabilities with particular types 
of impairments; and
    (3) For purposes other than those specified in Sec. 361.60(b)(3)(i) 
and consistent with the requirements in Sec. 361.60(b)(3)(ii), the 
State includes in its State plan, and the Secretary approves, a waiver 
of the statewideness requirement, in accordance with the requirements 
of paragraph (b) of this section.
    (b) Request for waiver. The request for a waiver of statewideness 
must--
    (1) Identify the types of services to be provided;
    (2) Contain a written assurance from the local public agency that 
it will make available to the State unit the non-Federal share of 
funds;
    (3) Contain a written assurance that State unit approval will be 
obtained for each proposed service before it is put into effect; and
    (4) Contain a written assurance that all other State plan 
requirements, including a State's order of selection requirements, will 
apply to all services approved under the waiver.

(Authority: Section 101(a)(4) of the Act; 29 U.S.C. 721(a)(4))


Sec. 361.27  Shared funding and administration of joint programs.

    (a) If the State plan provides for the designated State agency to 
share funding and administrative responsibility with another State 
agency or local public agency to carry out a joint program to provide 
services to individuals with disabilities, the State must submit to the 
Secretary for approval a plan that describes its shared funding and 
administrative arrangement.
    (b) The plan under paragraph (a) of this section must include--
    (1) A description of the nature and scope of the joint program;
    (2) The services to be provided under the joint program;
    (3) The respective roles of each participating agency in the 
administration and provision of services; and
    (4) The share of the costs to be assumed by each agency.
    (c) If a proposed joint program does not comply with the 
statewideness requirement in Sec. 361.25, the State unit must obtain a 
waiver of statewideness, in accordance with Sec. 361.26.

(Authority: Section 101(a)(2)(A) of the Act; 29 U.S.C. 721(a)(2)(A))


Sec. 361.28  Third-party cooperative arrangements involving funds from 
other public agencies.

    (a) The designated State unit may enter into a third-party 
cooperative arrangement for providing or administering vocational 
rehabilitation services with another State agency or a local public 
agency that is furnishing part or all of the non-Federal share, if the 
designated State unit ensures that--
    (1) The services provided by the cooperating agency are not the 
customary or typical services provided by that agency but are new 
services that have a vocational rehabilitation focus or existing 
services that have been modified, adapted, expanded, or reconfigured to 
have a vocational rehabilitation focus;
    (2) The services provided by the cooperating agency are only 
available to applicants for, or recipients of, services from the 
designated State unit;
    (3) Program expenditures and staff providing services under the 
cooperative arrangement are under the administrative supervision of the 
designated State unit; and
    (4) All State plan requirements, including a State's order of 
selection, will apply to all services provided under the cooperative 
program.
    (b) If a third party cooperative agreement does not comply with the 
statewideness requirement in Sec. 361.25, the State unit must obtain a 
waiver of statewideness, in accordance with Sec. 361.26.

(Authority: Section 12(c) of the Act; 29 U.S.C. 709(c))

Sec. 361.29  Statewide assessment; annual estimates; annual State goals 
and priorities; strategies; and progress reports.

    (a) Comprehensive statewide assessment. (1) The State plan must 
include--
    (i) The results of a comprehensive, statewide assessment, jointly 
conducted by the designated State unit and the State Rehabilitation 
Council (if the State unit has a Council) every 3 years describing the 
rehabilitation needs of individuals with disabilities residing within 
the State, particularly the vocational rehabilitation services needs 
of--
    (A) Individuals with the most significant disabilities, including 
their need for supported employment services;
    (B) Individuals with disabilities who are minorities and 
individuals with disabilities who have been unserved or underserved by 
the vocational rehabilitation program carried out under this part; and
    (C) Individuals with disabilities served through other components 
of the statewide workforce investment system as identified by those 
individuals and personnel assisting those individuals through the 
components of the system; and
    (ii) An assessment of the need to establish, develop, or improve 
community rehabilitation programs within the State.
    (2) The State plan must assure that the State will submit to the 
Secretary a report containing information regarding updates to the 
assessments under paragraph (a) of this section for any year in which 
the State updates the assessments.
    (b) Annual estimates. The State plan must include, and must assure 
that the State will annually submit a report to the Secretary that 
includes, State estimates of--

[[Page 4398]]

    (1) The number of individuals in the State who are eligible for 
services under this part;
    (2) The number of eligible individuals who will receive services 
provided with funds provided under part B of Title I of the Act and 
under part B of Title VI of the Act, including, if the designated State 
agency uses an order of selection in accordance with Sec. 361.36, 
estimates of the number of individuals to be served under each priority 
category within the order; and
    (3) The costs of the services described in paragraph (b)(1) of this 
section, including, if the designated State agency uses an order of 
selection, the service costs for each priority category within the 
order.
    (c) Goals and priorities.
    (1) In general. The State plan must identify the goals and 
priorities of the State in carrying out the program.
    (2) Council. The goals and priorities must be jointly developed, 
agreed to, reviewed annually, and, as necessary, revised by the 
designated State unit and the State Rehabilitation Council, if the 
State unit has a Council.
    (3) Submission. The State plan must assure that the State will 
submit to the Secretary a report containing information regarding 
revisions in the goals and priorities for any year in which the State 
revises the goals and priorities.
    (4) Basis for goals and priorities. The State goals and priorities 
must be based on an analysis of--
    (i) The comprehensive statewide assessment described in paragraph 
(a) of this section, including any updates to the assessment;
    (ii) The performance of the State on the standards and indicators 
established under section 106 of the Act; and
    (iii) Other available information on the operation and the 
effectiveness of the vocational rehabilitation program carried out in 
the State, including any reports received from the State Rehabilitation 
Council under Sec. 361.17(h) and the findings and recommendations from 
monitoring activities conducted under section 107 of the Act.
    (5) Service and outcome goals for categories in order of selection. 
If the designated State agency uses an order of selection in accordance 
with Sec. 361.36, the State plan must identify the State's service and 
outcome goals and the time within which these goals may be achieved for 
individuals in each priority category within the order.
    (d)Strategies. The State plan must describe the strategies the 
State will use to address the needs identified in the assessment 
conducted under paragraph (a) of this section and achieve the goals and 
priorities identified in paragraph (c) of this section, including--
    (1) The methods to be used to expand and improve services to 
individuals with disabilities, including how a broad range of assistive 
technology services and assistive technology devices will be provided 
to those individuals at each stage of the rehabilitation process and 
how those services and devices will be provided to individuals with 
disabilities on a statewide basis;
    (2) Outreach procedures to identify and serve individuals with 
disabilities who are minorities and individuals with disabilities who 
have been unserved or underserved by the vocational rehabilitation 
program;
    (3) As applicable, the plan of the State for establishing, 
developing, or improving community rehabilitation programs;
    (4) Strategies to improve the performance of the State with respect 
to the evaluation standards and performance indicators established 
pursuant to section 106 of the Act; and
    (5) Strategies for assisting other components of the statewide 
workforce investment system in assisting individuals with disabilities.
    (e) Evaluation and reports of progress. (1) The State plan must 
include--
    (i) The results of an evaluation of the effectiveness of the 
vocational rehabilitation program; and
    (ii) A joint report by the designated State unit and the State 
Rehabilitation Council, if the State unit has a Council, to the 
Secretary on the progress made in improving the effectiveness of the 
program from the previous year. This evaluation and joint report must 
include--
    (A) An evaluation of the extent to which the goals and priorities 
identified in paragraph (c) of this section were achieved;
    (B) A description of the strategies that contributed to the 
achievement of the goals and priorities;
    (C) To the extent to which the goals and priorities were not 
achieved, a description of the factors that impeded that achievement; 
and
    (D) An assessment of the performance of the State on the standards 
and indicators established pursuant to section 106 of the Act.
    (2) The State plan must assure that the designated State unit and 
the State Rehabilitation Council, if the State unit has a Council, will 
jointly submit to the Secretary an annual report that contains the 
information described in paragraph (e)(1) of this section.

(Authority: Section 101(a)(15) of the Act; 29 U.S.C. 721(a)(15))


Sec. 361.30  Services to American Indians.

    The State plan must assure that the designated State agency 
provides vocational rehabilitation services to American Indians who are 
individuals with disabilities residing in the State to the same extent 
as the designated State agency provides vocational rehabilitation 
services to other significant populations of individuals with 
disabilities residing in the State.

(Authority: Sections 101(a)(13) and 121(b)(3) of the Act; 29 U.S.C. 
721(a)(13) and 741(b)(3))


Sec. 361.31  Cooperative agreements with private nonprofit 
organizations.

    The State plan must describe the manner in which cooperative 
agreements with private nonprofit vocational rehabilitation service 
providers will be established.

(Authority: Sections 101(a)(24)(B); 29 U.S.C. 721(a)(24)(B))


Sec. 361.32  Use of profitmaking organizations for on-the-job training 
in connection with selected projects.

    The State plan must assure that the designated State agency has the 
authority to enter into contracts with for-profit organizations for the 
purpose of providing, as vocational rehabilitation services, on-the-job 
training and related programs for individuals with disabilities under 
the Projects With Industry program, 34 CFR part 379, if the designated 
State agency has determined that for-profit agencies are better 
qualified to provide needed vocational rehabilitation services than 
nonprofit agencies and organizations.

(Authority: Section 101(a)(24)(A) of the Act; 29 U.S.C. 
721(a)(24)(A))


Sec. 361.33  [Reserved]


Sec. 361.34  Supported employment State plan supplement.

    (a) The State plan must assure that the State has an acceptable 
plan under 34 CFR part 363 that provides for the use of funds under 
that part to supplement funds under this part for the cost of services 
leading to supported employment.
    (b) The supported employment plan, including any needed annual 
revisions, must be submitted as a supplement to the State plan 
submitted under this part.

(Authority: Sections 101(a)(22) and 625(a) of the Act; 29 U.S.C. 
721(a)(22) and 795(k))


Sec. 361.35  Innovation and expansion activities.

    (a) The State plan must assure that the State will reserve and use 
a portion of the funds allotted to the State under section 110 of the 
Act--
    (1) For the development and implementation of innovative

[[Page 4399]]

approaches to expand and improve the provision of vocational 
rehabilitation services to individuals with disabilities, particularly 
individuals with the most significant disabilities, consistent with the 
findings of the comprehensive, statewide assessment of the 
rehabilitation needs of individuals with disabilities under 
Sec. 361.29(a) and the State's goals and priorities under 
Sec. 361.29(c); and
    (2) To support the funding of--
    (i) The State Rehabilitation Council, if the State has a Council, 
consistent with the resource plan identified in Sec. 361.17(i); and
    (ii) The Statewide Independent Living Council, consistent with the 
plan prepared under 34 CFR 364.21(i).
    (b) The State plan must--
    (1) Describe how the reserved funds will be used; and
    (2) Include, on an annual basis, a report describing how the 
reserved funds were used during the preceding year.

(Authority: Section 101(a)(18) of the Act; 29 U.S.C. 721(a)(18))


Sec. 361.36  Ability to serve all eligible individuals; order of 
selection for services.

    (a) General provisions.
    (1) The designated State unit either must be able to provide the 
full range of services listed in section 103(a) of the Act and 
Sec. 361.48, as appropriate, to all eligible individuals or, in the 
event that vocational rehabilitation services cannot be provided to all 
eligible individuals in the State who apply for the services, include 
in the State plan the order to be followed in selecting eligible 
individuals to be provided vocational rehabilitation services.
    (2) The ability of the designated State unit to provide the full 
range of vocational rehabilitation services to all eligible individuals 
must be supported by a determination that satisfies the requirements of 
paragraph (b) or (c) of this section and a determination that, on the 
basis of the designated State unit's projected fiscal and personnel 
resources and its assessment of the rehabilitation needs of individuals 
with significant disabilities within the State, it can--
    (i) Continue to provide services to all individuals currently 
receiving services;
    (ii) Provide assessment services to all individuals expected to 
apply for services in the next fiscal year;
    (iii) Provide services to all individuals who are expected to be 
determined eligible in the next fiscal year; and
    (iv) Meet all program requirements.
    (3) If the designated State unit is unable to provide the full 
range vocational rehabilitation services to all eligible individuals in 
the State who apply for the services, the State plan must--
    (i) Show the order to be followed in selecting eligible individuals 
to be provided vocational rehabilitation services;
    (ii) Provide a justification for the order of selection;
    (iii) Identify service and outcome goals and the time within which 
the goals may be achieved for individuals in each priority category 
within the order, as required under Sec. 361.29(c)(5); and
    (iv) Assure that--
    (A) In accordance with criteria established by the State for the 
order of selection, individuals with the most significant disabilities 
will be selected first for the provision of vocational rehabilitation 
services; and
    (B) Individuals who do not meet the order of selection criteria 
will have access to services provided through the information and 
referral system established under Sec. 361.37.
    (b) Basis for assurance that services can be provided to all 
eligible individuals.
    (1) For a designated State unit that determined, for the current 
fiscal year and the preceding fiscal year, that it is able to provide 
the full range of services, as appropriate, to all eligible 
individuals, the State unit, during the current fiscal and preceding 
fiscal year, must have in fact--
    (i) Provided assessment services to all applicants and the full 
range of services, as appropriate, to all eligible individuals;
    (ii) Made referral forms widely available throughout the State;
    (iii) Conducted outreach efforts to identify and serve individuals 
with disabilities who have been unserved or underserved by the 
vocational rehabilitation system; and
    (iv) Not delayed, through waiting lists or other means, 
determinations of eligibility, the development of individualized plans 
for employment for individuals determined eligible for vocational 
rehabilitation services, or the provision of services for eligible 
individuals for whom individualized plans for employment have been 
developed.
    (2) For a designated State unit that was unable to provide the full 
range of services to all eligible individuals during the current or 
preceding fiscal year or that has not met the requirements in paragraph 
(b)(1) of this section, the determination that the designated State 
unit is able to provide the full range of vocational rehabilitation 
services to all eligible individuals in the next fiscal year must be 
based on--
    (i) Circumstances that have changed that will allow the designated 
State unit to meet the requirements of paragraph (a)(2) of this section 
in the next fiscal year, including--
    (A) An estimate of the number of and projected costs of serving, in 
the next fiscal year, individuals with existing individualized plans 
for employment;
    (B) The projected number of individuals with disabilities who will 
apply for services and will be determined eligible in the next fiscal 
year and the projected costs of serving those individuals;
    (C) The projected costs of administering the program in the next 
fiscal year, including, but not limited to, costs of staff salaries and 
benefits, outreach activities, and required statewide studies; and
    (D) The projected revenues and projected number of qualified 
personnel for the program in the next fiscal year;
    (ii) Comparable data, as relevant, for the current or preceding 
fiscal year, or for both years, of the costs listed in paragraphs 
(b)(2)(i)(A) through (C) of this section and the resources identified 
in paragraph (b)(2)(i)(D) of this section and an explanation of any 
projected increases or decreases in these costs and resources; and
    (iii) A determination that the projected revenues and the projected 
number of qualified personnel for the program in the next fiscal year 
are adequate to cover the costs identified in paragraphs (b)(2)(i)(A) 
through (C) of this section to ensure the provision of the full range 
of services, as appropriate, to all eligible individuals.
    (c) Determining need for establishing and implementing an order of 
selection.
    (1) The designated State unit must determine, prior to the 
beginning of each fiscal year, whether to establish and implement an 
order of selection.
    (2) If the designated State unit determines that it does not need 
to establish an order of selection, it must reevaluate this 
determination whenever changed circumstances during the course of a 
fiscal year, such as a decrease in its fiscal or personnel resources or 
an increase in its program costs, indicate that it may no longer be 
able to provide the full range of services, as appropriate, to all 
eligible individuals, as described in paragraph (a)(2) of this section.
    (3) If a DSU establishes an order of selection, but determines that 
it does not need to implement that order at the beginning of the fiscal 
year, it must continue to meet the requirements of paragraph (a)(2) of 
this section, or it must implement the order of selection

[[Page 4400]]

by closing one or more priority categories.
    (d) Establishing an order of selection.
    (1) Basis for order of selection. An order of selection must be 
based on a refinement of the three criteria in the definition of 
``individual with a significant disability'' in section 7(21)(A) of the 
Act and Sec. 361.5(b)(31).
    (2) Factors that cannot be used in determining order of selection 
of eligible individuals. An order of selection may not be based on any 
other factors, including--
    (i) Any duration of residency requirement, provided the individual 
is present in the State;
    (ii) Type of disability;
    (iii) Age, gender, race, color, or national origin;
    (iv) Source of referral;
    (v) Type of expected employment outcome;
    (vi) The need for specific services or anticipated cost of services 
required by an individual; or
    (vii) The income level of an individual or an individual's family.
    (e) Administrative requirements. In administering the order of 
selection, the designated State unit must--
    (1) Implement the order of selection on a statewide basis;
    (2) Notify all eligible individuals of the priority categories in a 
State's order of selection, their assignment to a particular category, 
and their right to appeal their category assignment;
    (3) Continue to provide all needed services to any eligible 
individual who has begun to receive services under an individualized 
plan for employment prior to the effective date of the order of 
selection, irrespective of the severity of the individual's disability; 
and
    (4) Ensure that its funding arrangements for providing services 
under the State plan, including third-party arrangements and awards 
under the establishment authority, are consistent with the order of 
selection. If any funding arrangements are inconsistent with the order 
of selection, the designated State unit must renegotiate these funding 
arrangements so that they are consistent with the order of selection.
    (f) State Rehabilitation Council. The designated State unit must 
consult with the State Rehabilitation Council, if the State unit has a 
Council, regarding the--
    (1) Need to establish an order of selection, including any 
reevaluation of the need under paragraph (c)(2) of this section;
    (2) Priority categories of the particular order of selection;
    (3) Criteria for determining individuals with the most significant 
disabilities; and
    (4) Administration of the order of selection.

(Authority: Sections 12(d); 101(a)(5); 101(a)(12); 101(a)(15)(A), 
(B) and (C); 101(a)(21)(A)(ii); and 504(a) of the Act; 29 U.S.C. 
709(d), 721(a)(5), 721(a)(12), 721(a)(15)(A), (B) and (C); 
721(a)(21)(A)(ii), and 794(a))


Sec. 361.37  Information and referral services.

    (a) General provisions. The State plan must assure that--
    (1) The designated State agency will implement an information and 
referral system adequate to ensure that individuals with disabilities, 
including eligible individuals who do not meet the agency's order of 
selection criteria for receiving vocational rehabilitation services if 
the agency is operating on an order of selection, are provided accurate 
vocational rehabilitation information and guidance (which may include 
counseling and referral for job placement) using appropriate modes of 
communication to assist them in preparing for, securing, retaining, or 
regaining employment; and
    (2) The designated State agency will refer individuals with 
disabilities to other appropriate Federal and State programs, including 
other components of the statewide workforce investment system.
    (b) Criteria for appropriate referrals. In making the referrals 
identified in paragraph (a)(2) of this section, the designated State 
unit must--
    (1) Refer the individual to Federal or State programs, including 
programs carried out by other components of the statewide workforce 
investment system, best suited to address the specific employment needs 
of an individual with a disability; and
    (2) Provide the individual who is being referred--
    (i) A notice of the referral by the designated State agency to the 
agency carrying out the program;
    (ii) Information identifying a specific point of contact within the 
agency to which the individual is being referred; and
    (iii) Information and advice regarding the most suitable services 
to assist the individual to prepare for, secure, retain, or regain 
employment.
    (c) Order of selection. In providing the information and referral 
services under this section to eligible individuals who are not in the 
priority category or categories to receive vocational rehabilitation 
services under the State's order of selection, the State unit must 
identify, as part of its reporting under section 101(a)(10) of the Act 
and Sec. 361.40, the number of eligible individuals who did not meet 
the agency's order of selection criteria for receiving vocational 
rehabilitation services and did receive information and referral 
services under this section.

(Authority: Sections 101(a)(5)(D) and (20) and 101(a)(10)(C)(ii) of 
the Act; 29 U.S.C. 721(a)(5)(D) and (20) and (a)(10)(C)(ii))


Sec. 361.38  Protection, use, and release of personal information.

    (a) General provisions.
    (1) The State agency and the State unit must adopt and implement 
written policies and procedures to safeguard the confidentiality of all 
personal information, including photographs and lists of names. These 
policies and procedures must ensure that--
    (i) Specific safeguards are established to protect current and 
stored personal information;
    (ii) All applicants and eligible individuals and, as appropriate, 
those individuals' representatives, service providers, cooperating 
agencies, and interested persons are informed through appropriate modes 
of communication of the confidentiality of personal information and the 
conditions for accessing and releasing this information;
    (iii) All applicants or their representatives are informed about 
the State unit's need to collect personal information and the policies 
governing its use, including--
    (A) Identification of the authority under which information is 
collected;
    (B) Explanation of the principal purposes for which the State unit 
intends to use or release the information;
    (C) Explanation of whether providing requested information to the 
State unit is mandatory or voluntary and the effects of not providing 
requested information;
    (D) Identification of those situations in which the State unit 
requires or does not require informed written consent of the individual 
before information may be released; and
    (E) Identification of other agencies to which information is 
routinely released;
    (iv) An explanation of State policies and procedures affecting 
personal information will be provided to each individual in that 
individual's native language or through the appropriate mode of 
communication; and
    (v) These policies and procedures provide no fewer protections for 
individuals than State laws and regulations.
    (2) The State unit may establish reasonable fees to cover 
extraordinary costs of duplicating records or making extensive searches 
and must establish policies and procedures governing access to records.

[[Page 4401]]

    (b) State program use. All personal information in the possession 
of the State agency or the designated State unit must be used only for 
the purposes directly connected with the administration of the 
vocational rehabilitation program. Information containing identifiable 
personal information may not be shared with advisory or other bodies 
that do not have official responsibility for administration of the 
program. In the administration of the program, the State unit may 
obtain personal information from service providers and cooperating 
agencies under assurances that the information may not be further 
divulged, except as provided under paragraphs (c), (d), and (e) of this 
section.
    (c) Release to applicants and eligible individuals.
    (1) Except as provided in paragraphs (c)(2) and (c)(3) of this 
section, if requested in writing by an applicant or eligible 
individual, the State unit must make all requested information in that 
individual's record of services accessible to and must release the 
information to the individual or the individual's representative in a 
timely manner.
    (2) Medical, psychological, or other information that the State 
unit determines may be harmful to the individual may not be released 
directly to the individual, but must be provided to the individual 
through a third party chosen by the individual, which may include, 
among others, an advocate, a family member, or a qualified medical or 
mental health professional, unless a representative has been appointed 
by a court to represent the individual, in which case the information 
must be released to the court-appointed representative.
    (3) If personal information has been obtained from another agency 
or organization, it may be released only by, or under the conditions 
established by, the other agency or organization.
    (4) An applicant or eligible individual who believes that 
information in the individual's record of services is inaccurate or 
misleading may request that the designated State unit amend the 
information. If the information is not amended, the request for an 
amendment must be documented in the record of services, consistent with 
Sec. 361.47(a)(12).
    (d) Release for audit, evaluation, and research. Personal 
information may be released to an organization, agency, or individual 
engaged in audit, evaluation, or research only for purposes directly 
connected with the administration of the vocational rehabilitation 
program or for purposes that would significantly improve the quality of 
life for applicants and eligible individuals and only if the 
organization, agency, or individual assures that--
    (1) The information will be used only for the purposes for which it 
is being provided;
    (2) The information will be released only to persons officially 
connected with the audit, evaluation, or research;
    (3) The information will not be released to the involved 
individual;
    (4) The information will be managed in a manner to safeguard 
confidentiality; and
    (5) The final product will not reveal any personal identifying 
information without the informed written consent of the involved 
individual or the individual's representative.
    (e) Release to other programs or authorities.
    (1) Upon receiving the informed written consent of the individual 
or, if appropriate, the individual's representative, the State unit may 
release personal information to another agency or organization for its 
program purposes only to the extent that the information may be 
released to the involved individual or the individual's representative 
and only to the extent that the other agency or organization 
demonstrates that the information requested is necessary for its 
program.
    (2) Medical or psychological information that the State unit 
determines may be harmful to the individual may be released if the 
other agency or organization assures the State unit that the 
information will be used only for the purpose for which it is being 
provided and will not be further released to the individual.
    (3) The State unit must release personal information if required by 
Federal law or regulations.
    (4) The State unit must release personal information in response to 
investigations in connection with law enforcement, fraud, or abuse, 
unless expressly prohibited by Federal or State laws or regulations, 
and in response to an order issued by a judge, magistrate, or other 
authorized judicial officer.
    (5) The State unit also may release personal information in order 
to protect the individual or others if the individual poses a threat to 
his or her safety or to the safety of others.

(Authority: Sections 12(c) and 101(a)(6)(A) of the Act; 29 U.S.C. 
709(c) and 721(a)(6)(A))


Sec. 361.39  State-imposed requirements.

    The designated State unit must, upon request, identify those 
regulations and policies relating to the administration or operation of 
its vocational rehabilitation program that are State-imposed, including 
any regulations or policy based on State interpretation of any Federal 
law, regulations, or guideline.

(Authority: Section 17 of the Act; 29 U.S.C. 714)


Sec. 361.40  Reports.

    (a) The State plan must assure that the designated State agency 
will submit reports, including reports required under sections 13, 14, 
and 101(a)(10) of the Act--
    (1) In the form and level of detail and at the time required by the 
Secretary regarding applicants for and eligible individuals receiving 
services under this part; and
    (2) In a manner that provides a complete count (other than the 
information obtained through sampling consistent with section 
101(a)(10)(E) of the Act) of the applicants and eligible individuals 
to--
    (i) Permit the greatest possible cross-classification of data; and
    (ii) Protect the confidentiality of the identity of each 
individual.
    (b) The designated State agency must comply with any requirements 
necessary to ensure the accuracy and verification of those reports.

(Authority: Section 101(a)(10)(A) and (F) of the Act; 29 U.S.C. 
721(a)(10)(A) and (F))

Provision and Scope of Services


Sec. 361.41  Processing referrals and applications.

    (a) Referrals. The designated State unit must establish and 
implement standards for the prompt and equitable handling of referrals 
of individuals for vocational rehabilitation services, including 
referrals of individuals made through the One-Stop service delivery 
systems established under section 121 of the Workforce Investment Act 
of 1998. The standards must include timelines for making good faith 
efforts to inform these individuals of application requirements and to 
gather information necessary to initiate an assessment for determining 
eligibility and priority for services.
    (b) Applications.
    (1) Once an individual has submitted an application for vocational 
rehabilitation services, including applications made through common 
intake procedures in One-Stop centers established under section 121 of 
the Workforce Investment Act of 1998, an eligibility determination must 
be made within 60 days, unless--
    (i) Exceptional and unforeseen circumstances beyond the control of 
the designated State unit preclude making an eligibility determination 
within 60 days and the designated State unit and

[[Page 4402]]

the individual agree to a specific extension of time; or
    (ii) An exploration of the individual's abilities, capabilities, 
and capacity to perform in work situations is carried out in accordance 
with Sec. 361.42(e) or, if appropriate, an extended evaluation is 
carried out in accordance with Sec. 361.42(f).
    (2) An individual is considered to have submitted an application 
when the individual or the individual's representative, as 
appropriate--
    (i)(A) Has completed and signed an agency application form;
    (B) Has completed a common intake application form in a One-Stop 
center requesting vocational rehabilitation services; or
    (C) Has otherwise requested services from the designated State 
unit;
    (ii) Has provided to the designated State unit information 
necessary to initiate an assessment to determine eligibility and 
priority for services; and
    (iii) Is available to complete the assessment process.
    (3) The designated State unit must ensure that its application 
forms are widely available throughout the State, particularly in the 
One-Stop centers established under section 121 of the Workforce 
Investment Act of 1998.

(Authority: Sections 101(a)(6)(A) and 102(a)(6) of the Act; 29 
U.S.C. 721(a)(6)(A) and 722(a)(6))

Sec. 361.42  Assessment for determining eligibility and priority for 
services.

    In order to determine whether an individual is eligible for 
vocational rehabilitation services and the individual's priority under 
an order of selection for services (if the State is operating under an 
order of selection), the designated State unit must conduct an 
assessment for determining eligibility and priority for services. The 
assessment must be conducted in the most integrated setting possible, 
consistent with the individual's needs and informed choice, and in 
accordance with the following provisions:
    (a) Eligibility requirements.
    (1) Basic requirements. The designated State unit's determination 
of an applicant's eligibility for vocational rehabilitation services 
must be based only on the following requirements:
    (i) A determination by qualified personnel that the applicant has a 
physical or mental impairment.
    (ii) A determination by qualified personnel that the applicant's 
physical or mental impairment constitutes or results in a substantial 
impediment to employment for the applicant.
    (iii) A determination by a qualified vocational rehabilitation 
counselor employed by the designated State unit that the applicant 
requires vocational rehabilitation services to prepare for, secure, 
retain, or regain employment consistent with the applicant's unique 
strengths, resources, priorities, concerns, abilities, capabilities, 
interests, and informed choice.
    (iv) A presumption, in accordance with paragraph (a)(2) of this 
section, that the applicant can benefit in terms of an employment 
outcome from the provision of vocational rehabilitation services.
    (2) Presumption of benefit. The designated State unit must presume 
that an applicant who meets the eligibility requirements in paragraphs 
(a)(1)(i) and (ii) of this section can benefit in terms of an 
employment outcome unless it demonstrates, based on clear and 
convincing evidence, that the applicant is incapable of benefiting in 
terms of an employment outcome from vocational rehabilitation services 
due to the severity of the applicant's disability.
    (3) Presumption of eligibility for Social Security recipients and 
beneficiaries.
    (i) Any applicant who has been determined eligible for Social 
Security benefits under Title II or Title XVI of the Social Security 
Act is--
    (A) Presumed eligible for vocational rehabilitation services under 
paragraphs (a)(1) and (2) of this section; and
    (B) Considered an individual with a significant disability as 
defined in Sec. 361.5(b)(31).
    (ii) If an applicant for vocational rehabilitation services asserts 
that he or she is eligible for Social Security benefits under Title II 
or Title XVI of the Social Security Act (and, therefore, is presumed 
eligible for vocational rehabilitation services under paragraph 
(a)(3)(i)(A) of this section), but is unable to provide appropriate 
evidence, such as an award letter, to support that assertion, the State 
unit must verify the applicant's eligibility under Title II or Title 
XVI of the Social Security Act by contacting the Social Security 
Administration. This verification must be made within a reasonable 
period of time that enables the State unit to determine the applicant's 
eligibility for vocational rehabilitation services within 60 days of 
the individual submitting an application for services in accordance 
with Sec. 361.41(b)(2).
    (4) Achievement of an employment outcome. Any eligible individual, 
including an individual whose eligibility for vocational rehabilitation 
services is based on the individual being eligible for Social Security 
benefits under Title II or Title XVI of the Social Security Act, must 
intend to achieve an employment outcome that is consistent with the 
applicant's unique strengths, resources, priorities, concerns, 
abilities, capabilities, interests, and informed choice.
    (i) The State unit is responsible for informing individuals, 
through its application process for vocational rehabilitation services, 
that individuals who receive services under the program must intend to 
achieve an employment outcome.
    (ii) The applicant's completion of the application process for 
vocational rehabilitation services is sufficient evidence of the 
individual's intent to achieve an employment outcome, and no additional 
demonstration on the part of the applicant is required for purposes of 
satisfying paragraph (a)(4) of this section.
    (5) Interpretation. Nothing in this section, including paragraph 
(a)(3)(i), is to be construed to create an entitlement to any 
vocational rehabilitation service.
    (b) Interim determination of eligibility.
    (1) The designated State unit may initiate the provision of 
vocational rehabilitation services for an applicant on the basis of an 
interim determination of eligibility prior to the 60-day period 
described in Sec. 361.41(b)(2).
    (2) If a State chooses to make interim determinations of 
eligibility, the designated State unit must--
    (i) Establish criteria and conditions for making those 
determinations;
    (ii) Develop and implement procedures for making the 
determinations; and
    (iii) Determine the scope of services that may be provided pending 
the final determination of eligibility.
    (3) If a State elects to use an interim eligibility determination, 
the designated State unit must make a final determination of 
eligibility within 60 days of the individual submitting an application 
for services in accordance with Sec. 361.41(b)(2).
    (c) Prohibited factors.
    (1) The State plan must assure that the State unit will not impose, 
as part of determining eligibility under this section, a duration of 
residence requirement that excludes from services any applicant who is 
present in the State.
    (2) In making a determination of eligibility under this section, 
the designated State unit also must ensure that--
    (i) No applicant or group of applicants is excluded or found 
ineligible solely on the basis of the type of disability; and
    (ii) The eligibility requirements are applied without regard to 
the--
    (A) Age, gender, race, color, or national origin of the applicant;

[[Page 4403]]

    (B) Type of expected employment outcome;
    (C) Source of referral for vocational rehabilitation services; and
    (D) Particular service needs or anticipated cost of services 
required by an applicant or the income level of an applicant or 
applicant's family.
    (d) Review and assessment of data for eligibility determination. 
Except as provided in paragraph (e) of this section, the designated 
State unit--
    (1) Must base its determination of each of the basic eligibility 
requirements in paragraph (a) of this section on--
    (i) A review and assessment of existing data, including counselor 
observations, education records, information provided by the individual 
or the individual's family, particularly information used by education 
officials, and determinations made by officials of other agencies; and
    (ii) To the extent existing data do not describe the current 
functioning of the individual or are unavailable, insufficient, or 
inappropriate to make an eligibility determination, an assessment of 
additional data resulting from the provision of vocational 
rehabilitation services, including trial work experiences, assistive 
technology devices and services, personal assistance services, and any 
other support services that are necessary to determine whether an 
individual is eligible; and
    (2) Must base its presumption under paragraph (a)(3)(i) of this 
section that an applicant who has been determined eligible for Social 
Security benefits under Title II or Title XVI of the Social Security 
Act satisfies each of the basic eligibility requirements in paragraph 
(a) of this section on determinations made by the Social Security 
Administration.
    (e) Trial work experiences for individuals with significant 
disabilities.
    (1) Prior to any determination that an individual with a disability 
is incapable of benefiting from vocational rehabilitation services in 
terms of an employment outcome because of the severity of that 
individual's disability, the designated State unit must conduct an 
exploration of the individual's abilities, capabilities, and capacity 
to perform in realistic work situations to determine whether or not 
there is clear and convincing evidence to support such a determination.
    (2)(i) The designated State unit must develop a written plan to 
assess periodically the individual's abilities, capabilities, and 
capacity to perform in work situations through the use of trial work 
experiences, which must be provided in the most integrated setting 
possible, consistent with the informed choice and rehabilitation needs 
of the individual.
    (ii) Trial work experiences include supported employment, on-the-
job training, and other experiences using realistic work settings.
    (iii) Trial work experiences must be of sufficient variety and over 
a sufficient period of time for the designated State unit to determine 
that--
    (A) There is sufficient evidence to conclude that the individual 
can benefit from the provision of vocational rehabilitation services in 
terms of an employment outcome; or
    (B) There is clear and convincing evidence that the individual is 
incapable of benefiting from vocational rehabilitation services in 
terms of an employment outcome due to the severity of the individual's 
disability.
    (iv) The designated State unit must provide appropriate supports, 
including assistive technology devices and services and personal 
assistance services, to accommodate the rehabilitation needs of the 
individual during the trial work experiences.
    (f) Extended evaluation for certain individuals with significant 
disabilities.
    (1) Under limited circumstances if an individual cannot take 
advantage of trial work experiences or if options for trial work 
experiences have been exhausted before the State unit is able to make 
the determinations described in paragraph (e)(2)(iii) of this section, 
the designated State unit must conduct an extended evaluation to make 
these determinations.
    (2) During the extended evaluation period, vocational 
rehabilitation services must be provided in the most integrated setting 
possible, consistent with the informed choice and rehabilitation needs 
of the individual.
    (3) During the extended evaluation period, the designated State 
unit must develop a written plan for providing services necessary to 
make a determination under paragraph (e)(2)(iii) of this section.
    (4) During the extended evaluation period, the designated State 
unit provides only those services that are necessary to make the 
determinations described in paragraph (e)(2)(iii) of this section and 
terminates extended evaluation services when the State unit is able to 
make the determinations.
    (g) Data for determination of priority for services under an order 
of selection. If the designated State unit is operating under an order 
of selection for services, as provided in Sec. 361.36, the State unit 
must base its priority assignments on--
    (1) A review of the data that was developed under paragraphs (d) 
and (e) of this section to make the eligibility determination; and
    (2) An assessment of additional data, to the extent necessary.

(Authority: Sections 7(2)(A), 7(2)(B)(ii)(I), 7(2)(C), 7(2)(D), 
101(a)(12), 102(a)(1), 102(a)(2), 102(a)(3), 102(a)(4)(A), 
102(a)(4)(B), 102(a)(4)(C), 103(a)(1), 103(a)(9), 103(a)(10) and 
103(a)(14) of the Act; 29 U.S.C. 705(2)(A), 705(2)(B)(ii)(I), 
705(2)(C), 705(2)(D), 721(a)(12), 722(a)(1), 722(a)(2), 722(a)(3), 
722(a)(4)(A), 722(a)(4)(B), 722(a)(4)(C), 723(a)(1), 723(a)(9), 
723(a)(10) and 723(a)(14))


    Note to Sec. 361.42: Clear and convincing evidence means that 
the designated State unit shall have a high degree of certainty 
before it can conclude that an individual is incapable of benefiting 
from services in terms of an employment outcome. The ``clear and 
convincing'' standard constitutes the highest standard used in our 
civil system of law and is to be individually applied on a case-by-
case basis. The term clear means unequivocal. For example, the use 
of an intelligence test result alone would not constitute clear and 
convincing evidence. Clear and convincing evidence might include a 
description of assessments, including situational assessments and 
supported employment assessments, from service providers who have 
concluded that they would be unable to meet the individual's needs 
due to the severity of the individual's disability. The 
demonstration of ``clear and convincing evidence'' must include, if 
appropriate, a functional assessment of skill development 
activities, with any necessary supports (including assistive 
technology), in real life settings. (S. Rep. No. 357, 102d Cong., 
2d. Sess. 37-38 (1992))

Sec. 361.43  Procedures for ineligibility determination.

    If the State unit determines that an applicant is ineligible for 
vocational rehabilitation services or determines that an individual 
receiving services under an individualized plan for employment is no 
longer eligible for services, the State unit must--
    (a) Make the determination only after providing an opportunity for 
full consultation with the individual or, as appropriate, with the 
individual's representative;
    (b) Inform the individual in writing, supplemented as necessary by 
other appropriate modes of communication consistent with the informed 
choice of the individual, of the ineligibility determination, including 
the reasons for that determination, the requirements under this 
section, and the means by which the individual may express and seek 
remedy for any dissatisfaction, including the procedures for review of 
State unit personnel determinations in accordance with Sec. 361.57;
    (c) Provide the individual with a description of services available 
from a

[[Page 4404]]

client assistance program established under 34 CFR part 370 and 
information on how to contact that program;
    (d) Refer the individual to other training or employment-related 
programs that are part of the One-Stop service delivery system under 
the Workforce Investment Act; and
    (e) Review within 12 months and annually thereafter if requested by 
the individual or, if appropriate, by the individual's representative 
any ineligibility determination that is based on a finding that the 
individual is incapable of achieving an employment outcome. This review 
need not be conducted in situations in which the individual has refused 
it, the individual is no longer present in the State, the individual's 
whereabouts are unknown, or the individual's medical condition is 
rapidly progressive or terminal.

(Authority: Sections 102(a)(5) and 102(c) of the Act; 29 U.S.C. 
722(a)(5) and 722(c))


Sec. 361.44  Closure without eligibility determination.

    The designated State unit may not close an applicant's record of 
services prior to making an eligibility determination unless the 
applicant declines to participate in, or is unavailable to complete, an 
assessment for determining eligibility and priority for services, and 
the State unit has made a reasonable number of attempts to contact the 
applicant or, if appropriate, the applicant's representative to 
encourage the applicant's participation.

(Authority: Section 12(c) of the Act; 29 U.S.C. 709(c))


Sec. 361.45  Development of the individualized plan for employment.

    (a) General requirements. The State plan must assure that--
    (1) An individualized plan for employment (IPE) meeting the 
requirements of this section and Sec. 361.46 is developed and 
implemented in a timely manner for each individual determined to be 
eligible for vocational rehabilitation services or, if the designated 
State unit is operating under an order of selection in accordance with 
Sec. 361.36, for each eligible individual to whom the State unit is 
able to provide services; and
    (2) Services will be provided in accordance with the provisions of 
the IPE.
    (b) Purpose. 
    (1) The designated State unit must conduct an assessment for 
determining vocational rehabilitation needs, if appropriate, for each 
eligible individual or, if the State is operating under an order of 
selection, for each eligible individual to whom the State is able to 
provide services. The purpose of this assessment is to determine the 
employment outcome, and the nature and scope of vocational 
rehabilitation services to be included in the IPE.
    (2) The IPE must--
    (i) Be designed to achieve the specific employment outcome that is 
selected by the individual consistent with the individual's unique 
strengths, resources, priorities, concerns, abilities, capabilities, 
interests, and informed choice; and
    (ii) To the maximum extent appropriate, result in employment in an 
integrated setting.
    (c) Required information. The State unit must provide the following 
information to each eligible individual or, as appropriate, the 
individual's representative, in writing and, if appropriate, in the 
native language or mode of communication of the individual or the 
individual's representative:
    (1) Options for developing an IPE. Information on the available 
options for developing the IPE, including the option that an eligible 
individual or, as appropriate, the individual's representative may 
develop all or part of the IPE--
    (i) Without assistance from the State unit or other entity; or
    (ii) With assistance from--
    (A) A qualified vocational rehabilitation counselor employed by the 
State unit;
    (B) A qualified vocational rehabilitation counselor who is not 
employed by the State unit; or
    (C) Resources other than those in paragraph (A) or (B) of this 
section.
    (2) Additional information. Additional information to assist the 
eligible individual or, as appropriate, the individual's representative 
in developing the IPE, including--
    (i) Information describing the full range of components that must 
be included in an IPE;
    (ii) As appropriate to each eligible individual--
    (A) An explanation of agency guidelines and criteria for 
determining an eligible individual's financial commitments under an 
IPE;
    (B) Information on the availability of assistance in completing 
State unit forms required as part of the IPE; and
    (C) Additional information that the eligible individual requests or 
the State unit determines to be necessary to the development of the 
IPE;
    (iii) A description of the rights and remedies available to the 
individual, including, if appropriate, recourse to the processes 
described in Sec. 361.57; and
    (iv) A description of the availability of a client assistance 
program established under 34 CFR part 370 and information on how to 
contact the client assistance program.
    (d) Mandatory procedures. The designated State unit must ensure 
that--
    (1) The IPE is a written document prepared on forms provided by the 
State unit;
    (2) The IPE is developed and implemented in a manner that gives 
eligible individuals the opportunity to exercise informed choice, 
consistent with Sec. 361.52, in selecting--
    (i) The employment outcome, including the employment setting;
    (ii) The specific vocational rehabilitation services needed to 
achieve the employment outcome, including the settings in which 
services will be provided;
    (iii) The entity or entities that will provide the vocational 
rehabilitation services; and
    (iv) The methods available for procuring the services;
    (3) The IPE is--
    (i) Agreed to and signed by the eligible individual or, as 
appropriate, the individual's representative; and
    (ii) Approved and signed by a qualified vocational rehabilitation 
counselor employed by the designated State unit;
    (4) A copy of the IPE and a copy of any amendments to the IPE are 
provided to the eligible individual or, as appropriate, to the 
individual's representative, in writing and, if appropriate, in the 
native language or mode of communication of the individual or, as 
appropriate, the individual's representative;
    (5) The IPE is reviewed at least annually by a qualified vocational 
rehabilitation counselor and the eligible individual or, as 
appropriate, the individual's representative to assess the eligible 
individual's progress in achieving the identified employment outcome;
    (6) The IPE is amended, as necessary, by the individual or, as 
appropriate, the individual's representative, in collaboration with a 
representative of the State unit or a qualified vocational 
rehabilitation counselor (to the extent determined to be appropriate by 
the individual), if there are substantive changes in the employment 
outcome, the vocational rehabilitation services to be provided, or the 
providers of the vocational rehabilitation services;
    (7) Amendments to the IPE do not take effect until agreed to and 
signed by the eligible individual or, as appropriate, the individual's 
representative and by a qualified vocational rehabilitation counselor

[[Page 4405]]

employed by the designated State unit; and
    (8) An IPE for a student with a disability receiving special 
education services is developed--
    (i) In consideration of the student's IEP; and
    (ii) In accordance with the plans, policies, procedures, and terms 
of the interagency agreement required under Sec. 361.22.
    (e) Standards for developing the IPE. The designated State unit 
must establish and implement standards for the prompt development of 
IPEs for the individuals identified under paragraph (a) of this 
section, including timelines that take into consideration the needs of 
the individuals.
    (f) Data for preparing the IPE.
    (1) Preparation without comprehensive assessment. To the extent 
possible, the employment outcome and the nature and scope of 
rehabilitation services to be included in the individual's IPE must be 
determined based on the data used for the assessment of eligibility and 
priority for services under Sec. 361.42.
    (2) Preparation based on comprehensive assessment.
    (i) If additional data are necessary to determine the employment 
outcome and the nature and scope of services to be included in the IPE 
of an eligible individual, the State unit must conduct a comprehensive 
assessment of the unique strengths, resources, priorities, concerns, 
abilities, capabilities, interests, and informed choice, including the 
need for supported employment services, of the eligible individual, in 
the most integrated setting possible, consistent with the informed 
choice of the individual in accordance with the provisions of 
Sec. 361.5(b)(6)(ii).
    (ii) In preparing the comprehensive assessment, the State unit must 
use, to the maximum extent possible and appropriate and in accordance 
with confidentiality requirements, existing information that is current 
as of the date of the development of the IPE, including--
    (A) Information available from other programs and providers, 
particularly information used by education officials and the Social 
Security Administration;
    (B) Information provided by the individual and the individual's 
family; and
    (C) Information obtained under the assessment for determining the 
individual's eligibility and vocational rehabilitation needs.

(Authority: Sections 7(2)(B), 101(a)(9), 102(b)(1), 102(b)(2), 
102(c) and 103(a)(1); 29 U.S.C. 705(2)(B), 721(a)(9), 722(b)(1), 
722(b)(2), 722(c) and 723(a)(1))


Sec. 361.46  Content of the individualized plan for employment.

    (a) Mandatory components. Regardless of the approach in 
Sec. 361.45(c)(1) that an eligible individual selects for purposes of 
developing the IPE, each IPE must include--
    (1) A description of the specific employment outcome that is chosen 
by the eligible individual that--
    (i) Is consistent with the individual's unique strengths, 
resources, priorities, concerns, abilities, capabilities, career 
interests, and informed choice; and
    (ii) To the maximum extent appropriate, results in employment in an 
integrated setting;
    (2) A description of the specific rehabilitation services under 
Sec. 361.48 that are--
    (i) Needed to achieve the employment outcome, including, as 
appropriate, the provision of assistive technology devices, assistive 
technology services, and personal assistance services, including 
training in the management of those services; and
    (ii) Provided in the most integrated setting that is appropriate 
for the services involved and is consistent with the informed choice of 
the eligible individual;
    (3) Timelines for the achievement of the employment outcome and for 
the initiation of services;
    (4) A description of the entity or entities chosen by the eligible 
individual or, as appropriate, the individual's representative that 
will provide the vocational rehabilitation services and the methods 
used to procure those services;
    (5) A description of the criteria that will be used to evaluate 
progress toward achievement of the employment outcome; and
    (6) The terms and conditions of the IPE, including, as appropriate, 
information describing--
    (i) The responsibilities of the designated State unit;
    (ii) The responsibilities of the eligible individual, including--
    (A) The responsibilities the individual will assume in relation to 
achieving the employment outcome;
    (B) If applicable, the extent of the individual's participation in 
paying for the cost of services; and
    (C) The responsibility of the individual with regard to applying 
for and securing comparable services and benefits as described in 
Sec. 361.53; and
    (iii) The responsibilities of other entities as the result of 
arrangements made pursuant to the comparable services or benefits 
requirements in Sec. 361.53.
    (b) Supported employment requirements. An IPE for an individual 
with a most significant disability for whom an employment outcome in a 
supported employment setting has been determined to be appropriate 
must--
    (1) Specify the supported employment services to be provided by the 
designated State unit;
    (2) Specify the expected extended services needed, which may 
include natural supports;
    (3) Identify the source of extended services or, to the extent that 
it is not possible to identify the source of extended services at the 
time the IPE is developed, include a description of the basis for 
concluding that there is a reasonable expectation that those sources 
will become available;
    (4) Provide for periodic monitoring to ensure that the individual 
is making satisfactory progress toward meeting the weekly work 
requirement established in the IPE by the time of transition to 
extended services;
    (5) Provide for the coordination of services provided under an IPE 
with services provided under other individualized plans established 
under other Federal or State programs;
    (6) To the extent that job skills training is provided, identify 
that the training will be provided on site; and
    (7) Include placement in an integrated setting for the maximum 
number of hours possible based on the unique strengths, resources, 
priorities, concerns, abilities, capabilities, interests, and informed 
choice of individuals with the most significant disabilities.
    (c) Post-employment services. The IPE for each individual must 
contain, as determined to be necessary, statements concerning--
    (1) The expected need for post-employment services prior to closing 
the record of services of an individual who has achieved an employment 
outcome;
    (2) A description of the terms and conditions for the provision of 
any post-employment services; and
    (3) If appropriate, a statement of how post-employment services 
will be provided or arranged through other entities as the result of 
arrangements made pursuant to the comparable services or benefits 
requirements in Sec. 361.53.
    (d) Coordination of services for students with disabilities who are 
receiving special education services. The IPE for a student with a 
disability who is receiving special education services must be 
coordinated with the

[[Page 4406]]

IEP for that individual in terms of the goals, objectives, and services 
identified in the IEP.

(Authority: Sections 101(a)(8), 101(a)(9), 102(b)(3), and 625(b)(6) 
of the Act; 29 U.S.C. 721(a)(8), 721(a)(9), 722(b)(3), and 795(k))


Sec. 361.47  Record of services.

    (a) The designated State unit must maintain for each applicant and 
eligible individual a record of services that includes, to the extent 
pertinent, the following documentation:
    (1) If an applicant has been determined to be an eligible 
individual, documentation supporting that determination in accordance 
with the requirements under Sec. 361.42.
    (2) If an applicant or eligible individual receiving services under 
an IPE has been determined to be ineligible, documentation supporting 
that determination in accordance with the requirements under 
Sec. 361.43.
    (3) Documentation that describes the justification for closing an 
applicant's or eligible individual's record of services if that closure 
is based on reasons other than ineligibility, including, as 
appropriate, documentation indicating that the State unit has satisfied 
the requirements in Sec. 361.44.
    (4) If an individual has been determined to be an individual with a 
significant disability or an individual with a most significant 
disability, documentation supporting that determination.
    (5) If an individual with a significant disability requires an 
exploration of abilities, capabilities, and capacity to perform in 
realistic work situations through the use of trial work experiences or, 
as appropriate, an extended evaluation to determine whether the 
individual is an eligible individual, documentation supporting the need 
for, and the plan relating to, that exploration or, as appropriate, 
extended evaluation and documentation regarding the periodic 
assessments carried out during the trial work experiences or, as 
appropriate, the extended evaluation, in accordance with the 
requirements under Sec. 361.42(e) and (f).
    (6) The IPE, and any amendments to the IPE, consistent with the 
requirements under Sec. 361.46.
    (7) Documentation describing the extent to which the applicant or 
eligible individual exercised informed choice regarding the provision 
of assessment services and the extent to which the eligible individual 
exercised informed choice in the development of the IPE with respect to 
the selection of the specific employment outcome, the specific 
vocational rehabilitation services needed to achieve the employment 
outcome, the entity to provide the services, the employment setting, 
the settings in which the services will be provided, and the methods to 
procure the services.
    (8) In the event that the IPE provides for services or an 
employment outcome in a non-integrated setting, a justification to 
support the non-integrated setting.
    (9) In the event that an individual obtains competitive employment, 
verification that the individual is compensated at or above the minimum 
wage and that the individual's wage and level of benefits are not less 
than that customarily paid by the employer for the same or similar work 
performed by non-disabled individuals in accordance with 
Sec. 361.5(b)(11)(ii).
    (10) In the event that an individual obtains an employment outcome 
in an extended employment setting in a community rehabilitation program 
or any other employment under section 14(c) of the Fair Labor Standards 
Act, documentation of the results of the annual reviews required under 
Sec. 361.55, the individual's input into those reviews, and the 
individual's or, if appropriate, the individual's representative's 
acknowledgement that those reviews were conducted.
    (11) Documentation concerning any action or decision resulting from 
a request by an individual under Sec. 361.57 for a review of 
determinations made by designated State unit personnel.
    (12) In the event that an applicant or eligible individual requests 
under Sec. 361.38(c)(4) that documentation in the record of services be 
amended and the documentation is not amended, documentation of the 
request.
    (13) In the event an individual is referred to another program 
through the State unit's information and referral system under 
Sec. 361.37, including other components of the statewide workforce 
investment system, documentation on the nature and scope of services 
provided by the designated State unit to the individual and on the 
referral itself, consistent with the requirements of Sec. 361.37.
    (14) In the event an individual's record of service is closed under 
Sec. 361.56, documentation that demonstrates the services provided 
under the individual's IPE contributed to the achievement of the 
employment outcome.
    (15) In the event an individual's record of service is closed under 
Sec. 361.56, documentation verifying that the provisions of Sec. 361.56 
have been satisfied.
    (b) The State unit, in consultation with the State Rehabilitation 
Council if the State has a Council, must determine the type of 
documentation that the State unit must maintain for each applicant and 
eligible individual in order to meet the requirements in paragraph (a) 
of this section.

(Authority: Sections 101(a)(6), (9), (14), (20) and 102(a), (b), and 
(d) of the Act; 29 U.S.C. 721(a)(6), (9), (14), (20) and 722(a),(b), 
and (d))


Sec. 361.48  Scope of vocational rehabilitation services for 
individuals with disabilities.

    As appropriate to the vocational rehabilitation needs of each 
individual and consistent with each individual's informed choice, the 
designated State unit must ensure that the following vocational 
rehabilitation services are available to assist the individual with a 
disability in preparing for, securing, retaining, or regaining an 
employment outcome that is consistent with the individual's strengths, 
resources, priorities, concerns, abilities, capabilities, interests, 
and informed choice:
    (a) Assessment for determining eligibility and priority for 
services by qualified personnel, including, if appropriate, an 
assessment by personnel skilled in rehabilitation technology, in 
accordance with Sec. 361.42.
    (b) Assessment for determining vocational rehabilitation needs by 
qualified personnel, including, if appropriate, an assessment by 
personnel skilled in rehabilitation technology, in accordance with 
Sec. 361.45.
    (c) Vocational rehabilitation counseling and guidance, including 
information and support services to assist an individual in exercising 
informed choice in accordance with Sec. 361.52.
    (d) Referral and other services necessary to assist applicants and 
eligible individuals to secure needed services from other agencies, 
including other components of the statewide workforce investment 
system, in accordance with Secs. 361.23, 361.24, and 361.37, and to 
advise those individuals about client assistance programs established 
under 34 CFR part 370.
    (e) In accordance with the definition in Sec. 361.5(b)(40), 
physical and mental restoration services, to the extent that financial 
support is not readily available from a source other than the 
designated State unit (such as through health insurance or a comparable 
service or benefit as defined in Sec. 361.5(b)(10)).
    (f) Vocational and other training services, including personal and 
vocational adjustment training, books, tools, and other training 
materials,

[[Page 4407]]

except that no training or training services in an institution of 
higher education (universities, colleges, community or junior colleges, 
vocational schools, technical institutes, or hospital schools of 
nursing) may be paid for with funds under this part unless maximum 
efforts have been made by the State unit and the individual to secure 
grant assistance in whole or in part from other sources to pay for that 
training.
    (g) Maintenance, in accordance with the definition of that term in 
Sec. 361.5(b)(35).
    (h) Transportation in connection with the rendering of any 
vocational rehabilitation service and in accordance with the definition 
of that term in Sec. 361.5(b)(57).
    (i) Vocational rehabilitation services to family members, as 
defined in Sec. 361.5(b)(23), of an applicant or eligible individual if 
necessary to enable the applicant or eligible individual to achieve an 
employment outcome.
    (j) Interpreter services, including sign language and oral 
interpreter services, for individuals who are deaf or hard of hearing 
and tactile interpreting services for individuals who are deaf-blind 
provided by qualified personnel.
    (k) Reader services, rehabilitation teaching services, and 
orientation and mobility services for individuals who are blind.
    (l) Job-related services, including job search and placement 
assistance, job retention services, follow-up services, and follow-
along services.
    (m) Supported employment services in accordance with the definition 
of that term in Sec. 361.5(b)(54).
    (n) Personal assistance services in accordance with the definition 
of that term in Sec. 361.5(b)(39).
    (o) Post-employment services in accordance with the definition of 
that term in Sec. 361.5(b)(42).
    (p) Occupational licenses, tools, equipment, initial stocks, and 
supplies.
    (q) Rehabilitation technology in accordance with the definition of 
that term in Sec. 361.5(b)(45), including vehicular modification, 
telecommunications, sensory, and other technological aids and devices.
    (r) Transition services in accordance with the definition of that 
term in Sec. 361.5(b)(55).
    (s) Technical assistance and other consultation services to conduct 
market analyses, develop business plans, and otherwise provide 
resources, to the extent those resources are authorized to be provided 
through the statewide workforce investment system, to eligible 
individuals who are pursuing self-employment or telecommuting or 
establishing a small business operation as an employment outcome.
    (t) Other goods and services determined necessary for the 
individual with a disability to achieve an employment outcome.

(Authority: Section 103(a) of the Act; 29 U.S.C. 723(a))


Sec. 361.49  Scope of vocational rehabilitation services for groups of 
individuals with disabilities.

    (a) The designated State unit may also provide for the following 
vocational rehabilitation services for the benefit of groups of 
individuals with disabilities:
    (1) The establishment, development, or improvement of a public or 
other nonprofit community rehabilitation program that is used to 
provide vocational rehabilitation services that promote integration and 
competitive employment, including, under special circumstances, the 
construction of a facility for a public or nonprofit community 
rehabilitation program. Examples of ``special circumstances'' include 
the destruction by natural disaster of the only available center 
serving an area or a State determination that construction is necessary 
in a rural area because no other public agencies or private nonprofit 
organizations are currently able to provide vocational rehabilitation 
services to individuals.
    (2) Telecommunications systems that have the potential for 
substantially improving vocational rehabilitation service delivery 
methods and developing appropriate programming to meet the particular 
needs of individuals with disabilities, including telephone, 
television, video description services, satellite, tactile-vibratory 
devices, and similar systems, as appropriate.
    (3) Special services to provide nonvisual access to information for 
individuals who are blind, including the use of telecommunications, 
Braille, sound recordings, or other appropriate media; captioned 
television, films, or video cassettes for individuals who are deaf or 
hard of hearing; tactile materials for individuals who are deaf-blind; 
and other special services that provide information through tactile, 
vibratory, auditory, and visual media.
    (4) Technical assistance and support services to businesses that 
are not subject to Title I of the Americans with Disabilities Act of 
1990 and that are seeking to employ individuals with disabilities.
    (5) In the case of any small business enterprise operated by 
individuals with significant disabilities under the supervision of the 
designated State unit, including enterprises established under the 
Randolph-Sheppard program, management services and supervision provided 
by the State unit along with the acquisition by the State unit of 
vending facilities or other equipment, initial stocks and supplies, and 
initial operating expenses, in accordance with the following 
requirements:
    (i) ``Management services and supervision'' includes inspection, 
quality control, consultation, accounting, regulating, in-service 
training, and related services provided on a systematic basis to 
support and improve small business enterprises operated by individuals 
with significant disabilities. ``Management services and supervision'' 
may be provided throughout the operation of the small business 
enterprise.
    (ii) ``Initial stocks and supplies'' includes those items necessary 
to the establishment of a new business enterprise during the initial 
establishment period, which may not exceed 6 months.
    (iii) Costs of establishing a small business enterprise may include 
operational costs during the initial establishment period, which may 
not exceed 6 months.
    (iv) If the designated State unit provides for these services, it 
must ensure that only individuals with significant disabilities will be 
selected to participate in this supervised program.
    (v) If the designated State unit provides for these services and 
chooses to set aside funds from the proceeds of the operation of the 
small business enterprises, the State unit must maintain a description 
of the methods used in setting aside funds and the purposes for which 
funds are set aside. Funds may be used only for small business 
enterprises purposes, and benefits that are provided to operators from 
set-aside funds must be provided on an equitable basis.
    (6) Other services that promise to contribute substantially to the 
rehabilitation of a group of individuals but that are not related 
directly to the individualized plan for employment of any one 
individual. Examples of those other services might include the purchase 
or lease of a bus to provide transportation to a group of applicants or 
eligible individuals or the purchase of equipment or instructional 
materials that would benefit a group of applicants or eligible 
individuals.
    (7) Consultative and technical assistance services to assist 
educational agencies in planning for the transition of students with 
disabilities from school to post-school activities, including 
employment.

[[Page 4408]]

    (b) If the designated State unit provides for vocational 
rehabilitation services for groups of individuals, it must--
    (1) Develop and maintain written policies covering the nature and 
scope of each of the vocational rehabilitation services it provides and 
the criteria under which each service is provided; and
    (2) Maintain information to ensure the proper and efficient 
administration of those services in the form and detail and at the time 
required by the Secretary, including the types of services provided, 
the costs of those services, and, to the extent feasible, estimates of 
the numbers of individuals benefiting from those services.

(Authority: Sections 12(c), 101(a)(6)(A), and 103(b) of the Act; 29 
U.S.C. 709(c), 721(a)(6), and 723(b))


Sec. 361.50  Written policies governing the provision of services for 
individuals with disabilities.

    (a) Policies. The State unit must develop and maintain written 
policies covering the nature and scope of each of the vocational 
rehabilitation services specified in Sec. 361.48 and the criteria under 
which each service is provided. The policies must ensure that the 
provision of services is based on the rehabilitation needs of each 
individual as identified in that individual's IPE and is consistent 
with the individual's informed choice. The written policies may not 
establish any arbitrary limits on the nature and scope of vocational 
rehabilitation services to be provided to the individual to achieve an 
employment outcome. The policies must be developed in accordance with 
the following provisions:
    (b) Out-of-State services.
    (1) The State unit may establish a preference for in-State 
services, provided that the preference does not effectively deny an 
individual a necessary service. If the individual chooses an out-of-
State service at a higher cost than an in-State service, if either 
service would meet the individual's rehabilitation needs, the 
designated State unit is not responsible for those costs in excess of 
the cost of the in-State service.
    (2) The State unit may not establish policies that effectively 
prohibit the provision of out-of-State services.
    (c) Payment for services.
    (1) The State unit must establish and maintain written policies to 
govern the rates of payment for all purchased vocational rehabilitation 
services.
    (2) The State unit may establish a fee schedule designed to ensure 
a reasonable cost to the program for each service, if the schedule is--
    (i) Not so low as to effectively deny an individual a necessary 
service; and
    (ii) Not absolute and permits exceptions so that individual needs 
can be addressed.
    (3) The State unit may not place absolute dollar limits on specific 
service categories or on the total services provided to an individual.
    (d) Duration of services.
    (1) The State unit may establish reasonable time periods for the 
provision of services provided that the time periods are--
    (i) Not so short as to effectively deny an individual a necessary 
service; and
    (ii) Not absolute and permit exceptions so that individual needs 
can be addressed.
    (2) The State unit may not establish absolute time limits on the 
provision of specific services or on the provision of services to an 
individual. The duration of each service needed by an individual must 
be determined on an individual basis and reflected in that individual's 
individualized plan for employment.
    (e) Authorization of services. The State unit must establish 
policies related to the timely authorization of services, including any 
conditions under which verbal authorization can be given.

(Authority: Sections 12(c) and 101(a)(6) of the Act and 29 U.S.C. 
709(c) and 721(a)(6))

Sec. 361.51  Standards for facilities and providers of services.

    (a) Accessibility of facilities. The State plan must assure that 
any facility used in connection with the delivery of vocational 
rehabilitation services under this part meets program accessibility 
requirements consistent with the requirements, as applicable, of the 
Architectural Barriers Act of 1968, the Americans with Disabilities Act 
of 1990, section 504 of the Act, and the regulations implementing these 
laws.
    (b) Affirmative action. The State plan must assure that community 
rehabilitation programs that receive assistance under part B of Title I 
of the Act take affirmative action to employ and advance in employment 
qualified individuals with disabilities covered under and on the same 
terms and conditions as in section 503 of the Act.
    (c) Special communication needs personnel. The designated State 
unit must ensure that providers of vocational rehabilitation services 
are able to communicate--
    (1) In the native language of applicants and eligible individuals 
who have limited English speaking ability; and
    (2) By using appropriate modes of communication used by applicants 
and eligible individuals.

(Authority: Sections 12(c) and 101(a)(6)(B) and (C) of the Act; 29 
U.S.C. 709(c) and 721(a)(6)(B) and (C))

Sec. 361.52  Informed choice.

    (a) General provision. The State plan must assure that applicants 
and eligible individuals or, as appropriate, their representatives are 
provided information and support services to assist applicants and 
eligible individuals in exercising informed choice throughout the 
rehabilitation process consistent with the provisions of section 102(d) 
of the Act and the requirements of this section.
    (b) Written policies and procedures. The designated State unit, in 
consultation with its State Rehabilitation Council, if it has a 
Council, must develop and implement written policies and procedures 
that enable an applicant or eligible individual to exercise informed 
choice throughout the vocational rehabilitation process. These policies 
and procedures must provide for--
    (1) Informing each applicant and eligible individual (including 
students with disabilities who are making the transition from programs 
under the responsibility of an educational agency to programs under the 
responsibility of the designated State unit), through appropriate modes 
of communication, about the availability of and opportunities to 
exercise informed choice, including the availability of support 
services for individuals with cognitive or other disabilities who 
require assistance in exercising informed choice throughout the 
vocational rehabilitation process;
    (2) Assisting applicants and eligible individuals in exercising 
informed choice in decisions related to the provision of assessment 
services;
    (3) Developing and implementing flexible procurement policies and 
methods that facilitate the provision of vocational rehabilitation 
services and that afford eligible individuals meaningful choices among 
the methods used to procure vocational rehabilitation services;
    (4) Assisting eligible individuals or, as appropriate, the 
individuals' representatives in acquiring information that enables them 
to exercise informed choice in the development of their IPEs with 
respect to the selection of the--
    (i) Employment outcome;
    (ii) Specific vocational rehabilitation services needed to achieve 
the employment outcome;

[[Page 4409]]

    (iii) Entity that will provide the services;
    (iv) Employment setting and the settings in which the services will 
be provided; and
    (v) Methods available for procuring the services; and
    (5) Ensuring that the availability and scope of informed choice is 
consistent with the obligations of the designated State agency under 
this part.
    (c) Information and assistance in the selection of vocational 
rehabilitation services and service providers. In assisting an 
applicant and eligible individual in exercising informed choice during 
the assessment for determining eligibility and vocational 
rehabilitation needs and during development of the IPE, the designated 
State unit must provide the individual or the individual's 
representative, or assist the individual or the individual's 
representative in acquiring, information necessary to make an informed 
choice about the specific vocational rehabilitation services, including 
the providers of those services, that are needed to achieve the 
individual's employment outcome. This information must include, at a 
minimum, information relating to the--
    (1) Cost, accessibility, and duration of potential services;
    (2) Consumer satisfaction with those services to the extent that 
information relating to consumer satisfaction is available;
    (3) Qualifications of potential service providers;
    (4) Types of services offered by the potential providers;
    (5) Degree to which services are provided in integrated settings; 
and
    (6) Outcomes achieved by individuals working with service 
providers, to the extent that such information is available.
    (d) Methods or sources of information. In providing or assisting 
the individual or the individual's representative in acquiring the 
information required under paragraph (c) of this section, the State 
unit may use, but is not limited to, the following methods or sources 
of information:
    (1) Lists of services and service providers.
    (2) Periodic consumer satisfaction surveys and reports.
    (3) Referrals to other consumers, consumer groups, or disability 
advisory councils qualified to discuss the services or service 
providers.
    (4) Relevant accreditation, certification, or other information 
relating to the qualifications of service providers.
    (5) Opportunities for individuals to visit or experience various 
work and service provider settings.

(Authority: Sections 12(c), 101(a)(19); 102(b)(2)(B) and 102(d) of 
the Act; 29 U.S.C. 709(c), 721(a)(19); 722(b)(2)(B) and 722(d))

Sec. 361.53  Comparable services and benefits.

    (a) Determination of availability. The State plan must assure that 
prior to providing any vocational rehabilitation services, except those 
services listed in paragraph (b) of this section, to an eligible 
individual, or to members of the individual's family, the State unit 
must determine whether comparable services and benefits, as defined in 
Sec. 361.5(b)(10), exist under any other program and whether those 
services and benefits are available to the individual unless such a 
determination would interrupt or delay--
    (1) The progress of the individual toward achieving the employment 
outcome identified in the individualized plan for employment;
    (2) An immediate job placement; or
    (3) The provision of vocational rehabilitation services to any 
individual who is determined to be at extreme medical risk, based on 
medical evidence provided by an appropriate qualified medical 
professional.
    (b) Exempt services. The following vocational rehabilitation 
services described in Sec. 361.48(a) are exempt from a determination of 
the availability of comparable services and benefits under paragraph 
(a) of this section:
    (1) Assessment for determining eligibility and vocational 
rehabilitation needs.
    (2) Counseling and guidance, including information and support 
services to assist an individual in exercising informed choice.
    (3) Referral and other services to secure needed services from 
other agencies, including other components of the statewide workforce 
investment system, if those services are not available under this part.
    (4) Job-related services, including job search and placement 
assistance, job retention services, follow-up services, and follow-
along services.
    (5) Rehabilitation technology, including telecommunications, 
sensory, and other technological aids and devices.
    (6) Post-employment services consisting of the services listed 
under paragraphs (b)(1) through (5) of this section.
    (c) Provision of services.
    (1) If comparable services or benefits exist under any other 
program and are available to the individual at the time needed to 
ensure the progress of the individual toward achieving the employment 
outcome in the individual's IPE, the designated State unit must use 
those comparable services or benefits to meet, in whole or part, the 
costs of the vocational rehabilitation services.
    (2) If comparable services or benefits exist under any other 
program, but are not available to the individual at the time needed to 
ensure the progress of the individual toward achieving the employment 
outcome in the individual's IPE, the designated State unit must provide 
vocational rehabilitation services until those comparable services and 
benefits become available.
    (d) Interagency coordination.
    (1) The State plan must assure that the Governor, in consultation 
with the entity in the State responsible for the vocational 
rehabilitation program and other appropriate agencies, will ensure that 
an interagency agreement or other mechanism for interagency 
coordination takes effect between the designated State vocational 
rehabilitation unit and any appropriate public entity, including the 
State entity responsible for administering the State medicaid program, 
a public institution of higher education, and a component of the 
statewide workforce investment system, to ensure the provision of 
vocational rehabilitation services (other than those services listed in 
paragraph (b) of this section) that are included in the IPE, including 
the provision of those vocational rehabilitation services during the 
pendency of any interagency dispute in accordance with the provisions 
of paragraph (d)(3)(iii) of this section.
    (2) The Governor may meet the requirements of paragraph (d)(1) of 
this section through--
    (i) A State statute or regulation;
    (ii) A signed agreement between the respective officials of the 
public entities that clearly identifies the responsibilities of each 
public entity for the provision of the services; or
    (iii) Another appropriate mechanism as determined by the designated 
State vocational rehabilitation unit.
    (3) The interagency agreement or other mechanism for interagency 
coordination must include the following:
    (i) Agency financial responsibility. An identification of, or 
description of a method for defining, the financial responsibility of 
the public entity for providing the vocational rehabilitation services 
other than those listed in paragraph (b) of this section and a 
provision stating the financial

[[Page 4410]]

responsibility of the public entity for providing those services.
    (ii) Conditions, terms, and procedures of reimbursement. 
Information specifying the conditions, terms, and procedures under 
which the designated State unit must be reimbursed by the other public 
entities for providing vocational rehabilitation services based on the 
terms of the interagency agreement or other mechanism for interagency 
coordination.
    (iii) Interagency disputes. Information specifying procedures for 
resolving interagency disputes under the interagency agreement or other 
mechanism for interagency coordination, including procedures under 
which the designated State unit may initiate proceedings to secure 
reimbursement from other public entities or otherwise implement the 
provisions of the agreement or mechanism.
    (iv) Procedures for coordination of services. Information 
specifying policies and procedures for public entities to determine and 
identify interagency coordination responsibilities of each public 
entity to promote the coordination and timely delivery of vocational 
rehabilitation services other than those listed in paragraph (b) of 
this section.
    (e) Responsibilities under other law.
    (1) If a public entity (other than the designated State unit) is 
obligated under Federal law (such as the Americans with Disabilities 
Act, section 504 of the Act, or section 188 of the Workforce Investment 
Act) or State law, or assigned responsibility under State policy or an 
interagency agreement established under this section, to provide or pay 
for any services considered to be vocational rehabilitation services 
(e.g., interpreter services under Sec. 361.48(j)), other than those 
services listed in paragraph (b) of this section, the public entity 
must fulfill that obligation or responsibility through--
    (i) The terms of the interagency agreement or other requirements of 
this section;
    (ii) Providing or paying for the service directly or by contract; 
or
    (iii) Other arrangement.
    (2) If a public entity other than the designated State unit fails 
to provide or pay for vocational rehabilitation services for an 
eligible individual as established under this section, the designated 
State unit must provide or pay for those services to the individual and 
may claim reimbursement for the services from the public entity that 
failed to provide or pay for those services. The public entity must 
reimburse the designated State unit pursuant to the terms of the 
interagency agreement or other mechanism described in paragraph (d) of 
this section in accordance with the procedures established in the 
agreement or mechanism pursuant to paragraph (d)(3)(ii) of this 
section.

(Authority: Sections 12(c) and 101(a)(8) of the Act; 29 U.S.C. 
709(c) and 721(a)(8))

Sec. 361.54  Participation of individuals in cost of services based on 
financial need.

    (a) No Federal requirement. There is no Federal requirement that 
the financial need of individuals be considered in the provision of 
vocational rehabilitation services.
    (b) State unit requirements. 
    (1) The State unit may choose to consider the financial need of 
eligible individuals or individuals who are receiving services through 
trial work experiences under Sec. 361.42(e) or during an extended 
evaluation under Sec. 361.42(f) for purposes of determining the extent 
of their participation in the costs of vocational rehabilitation 
services, other than those services identified in paragraph (b)(3) of 
this section.
    (2) If the State unit chooses to consider financial need--
    (i) It must maintain written policies--
    (A) Explaining the method for determining the financial need of an 
eligible individual; and
    (B) Specifying the types of vocational rehabilitation services for 
which the unit has established a financial needs test;
    (ii) The policies must be applied uniformly to all individuals in 
similar circumstances;
    (iii) The policies may require different levels of need for 
different geographic regions in the State, but must be applied 
uniformly to all individuals within each geographic region; and
    (iv) The policies must ensure that the level of an individual's 
participation in the cost of vocational rehabilitation services is--
    (A) Reasonable;
    (B) Based on the individual's financial need, including 
consideration of any disability-related expenses paid by the 
individual; and
    (C) Not so high as to effectively deny the individual a necessary 
service.
    (3) The designated State unit may not apply a financial needs test, 
or require the financial participation of the individual--
    (i) As a condition for furnishing the following vocational 
rehabilitation services:
    (A) Assessment for determining eligibility and priority for 
services under Sec. 361.48(a), except those non-assessment services 
that are provided to an individual with a significant disability during 
either an exploration of the individual's abilities, capabilities, and 
capacity to perform in work situations through the use of trial work 
experiences under Sec. 361.42(e) or an extended evaluation under 
Sec. 361.42(f).
    (B) Assessment for determining vocational rehabilitation needs 
under Sec. 361.48(b).
    (C) Vocational rehabilitation counseling and guidance under 
Sec. 361.48(c).
    (D) Referral and other services under Sec. 361.48(d).
    (E) Job-related services under Sec. 361.48(l).
    (F) Personal assistance services under Sec. 361.48(n).
    (G) Any auxiliary aid or service (e.g., interpreter services under 
Sec. 361.48(j), reader services under Sec. 361.48(k)) that an 
individual with a disability requires under section 504 of the Act (29 
U.S.C. 794) or the Americans with Disabilities Act (42 U.S.C. 12101, et 
seq.), or regulations implementing those laws, in order for the 
individual to participate in the VR program as authorized under this 
part; or
    (ii) As a condition for furnishing any vocational rehabilitation 
service if the individual in need of the service has been determined 
eligible for Social Security benefits under Titles II or XVI of the 
Social Security Act.

(Authority: Section 12(c) of the Act; 29 U.S.C. 709(c))

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

    The State plan must assure that the designated State unit--
    (a) Annually reviews and reevaluates the status of each individual 
with a disability served under the vocational rehabilitation program 
who has achieved an employment outcome either in an extended employment 
setting in a community rehabilitation program or in any other 
employment setting in which the individual is compensated in accordance 
with section 14(c) of the Fair Labor Standards Act for 2 years after 
the individual achieves the employment outcome (and thereafter if 
requested by the individual or, if appropriate, the individual's 
representative) to determine the interests, priorities, and needs of 
the individual with respect to competitive employment or training for 
competitive employment;
    (b) Enables the individual or, if appropriate, the individual's

[[Page 4411]]

representative to provide input into the review and reevaluation and 
documents that input in the record of services, consistent with 
Sec. 361.47(a)(10), with the individual's or, as appropriate, the 
individual's representative's signed acknowledgment that the review and 
reevaluation have been conducted; and
    (c) Makes maximum efforts, including identifying and providing 
vocational rehabilitation services, reasonable accommodations, and 
other necessary support services, to assist the individuals identified 
in paragraph (a) of this section in engaging in competitive employment 
as defined in Sec. 361.5(b)(11).

(Authority: Section 101(a)(14) of the Act; 29 U.S.C. 721(a)(14))


Sec. 361.56  Requirements for closing the record of services of an 
individual who has achieved an employment outcome.

    The record of services of an individual who has achieved an 
employment outcome may be closed only if all of the following 
requirements are met:
    (a) Employment outcome achieved. The individual has achieved the 
employment outcome that is described in the individual's IPE in 
accordance with Sec. 361.46(a)(1) and is--
    (1) Consistent with the individual's strengths, resources, 
priorities, concerns, abilities, capabilities, interests, and informed 
choice; and (2) In the most integrated setting possible, consistent 
with the individual's informed choice.
    (b) Employment outcome maintained. The individual has maintained 
the employment outcome for an appropriate period of time, but not less 
than 90 days, necessary to ensure the stability of the employment 
outcome, and the individual no longer needs vocational rehabilitation 
services.
    (c) Satisfactory outcome. At the end of the appropriate period 
under paragraph (b) of this section, the individual and the qualified 
rehabilitation counselor employed by the designated State unit consider 
the employment outcome to be satisfactory and agree that the individual 
is performing well in the employment.
    (d) Post-employment services. The individual is informed through 
appropriate modes of communication of the availability of post-
employment services.

(Authority: Sections 12(c), 101(a)(6), and 106(a)(2) of the Act; 29 
U.S.C. 711(c), 721(a)(6), and 726(a)(2))

Sec. 361.57  Review of determinations made by designated State unit 
personnel.

    (a) Procedures. The designated State unit must develop and 
implement procedures to ensure that an applicant or eligible individual 
who is dissatisfied with any determination made by personnel of the 
designated State unit that affects the provision of vocational 
rehabilitation services may request, or, if appropriate, may request 
through the individual's representative, a timely review of that 
determination. The procedures must be in accordance with paragraphs (b) 
through (k) of this section:
    (b) General requirements.
    (1) Notification. Procedures established by the State unit under 
this section must provide an applicant or eligible individual or, as 
appropriate, the individual's representative notice of--
    (i) The right to obtain review of State unit determinations that 
affect the provision of vocational rehabilitation services through an 
impartial due process hearing under paragraph (e) of this section;
    (ii) The right to pursue mediation under paragraph (d) of this 
section with respect to determinations made by designated State unit 
personnel that affect the provision of vocational rehabilitation 
services to an applicant or eligible individual;
    (iii) The names and addresses of individuals with whom requests for 
mediation or due process hearings may be filed;
    (iv) The manner in which a mediator or impartial hearing officer 
may be selected consistent with the requirements of paragraphs (d) and 
(f) of this section; and
    (v) The availability of the client assistance program, established 
under 34 CFR part 370, to assist the applicant or eligible individual 
during mediation sessions or impartial due process hearings.
    (2) Timing. Notice described in paragraph (b)(1) of this section 
must be provided in writing--
    (i) At the time the individual applies for vocational 
rehabilitation services under this part;
    (ii) At the time the individual is assigned to a category in the 
State's order of selection, if the State has established an order of 
selection under Sec. 361.36;
    (iii) At the time the IPE is developed; and
    (iv) Whenever vocational rehabilitation services for an individual 
are reduced, suspended, or terminated.
    (3) Evidence and representation. Procedures established under this 
section must--
    (i) Provide an applicant or eligible individual or, as appropriate, 
the individual's representative with an opportunity to submit during 
mediation sessions or due process hearings evidence and other 
information that supports the applicant's or eligible individual's 
position; and
    (ii) Allow an applicant or eligible individual to be represented 
during mediation sessions or due process hearings by counsel or other 
advocate selected by the applicant or eligible individual.
    (4) Impact on provision of services. The State unit may not 
institute a suspension, reduction, or termination of vocational 
rehabilitation services being provided to an applicant or eligible 
individual, including evaluation and assessment services and IPE 
development, pending a resolution through mediation, pending a decision 
by a hearing officer or reviewing official, or pending informal 
resolution under this section unless--
    (i) The individual or, in appropriate cases, the individual's 
representative requests a suspension, reduction, or termination of 
services; or
    (ii) The State agency has evidence that the services have been 
obtained through misrepresentation, fraud, collusion, or criminal 
conduct on the part of the individual or the individual's 
representative.
    (5) Ineligibility. Applicants who are found ineligible for 
vocational rehabilitation services and previously eligible individuals 
who are determined to be no longer eligible for vocational 
rehabilitation services pursuant to Sec. 361.43 are permitted to 
challenge the determinations of ineligibility under the procedures 
described in this section.
    (c) Informal dispute resolution. The State unit may develop an 
informal process for resolving a request for review without conducting 
mediation or a formal hearing. A State's informal process must not be 
used to deny the right of an applicant or eligible individual to a 
hearing under paragraph (e) of this section or any other right provided 
under this part, including the right to pursue mediation under 
paragraph (d) of this section. If informal resolution under this 
paragraph or mediation under paragraph (d) of this section is not 
successful in resolving the dispute within the time period established 
under paragraph (e)(1) of this section, a formal hearing must be 
conducted within that same time period, unless the parties agree to a 
specific extension of time.

[[Page 4412]]

    (d) Mediation.
    (1) The State must establish and implement procedures, as required 
under paragraph (b)(1)(ii) of this section, to allow an applicant or 
eligible individual and the State unit to resolve disputes involving 
State unit determinations that affect the provision of vocational 
rehabilitation services through a mediation process that must be made 
available, at a minimum, whenever an applicant or eligible individual 
or, as appropriate, the individual's representative requests an 
impartial due process hearing under this section.
    (2) Mediation procedures established by the State unit under 
paragraph (d) must ensure that--
    (i) Participation in the mediation process is voluntary on the part 
of the applicant or eligible individual, as appropriate, and on the 
part of the State unit;
    (ii) Use of the mediation process is not used to deny or delay the 
applicant's or eligible individual's right to pursue resolution of the 
dispute through an impartial hearing held within the time period 
specified in paragraph (e)(1) of this section or any other rights 
provided under this part. At any point during the mediation process, 
either party or the mediator may elect to terminate the mediation. In 
the event mediation is terminated, either party may pursue resolution 
through an impartial hearing;
    (iii) The mediation process is conducted by a qualified and 
impartial mediator, as defined in Sec. 361.5(b)(43), who must be 
selected from a list of qualified and impartial mediators maintained by 
the State--
    (A) On a random basis;
    (B) By agreement between the director of the designated State unit 
and the applicant or eligible individual or, as appropriate, the 
individual's representative; or
    (C) In accordance with a procedure established in the State for 
assigning mediators, provided this procedure ensures the neutrality of 
the mediator assigned; and
    (iv) Mediation sessions are scheduled and conducted in a timely 
manner and are held in a location and manner that is convenient to the 
parties to the dispute.
    (3) Discussions that occur during the mediation process must be 
kept confidential and may not be used as evidence in any subsequent due 
process hearings or civil proceedings, and the parties to the mediation 
process may be required to sign a confidentiality pledge prior to the 
commencement of the process.
    (4) An agreement reached by the parties to the dispute in the 
mediation process must be described in a written mediation agreement 
that is developed by the parties with the assistance of the qualified 
and impartial mediator and signed by both parties. Copies of the 
agreement must be sent to both parties.
    (5) The costs of the mediation process must be paid by the State. 
The State is not required to pay for any costs related to the 
representation of an applicant or eligible individual authorized under 
paragraph (b)(3)(ii) of this section.
    (e) Impartial due process hearings. The State unit must establish 
and implement formal review procedures, as required under paragraph 
(b)(1)(i) of this section, that provide that--
    (1) A hearing conducted by an impartial hearing officer, selected 
in accordance with paragraph (f) of this section, must be held within 
60 days of an applicant's or eligible individual's request for review 
of a determination made by personnel of the State unit that affects the 
provision of vocational rehabilitation services to the individual, 
unless informal resolution or a mediation agreement is achieved prior 
to the 60th day or the parties agree to a specific extension of time;
    (2) In addition to the rights described in paragraph (b)(3) of this 
section, the applicant or eligible individual or, if appropriate, the 
individual's representative must be given the opportunity to present 
witnesses during the hearing and to examine all witnesses and other 
relevant sources of information and evidence;
    (3) The impartial hearing officer must--
    (i) Make a decision based on the provisions of the approved State 
plan, the Act, Federal vocational rehabilitation regulations, and State 
regulations and policies that are consistent with Federal requirements; 
and
    (ii) Provide to the individual or, if appropriate, the individual's 
representative and to the State unit a full written report of the 
findings and grounds for the decision within 30 days of the completion 
of the hearing; and
    (4) The hearing officer's decision is final, except that a party 
may request an impartial review under paragraph (g)(1) of this section 
if the State has established procedures for that review, and a party 
involved in a hearing may bring a civil action under paragraph (i) of 
this section.
    (f) Selection of impartial hearing officers. The impartial hearing 
officer for a particular case must be selected--
    (1) From a list of qualified impartial hearing officers maintained 
by the State unit. Impartial hearing officers included on the list must 
be--
    (i) Identified by the State unit if the State unit is an 
independent commission; or
    (ii) Jointly identified by the State unit and the State 
Rehabilitation Council if the State has a Council; and
    (2)(i) On a random basis; or
    (ii) By agreement between the director of the designated State unit 
and the applicant or eligible individual or, as appropriate, the 
individual's representative.
    (g) Administrative review of hearing officer's decision. The State 
may establish procedures to enable a party who is dissatisfied with the 
decision of the impartial hearing officer to seek an impartial 
administrative review of the decision under paragraph (e)(3) of this 
section in accordance with the following requirements:
    (1) A request for administrative review under paragraph (g) of this 
section must be made within 20 days of the mailing of the impartial 
hearing officer's decision.
    (2) Administrative review of the hearing officer's decision must be 
conducted by--
    (i) The chief official of the designated State agency if the State 
has established both a designated State agency and a designated State 
unit under Sec. 361.13(b); or
    (ii) An official from the office of the Governor.
    (3) The reviewing official described in paragraph (g)(2)(i) of this 
section--
    (i) Provides both parties with an opportunity to submit additional 
evidence and information relevant to a final decision concerning the 
matter under review;
    (ii) May not overturn or modify the hearing officer's decision, or 
any part of that decision, that supports the position of the applicant 
or eligible individual unless the reviewing official concludes, based 
on clear and convincing evidence, that the decision of the impartial 
hearing officer is clearly erroneous on the basis of being contrary to 
the approved State plan, the Act, Federal vocational rehabilitation 
regulations, or State regulations and policies that are consistent with 
Federal requirements;
    (iii) Makes an independent, final decision following a review of 
the entire hearing record and provides the decision in writing, 
including a full report of the findings and the statutory, regulatory, 
or policy grounds for the decision, to the applicant or eligible 
individual or, as appropriate, the individual's representative and to 
the State unit within 30 days of the request

[[Page 4413]]

for administrative review under paragraph (g)(1) of this section; and
    (iv) May not delegate the responsibility for making the final 
decision under paragraph (g) of this section to any officer or employee 
of the designated State unit.
    (4) The reviewing official's decision under paragraph (g) of this 
section is final unless either party brings a civil action under 
paragraph (i) of this section.
    (h) Implementation of final decisions. If a party brings a civil 
action under paragraph (h) of this section to challenge the final 
decision of a hearing officer under paragraph (e) of this section or to 
challenge the final decision of a State reviewing official under 
paragraph (g) of this section, the final decision of the hearing 
officer or State reviewing official must be implemented pending review 
by the court.
    (i) Civil action.
    (1) Any party who disagrees with the findings and decision of an 
impartial hearing officer under paragraph (e) of this section in a 
State that has not established administrative review procedures under 
paragraph (g) of this section and any party who disagrees with the 
findings and decision under paragraph (g)(3)(iii) of this section have 
a right to bring a civil action with respect to the matter in dispute. 
The action may be brought in any State court of competent jurisdiction 
or in a district court of the United States of competent jurisdiction 
without regard to the amount in controversy.
    (2) In any action brought under paragraph (i) of this section, the 
court--
    (i) Receives the records related to the impartial due process 
hearing and the records related to the administrative review process, 
if applicable;
    (ii) Hears additional evidence at the request of a party; and
    (iii) Basing its decision on the preponderance of the evidence, 
grants the relief that the court determines to be appropriate.
    (j) State fair hearing board. A fair hearing board as defined in 
Sec. 361.5(b)(22) is authorized to carry out the responsibilities of 
the impartial hearing officer under paragraph (e) of this section in 
accordance with the following criteria:
    (1) The fair hearing board may conduct due process hearings either 
collectively or by assigning responsibility for conducting the hearing 
to one or more members of the fair hearing board.
    (2) The final decision issued by the fair hearing board following a 
hearing under paragraph (j)(1) of this section must be made 
collectively by, or by a majority vote of, the fair hearing board.
    (3) The provisions of paragraphs (b)(1), (2), and (3) of this 
section that relate to due process hearings and of paragraphs (e), (f), 
(g), and (h) of this section do not apply to fair hearing boards under 
this paragraph (j).
    (k) Data collection.
    (1) The director of the designated State unit must collect and 
submit, at a minimum, the following data to the Commissioner of the 
Rehabilitation Services Administration (RSA) for inclusion each year in 
the annual report to Congress under section 13 of the Act:
    (i) A copy of the standards used by State reviewing officials for 
reviewing decisions made by impartial hearing officers under this 
section.
    (ii) The number of mediations held, including the number of 
mediation agreements reached.
    (iii) The number of hearings and reviews sought from impartial 
hearing officers and State reviewing officials, including the type of 
complaints and the issues involved.
    (iv) The number of hearing officer decisions that were not reviewed 
by administrative reviewing officials.
    (v) The number of hearing decisions that were reviewed by State 
reviewing officials and, based on these reviews, the number of hearing 
decisions that were--
    (A) Sustained in favor of an applicant or eligible individual;
    (B) Sustained in favor of the designated State unit;
    (C) Reversed in whole or in part in favor of the applicant or 
eligible individual; and
    (D) Reversed in whole or in part in favor of the State unit.
    (2) The State unit director also must collect and submit to the 
Commissioner of RSA copies of all final decisions issued by impartial 
hearing officers under paragraph (e) of this section and by State 
review officials under paragraph (g) of this section.
    (3) The confidentiality of records of applicants and eligible 
individuals maintained by the State unit may not preclude the access of 
the RSA Commissioner to those records for the purposes described in 
this section.

(Authority: Section 102(c) of the Act; 29 U.S.C. 722(c))

Subpart C--Financing of State Vocational Rehabilitation Programs


Sec. 361.60  Matching requirements.

    (a) Federal share.
    (1) General. Except as provided in paragraph (a)(2) of this 
section, the Federal share for expenditures made by the State under the 
State plan, including expenditures for the provision of vocational 
rehabilitation services and the administration of the State plan, is 
78.7 percent.
    (2) Construction projects. The Federal share for expenditures made 
for the construction of a facility for community rehabilitation program 
purposes may not be more than 50 percent of the total cost of the 
project.
    (b) Non-Federal share.
    (1) General. Except as provided in paragraph (b)(2) and (3) of this 
section, expenditures made under the State plan to meet the non-Federal 
share under this section must be consistent with the provisions of 34 
CFR 80.24.
    (2) Third party in-kind contributions. Third party in-kind 
contributions specified in 34 CFR 80.24(a)(2) may not be used to meet 
the non-Federal share under this section.
    (3) Contributions by private entities. Expenditures made from 
contributions by private organizations, agencies, or individuals that 
are deposited in the account of the State agency or sole local agency 
in accordance with State law and that are earmarked, under a condition 
imposed by the contributor, may be used as part of the non-Federal 
share under this section if the funds are earmarked for--
    (i) Meeting in whole or in part the State's share for establishing 
a community rehabilitation program or constructing a particular 
facility for community rehabilitation program purposes;
    (ii) Particular geographic areas within the State for any purpose 
under the State plan, other than those described in paragraph (b)(3)(i) 
of this section, in accordance with the following criteria:
    (A) Before funds that are earmarked for a particular geographic 
area may be used as part of the non-Federal share, the State must 
notify the Secretary that the State cannot provide the full non-Federal 
share without using these funds.
    (B) Funds that are earmarked for a particular geographic area may 
be used as part of the non-Federal share without requesting a waiver of 
statewideness under Sec. 361.26.
    (C) Except as provided in paragraph (b)(3)(i) of this section, all 
Federal funds must be used on a statewide basis consistent with 
Sec. 361.25, unless a waiver of statewideness is obtained under 
Sec. 361.26; and
    (iii) Any other purpose under the State plan, provided the 
expenditures do not benefit in any way the donor, an individual to whom 
the donor is related by blood or marriage or with whom the donor has a 
close personal relationship,

[[Page 4414]]

or an individual, entity, or organization with whom the donor shares a 
financial interest. The Secretary does not consider a donor's receipt 
from the State unit of a grant, subgrant, or contract with funds 
allotted under this part to be a benefit for the purposes of this 
paragraph if the grant, subgrant, or contract is awarded under the 
State's regular competitive procedures.

(Authority: Sections 7(14), 101(a)(3), 101(a)(4) and 104 of the Act; 
29 U.S.C. 706(14), 721(a)(3), 721(a)(4) and 724))

    Example for paragraph (b)(3): Contributions may be earmarked in 
accordance with Sec. 361.60(b)(3)(iii) for providing particular 
services (e.g., rehabilitation technology services); serving 
individuals with certain types of disabilities (e.g., individuals 
who are blind), consistent with the State's order of selection, if 
applicable; providing services to special groups that State or 
Federal law permits to be targeted for services (e.g., students with 
disabilities who are receiving special education services), 
consistent with the State's order of selection, if applicable; or 
carrying out particular types of administrative activities 
permissible under State law. Contributions also may be restricted to 
particular geographic areas to increase services or expand the scope 
of services that are available statewide under the State plan in 
accordance with the requirements in Sec. 361.60(b)(3)(ii).


Sec. 361.61  Limitation on use of funds for construction expenditures.

    No more than 10 percent of a State's allotment for any fiscal year 
under section 110 of the Act may be spent on the construction of 
facilities for community rehabilitation program purposes.

(Authority: Section 101(a)(17)(A) of the Act; 29 U.S.C. 
721(a)(17)(A))

Sec. 361.62  Maintenance of effort requirements.

    (a) General requirements.

    (1) The Secretary reduces the amount otherwise payable to a State 
for a fiscal year by the amount by which the total expenditures from 
non-Federal sources under the State plan for the previous fiscal year 
were less than the total of those expenditures for the fiscal year 2 
years prior to the previous fiscal year.

    Example: For fiscal year 2001, a State's maintenance of effort 
level is based on the amount of its expenditures from non-Federal 
sources for fiscal year 1999. Thus, if the State's non-Federal 
expenditures in 2001 are less than they were in 1999, the State has 
a maintenance of effort deficit, and the Secretary reduces the 
State's allotment in 2002 by the amount of that deficit.

    (2) If, at the time the Secretary makes a determination that a 
State has failed to meet its maintenance of effort requirements, it is 
too late for the Secretary to make a reduction in accordance with 
paragraph (a)(1) of this section, then the Secretary recovers the 
amount of the maintenance of effort deficit through audit disallowance.
    (b) Specific requirements for construction of facilities. If the 
State provides for the construction of a facility for community 
rehabilitation program purposes, the amount of the State's share of 
expenditures for vocational rehabilitation services under the plan, 
other than for the construction of a facility for community 
rehabilitation program purposes or the establishment of a facility for 
community rehabilitation purposes, must be at least equal to the 
expenditures for those services for the second prior fiscal year. If a 
State fails to meet the requirements of this paragraph, the Secretary 
recovers the amount of the maintenance of effort deficit through audit 
disallowance.
    (c) Separate State agency for vocational rehabilitation services 
for individuals who are blind. If there is a separate part of the State 
plan administered by a separate State agency to provide vocational 
rehabilitation services for individuals who are blind--
    (1) Satisfaction of the maintenance of effort requirements under 
paragraphs (a) and (b) of this section are determined based on the 
total amount of a State's non-Federal expenditures under both parts of 
the State plan; and
    (2) If a State fails to meet any maintenance of effort requirement, 
the Secretary reduces the amount otherwise payable to the State for 
that fiscal year under each part of the plan in direct relation to the 
amount by which expenditures from non-Federal sources under each part 
of the plan in the previous fiscal year were less than they were for 
that part of the plan for the fiscal year 2 years prior to the previous 
fiscal year.
    (d) Waiver or modification.
    (1) The Secretary may waive or modify the maintenance of effort 
requirement in paragraph (a)(1) of this section if the Secretary 
determines that a waiver or modification is necessary to permit the 
State to respond to exceptional or uncontrollable circumstances, such 
as a major natural disaster or a serious economic downturn, that--
    (i) Cause significant unanticipated expenditures or reductions in 
revenue that result in a general reduction of programs within the 
State; or
    (ii) Require the State to make substantial expenditures in the 
vocational rehabilitation program for long-term purposes due to the 
one-time costs associated with the construction of a facility for 
community rehabilitation program purposes, the establishment of a 
facility for community rehabilitation program purposes, or the 
acquisition of equipment.
    (2) The Secretary may waive or modify the maintenance of effort 
requirement in paragraph (b) of this section or the 10 percent 
allotment limitation in Sec. 361.61 if the Secretary determines that a 
waiver or modification is necessary to permit the State to respond to 
exceptional or uncontrollable circumstances, such as a major natural 
disaster, that result in significant destruction of existing facilities 
and require the State to make substantial expenditures for the 
construction of a facility for community rehabilitation program 
purposes or the establishment of a facility for community 
rehabilitation program purposes in order to provide vocational 
rehabilitation services.
    (3) A written request for waiver or modification, including 
supporting justification, must be submitted to the Secretary as soon as 
the State determines that an exceptional or uncontrollable circumstance 
will prevent it from making its required expenditures from non-Federal 
sources.

(Authority: Sections 101(a)(17) and 111(a)(2) of the Act; 29 U.S.C. 
721(a)(17) and 731(a)(2))


Sec. 361.63  Program income.

    (a) Definition. For purposes of this section, program income means 
gross income received by the State that is directly generated by an 
activity supported under this part.
    (b) Sources. Sources of program income include, but are not limited 
to, payments from the Social Security Administration for assisting 
Social Security beneficiaries and recipients to achieve employment 
outcomes, payments received from workers' compensation funds, fees for 
services to defray part or all of the costs of services provided to 
particular individuals, and income generated by a State-operated 
community rehabilitation program.
    (c) Use of program income.
    (1) Except as provided in paragraph (c)(2) of this section, program 
income, whenever earned, must be used for the provision of vocational 
rehabilitation services and the administration of the State plan. 
Program income is considered earned when it is received.
    (2) Payments provided to a State from the Social Security 
Administration for assisting Social Security beneficiaries and 
recipients to achieve employment outcomes may also be used to carry out 
programs under part B of Title I of the Act (client assistance), part B 
of Title VI

[[Page 4415]]

of the Act (supported employment), and Title VII of the Act 
(independent living).
    (3) The State is authorized to treat program income as--
    (i) An addition to the grant funds to be used for additional 
allowable program expenditures, in accordance with 34 CFR 80.25(g)(2); 
or
    (ii) A deduction from total allowable costs, in accordance with 34 
CFR 80.25(g)(1).
    (4) Program income cannot be used to meet the non-Federal share 
requirement under Sec. 361.60.

(Authority: Section 108 of the Act; 29 U.S.C. 728; 34 CFR 80.25)


Sec. 361.64  Obligation of Federal funds and program income.

    (a) Except as provided in paragraph (b) of this section, any 
Federal funds, including reallotted funds, that are appropriated for a 
fiscal year to carry out a program under this part that are not 
obligated by the State by the beginning of the succeeding fiscal year 
and any program income received during a fiscal year that is not 
obligated by the State by the beginning of the succeeding fiscal year 
remain available for obligation by the State during that succeeding 
fiscal year.
    (b) Federal funds appropriated for a fiscal year remain available 
for obligation in the succeeding fiscal year only to the extent that 
the State met the matching requirement for those Federal funds by 
obligating, in accordance with 34 CFR 76.707, the non-Federal share in 
the fiscal year for which the funds were appropriated.

(Authority: Section 19 of the Act; 29 U.S.C. 716)


Sec. 361.65  Allotment and payment of Federal funds for vocational 
rehabilitation services.

    (a) Allotment.
    (1) The allotment of Federal funds for vocational rehabilitation 
services for each State is computed in accordance with the requirements 
of section 110 of the Act, and payments are made to the State on a 
quarterly basis, unless some other period is established by the 
Secretary.
    (2) If the State plan designates one State agency to administer, or 
supervise the administration of, the part of the plan under which 
vocational rehabilitation services are provided for individuals who are 
blind and another State agency to administer the rest of the plan, the 
division of the State's allotment is a matter for State determination.
    (b) Reallotment.
    (1) The Secretary determines not later than 45 days before the end 
of a fiscal year which States, if any, will not use their full 
allotment.
    (2) As soon as possible, but not later than the end of the fiscal 
year, the Secretary reallots these funds to other States that can use 
those additional funds during the current or subsequent fiscal year, 
provided the State can meet the matching requirement by obligating the 
non-Federal share of any reallotted funds in the fiscal year for which 
the funds were appropriated.
    (3) Funds reallotted to another State are considered to be an 
increase in the recipient State's allotment for the fiscal year for 
which the funds were appropriated.

(Authority: Sections 110 and 111 of the Act; 29 U.S.C. 730 and 731)

Subpart D--[Reserved]

Subpart E--Evaluation Standards and Performance Indicators


Sec. 361.80  Purpose.

    The purpose of this subpart is to establish evaluation standards 
and performance indicators for the Program.

(Authority: 29 U.S.C. 726(a))

Sec. 361.81  Applicable definitions.

    In addition to those definitions in Sec. 361.5(b), the following 
definitions apply to this subpart:
    Average hourly earnings means the average per hour earnings in the 
week prior to exiting the vocational rehabilitation (VR) program of an 
eligible individual who has achieved a competitive employment outcome.
    Business Enterprise Program (BEP) means an employment outcome in 
which an individual with a significant disability operates a vending 
facility or other small business under the management and supervision 
of a designated State unit (DSU). This term includes home industry, 
farming, and other enterprises.
    Exit the VR program means that a DSU has closed the individual's 
record of VR services in one of the following categories:
    (1) Ineligible for VR services.
    (2) Received services under an individualized plan for employment 
(IPE) and achieved an employment outcome.
    (3) Received services under an IPE but did not achieve an 
employment outcome.
    (4) Eligible for VR services but did not receive services under an 
IPE.
    General or combined DSU means a DSU that does not serve exclusively 
individuals with visual impairments or blindness.
    Individuals from a minority background means individuals who report 
their race and ethnicity in any of the following categories: American 
Indian or Alaska Native, Asian, Black or African American, Native 
Hawaiian or Other Pacific Islander, or Hispanic or Latino.
    Minimum wage means the higher of the rate specified in section 
6(a)(1) of the Fair Labor Standards Act of 1938, 29 U.S.C. 206(a)(1), 
(i.e., the Federal minimum wage) or applicable State minimum wage law.
    Non-minority individuals means individuals who report themselves 
exclusively as White, non-Hispanic.
    Performance period is the reporting period during which a DSU's 
performance is measured. For Evaluation Standards 1 and 2, performance 
data must be aggregated and reported for each fiscal year beginning 
with fiscal year 1999. However, DSUs that exclusively serve individuals 
with visual impairments or blindness must report each year the 
aggregated data for the 2 previous years for Performance Indicators 1.1 
through 1.6; the second year must coincide with the performance period 
for general or combined DSUs.
    Primary indicators means Performance Indicators 1.3, 1.4, and 1.5, 
which are specifically designed to measure--
    (1) The achievement of competitive, self-, or BEP employment with 
earnings equivalent to the minimum wage or higher, particularly by 
individuals with significant disabilities; and
    (2) The ratio between the average hourly earnings of individuals 
who exit the VR program in competitive, self-, or BEP employment with 
earnings equivalent to the minimum wage or higher and the State's 
average hourly earnings for all employed individuals.
    RSA-911 means the Case Service Report that is submitted annually by 
a DSU as approved by the Office of Management and Budget (OMB).
    Self-employment means an employment outcome in which the individual 
works for profit or fee in his or her own business, farm, shop, or 
office, including sharecroppers.
    Service rate means the result obtained by dividing the number of 
individuals who exit the VR program after receiving one or more 
services under an IPE during any reporting period by the total number 
of individuals who exit the VR program (as defined in this section) 
during that reporting period.
    State's average hourly earnings means the average hourly earnings 
of all persons in the State in which the DSU is located.


[[Page 4416]]


(Authority: 29 U.S.C. 726(a))

Sec. 361.82  Evaluation standards.

    (a) The Secretary establishes two evaluation standards to evaluate 
the performance of each DSU that receives funds under this part. The 
evaluation standards assist the Secretary and each DSU to evaluate a 
DSU's performance in serving individuals with disabilities under the VR 
program.
    (b) A DSU must achieve successful performance on both evaluation 
standards during each performance period.
    (c) The evaluation standards for the VR program are--
    (1) Evaluation Standard 1--Employment outcomes. A DSU must assist 
any eligible individual, including an individual with a significant 
disability, to obtain, maintain, or regain high-quality employment.
    (2) Evaluation Standard 2--Equal access to services. A DSU must 
ensure that individuals from minority backgrounds have equal access to 
VR services. (Approved by the Office of Management and Budget under 
control number 1820-0508.)


(Authority: 29 U.S.C. 726(a))

Sec. 361.84  Performance indicators.

    (a) The performance indicators establish what constitutes minimum 
compliance with the evaluation standards.
    (b) The performance indicators require a DSU to provide information 
on a variety of factors to enable the Secretary to measure compliance 
with the evaluation standards.
    (c) The performance indicators are as follows:
    (1) Employment outcomes. 
    (i) Performance Indicator 1.1. The number of individuals exiting 
the VR program who achieved an employment outcome during the current 
performance period compared to the number of individuals who exit the 
VR program after achieving an employment outcome during the previous 
performance period.
    (ii) Performance Indicator 1.2. Of all individuals who exit the VR 
program after receiving services, the percentage who are determined to 
have achieved an employment outcome.
    (iii) Performance Indicator 1.3. Of all individuals determined to 
have achieved an employment outcome, the percentage who exit the VR 
program in competitive, self-, or BEP employment with earnings 
equivalent to at least the minimum wage.
    (iv) Performance Indicator 1.4. Of all individuals who exit the VR 
program in competitive, self-, or BEP employment with earnings 
equivalent to at least the minimum wage, the percentage who are 
individuals with significant disabilities.
    (v) Performance Indicator 1.5. The average hourly earnings of all 
individuals who exit the VR program in competitive, self-, or BEP 
employment with earnings levels equivalent to at least the minimum wage 
as a ratio to the State's average hourly earnings for all individuals 
in the State who are employed (as derived from the Bureau of Labor 
Statistics report ``State Average Annual Pay'' for the most recent 
available year).
    (vi) Performance Indicator 1.6. Of all individuals who exit the VR 
program in competitive, self-, or BEP employment with earnings 
equivalent to at least the minimum wage, the difference between the 
percentage who report their own income as the largest single source of 
economic support at the time they exit the VR program and the 
percentage who report their own income as the largest single source of 
support at the time they apply for VR services.
    (2) Equal access to services.
    (i) Performance Indicator 2.1. The service rate for all individuals 
with disabilities from minority backgrounds as a ratio to the service 
rate for all non-minority individuals with disabilities.

(Approved by the Office of Management and Budget under control 
number 1820-0508.)

(Authority: 29 U.S.C. 726(a))


Sec. 361.86  Performance levels.

    (a) General.
    (1) Paragraph (b) of this section establishes performance levels 
for--
    (i) General or combined DSUs; and
    (ii) DSUs serving exclusively individuals who are visually impaired 
or blind.
    (2) The Secretary may establish, by regulations, new performance 
levels.
    (b) Performance levels for each performance indicator.
    (1)(i) The performance levels for Performance Indicators 1.1 
through 1.6 are--

----------------------------------------------------------------------------------------------------------------
                                                           Performance level by type of DSU
       Performance indicator        ----------------------------------------------------------------------------
                                                     General/Combined                            Blind
----------------------------------------------------------------------------------------------------------------
1.1................................  Equal or exceed previous performance period....  Same.
1.2................................  55.8%..........................................  68.9%.
1.3................................  72.6%..........................................  35.4%.
1.4................................  62.4%..........................................  89.0%.
1.5................................  .52 (Ratio)....................................  .59.
1.6................................  53.0 (Math. Difference)........................  30.4.
----------------------------------------------------------------------------------------------------------------

    (ii) To achieve successful performance on Evaluation Standard 1 
(Employment outcomes), a DSU must meet or exceed the performance levels 
established for four of the six performance indicators in the 
evaluation standard, including meeting or exceeding the performance 
levels for two of the three primary indicators (Performance Indicators 
1.3, 1.4, and 1.5).
    (2)(i) The performance level for Performance Indicator 2.1 is--

------------------------------------------------------------------------
         Performance indicator                  Performance levels
------------------------------------------------------------------------
2.1....................................  .80 (Ratio).
------------------------------------------------------------------------

    (ii) To achieve successful performance on Evaluation Standard 2 
(Equal access), DSUs must meet or exceed the performance level 
established for Performance Indicator 2.1 or meet the performance 
requirement in paragraph (2)(iii) of this section.
    (iii) If a DSU's performance does not meet or exceed the 
performance level required for Performance Indicator 2.1, or if fewer 
than 100 individuals from a minority population have exited the VR 
program during the reporting period, the DSU must describe the policies 
it has adopted or will adopt and the steps it has taken or will take to 
ensure that individuals with disabilities from minority backgrounds 
have equal access to VR services.

(Authority: 29 U.S.C. 726(a))


Sec. 361.88  Reporting requirements.

    (a) The Secretary requires that each DSU report within 60 days 
after the end of each fiscal year the extent to which the State is in 
compliance with the

[[Page 4417]]

evaluation standards and performance indicators and include in this 
report the following RSA-911 data:
    (1) The number of individuals who exited the VR program in each 
closure category as specified in the definition of ``Exit the VR 
program'' under Sec. 361.81.
    (2) The number of individuals who exited the VR program in 
competitive, self-, or BEP employment with earnings at or above the 
minimum wage.
    (3) The number of individuals with significant disabilities who 
exited the VR program in competitive, self-, or BEP employment with 
earnings at or above the minimum wage.
    (4) The weekly earnings and hours worked of individuals who exited 
the VR program in competitive, self-, or BEP employment with earnings 
at or above the minimum wage.
    (5) The number of individuals who exited the VR program in 
competitive, self-, or BEP employment with earnings at or above the 
minimum wage whose primary source of support at the time they applied 
for VR services was ``personal income.''
    (6) The number of individuals who exited the VR program in 
competitive, self-, or BEP employment with earnings at or above the 
minimum wage whose primary source of support at closure was ``personal 
income.''
    (7) The number of individuals exiting the VR program who are 
individuals from a minority background.
    (8) The number of non-minority individuals exiting the VR program.
    (9) The number of individuals from a minority background exiting 
the VR program after receiving services under an IPE.
    (10) The number of non-minority individuals exiting the VR program 
after receiving services under an IPE.
    (b) In lieu of the report required in paragraph (a) of this 
section, a DSU may submit its RSA-911 data on tape, diskette, or any 
alternative electronic format that is compatible with RSA's capability 
to process such an alternative, as long as the tape, diskette, or 
alternative electronic format includes the data that--
    (1) Are required by paragraph (a)(1) through (10) of this section; 
and
    (2) Meet the requirements of paragraph (c) of this section.
    (c) Data reported by a DSU must be valid, accurate, and in a 
consistent format. If a DSU fails to submit data that are valid, 
accurate, and in a consistent format within the 60-day period, the DSU 
must develop a program improvement plan pursuant to Sec. 361.89(a). 
(Approved by the Office of Management and Budget under control number 
1820-0508.)

(Authority: 29 U.S.C. 726(b))


Sec. 361.89  Enforcement procedures.

    (a) If a DSU fails to meet the established performance levels on 
both evaluation standards as required by Sec. 361.82(b), the Secretary 
and the DSU must jointly develop a program improvement plan that 
outlines the specific actions to be taken by the DSU to improve program 
performance.
    (b) In developing the program improvement plan, the Secretary 
considers all available data and information related to the DSU's 
performance.
    (c) When a program improvement plan is in effect, review of the 
plan is conducted on a biannual basis. If necessary, the Secretary may 
request that a DSU make further revisions to the plan to improve 
performance. If the Secretary establishes new performance levels under 
Sec. 361.86(a)(2), the Secretary and the DSU must jointly modify the 
program improvement plan based on the new performance levels. The 
Secretary continues reviews and requests revisions until the DSU 
sustains satisfactory performance based on the current performance 
levels over a period of more than 1 year.
    (d) If the Secretary determines that a DSU with less than 
satisfactory performance has failed to enter into a program improvement 
plan or comply substantially with the terms and conditions of the 
program improvement plan, the Secretary, consistent with the procedures 
specified in Sec. 361.11, reduces or makes no further payments to the 
DSU under this program until the DSU has met one of these two 
requirements or raised its subsequent performance to meet the current 
overall minimum satisfactory level on the compliance indicators.

(Approved by the Office of Management and Budget under control 
number 1820-0508.)

(Authority: 29 U.S.C. 726(b) and (c))

Appendix

Analysis of Comments and Changes

    Note: The following appendix will not appear in the Code of 
Federal Regulations.

Section 361.4--Applicable Regulations

    Comments: Several commenters requested clarification of proposed 
Sec. 361.4(c) and (d) that made applicable to the VR program the 
regulations implementing the One-Stop system under Title I of the 
WIA. In particular, these commenters requested that the Secretary 
assure in this section that the regulations governing the One-Stop 
system do not conflict with the regulations in part 361 and that the 
One-Stop system requirements would not apply if conflicts between 
regulatory provisions arise.
    Discussion: Proposed Sec. 361.4(c) listed the regulations in 20 
CFR part 662 (Description of One-Stop Service Delivery System under 
Title I of WIA) among the regulations applicable to the VR program. 
Similarly, proposed Sec. 361.4(d) identified the civil rights 
protections under 29 CFR part 37 (Implementation of the 
Nondiscrimination and Equal Opportunity Provisions of WIA) as 
applicable to VR program activities that are conducted as part of 
the One-Stop system. Citing these parts of Federal regulations is 
intended solely as a means of notifying State units of their 
regulatory obligations as One-Stop system partners.
    Moreover, both Title I of WIA and its implementing regulations 
specify that partner programs, such as the VR program, are to 
participate in applicable One-Stop system activities in a manner 
that is consistent with the Federal law authorizing the individual 
partner program (see e.g., section 121(b)(1)(A)(ii) of WIA; 20 CFR 
662.230(d)). We interpret this requirement to mean that the DSU 
administering the VR program in the State must partner with the 
other components of the One-Stop system in accordance with the 
requirements of both Title I of the Rehabilitation Act of 1973 and 
these final regulations. Given that condition on One-Stop system 
participation, and the fact that these regulations generally govern 
State conduct, we do not consider it appropriate to include in the 
regulations the assurances sought by the commenters. However, we 
emphasize that we have worked closely with the U.S. Department of 
Labor to ensure that the One-Stop system regulations do not conflict 
with VR program requirements. Despite these efforts, we urge State 
units and others to inform us of any apparent conflicts between 
regulatory provisions that arise so that we, along with the 
Department of Labor, can address any inconsistencies that might 
remain.
    Changes: None.

Section 361.5(b)--Applicable Definitions

    <bullet> General
    Comments: Several commenters asked that additional terms be 
defined in the final regulations. One commenter requested that a 
definition of ``informed choice'' be added to the regulations. Other 
commenters asked that separate definitions of the terms ``qualified 
vocational rehabilitation counselor'' and ``qualified vocational 
rehabilitation counselor employed by the designated State unit'' be 
included among the regulatory definitions. Finally, some commenters 
asked that ``rehabilitation engineering'' be defined in the final 
regulations since that term is used in the definition of 
``rehabilitation technology,'' while others suggested that 
``mediation'' be defined in the final regulations in order to 
clarify the scope of the mediation process.
    Discussion: We do not believe it is necessary to define 
``informed choice'' in the final regulations. Section 361.52 of both 
the proposed and final regulations, which tracks section 102(d) of 
the Act, enumerates the critical aspects of informed choice and 
reflects the statutory emphasis that individuals participating in 
the VR program must be able to exercise informed choice

[[Page 4418]]

throughout the entire rehabilitation process. That section of the 
regulations also retains additional choice-related provisions from 
the current regulations, including, in Sec. 361.52(c), the types of 
information that must be provided for an individual to exercise 
choice in selecting VR services and service providers. Thus, 
Sec. 361.52, as a whole, contains a comprehensive list of 
requirements intended to ensure that individuals are given 
meaningful choices, and the opportunity to exercise those choices, 
in each aspect of their rehabilitation, as the Act intends.
    For further discussion of our decision to not define ``informed 
choice,'' please see the analysis of comments to Sec. 361.52 in this 
appendix.
    We agree that clarification is needed concerning the distinction 
between a ``qualified vocational rehabilitation counselor'' and a 
``qualified vocational rehabilitation counselor employed by the 
DSU.'' However, we do not believe that defining these terms would 
provide the necessary clarification since States can readily 
determine which counselors they employ. Rather, we think it would be 
more helpful to further explain the differences between the 
functions that must be performed by DSU and non-DSU counselors. That 
discussion can be found in the analysis of comments received under 
Sec. 361.45.
    We agree that retaining the current regulatory definition of 
``rehabilitation engineering'' would be beneficial.
    Finally, the 1998 Amendments introduced mediation as another 
means for individuals and State units to resolve disputes regarding 
the provision of VR services. Although mediation is new to the VR 
program, it has been used for years in other programs as a less 
adversarial process for resolving disputes than formal due process 
hearings or court litigation. The NPRM provided guidance to States 
in developing their systems of mediation by defining the statutory 
term ``qualified and impartial mediator.'' However, we agree that 
defining ``mediation'' in the regulations would provide further 
clarification.
    We believe it is important that the regulations give States 
sufficient flexibility to establish mediation procedures that best 
meet the needs of individuals with disabilities in the State and the 
needs of the State unit. At the same time, for efficiency purposes, 
we feel that the definition of ``mediation'' in the final 
regulations should allow for States to conduct mediations under the 
VR program in a manner that is consistent with those conducted by 
the State under similar programs. We believe that a definition that 
is based on relevant portions of the definition of ``mediation'' in 
the Federal regulations governing the Client Assistance Program 
(CAP) in 34 CFR 370.6(b) serves both of those purposes.
    Changes: We have amended the proposed regulations to include 
definitions of the terms ``mediation'' and ``rehabilitation 
engineering.'' These definitions are located in Sec. 361.5(b)(36) 
and (b)(44), respectively, meaning that other definitions in the 
proposed regulations have been renumbered in the final regulations.
    <bullet> Administrative costs under the State plan
    Comments: One commenter asked why the listing of costs in the 
proposed definition of ``administrative costs under the State plan'' 
was preceded by the term ``including'' rather than ``including, but 
not limited to,'' as in the current regulations. This same commenter 
also asked what is meant by ``support services'' to other entities, 
which was listed as an administrative cost under 
Sec. 361.5(b)(2)(iv) of the proposed regulations.
    Discussion: The proposed definition of ``administrative costs 
under the State plan,'' which tracks the definition in section 7(1) 
of the Act, does not differ substantively from the previous 
regulatory definition. However, because we interpret the statutory 
definition to allow for ``administrative costs'' other than those 
listed in the Act, we agree with the commenter that the definition 
should specify that the scope of administrative costs is not limited 
to the costs listed in the definition.
    ``Support services to other State agencies, private nonprofit 
organizations, and businesses and industries,'' which is referenced 
in section 7(1)(D) of the Act, as well as in Sec. 361.5(b)(2)(iv), 
can include activities such as training the staff of the One-Stop 
system on disability issues, providing organizations with materials 
and advice on auxiliary aids and services and other accessibility 
issues, reviewing employers' workplace policies and hiring 
practices, and other activities that would facilitate and promote 
the employment of individuals with disabilities. The scope of 
support services that a State unit may provide would differ 
depending upon the circumstances in that State.
    Changes: We have amended the definition of ``administrative 
costs under the State plan'' to clarify that the scope of 
administrative costs under the program includes, but is not limited 
to, the costs listed in the definition.
    <bullet> Appropriate modes of communication
    Comments: Several commenters requested that we amend the 
proposed definition of ``appropriate modes of communication'' to 
include additional communication modes that are available for 
individuals who are deaf or hard of hearing.
    Discussion: The definition of ``appropriate modes of 
communication'' in the proposed regulations, which was the same as 
the previous regulatory definition, was not intended as a 
comprehensive list of communication modes used by persons with 
disabilities. Accordingly, the definition specified that the scope 
of appropriate modes was not limited to the identified examples and 
allowed for other modes as they are needed.
    Changes: None.
    <bullet> Assessment for determining eligibility and vocational 
rehabilitation needs
    Comments: One commenter asked that this proposed definition be 
amended to ensure that the information used in assessing 
eligibility, order of selection category, and vocational 
rehabilitation needs of an individual with a disability is provided 
by professionals with expertise in the individual's disabling 
condition or conditions. This commenter also asked that we revise 
the proposed regulations to require that appropriate modes of 
communication are used in the course of conducting assessments.
    Discussion: The points made by the commenter relate to important 
elements of the assessment process. However, we believe those points 
are sufficiently addressed by other requirements in the regulations. 
For example, Sec. 361.42(a) of both the proposed and final 
regulations requires that determinations of eligibility be made by 
qualified personnel. Similarly, Sec. 361.18(e) requires that the 
State unit be able to communicate with applicants, as well as 
eligible individuals, through appropriate modes of communication. 
Because these requirements apply to the State unit as it conducts 
assessments and fulfills its other functions, we do not consider it 
necessary to amend the proposed definition as the commenter 
requested.
    Changes: None.
    <bullet> Comparable services and benefits
    Comments: One commenter asked that the proposed definition be 
revised to specifically exclude the personal resources of the 
eligible individual from the scope of ``comparable services and 
benefits'' that the State unit must use before expending program 
funds in support of VR services.
    In addition, a number of commenters asked whether a ``ticket'' 
issued to an individual with a disability under the Ticket to Work 
and Work Incentives Improvement Act of 1999, Pub. L. 106-170 
(TWWIIA) constitutes a comparable service or benefit. Several other 
commenters stated that a Plan for Achieving Self-Support (PASS) 
issued by the Social Security Administration (SSA) should not be 
treated as a comparable service or benefit.
    Discussion: The proposed regulatory definition of comparable 
services and benefits--services and benefits that are provided or 
paid for by other Federal, State or local public agencies, by health 
insurance, or by employee benefits--did not include the eligible 
individual's personal resources. Nonetheless, an individual may be 
asked to participate in the costs of certain VR services to the 
extent that the State unit uses a financial needs test that is 
consistent with the requirements in Sec. 361.54 of the regulations.
    Because Social Security recipients with disabilities are issued 
``tickets'' under TWWIIA in order to receive training and 
employment-related services from an employment network as defined in 
that act, we believe that the ticket constitutes a comparable 
service and benefit under the VR program. Thus, to the extent that a 
ticket holder is receiving services from another entity that is 
serving as that individual's employment network, the DSU need not 
expend VR program funds on services that are comparable to the 
services the individual is already receiving. On the other hand, if 
the individual initially chooses the DSU as its employment network 
under TWWIIA, or otherwise transfers his or her ticket to the DSU, 
then the individual would be served solely by the DSU, and the 
ticket would not be considered a comparable service and benefit.
    On a related point, we note that DSUs must accept a ticket as 
sufficient evidence that the

[[Page 4419]]

ticket holder has a disability, is receiving Social Security 
benefits, and therefore is presumptively eligible under the VR 
program (see Sec. 361.42(a)(3) of the final regulations).
    Finally, we agree with the commenters' assertion that a PASS 
does not constitute a comparable service or benefit. Simply stated, 
a PASS is a mechanism made available to SSDI beneficiaries under the 
Social Security Act that enables its holder to conserve certain 
amounts of his or her own income or resources for purposes of 
supporting himself or herself in the future. Thus, because a PASS is 
not a source of support for VR services, we do not view it as a 
comparable benefit that the DSU can look to as an alternative to 
expending VR program funds.
    Changes: None.
    <bullet> Competitive employment
    Comments: One commenter questioned the basis for the requirement 
that ``competitive employment'' be limited to employment outcomes in 
integrated settings. A second commenter asked that we broaden the 
definition of ``competitive employment'' in the proposed regulations 
to include employment under the Javits-Wagner-O'Day (JWOD) program 
if that employment is chosen by the eligible individual.
    Discussion: The proposed definition of ``competitive 
employment'' was the same as that found in the previous regulations. 
Although the term is not defined in the Act, section 7(11), the 
statutory definition of ``employment outcome'' does refer to 
competitive employment in the integrated labor market. On that 
basis, and in light of the great emphasis that the Act places on 
maximizing the integration into society of persons with 
disabilities, it has been our longstanding policy to define 
``competitive employment'' to mean employment in an integrated 
setting (at or above minimum wage). For further information on the 
integrated setting (and wage) components of the ``competitive 
employment'' definition, please refer to the relevant discussion in 
the preamble to the previous regulations (62 FR 6310 through 6311).
    Whether an employment outcome meets the regulatory definition of 
``competitive employment'' is to be determined on case-by-case 
basis. If a particular job, including a job secured under the JWOD 
program, is integrated (i.e., the individual with a disability 
interacts with non-disabled persons to the same extent that non-
disabled individuals in comparable positions interact with other 
persons; Sec. 361.5(b)(33)(ii) of the final regulations) and the 
individual is compensated at or above the minimum wage (and not less 
than the customary wage and benefit level paid by the employer for 
the same or similar work performed by individuals who are not 
disabled; Sec. 361.5(b)(11)(ii) of the final regulations), then that 
position would be considered competitive employment. In fact, we 
expect that many jobs secured under JWOD service contracts would 
meet these criteria. On the other hand, employment in a non-
integrated setting such as a sheltered workshop would not qualify as 
competitive employment regardless of whether the position is 
obtained under a JWOD contract or another program or arrangement.
    Changes: None.
    <bullet> Employment outcome
    Comments: A number of commenters recommended that we expand the 
definition of ``employment outcome'' in the proposed regulations 
(i.e., entering or retaining full- or part-time competitive, 
supported, or other employment) to include ``advancing in'' 
appropriate employment. This change, the commenters believe, would 
encourage DSUs to look beyond entry-level employment options for 
eligible individuals.
    Another commenter asked that we define ``part-time employment'' 
in the final regulations. This commenter expressed concern about 
DSUs expending resources on individuals who might work very few 
hours in the course of a week or a month.
    Discussion: The chief purpose of the VR program is to assist 
eligible individuals with disabilities to achieve high-quality 
employment outcomes consistent with the individual's strengths, 
resources, priorities, concerns, abilities, capabilities, interests, 
and informed choice. Because that standard is reflected in the 
definition of the term ``employment outcome,'' we believe that the 
regulations sufficiently support the commenters' point that 
individuals with disabilities who are currently employed should be 
able to receive VR services in order to advance in their careers.
    Additionally, the availability of VR services for purposes of 
``advancing in'' employment is addressed in other parts of the 
regulations. For example, Sec. 361.46(a)(1)(i)) of the final 
regulations also specifies that the employment outcome identified in 
the individualized plan for employment, i.e., the employment goal 
the individual must pursue with the assistance of the State unit, 
must be consistent with the individual's unique strengths, 
resources, priorities, concerns, abilities, capabilities, career 
interests, and informed choice. That section requires that States 
look beyond options in entry-level employment for VR program 
participants who are capable of more challenging work. Specifically, 
the eligible individual should be assisted in pursuing the job that 
reflects his or her strengths, resources, abilities, and other 
employment factors previously listed. We suggest that you consult 
Rehabilitation Services Administration (RSA) Policy Directive 97-04 
for a more complete discussion of the scope and selection of 
employment outcomes for eligible individuals.
    We have not defined ``part-time employment'' as used in the 
proposed definition of ``employment outcome.'' We note that most 
employers generally consider any job of less than 35 hours per week 
to be part-time. Yet, we do not believe that it would be appropriate 
to require a minimum number of hours for part-time work secured 
through the VR program.
    Although we think that instances in which eligible individuals 
work only a handful of hours per week are limited, we do not want to 
discourage State units from serving potential part-time workers who, 
with the State unit's support, may increase their hours or even 
become employed full-time at a later date.
    Changes: None.
    <bullet> Fair Hearing Board
    Comments: One commenter suggested modifying the proposed 
regulations to require a State's fair hearing board to include at 
least one individual with a disability.
    Discussion: By defining ``fair hearing board'' in the proposed 
regulations, we intended to clarify past confusion about the scope 
of the fair hearing board exception to the due process requirements 
under section 102(c)(6)(A) of the Act. In particular, the proposed 
regulations specified in Sec. 361.57(j) that for a State's pre-1985 
fair hearing board to qualify under the exception, that board must 
be comprised of a group of persons that acts collectively when 
issuing final decisions to resolve disputes concerning the provision 
of VR services to applicants or eligible individuals.
    These proposed requirements were intended to address instances 
in which some States had misinterpreted the exception as enabling a 
single administrative law judge or other official of a State office 
of hearing examiners to carry out hearings under Sec. 361.57 without 
following the procedural requirements in that section. In response, 
we modeled the proposed definition after the actual State fair 
hearing board that served as the catalyst for the statutory 
exception in the 1986 Amendments to the Rehabilitation Act. Because 
those few States with hearing boards that qualify under the 
exception have long followed this authorized State process for 
resolving individual disputes under the VR program, we do not 
believe it is necessary or prudent to impose special membership 
requirements on those boards through regulations. We do, however, 
encourage the few fair hearing board States to consider qualified 
individuals with disabilities when vacancies on these boards arise.
    Changes: None.
    <bullet> Maintenance
    Comments: Several commenters objected to the use of examples 
following this definition, stating that the information included in 
the examples should be placed in sub-regulatory guidance. Other 
commenters supported the use of the examples in the proposed 
regulations.
    In addition, one commenter asked that we clarify the types of 
``enrichment activities'' that would fall under the fourth example 
to the proposed definition, while another asked that we eliminate 
that example altogether.
    Discussion: As we have stated in preambles to prior versions of 
the VR program regulations, we believe that the limited use of 
examples following the regulatory definition of ``maintenance'' is 
helpful in understanding the types of services that maintenance may 
include. The examples are purely illustrative and are not meant to 
limit or exclude other types of services that could be considered 
maintenance.
    The fourth example to both the proposed and previous regulatory 
definition stated that maintenance can include the costs of an 
individual's ``participation in enrichment activities'' related to 
the individual's training. This example was added to the previous 
regulations in 1997 in response to the requests of public commenters 
who noted that some DSUs establish limits in

[[Page 4420]]

maintenance budgets that preclude individuals from participating in 
enrichment activities (e.g., student trips, visits to museums, 
supplemental lectures, etc.) that are often important components of 
a student's training program. The ``enrichment'' example was 
intended to encourage DSUs to factor in these extra costs when 
developing an individualized plan for employment (IPE) for a student 
so that the individual can take advantage of supplemental enrichment 
activities as appropriate.
    Changes: None.
    <bullet> Personal assistance services
    Comments: One commenter questioned the point at which a State 
unit can provide personal assistance services to an individual with 
a disability.
    Discussion: The proposed definition, which was the same as that 
in the previous regulations, specified that ``personal assistance 
services'' (i.e., services designed to assist persons with 
disabilities in daily living activities) must be necessary to the 
achievement of an employment outcome and may be provided only while 
the individual is receiving other VR services. As long as those 
conditions are met, personal assistance services, as defined in 
Sec. 361.5(b)(39) of the regulations, can be made available at any 
stage in the VR process, including during the assessment for 
determining the individual's eligibility and priority for VR 
services.
    Changes: None.
    <bullet> Physical and mental restoration services
    Comments: One commenter asked us to require that all services 
listed in the proposed definition of ``physical and mental 
restoration services'' be provided by personnel who are qualified in 
accordance with applicable State licensure laws. Another commenter 
asked that the definition in the final regulations specifically 
refer to ``assistive listening and alerting devices.'' Finally, one 
commenter asked that the regulations prohibit a State unit from 
providing physical or mental restoration services if other resources 
are available.
    Discussion: The proposed regulations followed the scope of 
physical and mental restoration services specified in section 
103(a)(6) of the Act, and we do not believe that it would be 
appropriate to apply, solely through regulations, State licensure 
requirements on the provision of additional restoration services. 
However, a State may, if it has not done so already, choose to 
establish licensure or other qualified personnel requirements for 
providers of physical and mental restoration services. Those States 
would need to address those requirements in its written policies on 
the nature and scope of services developed under Sec. 361.50.
    We do not believe it is necessary to list additional restoration 
services in the final regulatory definition. Additional medical or 
medically related services that an individual needs in order to 
achieve an employment outcome are authorized under 
Sec. 361.5(b)(40)(xvi).
    Similarly, the commenter's concerns about using other resources 
before expending VR funds in support of restoration services is 
fully addressed elsewhere in the regulations. Section 361.48(e) of 
both the proposed and final regulations, under which restoration 
services are authorized, specifies that those services can be made 
available only to the extent that financial support for the services 
is not available from other sources. The application of the more 
general comparable services and benefit requirements in Sec. 361.53 
produces the same result.
    Changes: None.
    <bullet> Physical or mental impairment
    Comments: Several commenters questioned the proposed revision to 
the previous regulatory definition of ``physical or mental 
impairment'' to mirror the definition used in the regulations 
implementing section 504 of the Act (section 504) (34 CFR 104.3) and 
the Americans with Disabilities Act (ADA). The commenters stated 
that using the ADA or section 504 definition may create confusion, 
conflict with existing definitions in State law, and weaken the 
eligibility criteria of the VR program. Several other commenters 
supported the revised definition, stating that consistency across 
Federal disability laws leads to more effective administration of 
the VR and other programs.
    Discussion: As noted in the preamble discussion of the changes 
to the definition of ``physical or mental impairment'' proposed in 
the NPRM (65 FR 10622), the revised definition does not impact on 
the employment-related eligibility criteria under the VR program. 
The changes to the definition in the previous regulations were 
proposed in an effort to make the VR program regulations more 
consistent with other Federal disability laws that define ``physical 
or mental impairment.'' We agree with those commenters who indicated 
that consistency with the definition used in the ADA and section 504 
regulations increases efficiency and actually lessens confusion by 
eliminating the need to duplicate efforts in assessing whether an 
individual has an impairment. Again, the changes address only 
whether an impairment exists; eligibility for VR services remains 
dependent on whether an individual also satisfies the eligibility 
criteria that are focused on employment (i.e., the impairment 
results in a substantial impediment to employment and the other 
criteria in Sec. 361.42(a)).
    Also, we do not believe that the proposed definition restricted 
the scope of physical or mental impairments that satisfied the 
previous regulatory definition or that the proposed definition 
conflicted with definitions of the same term in State law. If such a 
conflict exists, we ask that the State seek technical assistance 
from RSA in modifying its requirements in order to ensure that the 
State does not employ additional or more restrictive eligibility 
criteria for individuals to receive VR services as compared to the 
criteria specified in these final regulations.
    Changes: None.
    <bullet> Post-employment services
    Comments: One commenter requested that the proposed regulations 
be modified to eliminate the availability of post-employment 
services for purposes of ``advancing'' in employment.
    Discussion: Although the term ``post-employment services'' is 
not defined in the Act, section 103(a)(18) of the Act specifically 
authorizes post-employment services that are necessary to assist an 
individual with a disability to retain, regain, or advance in 
employment. The proposed definition, which followed the definition 
in the previous regulations, supported the use of post-employment 
services to enable persons to ``advance'' in employment. As in the 
previous regulations, the note that followed the proposed definition 
offered additional guidance regarding the provision of post-
employment services.
    Changes: None.
    <bullet> Qualified and impartial mediator
    Comments: We received many comments on the proposed definition 
of ``qualified and impartial mediator.'' First, several commenters 
stated that requiring mediators to be ``trained in effective 
mediation techniques consistent with any State-approved or -
recognized certification, licensing, registration, or other 
requirements* * *'' establishes too restrictive a standard for 
mediators. Others sought additional guidance on how to implement 
this requirement if the State has not established applicable 
certification or other requirements. In addition, several commenters 
asked whether the prohibition on public agency employees serving as 
mediators under the proposed definition applies to those from a 
State Office of Dispute Resolution who conduct mediations across 
multiple State programs.
    Aside from those issues, some commenters asked that we clarify 
whether a qualified and impartial mediator could also serve as an 
impartial hearing officer in resolving individual disputes that 
arise under the VR program. Other commenters voiced support for the 
proposed definition and for the emphasis given to mediation in the 
proposed regulations.
    Discussion: In establishing the general guidelines that govern 
mediations, section 102(c)(4) of the Act requires that mediations be 
conducted by a ``qualified and impartial mediator who is trained in 
effective mediation techniques.'' We defined ``qualified and 
impartial mediator'' in the proposed regulations as a means of 
providing guidance to the States in identifying or training 
available mediators.
    As indicated previously, we are aware that many States already 
use mediation to resolve disputes arising under other authorities 
(e.g., the Individuals with Disabilities Education Act (IDEA) or 
family law statutes) and that education, experience, or other 
qualification standards for mediators may vary from State to State. 
Thus, the proposed requirement that mediators under the VR program 
be trained consistent with applicable certification or other 
requirements was intended to ensure that mediators of disputes 
arising under the VR program are sufficiently qualified and that the 
State unit is able to use its State's existing pool of qualified 
mediators.
    We fully agree that mediators in a State Office of Dispute 
Resolution or other similar office should be able to conduct 
mediations under the VR program, and we have modified the proposed 
definition to accommodate that situation. This change is analogous 
to the provision that enables administrative law judges and hearing 
examiners in the State to

[[Page 4421]]

serve as impartial hearing officers even though those individuals 
are public employees (see the definition of ``impartial hearing 
officer'' in Sec. 361.5(b)(25)).
    In addition, although we believe that it is not generally the 
case, if there are no recognized credentialing or qualification 
standards for mediators in the State, then the Act and these final 
regulations require only that the State unit ensure that its 
mediators are trained in effective mediation techniques and meet the 
other components of the definition in Sec. 361.5(b)(43).
    It is critical that qualified and impartial mediators be neutral 
in facilitating the resolution of disputes regarding the provision 
of services to applicants or eligible individuals under the VR 
program. Therefore, we modeled the impartiality requirements in the 
proposed definition of ``qualified and impartial mediator'' after 
similar requirements in the previous definition of ``impartial 
hearing officer.'' Nevertheless, we realize that many States, 
particularly rural States with relatively small populations, have 
difficulty maintaining an appropriate pool of individuals to serve 
as hearing officers. It is not unusual in these or other States for 
hearing officers also to be trained as mediators, and we interpret 
the Act as allowing individuals to serve as both mediators and 
hearing officers under the VR program, provided they meet the 
applicable qualifications for each position. However, we also 
interpret the statutory requirement that mediators and hearing 
officers be impartial (see section 102(c)(4)(B)(iii) of the Act in 
reference to mediators and sections 7(16) and 102(c)(5) of the Act 
in reference to hearing officers) to preclude the same individual 
from serving as both mediator and hearing officer in the same case.
    Changes: We have revised the definition of ``qualified and 
impartial mediator'' to allow employees of a State office of 
mediators or similar office to serve as qualified and impartial 
mediators under the VR program.
    <bullet> Substantial impediment to employment
    Comments: One commenter suggested that ``communication'' be 
listed among the attendant factors in the definition that could 
indicate the existence of a ``substantial impediment to 
employment,'' since communication plays a critical role in the 
individual's ability to function in the workplace. Other commenters 
requested that the proposed definition be revised to include 
examples of how the attendant medical factors are applied if medical 
measures are taken and result in mitigating functional limitations.
    Discussion: We agree that communication competence is crucial to 
success in the workplace. Although the proposed and previous 
regulations stated explicitly that a ``substantial impediment to 
employment'' could be measured in terms of ``other factors,'' we 
agree that ``communication'' should be added to the specific factors 
listed in the final regulatory term.
    We suspect that those commenters who suggested that the final 
regulations explain how attendant medical factors indicating the 
existence of a ``substantial impediment to employment'' are assessed 
if medical measures that mitigate functional limitations (also 
referred to as ``mitigating measures'') are taken are questioning 
the application to the VR program of recent Supreme Court case law 
interpreting the ADA. The relevant cases require that any mitigating 
measures (e.g., medication) that an individual is using to lessen 
the effects of that person's impairment be taken into account in 
determining whether the individual has a disability under the ADA 
(i.e., an impairment that substantially limits one or more major 
life activities).
    It is not clear, however, that the Court's decisions apply to 
the VR program eligibility criterion that an individual's impairment 
constitutes a substantial impediment to employment, since that 
provision and ADA language in question are not identical. Moreover, 
the purpose of the ADA, which is a civil rights statute, differs 
from that of the VR program, which provides Federal funding to 
assist individuals with disabilities enter into employment. We are 
not aware of any instances in which States, based on these cases, 
have altered their processes for assessing an individual's 
eligibility for the VR program; nor would we encourage them to do 
so.
    Changes: None.
    <bullet> Supported employment
    Comments: Some commenters requested clarification of what it 
means to be ``working toward competitive employment'' for purposes 
of meeting the definition of ``supported employment'' in the 
proposed regulations. These commenters also asked whether the fact 
that an individual in supported employment is working toward 
competitive employment affects the 18-month limit on supported 
employment services provided by the State unit.
    Discussion: The 1998 Amendments expanded the prior statutory 
definition of ``supported employment'' (``competitive work in an 
integrated setting with ongoing supports'') to also include 
``employment in integrated settings in which individuals are working 
toward competitive work'' in order to cover persons who are working 
in supported employment settings but are making less than the 
minimum wage. ``Competitive employment,'' which we have long viewed 
as synonymous with the term ``competitive work'' used in the 
supported employment definition, generally refers to employment that 
is performed in an integrated setting for which the individual is 
compensated at or above the minimum wage. Thus, as long as an 
individual receiving ongoing support services while working in an 
integrated setting is also progressing or moving toward the minimum 
wage level, then the individual's job is considered ``supported 
employment.'' We note, however, that an individual in supported 
employment working toward competitive employment would not be 
considered to have achieved a ``competitive employment'' outcome 
until the individual is earning at least the minimum wage consistent 
with the definition of ``competitive employment'' in 
Sec. 361.5(b)(11).
    We also note that the change to the statutory definition of 
``supported employment'' does not affect the 18-month period for 
which the DSU can provide supported employment services. Once that 
18 months has passed (and unless the special circumstances warrant 
an extension), ongoing services, if needed, must be provided by a 
provider of extended services (see Sec. 361.5(b)(20) of the final 
regulations) regardless of whether the individual has yet to receive 
at least the minimum wage.
    Changes: None.
    <bullet> Transportation
    Comments: Five commenters asked that the examples following the 
proposed definition of ``transportation'' be deleted. Another 
commenter supported specifically the example stating that the 
modification of a vehicle is a rehabilitation technology, rather 
than a transportation, service. Another commenter asked that we 
include in the final regulations specific authority for DSUs to pay 
for the repair and maintenance of vehicles.
    Discussion: We have found that the examples following the 
previous regulatory definition of ``transportation,'' which were 
largely the same as those included in the proposed regulations, were 
helpful to State agency personnel, individuals with disabilities, 
and others in clarifying the scope of transportation services 
authorized under the VR program. As we have always maintained, these 
examples are purely illustrative and are not meant to provide a 
comprehensive set of allowable transportation services.
    Thus, because other authorized ``transportation'' services 
exist, and should be considered in light of the needs of the 
individual, we do not believe it is necessary to specify additional 
transportation costs in the regulations. We do note, however, that 
the second example to the proposed definition identifies the 
``purchase and repair'' of vehicles as an example of an authorized 
transportation expense. We view the vehicle ``repair and 
maintenance'' expense identified by the commenter as covered by that 
example and, therefore, authorized. We would also instruct each DSU 
to include in its written policies governing the nature and scope of 
services under Sec. 361.50(a) any additional transportation expenses 
that the DSU generally provides.
    Changes: None.

Section 361.10  Submission, Approval, and Disapproval of the State 
Plan

    Comments: Commenters expressed concern that the proposed 
regulations would require the State unit to hold public meetings 
throughout the State prior to adopting any new substantive policy or 
procedure concerning the provision of VR services or substantively 
amending an existing service-related policy or procedure. 
Consequently, many commenters viewed the provision as both 
burdensome and costly. Some of these commenters suggested that the 
State unit be permitted to adopt new policies and procedures (and 
make any amendments to existing policies) initially in accordance 
with applicable State laws and later invite public comment and input 
on those additions or changes during the State's public meetings on 
the State plan. Other commenters sought clarification of what 
constituted a ``substantive'' policy, procedure, or amendment and 
asked who would determine whether a policy is ``substantive.''

[[Page 4422]]

    Additional comments on this section of the proposed regulations 
reflected concerns about the different dates that govern the 
submission of the VR State plan. These commenters recommended that 
all States be required to submit updates and revisions to their 
State plans by the same date.
    Discussion: Section 101(a)(16)(A) of the Act requires the State 
to hold public meetings prior to adopting policies or procedures 
governing the provision of services under the State plan. This 
requirement is essentially the same as the statutory requirements 
concerning public meetings that preceded the 1998 Amendments. Thus, 
we interpret the requirement in section 101(a)(16)(A) of the Act in 
the same manner as we have historically, i.e., the public is to be 
given the opportunity to comment on the State plan prior to the 
State unit adopting substantive policies and procedures (and any 
amendments thereto) governing the provision of vocational 
rehabilitation services under the plan. Typically, a State unit 
fulfills this requirement by taking comment on new policies during 
public meetings on State plan revisions and updates. Regardless of 
the timing of the State's public meetings, however, section 
101(a)(16)(A) clearly requires that these meetings for receiving 
public input be held prior to States adopting new or revised 
policies affecting the provision of VR services. Implementing new 
policies in advance of the public meetings is not permitted.
    We also note that section 101(a)(16)(B) of the Act and 
Sec. 361.21 of both the previous and the proposed regulations 
required the designated State agency to consult with certain groups 
on matters of general policy arising in the administration of the 
State plan. In addition, a State unit that has a State 
Rehabilitation Council (Council), in accordance with section 
101(a)(21)(A)(ii)(II) of the Act and Sec. 361.16(a) of the 
regulations (again, both previous and proposed), must consult with 
the Council regarding the development, implementation, and revision 
of State policies and procedures of general applicability pertaining 
to the provision of vocational rehabilitation services. Each of the 
public comment or consultation requirements specified in the 
proposed regulations, and the resulting burden, was imposed by the 
Act, and each was intended to ensure that the State unit accounts 
for the diverse needs of its State's disability population before 
modifying its service-provision practices.
    Nonetheless, in an effort to reduce the burden on the States, we 
incorporated into both the proposed and final regulations the term 
``substantive'' to clarify that States need not hold public meetings 
on policy or procedural changes that are merely technical or do not 
affect the provision of VR services in any substantive manner. 
Longstanding RSA guidance (see PD-90-08 and PAC-90-05) provides 
additional information on the scope of this requirement. We note 
that the determination of whether a specific policy or procedure is 
sufficiently ``substantive'' to warrant public input is made by the 
State unit. Yet, we strongly urge State units to consult with their 
Councils in assessing whether proposed policy changes are 
``substantive'' or in developing evaluative criteria for the State 
unit to use in making that assessment.
    Section 101(a)(1)(A) of the Act requires the State to submit its 
State plan for the VR program on the same date that its submits its 
plan under section 112 of WIA. In addition, section 501 of WIA 
authorizes the State to submit a State unified plan in place of both 
a WIA section 112 plan and separate State plans for those WIA 
partner programs, including the VR program. We believe that in order 
to foster collaboration and cooperation between the VR program and 
other components of the One-Stop service delivery system, a State 
plan for the VR program that is not included in the State's unified 
plan should be submitted on the same date as that unified plan. That 
view is reflected in Sec. 361.10(f)(3) of the proposed and the final 
regulations.
    Changes: None

Section 361.16  Establishment of an Independent Commission or a 
State Rehabilitation Council

    Comments: One commenter expressed concern that the proposed 
regulations failed to require the State unit to provide documents to 
the Council in alternative formats and in a timely manner. As a 
result, this commenter stated that Council members who are blind 
will not have sufficient opportunity to review and respond to 
information provided by the State unit.
    Discussion: This section of the proposed regulations made only 
technical changes to the previous regulations in order to conform to 
statutory changes in the 1998 Amendments to the Act. We do not 
believe that a regulatory change to this provision is warranted 
based on the comment received. Providing information in appropriate 
formats to Council members with disabilities falls under the State 
unit's general responsibility under section 504(a) of the Act to not 
exclude, on the basis of disability, any individual from 
participating in programs or activities receiving Federal financial 
assistance. Moreover, Federal regulations at 34 CFR 104.4(b)(1)(vi) 
specify that a recipient's responsibility under section 504 of the 
Act extends to the participation of individuals with disabilities on 
advisory boards. Thus, as in many other instances in which it 
distributes written materials, the State unit must ensure that 
Council members who are blind or otherwise disabled are able to 
review information that the State unit transmits to the Council, as 
well as participate generally in Council activities.
    Changes: None.

Section 361.17  Requirements for a State Rehabilitation Council

    Comments: We received several comments regarding the composition 
requirements of the Council. One commenter requested clarification 
as to whether an entity that is a required member of the Council 
could select someone other than a member of that entity as its 
representative to the Council.
    Several commenters suggested that the regulations specify that 
the ``nonvoting'' membership status of Council members who are 
employees of the designated State agency does not apply to the 
representative of the CAP. This change, the commenters assert, is 
necessary since the CAPs in some States are components of the 
designated State agency that administers the VR program. The 
commenters raised questions regarding the required Council 
membership of a representative of the directors of the American 
Indian VR services projects authorized under section 121 of the Act. 
Some of these commenters indicated that the Council should include 
members from each of the section 121 projects and that a single 
representative of all the directors could not adequately represent 
all American Indian VR service projects in the State. Other 
commenters described situations in which a section 121 project is 
``headquartered'' in one State but has a service area that extends 
across State lines into another State and asked whether that project 
must be represented on the Council of each State that it serves.
    One commenter questioned whether a Council member could be 
appointed to the State Workforce Investment Board (SWIB) under 
section 111 of WIA in order to satisfy the requirement in the 
proposed regulations that the Council include a member of the SWIB. 
This commenter stated that otherwise this requirement would be 
difficult to meet given the limited pool of persons interested in 
serving on the Council as evidenced by the difficulty Councils 
experience in filling vacancies as they occur.
    Finally, we received several comments indicating that the 
proposed regulations failed to incorporate the new statutory 
requirement that the majority of members to a Council for a State 
agency for the blind must be individuals who are blind.
    Discussion: Section 105(b) of the Act contains the membership 
requirements for the Council to ensure that various constituencies 
of the VR program have a voice in the conduct of the VR program in 
the State. Section 105(b)(3) requires that the Governor, after 
soliciting recommendations from organizations representing 
individuals with disabilities, appoint members to the Council in 
accordance with the membership criteria in section 105(b)(1) of the 
Act.
    The question as to whether an entity can be represented on the 
Council by someone other than one of its own members or employees 
has been raised in the past. With few exceptions, the Council 
membership requirements in section 105(b)(1) of the Act state that a 
``representative'' of an identified entity must serve on the 
Council. The Act does not require that the ``representative'' be an 
employee or member of the required entity. Thus, we interpret 
section 105(b) of the Act and Sec. 361.17(b) of the regulations to 
allow an entity that is required to be represented on the Council to 
be represented by someone who is not an employee or member of that 
organization. Recommendations of appropriate representatives can be 
made by the organizations themselves, although final appointment 
authority rests with the Governor. Moreover, we would expect that 
such a Council member would be closely affiliated with and 
knowledgeable about the

[[Page 4423]]

organization or entity whose interests the individual is charged 
with representing.
    We agree that the non-voting status of State agency or State 
unit employees under Sec. 361.17(b)(2) of the proposed regulations 
does not apply to Council members representing the State's CAP 
pursuant to proposed Sec. 361.17(b)(1)(iii).
    Questions regarding Council representation of the section 121 
project directors have been raised frequently since the passage of 
the 1998 Amendments to the Act. Moreover, the commenters' concerns 
as to whether one project director can sufficiently represent the 
interests of several independent projects serving different 
populations of American Indians have generated the most debate. Yet, 
the requirement in proposed Sec. 361.17(b)(1)(ix) enabling one 
person to represent all section 121 project directors in the State 
came directly from section 105(b)(1)(ix) of the Act. This 
requirement appears to reflect an intent of Congress to minimize the 
burden on States and to ensure that the size of the Councils not be 
so large as to become unmanageable. Nevertheless, we urge the 
directors of section 121 projects in the same State to collaborate 
more extensively than they may have in the past and to work to 
ensure that their collective views are represented on the Council. 
We also note that neither the Act nor regulations prohibit the 
Governor from appointing to the Council more than one representative 
of the State's section 121 projects (or other groups) if warranted 
as long as the remaining composition requirements in the Act and 
regulations (e.g., the requirement that a majority of Council 
members be individuals with disabilities) are met. As for section 
121 projects that are ``headquartered'' in one State but serve those 
in another State, it is our understanding that to the extent this 
occurs, affected projects primarily serve American Indians with 
disabilities in the State in which the project is located and serve 
only a relatively small area in a neighboring State. We do not 
believe that the Council must include a representative of a section 
121 project serving American Indians with disabilities in the State 
if that project is primarily located, and serves those, in another 
State. In that instance, Sec. 361.17(b)(1)(ix) of the final 
regulations would apply only to the State in which the project is 
located. The Governor, however, always has the discretion to appoint 
to the Council a representative of an out-of-State project that also 
serves American Indians with disabilities in the Governor's State.
    Since the time that the Council requirements came into effect, 
questions regarding whether the same individual can fulfill more 
than one role on the Council have been raised often. In response, we 
consistently have taken the position that an individual may 
represent only one entity on the Council even though that same 
individual may qualify under more than one of the composition 
requirements. We recognize that some States have difficulty 
maintaining a sufficient pool of qualified individuals to serve on 
statewide Councils and that the 1998 Amendments to the Act added 
three new required members to the Council. Nevertheless, section 
105(b) of the Act establishes a minimum number of members for the 
Council, each of whom represents a specific component of the 
disability community. Because each member represents a different 
interest, sometimes one that is divergent from that of other 
members, we maintain that each organizational requirement must be 
met separately. Thus, a Council member who serves on the SWIB cannot 
represent both the SWIB and another organization on the Council.
    We agree with the commenters who pointed out the discrepancy 
between the Act and the regulations regarding the membership 
requirements that apply to a Council for a separate State agency 
that administers the VR program for individuals who are blind. These 
commenters correctly noted that the proposed regulations did not 
specify, as does the statute, that the majority of members of these 
Councils must be individuals who are blind. This omission was 
inadvertent, and we agree that it needs to be corrected in the final 
regulations.
    Changes: We have revised Sec. 361.17(b)(2) of the proposed 
regulations to clarify that the CAP representative is, in all 
instances, a voting member of the Council. In addition, we have 
modified Sec. 361.17(c) to reflect the requirement in section 
105(b)(4)(B) of the Act that a majority of the members on a Council 
for a separate State agency for the blind must be individuals who 
are blind.

Section 361.18(c)  Comprehensive System of Personnel Development--
Personnel Standards

    Comments: Some commenters expressed concern with the indication 
in the preamble to the NPRM that statewide ``multi-tiered'' 
personnel standards could be used by the State unit in establishing 
standards for its rehabilitation personnel. Other commenters 
suggested that the proposed regulations be revised to require that 
all rehabilitation counselors obtain a Master's degree consistent 
with the national certification standards for rehabilitation 
counselors.
    In addition, a number of commenters sought waiver or 
``grandfather'' provisions in the final regulations that would 
exempt current rehabilitation counselors and other professionals 
from the State's personnel standards. On a related point, some 
commenters asked whether currently employed rehabilitation 
counselors who do not meet the State unit's personnel standards can 
continue to serve as counselors while training to meet the standard.
    Additionally, several commenters viewed the requirement in the 
proposed regulations that the State unit develop a written plan for 
retraining, recruiting, and hiring staff to meet applicable 
personnel standards as unduly burdensome. Other commenters supported 
this requirement and suggested that the written plan be developed 
with input from the Council.
    Finally, several commenters suggested that RSA define the 
professional and paraprofessional disciplines for which a State unit 
must establish personnel standards, while others asked what 
standards the State unit should apply to professions or 
paraprofessions for which no certification or similar criteria 
exist.
    Discussion: The preamble discussion in the NPRM concerning the 
ability of State units to use the same multi-tiered personnel 
standards as those applied by other State agencies to its 
rehabilitation staff was intended to clarify the level of 
flexibility the proposed regulations give State units in ensuring 
that its personnel are qualified within the meaning of the Act. 
Typically, multi-tiered certification systems require rehabilitation 
counselors to reach a certain academic level depending on the amount 
of experience the individual has had in that field. As we indicated 
in the NPRM (65 FR 10623), because the Act clearly allows State 
units to base their personnel standards on applicable State 
standards, it is permissible for a DSU to apply the multi-tiered 
counselor certification criteria of, for example, the State Workers' 
Compensation program to DSU counselors if the counselors of both 
agencies perform similar functions. The Act gives State units that 
discretion, and that same discretion also prohibits requiring by 
Federal regulations that all State unit counselors obtain a Master's 
degree consistent with the national rehabilitation counselor 
certification standards as sought by some commenters. Nonetheless, 
as we stressed in the preamble to the NPRM, we encourage each State 
unit to ensure that its personnel standards promote quality among 
its counselors and other staff, and we caution State units not to 
employ minimally qualified individuals by routinely substituting 
``equivalent experience'' for higher-level degree criteria.
    The Act does not authorize ``grandfathering'' or the waiving of 
personnel standards for current staff. Rather, section 
101(a)(7)(B)(ii) of the Act compels the State unit, if its current 
personnel does not meet the ``highest requirements in the State'' 
(i.e., the highest entry-level academic degree needed for the 
applicable State or national certification, licensing, or 
registration requirements--see Sec. 361.18(b)(2)(i) of the final 
regulations), to retrain existing staff, as well as recruit new 
employees, to meet the personnel standards applicable to each 
profession.
    The written plan under Sec. 361.18(c)(ii) that describes the 
retraining, recruitment, and other efforts of a State unit whose 
current personnel standards do not conform to the highest 
requirements in the State is based on the requirement in the Act 
that directs the State to provide this information in its State 
plan. More importantly, however, we believe that the limited 
components of the written plan (e.g., retraining, recruiting, and 
hiring steps, timelines for those efforts, procedures for evaluating 
progress, etc.) are essential to ensuring that the State unit 
employs a fully qualified staff that is best able to meet the 
diverse needs of individuals with disabilities. Any burden 
associated with developing the plan, we believe, is caused by the 
intent of the Act. The narrow scope of required plan components is 
expected to provide States with a helpful framework for fulfilling 
their personnel development responsibilities and improving their 
service delivery capacity.
    As we have stated in the past, we recognize the many constraints 
faced by State agencies in securing a fully qualified staff, not the 
least of which is the time that it takes to

[[Page 4424]]

retrain existing staff. Thus, current counselors who, pursuant to 
the State unit's plan under Sec. 361.18(c)(1)(ii), are working 
toward applicable qualification standards can continue to perform 
their counselor functions. The Act establishes an expectation that 
rehabilitation counselors and other staff will become qualified 
consistent with the highest applicable personnel standards in the 
State. Accordingly, the requirements in the regulations are intended 
to ensure that the State unit can continue to serve persons with 
disabilities while it progresses as rapidly as possible toward the 
point at which all of its staff, both current and new hires, meet 
the highest qualifications that the State applies to their 
professions.
    We also emphasize the importance of the role of the Council in 
the area of personnel development. Section 361.18(a) of the final 
regulations requires that the Council, if it exists, have an 
opportunity to review and comment on the development of all plans, 
policies, and procedures necessary to meet the State unit's 
obligations under the comprehensive system of personnel development 
(CSPD). As with each of the Council's functions, we view the 
Council's input into the development of the State unit's personnel 
policies, procedures, and standards as vital toward ensuring that 
those efforts result in a State unit workforce that is fully capable 
of meeting the training and employment needs of persons with 
disabilities in the State.
    We decline to define the professional and paraprofessional 
disciplines for which a State unit must establish personnel 
standards, as some commenters requested. While a State unit must 
apply to its staff the highest personnel requirements that exist in 
the State and that apply to each profession, determining the types 
of professionals and paraprofessionals needed to effectively 
administer its VR program and establishing the scope of functions 
for each job are the responsibility of the State unit. It is the 
State unit that can best judge its staffing needs and establish 
staffing arrangements that meet the particular needs of that 
agency's service recipients. In the preamble to the NPRM, however, 
we did provide some guidance on the categories of professional and 
paraprofessional disciplines most closely associated with the VR 
program for which the State unit should give priority in developing 
both specific job criteria and appropriate qualification standards. 
Those professions include rehabilitation counselors, vocational 
evaluators, job coaches for individuals in supported employment or 
transitional employment, job development and job placement 
specialists, and personnel who provide medical or psychological 
services to individuals with disabilities.
    As a final matter, we note that if there are no State or 
national licensing, certification, or registration requirements for 
a given profession established by the State unit, then both the Act 
and the final regulations require the State to use other 
``comparable requirements'' (such as State personnel requirements) 
for that profession or discipline. The scope of these ``comparable 
requirements'' (e.g., degree criteria, work experience, etc.) that 
are applied to jobs for which no licensing or similar requirements 
exist is left to the reasonable judgement of the State unit.
    Changes: None.

Section 361.22  Coordination With Education Officials

    Comments: Some commenters opposed the requirement in the 
proposed regulations that the State unit complete the IPE for 
students eligible for VR services before they leave school. These 
commenters stated, for example, that the proposed requirement would 
be impracticable for State units to fulfill, would lead to rashly 
formulated IPEs, or would exceed applicable statutory requirements. 
Other commenters supported requiring completion of the IPE before 
the student leaves school and viewed the requirement in the proposed 
regulations as essential if transition planning is to prove 
effective.
    In addition, one commenter requested that the proposed 
regulations be revised to require that the formal interagency 
agreement between the State unit and educational agencies specify 
both the manner and the time in which State unit staff will 
participate in transition planning for students with disabilities. 
Another commenter suggested that each agreement include provisions 
for resolving disputes regarding the agencies' financial 
responsibilities in paying for transition services and for enabling 
students to retain assistive technology provided by schools that the 
student needs following transition.
    Discussion: The proposed requirement that State units provide 
for the development and completion of the IPE before students who 
are eligible for VR services leave the school setting was carried 
over from the previous regulations. As we have indicated from the 
time the previous regulations were published in 1997, we believe 
that requiring IPE completion before eligible students with 
disabilities leave school is entirely consistent with the emphasis 
on transition in both the Act and its legislative history (see 
Senate Report 102-357). That emphasis was only heightened by the 
requirement in the 1998 Amendments that State units increase their 
participation in transition planning and related activities. More 
importantly, requiring the IPE to be in place before the student 
exits school is essential toward ensuring a smooth transition 
process, one in which students do not suffer unnecessary delays in 
services and can continue the progress toward employment that they 
began making while in school. In fact, it is in support of that 
effort that we have made two clarifications in these final 
regulations: (1) that designated State agencies should be involved 
in the transition planning process as early as possible; and (2) 
that the IPE must be ``approved'' (i.e., agreed to and signed by the 
individual and the DSU) prior to the student leaving school, as 
opposed to simply ``completed'' as stated in the proposed 
regulations.
    We have determined it necessary to clarify in the final 
regulations steps that the designated State agency must take, at a 
minimum, when conducting the statutorily required outreach to 
students with disabilities. It is essential for the designated State 
agency to inform these students of the purpose of the VR program, 
the application procedures, the eligibility requirements, and the 
potential scope of services that may be available. This information 
should be provided as early as possible during the transition 
planning process in order to enable students with disabilities to 
make an informed choice on whether to apply for VR services while 
still in school.
    We are not aware that State units have had great difficulty in 
completing IPEs for students. As before, the final regulations 
require that if the State is operating under an order of selection, 
only the IPEs of those students that the State unit can serve under 
the order must be developed before the student leaves school. 
Moreover, we believe that State units will be even better prepared 
to fulfill this requirement as they become more active in transition 
planning for special education and other students with disabilities 
(e.g., those students receiving services pursuant to section 504 of 
the Act or the IDEA) and in generally coordinating with school 
officials.
    We believe, as did some commenters, that the extent to which the 
State unit should be involved in transition planning for individual 
students with disabilities should be based on the needs of the 
student. However, we also believe that it is important for the 
designated State agency to participate actively throughout the 
transition planning process, not just when the student is nearing 
graduation. Early involvement by the designated State agency can be 
very beneficial in terms of assisting the student to make the 
transition from school to employment. For this reason, these final 
regulations clarify that the designated State agency should become 
involved in the transition planning process as early as possible. 
The designated State agency and the State education agency should 
negotiate more specific provisions, as part of their interagency 
agreement, to ensure that the students' needs are met in a timely 
manner. Congress clearly envisioned that that approach be followed 
in developing the terms of the State's interagency agreement (see 
e.g., Conference Report 105-659, page 354). Also left to local 
discretion is the scope of components, other than those limited 
components specified in the Act and clarified previously, that 
should be included in the agreement. Some of the additional 
agreement items identified by commenters may be considered in that 
regard.
    However, in response to the commenter's suggestion that each 
agreement should include provisions for resolving disputes in paying 
for transition services, we note that State units are authorized to 
pay for only transition services for students who have been 
determined eligible under the VR program and who have an approved 
IPE. Thus, as long as those criteria have been met, and the IPE 
specifies those transition services necessary for the successful 
implementation of the IPE, we anticipate that disputes of the type 
raised by the commenter will not be prevalent.
    Changes: We have amended Sec. 361.22(a) of the proposed 
regulations to clarify that the

[[Page 4425]]

IPE for a student determined to be eligible for vocational 
rehabilitation services must be developed and approved before the 
student leaves the school setting and as early as possible during 
the transition planning process. In addition, we have amended 
Sec. 361.22(b)(4) of the proposed regulations to clarify information 
that must be provided by the designated State agency, at a minimum, 
when conducting outreach to students with disabilities, and we have 
clarified that outreach should begin as early as possible during the 
transition planning process.

Section 361.23  Requirements Related to the Statewide Workforce 
Investment System

    Comments: We received a great many comments on this section of 
the proposed regulations that raise important policy issues and 
questions of interpretation that relate not only to the proposed 
regulations, but also to WIA and the regulations in 20 CFR part 662.
    Most commenters requested more detail in the final regulations 
that elaborates on how the VR program is to fulfill the requirements 
in proposed Sec. 361.23(a). For example, several commenters asked 
that we specify in the final regulations those core services under 
WIA that the VR program is expected to provide in accordance with 
proposed Sec. 361.23(a)(1), while others asked that we explain which 
activities related to ``creating and maintaining'' the One-Stop 
system under Sec. 361.23(a)(2) are allowable under the VR program.
    Some of the commenters on this proposed section also urged us to 
identify in the final regulations certain restrictions in the Act 
(e.g., the order of selection requirements under section 101(a)(5)) 
that may affect the extent to which State units can contribute to 
the cost of One-Stop system services or other One-Stop system 
activities. Of critical importance to the final regulations, most 
commenters stressed, is the need to address the responsibility of 
all WIA partner programs to serve individuals with disabilities.
    Other commenters asked that we add to the One-Stop system 
responsibilities listed in proposed Sec. 361.23(a) other items that 
are necessary for DSUs to effectively participate with other partner 
programs of the One-Stop system, including methods for allocating 
costs between programs, methods for ensuring proportionality between 
the partner's financial participation in the One-Stop system and the 
resulting benefits it receives, and methods for resolving disputes 
regarding funding that may arise between partner programs.
    Several other commenters identified additional components that 
they suggested be included in the required cooperative agreements 
between the designated State agency and those entities administering 
other One-Stop system partner programs. In addition, some commenters 
asked whether the requirement that State units, through the 
cooperative agreements, promote participation by individuals with 
disabilities in the One-Stop system also requires that State units 
pay the cost of reasonable accommodations at the One-Stop system 
center or other locations.
    Discussion: As we discussed at some length in the preamble to 
the NPRM (65 FR 10620, 10621, and 10624), we restated in 
Sec. 361.23(a) of the proposed regulations the responsibilities of 
One-Stop system partners, including the VR program, that are 
described in the regulations implementing Title I of WIA (20 CFR 
part 662). That effort was intended solely to inform State units of 
the One-Stop system responsibilities to which they are subject under 
WIA. We also asked that commenters raise specific interpretive or 
policy questions related to these One-Stop system responsibilities 
so that we may address, through appropriate guidance, those most 
pressing matters that DSUs face as they participate in the One-Stop 
service delivery system. Most of the comments received on this 
section of the proposed regulations focus on those types of 
questions.
    Although we anticipate addressing in future guidance materials, 
and in cooperation with other appropriate Federal agencies, the 
workforce policy questions posed by the commenters, we do note that 
many of the issues raised are impacted by a number of key One-Stop 
system principles embedded in WIA, its implementing regulations, and 
these final regulations.
    First, participation by DSUs in the One-Stop system must be 
performed in a manner that is consistent with the legal requirements 
applicable to the VR program (i.e., the Act and these final 
regulations). Thus, the DSUs' participation in the cost of core 
services or any other One-Stop system activities cannot, for 
example, result in expenditures for services to individuals who do 
not meet the priority for services in the order of selection under 
which a DSU is currently operating (although the DSU can 
participate, as appropriate, in the cost of intake and other 
expenditures that would normally be borne by the DSU prior to 
determining eligibility and the individual's priority category under 
the State's order of selection; see the discussion in the following 
section of this analysis of comments for further information on the 
relationship between order of selection requirements and 
participation in One-Stop system activities.) The fact that DSUs 
must comply with the Act and the VR program regulations in the 
course of participating in the One-Stop system, we believe, was made 
clear in the proposed regulations, as it is in Title I of WIA and 
the regulations implementing that title.
    Compliance with the ADA and section 504 of the Act represents 
another key issue that directly impacts the One-Stop system. In sum, 
those laws obligate One-Stop system centers and their partners to 
make their services accessible to individuals with disabilities. 
Thus, we, along with the Department of Labor and many of the 
commenters, have emphasized that the legal responsibility for 
assisting persons with disabilities does not fall to the DSU alone. 
Consequently, individuals with disabilities are likely to receive 
services through a variety of arrangements (e.g., through the One-
Stop system center, through a combination of core services at the 
One-Stop system center and specialized VR services from the DSU, 
etc.) depending on the configuration and structure of the local One-
Stop system. Nonetheless, because the universal access principles 
reflected in the ADA and section 504 relate to the responsibilities 
of non-DSU entities and because these final regulations establish 
requirements for designated State agencies and designated State 
units administering VR programs, we do not believe this section 
should be revised to address the application of the ADA and section 
504 to the One-Stop system generally. Those responsibilities are 
fully addressed in WIA, particularly in section 188 of that act and 
its implementing regulations, 29 CFR part 37, which establish the 
civil rights protections that must be provided by the State and 
local workforce development systems.
    Many of the commenters also raised important issues related to 
collaboration between the DSU and its One-Stop system partners. In 
response, we note that those issues can, and should, be addressed 
through the development of the memorandum of understanding (MOU) 
governing the operation of the One-Stop system referred to in 
Sec. 361.23(a)(3) or through the cooperative agreements developed 
between these same parties under Sec. 361.23(b). In fact, some of 
the suggested items, including the methods for funding One-Stop 
system costs among partner programs, are addressed in the 
regulations implementing title I of WIA (see MOU requirements in 20 
CFR 662.300). Rather than specifying additional MOU or cooperative 
agreement components in these final regulations, we would urge DSUs 
and their One-Stop system partners to determine which components, 
other than those specified in the MOU requirements in 20 CFR part 
662 and the agreement components in Sec. 361.23(b) of these final 
regulations, would be most appropriate to address given State and 
local circumstances.
    We do believe it is necessary, however, to clarify one technical 
item related to the cooperative agreement under Sec. 361.23(b) that 
some commenters raised. The commenters appeared to interpret 
Sec. 361.23(b)(2)(i)(B) as requiring DSUs to pay for reasonable 
accommodations, auxiliary aids, and other services for persons with 
disabilities participating in the One-Stop system. Yet, that 
proposed section, which comes directly from section 
101(a)(11)(A)(i)(II) of the Act, states only that DSUs, in promoting 
meaningful participation by persons with disabilities in One-Stop 
system and other workforce investment activities through program 
accessibility, may provide training and technical assistance to its 
One-Stop system partners on how to provide reasonable accommodations 
and auxiliary aids and services. Neither the relevant statutory 
provision nor the proposed regulatory section questioned by 
commenters instructs DSUs to pay the costs of providing individuals 
with disabilities access to the One-Stop system. In fact, as 
previously noted, that responsibility falls to the One-Stop system 
pursuant to the ADA and section 504.
    Changes: None.

Section 361.31  Cooperative Agreements With Private Nonprofit 
Organizations

    Comments: None.
    Discussion: We wish to clarify the relationship between these 
final regulations

[[Page 4426]]

and potential agreements that DSUs may enter into with employment 
networks authorized under the recently enacted TWWIIA. In 
particular, we note that neither the Act nor the regulations, 
including the requirement in section 101(a)(24)(B) of the Act and 
Sec. 361.31 of the regulations that the DSU enter into cooperative 
agreements under the VR program with private nonprofit VR service 
providers, are intended to limit or prohibit the establishment of a 
fee-for-service or other reimbursement type agreement between DSUs 
and employment networks. Typically, fee-for-service arrangements 
enable private service providers to purchase from the DSU services 
that are needed by an individual with a disability who is not a VR 
program participant.
    On a related note, we also emphasize that nothing in the Act or 
these regulations would affect the ability of a DSU to serve as an 
employment network as authorized under TWWIIA.
    Changes: None.

Section 361.36  Ability To Serve All Eligible Individuals; Order of 
Selection for Services

    Comments: One commenter suggested that this section of the 
proposed regulations be strengthened to ensure that States preserve 
resources and provide needed services to individuals with 
significant disabilities, particularly as the State unit becomes 
more closely linked to, and participates in, the One-Stop system 
under WIA.
    Discussion: As we discussed in the previous section, we agree 
that the policy behind the order of selection requirements in the 
Act and regulations--to preserve the fiscal and personnel resources 
of the DSU so that those with the most significant disabilities can 
receive the full range of VR services that they need to become 
appropriately employed--must be safeguarded. However, we believe 
those safeguards are in place. As a required partner in the One-Stop 
system, the State unit must participate toward the development and 
maintenance of an effective One-Stop system at the local level. 
Moreover, Title I of WIA and the regulations implementing that title 
clearly condition that participation on compliance with the 
Rehabilitation Act and these regulations. Thus, the order of 
selection requirements in section 101(a)(5) of the Act and these 
regulations, or any other statutory or regulatory requirement 
applicable to the VR program, must be followed in the course of 
participating in One-Stop system activities. If the State is 
operating on an order of selection because it cannot serve all 
eligible individuals given its current level of VR program 
resources, then the State unit can pay only for services (i.e., 
services beyond intake and assessment that are necessary to 
determine whether an individual is eligible under the program and, 
if so, to determine the individual's priority category under the 
order of selection) for the individuals who qualify for services 
under that order, regardless of whether those services are provided 
within or apart from the One-Stop system center. The severity of an 
individual's disability or the cost of the individual's program of 
services can have no bearing on the scope of services the individual 
receives.
    Changes: We have made one clarifying change to Sec. 361.36(c) of 
the proposed regulations that was not based on public comment. This 
proposed section has been revised to clarify that a DSU that has 
developed but not implemented an order of selection must continue to 
provide the full range of services, as appropriate, to all eligible 
individuals.

Section 361.42  Assessment for Determining Eligibility and Priority 
for Services

    Comments: Several commenters recommended requiring in this 
section of the final regulations a written assessment for 
determining eligibility and priority for services by a qualified VR 
counselor employed by the DSU, as a means of emphasizing the 
importance of the professional opinion of the VR counselor. These 
commenters also proposed that this written assessment be included 
with the information given to the eligible individual during IPE 
development.
    Some commenters opposed the eligibility provisions stated in 
proposed Sec. 361.42(a)(i) and (ii) (i.e., determinations by 
qualified personnel that the applicant has a physical or mental 
impairment and the impairment constitutes or results in a 
substantial impediment to employment) on the basis that neither 
provision required that the applicable determination be made by a 
qualified employee of the DSU. These commenters stated that all 
eligibility-related determinations should be made by the DSU.
    Several commenters opposed Sec. 361.42(a)(3) of the proposed 
regulations, which implemented the statutory requirements regarding 
presumptive VR program eligibility for individuals receiving SSI or 
SSDI under the Social Security Act. These commenters stated that a 
categorical presumption of eligibility for this group of individuals 
could be misconstrued as creating an entitlement to VR services, 
could lead to efforts to extend presumptive eligibility 
inappropriately to other groups with common characteristics, and may 
undermine the individualized nature of the VR program. Some of the 
commenters asserted that a presumption of eligibility should be able 
to be rebutted by a showing that an individual receiving SSI or SSDI 
does not meet one or more of the eligibility criteria. Other 
commenters suggested that presumptive eligibility for these 
individuals should apply to only those Social Security recipients or 
beneficiaries seeking to earn wages as opposed to those intending to 
become homemakers.
    On the other hand, several commenters supported the proposed 
requirements regarding presumptive VR program eligibility for 
individuals receiving SSI or SSDI. Some noted that the relevant 
statutory provision, section 102(a)(3) of the Act, already has been 
effective in reducing the time expended on eligibility 
determinations, thereby allowing counselors and individuals to focus 
on IPE development and initiating needed services.
    Many commenters opposed the manner in which the proposed 
regulations implemented the passage in section 102(a)(3)(ii) of the 
Act that states that Social Security recipients are presumed 
eligible under the VR program ``provided that the individual intends 
to achieve an employment outcome.'' Specifically, these commenters 
believed that completion of the application process, as described in 
the proposed regulations, is insufficient evidence of the 
individual's intent to achieve an employment outcome. They urged 
that the applicable paragraph in the proposed regulations be 
stricken on the basis that DSUs make eligibility-related decisions 
not only at the time of application but throughout the VR process.
    Several commenters opposed authorizing DSUs, under 
Sec. 361.42(b) of the proposed regulations, to make interim 
determinations of eligibility. Most of these commenters questioned 
the statutory authority for the proposed section or viewed the 
provision as unnecessary since all eligibility determinations must 
be completed within 60 days from the time the individual applies for 
VR services. On the other hand, many commenters supported the 
proposed interim eligibility authority and the fact that using it 
rests with the discretion of the DSU.
    Several commenters supported proposed Sec. 361.42(c)(1) that the 
DSU will not impose, as part of the eligibility determination 
process, a duration of residence requirement that excludes from 
services any applicant who is present in the State. Two commenters 
suggested that the proposed language more closely track the Act by 
applying the prohibition not only to applicants but to any 
individual who is present in the State. Other commenters supported 
retaining specific language stating that a requirement for an 
applicant to be present in the State cannot be used to circumvent an 
individual's choice of an out-of-State service provider.
    We received many comments on proposed Sec. 361.42(e), which 
implemented new statutory requirements regarding the use of trial 
work experiences as part of the process for determining eligibility 
for VR services. Several commenters responded to our request in the 
preamble to the NPRM that they identify examples of trial work 
experiences, other than supported employment and on-the-job 
training, that DSUs might employ. Suggestions included contract or 
production work in the individual's own home, internships, unpaid 
work experiences, on-the-job evaluations, job shadowing, structured 
volunteer experiences in real work settings, and community-based 
work assessments with supports, among others.
    Many commenters suggested that the final regulations authorize a 
DSU to consider trial work that the individual performed previously, 
and that is documented, for purposes of meeting the requirement that 
it assess the individual's capacity to perform trial work before the 
individual is determined too severely disabled to achieve an 
employment outcome (and, therefore, ineligible). These commenters 
also recommended that the final regulations clarify that trial work 
experiences need not be used for all individuals with significant 
disabilities or in instances in which an individual's ability to 
achieve an employment outcome is not in question.
    A number of commenters opposed the requirement in proposed 
Sec. 361.42(e)(2)(i) that the DSU develop a written plan to assess 
the individual's capacity to perform in realistic

[[Page 4427]]

work settings. These commenters noted that the Act does not require 
a written plan and that the proposed provision could have the 
unintended effect of delaying services to the individual. Other 
commenters expressed concern that the trial work assessment for an 
individual appeared open-ended and, therefore, recommended that the 
regulations apply a specific time limit to the use of trial work for 
purposes of determining eligibility.
    One commenter questioned the authority for the proposed 
regulatory requirement that DSUs provide appropriate supports, 
including assistive technology devices and services and personal 
assistance services, to accommodate the rehabilitation needs of an 
individual while performing trial work. In contrast, another 
commenter stated that it is vital for DSUs to provide the supports 
and assistive technology that are needed for an individual during 
the trial work period.
    Several commenters recommended deleting proposed Sec. 361.42(h), 
which authorized the continued use of extended evaluations in 
instances in which trial work experience options have been exhausted 
or cannot be used by the individual. These same commenters suggested 
that the 18-month time limit that applied to extended evaluation 
under the current regulations be applied to trial work experience 
options. Some of the commenters also questioned the authority for 
keeping the extended evaluation option in the regulations, while 
others suggested that since trial work experiences were available to 
most individuals with significant disabilities, the extended 
evaluation authority is no longer necessary or is inconsistent with 
the Act's preference for finding most applicants eligible for the VR 
program. In contrast, a number of commenters supported retaining the 
extended evaluation requirements.
    Discussion: We agree that the professional opinion of the VR 
counselor is critical in assessing an individual's eligibility and 
priority for services. Both the Act and the regulations specify that 
qualified personnel must conduct assessments under the VR program. 
Although we suspect that most States develop written assessments, we 
do not think it is necessary to require by rulemaking that the 
assessment itself be in writing. Thus, State units may continue to 
require written eligibility assessments, or otherwise attest to an 
individual's eligibility and priority of service category under an 
existing order of selection, as they deem appropriate. We do note, 
however, that the DSU is required to document, in some fashion, 
support for determinations of eligibility as part of the record of 
services required under Sec. 361.47 of the regulations. Whether that 
documentation is the assessment itself or some other combination of 
information, again, lies with the discretion of the DSU.
    We believe that proposed Sec. 361.42(a)(1)(i) and (ii) and the 
references to ``qualified personnel'' in each of the provisions are 
consistent with the Act. We interpret the requirements in section 
103(a)(1) of the Act (requiring assessments for determining 
eligibility and rehabilitation to be conducted by ``qualified 
personnel'') and section 102(a)(6) of the Act (requiring eligibility 
determinations to be conducted by the designated State unit) the 
same as we have historically since neither statutory provision 
changed in the 1998 Amendments. Specifically, the Act authorizes 
qualified professionals, both DSU and non-DSU employees, to 
determine the existence of an impairment and to determine whether 
the impairment results in a substantial impediment to employment 
(i.e., whether the first two eligibility criteria have been met.) 
The requirement in section 102(a)(4)(B) of the Act regarding the use 
of determinations made by officials of other agencies also supports 
this position. Assuming the DSU can confirm that a qualified 
professional has determined that the individual has met those 
criteria, the DSU counselor then assesses whether the individual 
requires VR services to obtain and retain work in the individual's 
chosen field that is appropriate to his or her abilities (i.e., the 
third criterion of eligibility.) The individual is presumed to have 
met the fourth criterion--that the individual can benefit from VR 
services under Sec. 361.42(a)(1)(iv). This framework, which we 
believe is required by the Act, is intended to ensure that the DSU 
controls the eligibility process at the same time that it 
facilitates more timely assessments that allow for existing 
information from other sources to be taken into account.
    The 1998 Amendments specify that those who qualify for SSI or 
SSDI are presumed eligible for the VR program. As we discussed 
extensively in the preamble to NPRM (65 FR 10625 and 10626), we 
believe that this change was adopted in the 1998 Amendments to 
streamline eligibility and expedite necessary VR services for those 
Social Security recipients since each category of recipients already 
has met stringent disability criteria under the Social Security Act 
and clearly needs VR services in order to achieve appropriate 
employment. We do not believe that this presumption will be 
misconstrued as changing the nature of the VR program to a program 
under which individuals are entitled to services without pursuing a 
job. In fact, section 102(a)(3)(B) of the Act and Sec. 361.42(a)(5) 
of these final regulations specify that nothing in the presumptive 
eligibility requirement creates an entitlement to VR services, 
meaning that individuals with disabilities are not automatically 
entitled to VR services but, rather, must expect to achieve an 
employment outcome as a result of receiving those services. The 
final regulations implement that expectation by ensuring that all 
applicants, including those receiving SSI or SSDI, are informed of 
the employment-related nature of the VR program during the 
application process.
    We also disagree with the assertion that a categorical 
presumption of eligibility for individuals receiving SSI or SSDI 
will lead to categorical eligibility for other groups and undermine 
the individualized nature of the VR program. Prior to the 1998 
Amendments, disabled SSI recipients were statutorily presumed to 
have a physical or mental impairment that constituted a substantial 
impediment to employment (i.e., were presumed to have met the first 
two eligibility criteria in Sec. 361.42(a)(1) of the regulations), 
as well as a severe disability. Section 102(a)(3) of the 1998 
reauthorized Act expanded this presumption by giving presumptive VR 
program eligibility (i.e. a presumption that individuals meet all of 
the eligibility criteria under the VR program) to this same 
population. The presumption applies only to these persons and is not 
written to broadly cover other groups that do not qualify under the 
stringent disability-related criteria applied by the Social Security 
Administration. Also, the individualized nature of the VR program 
(i.e., that services are provided under an IPE to meet an 
individual's rehabilitation needs and assist an individual to 
achieve an employment outcome) is unaffected by this requirement 
that only addresses eligibility for services.
    As section 102(a)(3)(A)(ii) of the Act makes clear, a DSU can 
rebut the presumption that an SSI or SSDI recipient is eligible 
under the VR program if it can demonstrate by clear and convincing 
evidence that the individual is incapable of benefiting in terms of 
an employment outcome from VR services due to the severity of the 
individual's disability. In response to the commenter's contentions, 
we maintain that a presumption of eligibility can be rebutted only 
on this basis.
    We also do not believe that presumptive eligibility for SSI or 
SSDI recipients should be restricted to those seeking certain types 
of employment outcomes. As we have long required, eligibility 
requirements are not to be applied with regard to the type of 
expected employment outcome that the applicant seeks (see 
Sec. 361.42(c)(2)(ii)(B) of these final regulations). Thus, whether 
an individual seeks a self-employment, another wage-earning 
employment, a homemaker, or other outcome cannot be used as a factor 
in determining the individual's eligibility for VR services or 
affect the presumptive eligibility of an individual receiving SSI or 
SSDI.
    We believe that completion of the application process after the 
DSU has informed the individual that he or she must seek an 
employment outcome to receive VR services is sufficient evidence 
that any individual, including SSI and SSDI recipients, ``intends to 
achieve an employment outcome,'' as section 102(a)(3)(ii) specifies. 
While we understand that some commenters are concerned that disabled 
Social Security recipients in particular will seek VR services 
without intending to work, we find that concern unfounded. We 
referred in the preamble to the NPRM to an obvious fact--that all 
applicants for VR services, not only those who qualify for SSI or 
SSDI, must intend to work to receive VR services. Thus, ensuring 
that the DSU explains the employment-related nature of the VR 
program as part of the application process ensures that applicants 
understand what is expected of them before participating in the 
program. Thus, the proposed regulatory method of ensuring an 
individual's intent to work fulfills an expectation that applies to 
all applicants for VR services and streamlines, rather than hinders, 
the eligibility process for SSI and SSDI recipients, as the Act 
intends.
    Additionally, we disagree with the contention that an 
individual's intent to

[[Page 4428]]

achieve an employment outcome constitutes an additional eligibility-
related criterion that must be applied throughout the VR process. 
Eligibility is assessed at the outset of the rehabilitation process, 
at a point when the final regulations require that the DSU apprise 
individuals of the nature of the program. As always, if an 
individual becomes too severely disabled to achieve an employment 
outcome (as supported by clear and convincing evidence) or, for 
whatever reason, stops participating in the VR program, then the DSU 
need not continue serving that individual. That approach applies no 
less to SSI recipients or SSDI beneficiaries than it does to any 
other participant in the VR program. Yet, as long as the individual 
continues to participate in the program, there exists a presumption 
that the individual intends to work.
    We agree with those commenters who supported proposed 
Sec. 361.42(b) that would allow DSUs to make interim determinations 
of eligibility for individuals who the DSU reasonably believes will 
be eligible for VR services at the end of the statutory 60-day 
period for making eligibility decisions. We emphasize that this 
provision is an option for DSUs to expedite further the delivery of 
services to individuals while the DSU awaits information to permit a 
final eligibility determination. DSUs are not required to implement 
provisions for interim determinations of eligibility.
    We also agree with the commenters who stressed the importance of 
language in section 101(a)(12) of the Act that prohibits a State 
from establishing any residence requirement that excludes from 
services any individual who is present in the State. However, we 
believe that the proposed regulatory language sufficiently tracks 
the statutory requirement that was not changed by the 1998 
Amendments. Again, we believe it is important to clarify, as 
explained in the Senate Committee Report on the Rehabilitation Act 
Amendments of 1998, that the requirement for an individual to be 
present in the State in order to be eligible to receive services 
should not be interpreted in any way to circumvent an individual's 
choice of an out-of-State provider (Senate Report 105-166, p. 13). 
The committee further stated that, with regard to out-of-State 
placements, the requirement that an individual be present in the 
State must be imposed at the time of the eligibility determination 
and may not be used as a means of denying the continuation of 
services that are being provided in an out-of-State setting.
    As we explained more fully in the preamble to the NPRM (65 FR 
10626 and 10627), the Act specifies that DSUs must explore an 
individual's abilities, capabilities, and capacity to perform in 
work settings through the use of trial work experiences before it 
can demonstrate that an individual is too severely disabled to 
benefit from VR services in terms of an employment outcome and, 
consequently, is ineligible under the program. We believe that this 
requirement establishes the fairest standard for assessing whether 
an individual with a significant disability is in fact capable of 
achieving employment. We also appreciate the trial work examples 
that commenters shared and note that these types of work options 
(e.g., supported employment, on-the-job training, internships, job 
shadowing, structured volunteer experiences in real work settings, 
and community-based work assessments with appropriate supports) 
should be considered by others as they seek to expand the scope of 
trial work experiences available to applicants with significant 
disabilities. Nevertheless, we believe that Sec. 361.42(e)(2)(ii) of 
the regulations is sufficiently broad to encompass each of these 
examples and that a change to that provision is not necessary.
    In addition, we interpret the Act to clearly require DSUs to 
give individuals trial work experiences before deciding that an 
individual is ineligible under the VR program due to the severity of 
the individual's disability. Accordingly, a DSU cannot meet the 
requirement that it use trial work to assess eligibility by simply 
securing documentation that addresses the individual's success in 
performing work previously. Using documentation in that regard runs 
the risk of violating the scope of the mandate in section 
102(a)(2)(B) of the Act, specifically that trial work options be 
sufficiently varied and take place over a sufficient period of time 
for the DSU to either conclude that the individual is eligible for 
VR services or (based on clear and convincing evidence) that the 
individual is incapable of benefiting from the provision of VR 
services in terms of an employment outcome. Given the State units' 
expertise in conducting assessments, and without knowing the 
validity of the documentation that exists or the circumstances that 
might have changed since the time the individual previously worked, 
we believe that it is appropriate to require that, before 
determining that an individual cannot benefit from VR services, the 
DSU give the individual a variety of trial work options regardless 
of the individual's past work history or assessments.
    We do not believe that the written plan for providing trial work 
experiences as required in Sec. 361.42(e)(2)(i) of the regulations 
is inconsistent with the Act or will cause delays in service 
delivery. On the contrary, we believe that requiring a written plan 
to assess an individual's abilities, capabilities, and capacities to 
perform in realistic work settings is a logical means of fulfilling 
the requirements in section 102(a)(2)(B) of the Act. The written 
plan will ensure that the assessment process is conducted in a 
deliberate and well-formulated manner, thus giving an individual a 
full opportunity to demonstrate his or her capabilities and enabling 
the DSU to accurately gauge whether the individual can achieve 
employment. Also, we feel that any burden or minor delay associated 
with developing the written plan is clearly justified given that the 
individual risks being found ineligible, and precluded from 
receiving services altogether, if trial work options are not well-
planned and prove unsuccessful.
    We recognize the concerns of those commenters who requested that 
time limits be included in the regulations to ensure that trial work 
opportunities do not extend beyond a reasonable length. Yet, we 
believe the timeframes that are the most reasonable and appropriate 
already were built into the proposed regulations. Specifically, 
Sec. 361.42(e)(2)(iii) of the regulations requires that the DSU 
assess the individual's capacity to work in realistic work settings 
through the use of trial work experiences that are provided over a 
sufficient period of time for the DSU to determine either that the 
individual is eligible for VR services or that there exists clear 
and convincing evidence that the individual cannot benefit from VR 
services in terms of an employment outcome due to the severity of 
the individual's disability. Because trial work is intended to 
result in either a determination of eligibility or a determination 
of ineligibility that is sufficiently supported, trial work 
opportunities must be provided until the point that the DSU can 
reach one of these two conclusions. Thus, specific time periods that 
would serve to discontinue trial work requirements before the DSU 
has reached either result would serve to undermine the purpose 
behind those very same requirements.
    We do not believe that the requirement in Sec. 361.42(e)(2)(iv) 
of the regulations that the DSU provide individuals with appropriate 
support services, such as assistive technology devices and services 
and personal assistance services, during trial work falls beyond the 
scope of the Act. Section 102(a)(2)(B) of the Act states explicitly 
that trial work experiences are to be afforded ``with appropriate 
supports provided by the designated State unit.'' Clearly, assistive 
technology devices and services and personal assistance services are 
authorized services available to individuals pursuing employment, 
including supported employment, through the VR program (see e.g., 
section 102(b)(3)(B)(i)(I) of the Act). Accordingly, we believe it 
is entirely appropriate to interpret the DSU's responsibility to 
provide ``necessary supports'' during the trial work period to cover 
these same services.
    We also disagree that the authority concerning extended 
evaluations should be deleted in the final regulations. Although the 
Act clearly places a priority on using trial work experiences in the 
course of assessments, Congress recognized the need to allow for 
extended evaluations in those limited instances in which a real work 
test is impossible or the State unit has exhausted its trial work 
options without reaching a determination of eligibility. That point 
is reflected in the legislative history to the trial work provisions 
in the Act, specifically in Senate Report 105-166, pages 9 and 10.
    Changes: None.

Section 361.45  Development of the Individualized Plan for 
Employment

    Comments: Several commenters recommended that the final 
regulations clarify that the DSU is not required to pay for the 
costs of technical assistance in IPE development that is provided by 
sources other than DSU personnel. On the other hand, other 
commenters suggested that the DSU be required to pay for the costs 
of the technical assistance provided by non-DSU sources, asserting 
that such a requirement

[[Page 4429]]

would be consistent with the individual's opportunity to exercise 
informed choice in selecting DSU or non-DSU assistance for purposes 
of developing the individual's IPE.
    Many commenters sought more explanatory information in the final 
regulations that details the role of the qualified VR counselor 
employed by the DSU in developing and approving the IPE and IPE 
amendments and in reviewing the IPE annually. These commenters 
indicated that the ``diminished role for the DSU counselor'' in the 
proposed regulations was inconsistent with the Act and other 
regulatory requirements. The commenters also stated that a DSU-
employed counselor must conduct the required annual review of the 
IPE and assess the individual's progress toward achieving the 
identified employment outcome since the DSU is responsible for the 
proper delivery of services and the outcome of the individual's 
participation in the program. Other commenters suggested that we 
distinguish between the roles of the ``qualified vocational 
rehabilitation counselor'' and the ``qualified vocational 
rehabilitation counselor employed by the designated State unit'' by 
defining each term in the final regulations.
    Some commenters suggested that this section of the proposed 
regulations be revised to prohibit VR counselors employed, or 
previously employed, by an agency or organization that may provide 
services under an individual's IPE from assisting the individual in 
developing the IPE. These commenters urged that a prohibition of 
this type be implemented in order to guard against conflicts of 
interest on the part of the counselor that could otherwise 
jeopardize the individual's ability to exercise informed choice in 
selecting services and service providers included in the IPE.
    In addition, a number of commenters opposed Sec. 361.45(e) of 
the proposed regulations, which required the DSU to establish and 
implement standards, including timelines, for the prompt development 
of IPEs. These commenters viewed this proposed section as beyond the 
scope of the Act. Other commenters recommended either requiring by 
regulations a specific time period governing IPE development and 
implementation (e.g., 30 days from the date eligibility is 
determined) or defining the term ``timely'' as it applies to IPE 
development.
    Discussion: Pursuant to section 102(b) of the Act and 
Sec. 361.45(c) of the final regulations, the DSU must inform 
eligible individuals of the range of available options in obtaining 
assistance for purposes of developing the IPE (e.g., developing the 
IPE with DSU assistance, with non-DSU assistance, or on one's own). 
Since IPE development assistance from non-DSU sources is authorized, 
the regulations do not prohibit the DSU from supporting the costs of 
that assistance. At the same time, however, we agree that the DSU 
need not pay the costs of assistance provided by non-DSU sources if 
it so chooses. Thus, it falls within the discretion of the DSU to 
determine whether, and under what circumstances, it will pay for 
technical assistance in IPE development from sources other than the 
DSU.
    We believe that the proposed regulations accurately reflected 
the scope of functions that the Act reserves to the DSU, as well as 
the broad authority for non-DSU counselors to assist in the 
development and review of IPEs at the individual's discretion. As 
some commenters pointed out, a qualified VR counselor who is 
employed by the DSU must approve and sign the IPE and any amendments 
to the IPE (see section 102(b)(2)(C)(ii) and (b)(2)(E) of the Act). 
The proposed regulations followed the framework established by the 
Act, i.e., by enabling individuals to receive assistance in IPE 
development from whichever source (if any) that they choose and 
ensuring that the DSU maintains final IPE approval authority as the 
Act requires. We do not believe that additional regulatory 
provisions in this area, including definitions, are needed.
    While we note, as we did in the preamble to the NPRM, that the 
DSU also is responsible for ensuring that the individual's IPE is 
reviewed annually, we do not agree that that review must necessarily 
be conducted by a DSU counselor. As discussed in greater detail in 
the NPRM preamble (65 FR 10626 and 10627), Congress intended to 
distinguish between IPE functions that must be performed by a 
qualified VR counselor employed by the DSU and related functions 
that may be performed by a qualified VR counselor or other person 
who is not employed by the State unit. Thus, in addition to enabling 
individuals to secure assistance from outside the DSU in developing 
the IPE and IPE amendments, the DSU can meet its responsibility to 
ensure that the IPE is reviewed at least annually with the 
individual by conducting the review itself or, at the individual's 
discretion, by approving the results of a review appropriately 
conducted by a qualified VR counselor from outside the DSU.
    At the same time, however, we do appreciate the commenters 
concerns regarding the potential conflicts of interest, including 
potential limits on the exercise of informed choice, that may arise 
if the counselor or other person assisting the individual in 
developing (or amending) the IPE is employed or otherwise affiliated 
with an organization that may provide services to the individual 
under that IPE. However, without information indicating whether that 
problem exists or the resulting effects that an existing problem has 
on participants in the program, we are not inclined to restrict, 
through these final regulations, the individual's choice of 
assistants in developing the IPE. Nonetheless, we emphasize that 
DSUs must ensure that individuals are given full opportunities to 
exercise informed choice in the selection of services and service 
providers consistent with the requirements of section 102(d) of the 
Act and Sec. 361.52 of these final regulations. Accordingly, we 
would expect DSUs to address any situation, if it arises, in which 
it believes that a counselor employed by a service provider is 
unduly influencing an individual during IPE development to obtain 
services through that counselor's employer without providing the 
individual with sufficient choices.
    We maintain that requirements in Sec. 361.45(e) regarding DSU 
standards, including timelines, for the prompt development of IPEs 
are entirely consistent with the Act. In particular, section 
101(a)(9) of the Act requires that the individual's IPE be developed 
and implemented ``in a timely manner'' subsequent to the 
determination of eligibility. In fact, both this regulatory 
requirement and the statutory provision on which it is based precede 
the 1998 Amendments. We continue to believe that the regulatory 
standards and timelines called for under Sec. 361.45(e) of the 
regulations are necessary to guard against delays in service 
delivery that are, in turn, caused by delays in the IPE development 
process. We emphasize that DSUs need not meet this requirement by 
establishing an arbitrary time limit to apply to the development of 
all IPEs. Instead, State units are expected to develop general 
standards to guide the timely development of IPEs and, as part of 
those standards, flexible timelines that take into account the 
specific needs of the individual.
    Changes: None.

Section 361.47  Record of Services

    Comments: Some commenters generally supported the modifications 
to record of services requirements that we proposed in the NPRM. One 
commenter supported the new flexibility given to DSUs in determining 
the sources of documentation it will use to meet the required 
components of the record of services, but asked that RSA identify 
minimum documentation types in the final regulations. Several 
commenters opposed the expansion of the service record requirements 
beyond those in the previous regulations.
    Several other commenters asked that we clarify the scope of 
Sec. 361.47(a)(7) of the proposed regulations, which required 
documentation in the service record describing the extent to which 
the applicant or eligible individual exercised informed choice 
regarding assessment services and regarding the employment outcome, 
VR services, and other components of the IPE. Some commenters 
suggested that this proposed requirement be replaced by a provision 
requiring simply that the DSU document that the individual was 
provided an opportunity to exercise informed choice. Other 
commenters stated that it would be difficult to meet the proposed 
requirement in instances in which the DSU is not directly involved 
in the development of the IPE.
    Many commenters opposed the newly proposed Sec. 361.47(b), which 
would require that the DSU consult with the State Rehabilitation 
Council in determining the type of documentation that it will 
maintain for each applicant and eligible individual. These 
commenters believed that the proposed provision would expand the 
functions of the Council beyond those functions required by the Act. 
Due to the voluntary nature of the Council, the commenters asserted, 
it would be inappropriate to expect members of the Council to be 
involved in the DSU's day-to-day operations, including the setting 
of documentation requirements. Other commenters supported requiring 
the Council to be involved in establishing the DSU's documentation 
requirements.
    Discussion: We revised Sec. 361.47(a) of the previous 
regulations to identify minimum

[[Page 4430]]

documentation standards that will enable DSUs to demonstrate that 
certain service delivery requirements, as they apply to applicants 
and eligible individuals participating in the VR program, have been 
met. While we identified in this proposed section those critical 
service delivery requirements that must be documented, we sought to 
provide greater flexibility to DSUs in determining the manner in 
which they would comply (i.e., determining the types of 
documentation each would use to comply) with the stated 
requirements. We believe that the proposed regulations provided that 
flexibility, while identifying only those requirements of the 
rehabilitation process that are most necessary to address in the 
record of services. Those proposed requirements that were not drawn 
from the previous regulations represented important aspects of the 
1998 Amendments that we believe the DSU, and we, must monitor to 
ensure the proper implementation of the program.
    In addition, we believe that Sec. 361.47(a)(7) of the proposed 
regulations established an appropriate standard for DSUs to meet in 
documenting compliance with a most critical aspect of the VR 
program--giving individuals the opportunity to exercise informed 
choice throughout the rehabilitation process. Accordingly, we do not 
believe that a simple statement that the applicant or eligible 
individual was provided an opportunity to exercise informed choice 
reflects either the scope or the importance of the choice-related 
requirements in the Act. Among those requirements, section 102(d) of 
the Act and Sec. 361.52 of the final regulations specify that 
applicants and eligible individuals must be given opportunities to 
exercise informed choice in selecting assessment services and in 
selecting an employment outcome, the VR services needed to achieve 
that outcome, the entities providing services, and the methods used 
to secure the services. Thus, given the emphasis accorded choice 
under the Act, we believe it is appropriate and prudent to require 
documentation describing the extent to which the applicant or 
eligible individual exercised informed choice in accordance with the 
Act's requirements. As for those instances in which an individual 
elects to develop an IPE without the DSU's assistance, we would 
expect the DSU to inform individuals about the availability and 
opportunities to exercise informed choice (as it is required to do 
under section 102(d)(1) of the Act), obtain information from the 
individual on the extent to which he or she exercised choice during 
IPE development, and supplement that information with additional 
information available to the DSU in order to meet the documentation 
requirement in Sec. 361.47(a)(7).
    As we stated in the preamble to the NPRM, we think it is 
necessary that the DSU consult with the Council, if it has a 
Council, in determining the type of documentation that the DSU will 
maintain in the record of services for each applicant and eligible 
individual. Section 101(a)(16)(B)(v) of the Act requires the State 
unit to take into account, in connection with matters of general 
policy arising in the administration of the State plan, the views of 
the Council and other specified groups. The document types that will 
comprise the records of services maintained by the DSU relate 
directly to the DSU's ability to demonstrate its compliance with 
important service provision requirements in the law, as well as its 
ability to justify its decisions (e.g., eligibility determinations) 
regarding the individual's participation under the VR program. We 
maintain, therefore, that the DSU's documentation standards for 
fulfilling the record of services requirements in this section of 
the regulations constitute a policy of general applicability on 
which the Council's input is required. Moreover, we do not believe 
that the consultation required under this section of the regulations 
expands the Council's functions beyond the scope of the statute, 
particularly the broad scope of review, analysis, and advisory 
functions carried out by the Council under section 105(c)(1) of the 
Act.
    Changes: None.

Section 361.48  Scope of Vocational Rehabilitation Services for 
Individuals With Disabilities

    Comments: Several commenters requested that we revise 
Sec. 361.48(j) of the proposed regulations to more clearly describe 
the type of interpreter and other communication access services that 
are authorized under the program. Other commenters requested 
clarification regarding the scope of assistance for eligible 
individuals seeking self-employment, telecommuting, or business 
ownership outcomes that is authorized under proposed Sec. 361.48(s). 
One of these commenters requested guidance on how these services 
relate to the entrepreneurial services available through the State 
workforce investment system.
    Discussion: We agree with the suggestion that the scope of 
authorized interpreter services under proposed Sec. 361.48(j) needs 
to be clarified in the final regulations. In particular, we believe 
that we need to clarify that sign language interpreter and oral 
interpreter services are authorized under that section.
    Regarding Sec. 361.48(s), we have received several inquiries, in 
addition to the noted comments, asking us to clarify the scope of 
resources that are authorized to be provided through the statewide 
workforce investment system in order to clarify the extent of the 
State unit's obligation under proposed Sec. 361.48(s). This 
provision restates section 103(a)(13) of the Act.
    Section 112 of Title I of WIA requires that each participating 
State submit to the Department of Labor a State plan that describes 
its statewide workforce investment system and the employment and 
training activities that it will support with WIA Title I funds. The 
specific employment and training activities included in the plan are 
determined individually by each State, depending on the needs and 
economic conditions in that State. Therefore, the scope of resources 
authorized under the VR program for self-employed persons, 
telecommuters, and small business owners will depend on the extent 
to which the State's workforce development system, as described in 
the State plan under section 112 of WIA, provides support to 
individuals pursuing that type of work. Given the variances in 
workforce investment systems across the States, we do not believe 
that it is practical to revise the language in proposed 
Sec. 361.48(s) that aligned the resources authorized under the VR 
program with those that the State makes available under WIA.
    Finally, we believe it is important to note that the list of 
authorized services in this section of the regulations is not 
exhaustive and that Sec. 361.48(t) specifically authorizes ``other 
goods and services'' that the DSU and individual determine to be 
necessary for the individual to achieve an employment outcome.
    Changes: We have revised Sec. 361.48(j) of the proposed 
regulations by referring specifically to sign language interpreter 
and oral interpreter services as included within the scope of 
authorized services for individuals who are deaf or hard of hearing.

Section 361.50  Written Policies Governing the Provision of 
Services for Individuals With Disabilities

    Comments: One commenter requested changes to Sec. 361.50(b)(1) 
of the proposed regulations, which authorized States to establish 
preferences for in-State services under certain conditions. The 
commenter contends that this provision, which was included in the 
previous regulations, has been subject to misuse and 
misinterpretation. In response, the commenter suggests restricting 
DSU preferences for in-State services to instances in which the in-
State service is equivalent to and likely to have the same results 
as an out-of-State service.
    Discussion: Section 361.50(b)(1) authorizes a DSU to establish a 
preference for in-State services in instances in which necessary 
services are available both within and outside the State. The 
preference (i.e., the State not taking responsibility for the costs 
of an out-of-State service that exceeds the costs of the same 
service provided in-State) is dependent on the in-State service 
meeting the individual's rehabilitation needs. For that reason, we 
believe that the provision establishes an appropriate standard, one 
that has the same effect as that of requiring equivalency between 
in-State and out-of-State services.
    Changes: None.

Section 361.51  Standards for Facilities and Providers of Services

    Comments: Many commenters expressed concern about the omission 
in the proposed regulations of the designated State unit's current 
regulatory responsibility to issue minimum standards for facilities 
and service providers. The commenters believed that omitting these 
requirements from the final regulations will have the effect of 
holding community providers and facilities to a lower standard than 
that which must be met by the State agency administering the VR 
program. The concern was that VR program participants receiving 
services from private providers would be adversely affected. These 
commenters encouraged us to maintain the current regulatory 
standards in the final regulations.
    The commenters on this section were concerned mostly about the 
proposed

[[Page 4431]]

removal of the previous regulatory provisions requiring providers of 
vocational rehabilitation services to use qualified personnel. For 
example, one party stated that financial constraints on community 
facilities may reduce a facility's capacity to maintain the same 
qualified personnel standards that section 101(a)(7) of the Act 
imposes on State agencies; nevertheless, this commenter believed 
that regulatory requirements should be developed to ensure a 
reasonable level of professional qualifications at provider 
facilities. Other commenters stated that individuals who are blind 
or visually impaired in particular, and all individuals with 
disabilities generally, must be assured that private facilities and 
providers of services under the VR program have proper 
qualifications beyond native language skills and the ability to use 
appropriate modes of communication (two current standards that were 
retained in the proposed regulations). In addition, many of the 
commenters expressed concern that the proposed regulations, unlike 
the previous regulations, did not require VR service providers to 
have adequate and appropriate policies and procedures to prevent 
fraud, waste, and abuse.
    Discussion: We had proposed to remove the regulatory 
requirements governing personnel and other standards for providers 
of VR services on the basis that the explicit statutory authority 
supporting those requirements was removed by the 1998 Amendments. 
Specifically, the 1998 Amendments removed provisions previously 
contained in section 12(e) of the Act that had required the 
Secretary to promulgate regulations pertaining to the selection of 
VR services and VR service providers. In accordance with the prior 
Act, Sec. 361.51 of the previous regulations included procedures to 
prevent fraud, waste, and abuse among service providers and 
procedures to ensure that service providers complied with applicable 
standards, such as those related to qualified personnel. The 
requirements in Sec. 361.51 of the proposed regulations that were 
retained from the previous regulations relating to the accessibility 
of facilities, affirmative action for qualified individuals with 
disabilities, and special communication needs personnel also were 
retained in the 1998 Amendments.
    We have interpreted Congress' removal of standards governing 
personnel and fraud, waste, and abuse from the Act as intended to 
give States greater discretion in determining how best to ensure 
that service providers used by the DSU are capable of providing 
necessary VR services and meeting the needs of VR program 
participants. In other words, Congress determined that States could 
ensure the quality of personnel and administrative efficiency among 
the service providers it uses by following applicable State rules. 
We want to emphasize that removing this particular requirement from 
the final regulations does not absolve State units from ensuring 
that entities providing services under the VR program meet 
applicable State laws that impose personnel standards and other 
safeguards on parties providing services under State-administered 
programs. We believe that this responsibility of the DSU, as well as 
the DSU's general responsibilities under OMB Circular A-87 and the 
Education Department General Administrative Regulations (EDGAR) to 
administer the VR program and the expenditure of VR program funds 
efficiently and effectively, ensures that the removal of previous 
regulatory standards for service providers will not have an adverse 
impact on the program.
    Changes: None.

Section 361.52  Informed Choice

    Comments: As with proposed Sec. 361.5(b) discussed previously, a 
number of commenters requested that we define the term ``informed 
choice'' in this section of the final regulations.
    Another commenter suggested that this section of the proposed 
regulations be revised to ensure that participants in the VR program 
are able to exercise informed choice in selecting their vocational 
rehabilitation counselor. Specifically, the commenter suggested that 
participants, prior to selecting a counselor, be given a list of 
counselors in the local office of the State unit, a statement of the 
counselors' qualifications, and the opportunity to interview a 
number of counselors.
    Other commenters suggested that DSUs make available to 
individuals information concerning the outcomes that individuals 
achieve in working with specific service providers. The commenters 
asked that this information be included in the scope of information 
that DSUs must provide individuals under Sec. 361.52(c). Other 
commenters proposed revisions to Sec. 361.52(d), which identifies 
sample methods or sources of information that the DSU may use to 
make available required information on services and service 
providers. Specifically, one commenter requested that DSUs make 
available to individuals information on nationwide services and 
service providers, as well as service-related information issued by 
national consumer groups.
    Discussion: We have long been asked to define the term 
``informed choice'' in regulations and have refrained on the basis 
that the current regulations establish appropriate guidelines 
governing the informed choice process, while leaving some discretion 
to DSUs, in conjunction with their Councils, if they have Councils, 
to determine how best to secure information and make that 
information available to participants so that they may exercise 
choice. The 1998 Amendments give even greater emphasis to informed 
choice, specifically in section 102(d), which identifies each of the 
stages at which choices must be given (essentially all stages of the 
rehabilitation process), requires the DSU to inform individuals 
about the availability of and the opportunity to exercise informed 
choice, and requires that the DSU assist individuals as is necessary 
so that they may make informed choices. We believe that this 
proposed section of the regulations sufficiently reflected the 
significant scope of the choice provisions in the Act and retained a 
number of key portions from the previous regulations that serve to 
guide DSUs in developing their choice-related policies. We again 
emphasize the crucial role that the Council must play in that 
regard.
    Although we maintain that, at this point, defining ``informed 
choice'' in the regulations would not be appropriate, we have 
established additional guidance materials designed to facilitate the 
choice process, most notably as part of the RSA Monitoring Guide for 
FY 2000. We intend to develop additional policy directives that will 
also assist in that effort.
    Section 361.45 of the regulations, which implements section 
102(b)(1) of the Act, specifies the range of options available to 
individuals in securing assistance in developing their IPEs, 
including assistance provided by DSU or non-DSU counselors or from 
other sources. However, neither that provision nor the broad choice 
requirements in section 102(d) of the Act establish a basis for 
requiring DSUs to provide individuals with their choice of VR 
counselors. At the same time, we note that the Act and the final 
regulations do not prevent a State from giving individuals the 
opportunity to exercise informed choice in selecting counselors. RSA 
guidance to the States (Program Assistance Circular 88-03, dated 
June 7, 1988) underscores the importance of an effective counseling 
relationship between the applicant or eligible individual and the 
DSU counselor. Thus, we would urge DSUs, taking into account 
caseload levels and other staffing considerations, to assign 
counselors to individuals in a manner that they believe will result 
in a most effective match. Given the obvious effect that that match 
has on the successful rehabilitation of the individual, we also 
indicate in the guidance that, if an individual requests a change in 
counselor and the request is denied, the individual can appeal the 
determination through the DSU's due process procedures.
    Section 361.52(c) of the proposed regulations listed the minimum 
scope of information that State units were required to provide to 
individuals, or assist the individual in acquiring, to enable the 
individual to make informed choices about the services, service 
providers, and outcome identified in the IPE. We agree with the 
commenter that the minimum information related to services and 
service providers specified in this section (e.g., cost, consumer 
satisfaction, qualifications, degree of integration, etc.) also 
should mention the types of outcomes that individuals have achieved 
in working with certain providers.
    Section 361.52(d) identifies specific methods and sources of 
information that the DSU may use to provide individuals with 
sufficient information about services and service providers. Since 
this provision is not a comprehensive listing of methods and 
sources, we note that DSUs and individuals may use any other methods 
and sources of information that are available to enable the 
individual to exercise choice. We agree that participants and State 
units may benefit greatly by securing information from national 
consumer groups or other national organizations with specialized 
expertise in particular disabilities, rehabilitation methods, and 
services. In addition, methods involving experiences that 
participants may use to gain information about types of employment 
outcomes, services, and service providers may prove helpful. We 
encourage

[[Page 4432]]

DSUs to assist individuals in obtaining useful information from many 
other appropriate sources.
    Changes: We have revised Sec. 361.52(c) of the proposed 
regulations to clarify that information and assistance provided 
under that section also must assist individuals in exercising 
informed choice among assessment services. In addition, we have 
included service provider outcomes in the scope of information 
relating to the selection of vocational rehabilitation services and 
service providers. We have deleted the terms ``local'' and ``state 
and regional'' from Sec. 361.52(d) and have added references to 
methods involving visiting or experiencing various settings to the 
list of potential methods or sources of obtaining information.

Section 361.53  Comparable Services and Benefits

    Comments: One commenter expressed concern that the requirement 
in the proposed regulations that DSUs provide services to an 
individual while waiting for identified comparable services and 
benefits to become available may serve as a disincentive for 
individuals to pursue the alternative benefits or services at the 
appropriate time. The commenter recommended that DSUs be able to 
discontinue services if an individual refuses to pursue the 
comparable benefits or services.
    Another commenter noted that the proposed regulations did not 
include the statutory exemption in section 101(a)(8)(A)(ii) of the 
Act that states that awards and scholarships based on merit are not 
considered comparable services and benefits under the program.
    Discussion: Both section 102(b)(3)(E)(ii) of the Act and 
Sec. 361.46(a)(6)(ii)(C)) of the regulations require that the IPE 
identify the individual's responsibilities with regard to applying 
for and securing comparable services and benefits. Thus, the law 
anticipates that State units and individuals will work out the 
extent of those responsibilities through the IPE development 
process. For that reason, we do not believe that Sec. 361.53(c)(2), 
which is unchanged from the previous regulations, would create the 
disincentive envisioned by the commenter as long as the individual 
is fully apprised of, and is assisted in fulfilling, his or her 
responsibilities in securing other services once they become 
available.
    We recognize that this section of the proposed regulations did 
not refer to the statutory exception to comparable services and 
benefits for scholarships and awards based on merit. However, this 
exemption is addressed in the definition of the term ``comparable 
services and benefits'' in Sec. 361.5(b)(10). We think the exception 
is best addressed in the definition itself since it is the 
definition that specifies the scope of comparable services and 
benefits under the program.
    Changes: None.

Section 361.54  Participation of Individuals in Cost of Services 
Based on Financial Need

    Comments: Many commenters supported the proposed expansion of 
those services that would be exempt from State financial needs 
tests, meaning that individuals could not be required to contribute 
to the cost of those services. One commenter suggested that the 
proposed exemption of interpreter services, reader services, and 
personal assistance services from financial needs tests be limited 
to the provision of those services during the assessment phase of 
the VR process. Another commenter supporting the proposal asked that 
we also emphasize that the DSU still must seek and use comparable 
services and benefits to pay for exempted services.
    In addition, in response to our request for comments on the 
appropriate scope of services that should be exempted from financial 
needs tests, a number of commenters requested that the proposed 
listing be expanded to specifically include assistive communication 
devices, rehabilitation engineering services, and other access-type 
services.
    Other commenters strongly opposed the proposed expansion of the 
list of services exempted from financial needs tests under the prior 
regulations. Some of these commenters stated that the proposed 
expansion would undermine the DSU's longstanding option of 
considering the financial need of program participants and would 
weaken the DSU's ability to conserve VR program funds.
    In addition, many commenters supported the proposed prohibition 
in the NPRM on applying financial needs tests to eligible 
individuals receiving SSI or SSDI. Other commenters supported 
prohibiting the application of financial needs tests only to 
individuals receiving SSI since SSI eligibility is based on the 
individual's financial need as opposed to SSDI beneficiaries who may 
have assets that they could contribute to the cost of vocational 
rehabilitation services.
    A significant number of commenters opposed the proposed 
exemption of SSI recipients and SSDI beneficiaries from the DSU's 
financial needs assessments on the basis that DSUs often consider 
the resources of the individual's entire household, as opposed to 
those of the individual only, in determining the level of resources 
the individual must contribute to the program of VR services. While 
these commenters agreed that DSUs could disregard an individual's 
actual SSI or SSDI cash payment, the commenters recommended that 
DSUs be able to consider the overall financial status of the 
individual and the individual's household when assessing the 
individual's financial need under the VR program.
    Discussion: In the NPRM, we proposed to expand the scope of 
services exempt from State financial needs tests under the prior 
regulations to include certain services (i.e., interpreter, reader, 
and personal assistance services) needed to participate in the VR 
program, as well as any service needed by a recipient of SSI or 
SSDI.
    The purpose of the proposal to exempt from State financial needs 
tests interpreter, reader, and personal assistance services was to 
ensure access to the VR program. As we discussed in the preamble to 
the NPRM (65 FR 10629), the additional services that we proposed 
excluding from State financial needs tests enable individuals to 
participate in training or employment-related services that they are 
seeking through the VR program. Typically, individuals do not apply, 
nor are they determined eligible, under the VR program solely to 
receive these access-type services. Rather, these services are 
provided in conjunction with employment and training services sought 
by the individual participating in the VR program. In fact, the 
distinguishing feature of these access services is that 
participation in the VR program is not possible without these 
services being afforded. Thus, placing an additional burden on the 
individual to participate in the cost of accessing the VR program, 
in our view, is inappropriate and contrary to both the purpose of 
the VR program and the principles in section of 504 of the Act and 
the ADA, which safeguard participation by persons with disabilities 
in federally funded (under section 504) or public (under the ADA) 
programs.
    As many of the commenters pointed out, we realize that access-
type services other than the three additional services that the NPRM 
would have exempted from financial needs tests (i.e., interpreter, 
reader, and personal assistance services) clearly exist and that 
individuals might need those services in order to participate in the 
VR program. In light of the extensive public comment we received on 
that point, and the fact that the limited scope of exempted services 
in the proposed regulations would not ensure that persons with 
certain disabilities are able to participate in the VR program, we 
have modified the proposed regulations to more clearly reflect the 
DSU's responsibility to ensure that all persons with disabilities do 
not incur the disability-related costs of accessing the VR program. 
Specifically, the final regulations prohibit the application of 
State financial needs tests to the provision of any auxiliary aid or 
service that would be necessary under section 504 of the Act or the 
ADA in order for an individual with a disability to participate in 
the VR program. Thus, the final regulations, in effect, ensure that 
individuals are able to receive, at no additional cost to 
themselves, aids and services to which they are already entitled 
under section 504 or the ADA.
    We note that interpreter and reader services--two services 
proposed to be exempt from financial needs tests in the NPRM--
generally would be covered under the section 504- and ADA-based 
standard in the final regulations if those services are needed in 
order for the individual to access other VR services. In addition, 
the final regulations, like the NPRM, identify personal assistance 
services as a separate category of services exempt from financial 
needs tests. While personal assistance services, as defined in the 
VR program regulations, might not necessarily be provided by public 
programs under section 504 or the ADA, those services are often 
critical for individuals with significant disabilities to be able to 
access employment and training under the VR program. As we indicated 
in the preamble to the NPRM, we believe it is important to exempt 
these services from financial needs tests as well. We also believe 
that retaining from the NPRM the exemption for personal assistance 
services will remove a significant disincentive toward pursuing

[[Page 4433]]

employment for those with the most significant disabilities.
    We also note, however, that the final regulations do not alter 
the State unit's responsibility to seek comparable services and 
benefits that can meet the individual's interpreter, reader, 
personal assistant, or other access needs. Nor does it affect 
entities outside of the DSU from meeting their responsibilities 
under section 504 of the Act, the ADA, or other laws. In fact, we 
expect that some of those entities are likely to be public agencies 
with which the State unit is required to enter into an interagency 
agreement in order for both parties to fulfill their 
responsibilities toward individuals with disabilities (see 
Sec. 361.53(d) of the final regulations).
    With regard to the proposed prohibition on applying financial 
needs tests to individuals who receive SSI or SSDI, we continue to 
believe that it is appropriate to exempt those persons from DSU 
financial needs tests given the Act's emphasis on streamlining 
access to VR services for disabled Social Security recipients. 
Moreover, as we discussed in the preamble to the NPRM (65 FR 10629), 
this change to the prior regulations facilitates the primary goal 
behind referring SSI recipients and SSDI beneficiaries to the VR 
program--supporting their efforts (and reducing disincentives) to 
pursue gainful employment and no longer require Social Security 
support.
    Our rationale for exempting individuals receiving SSI benefits, 
or a combination of SSI and SSDI benefits, from State-imposed 
financial needs tests is further supported by the fact that these 
persons already have gone through a rigorous, federally mandated 
financial needs test that is typically more restrictive than those 
tests employed at the State level. To qualify for SSI, individual 
recipients must have very limited, if any, monthly income--
individual or household--or other assets. These individuals 
generally live at or below the federally established poverty level. 
Consequently, SSI recipients clearly have a limited ability to 
contribute to the costs of VR services. Requiring these same persons 
to undergo an additional financial needs test at the State level 
would serve only to unnecessarily delay the provision of VR 
services.
    On the other hand, the rationale behind exempting from DSU 
financial needs tests individuals receiving SSDI benefits alone is 
based on three critical points. First, SSA, as a matter of policy, 
has deemed it necessary to award SSDI beneficiaries monthly cash 
assistance due to their inability to work. While it is true that 
SSDI benefits are awarded on the basis of earnings and years worked 
as opposed to extreme financial need, SSA has determined that these 
individuals can no longer work due to their disabilities and, 
therefore, cannot earn income to support themselves or their 
families. SSDI payments are intended to cover a person's living 
expenses. Once a person achieves an employment outcome earning 
sufficient wages, as determined by SSA, the individual would be 
removed from the SSDI rolls.
    Second, many State and Federal agencies currently are working to 
remove as many disincentives as possible for individuals with 
disabilities, including individuals with significant disabilities 
receiving Social Security benefits, to return to work. For example, 
Congress has adopted changes to Social Security laws not to penalize 
persons (i.e., not to eliminate or reduce Social Security benefits, 
including health care coverage) for working since individual's wages 
are often insufficient to cover costly medical and other living 
expenses. Previously, many individuals with disabilities chose to 
remain on SSDI, at Federal expense, rather than risk losing health 
care coverage. Imposing a financial needs test on this same 
population that is seeking VR services in order to achieve an 
employment outcome, in effect, creates an additional disincentive to 
work and could adversely affect the results sought through the 
revised Social Security laws and other reforms.
    Third, it is important to note that SSA reimburses State VR 
agencies for the costs incurred in serving an SSI or SSDI recipient 
when that individual achieves an employment outcome (i.e., 
substantial gainful activity under Social Security laws) for a 
specified period of time. Thus, as far as those SSI and SSDI 
recipients who successfully achieve employment outcomes under the VR 
program are concerned, there is ultimately little financial burden 
on the DSU in serving these persons to justify transferring that 
burden to individuals.
    Changes: We have amended the proposed regulations to exempt from 
DSU financial needs tests any service that constitutes an auxiliary 
aid or service afforded the individual under section 504 of the Act 
or the ADA in order for the individual to participate in the VR 
program.

Section 361.56  Requirements for Closing the Record of Services of 
an Individual Who Has Achieved an Employment Outcome

    Comments: Several commenters expressed concern about proposed 
Sec. 361.56(a), which required, as a condition of closing the 
individual's record of services, that the employment outcome 
achieved by the individual be the same as that described in the 
individual's IPE. These commenters viewed the provision as 
inappropriate since amending the IPE to specify a new employment 
outcome is not always possible, for example when the individual is 
unavailable to sign an amended IPE.
    Other commenters questioned Sec. 361.56(c) of the proposed 
regulations, which required an agreement between the individual and 
the DSU counselor that the employment outcome is satisfactory and 
that the individual is performing well in the employment before the 
DSU can close the individual's record of services. These commenters 
suggested that the proposed provision might lead to differences of 
opinion between the counselor and the individual as to whether the 
outcome is ``satisfactory'' and thus preclude the State unit from 
appropriately closing the service record.
    Discussion: We agree that in very limited instances it may be 
impractical for the DSU and the individual, together, to amend the 
individual's IPE to reflect the ultimate employment outcome that the 
individual obtains while participating in the VR program. Yet, we 
believe that in most instances necessary amendments to the IPE can 
be accomplished since the DSU and the individual need not approve 
and sign the amended IPE simultaneously. Moreover, the required 
consistency between the IPE and the individual's outcome, in our 
view, is warranted in order to preserve the usefulness of the IPE 
development process.
    With respect to the comments on proposed Sec. 361.56(c), we note 
that this provision in the NPRM was substantially the same as the 
previous regulatory provision. In addition, we are not aware of any 
reported problems regarding the implementation of this provision 
through RSA monitoring activities, referrals to the Client 
Assistance Program, or due process hearings. More importantly, given 
that employee and counselor satisfaction is a critical factor toward 
assessing the stability of the individual's job, we believe that the 
provision should be retained in the final regulations.
    Changes: None

Section 361.57  Review of Determinations Made by Designated State 
Unit Personnel

    Comments: One commenter suggested revising Sec. 361.57(a) of the 
proposed regulations to require the State unit to provide in writing 
all agency decisions that result in a suspension, termination, or 
denial of services. This commenter explained that requiring written 
notification of service denials would be consistent with procedural 
safeguards in other Federal programs.
    We received several comments regarding proposed Sec. 361.57(b), 
the general requirements governing State due process procedures. 
Specifically, commenters expressed dissatisfaction with proposed 
Sec. 361.57(b)(3)(ii) regarding representation during mediation 
sessions and formal due process hearings. One commenter suggested 
revising that paragraph to exclude the use of attorneys during 
mediation and to require the use of attorneys during the formal 
hearing process. The commenter expressed concern that the use of 
attorneys during mediation would alter the informal nature of that 
process. Conversely, the commenter explained, individuals who are 
not represented by attorneys during the formal hearing are at a 
distinct disadvantage since the State unit, in general, is 
represented in hearings by an attorney.
    At least one commenter questioned whether mediation should be 
voluntary on the part of the State unit. The commenter suggested 
revising proposed Sec. 361.57(d)(2)(i) to require the State unit to 
participate in good faith in the mediation process whenever 
mediation is requested by the individual.
    Commenters suggested that Sec. 361.57(d)(2)(ii) of the proposed 
regulations be modified to allow the mediator, in addition to the 
parties to the mediation, to terminate the mediation process. The 
commenters stated that it is common practice to give mediators that 
authority.
    A few commenters raised concerns about proposed 
Sec. 361.57(d)(2)(iii), which governs the manner in which mediators 
are assigned to a particular case and lists of qualified and

[[Page 4434]]

impartial mediators are maintained. One commenter described the 
meticulous and thoughtful steps used in one State to assign the 
mediator who is most appropriate to each case. Another commenter 
suggested that the regulations require that the State unit and the 
Council agree to the list of mediators as they do for impartial 
hearing officers.
    The final set of comments regarding the proposed mediation 
procedures pertain to the requirements governing mediation 
agreements under proposed Sec. 361.57(d)(4). One commenter stated 
that mediators do not ``issue'' mediation agreements as that 
provision suggests. Several commenters urged us to make mediation 
agreements binding on all parties in order to create greater 
incentive to pursue mediation.
    We received many comments regarding the requirement in proposed 
Sec. 361.57(e)(1) that hearings generally be conducted within 45 
days of an individual's request for review of a State unit decision 
that affects the provision of services to the individual. With one 
exception, all commenters indicated that it is overly burdensome to 
require the State unit to conduct informal reviews, mediation, and 
the formal hearing within the same 45-day period. Some suggested 
that the 45-day clock not begin until after an informal review and, 
if applicable, the mediation process are completed. Others suggested 
that the time period be extended by a certain number of days (e.g., 
10 days) to allow for mediation to occur. Still others suggested 
that the regulations allow separate time periods for each phase of 
dispute resolution and that the time periods run consecutively.
    Several commenters suggested that Sec. 361.57(g)(3)(iii) of the 
proposed regulations be modified to eliminate the 30-day deadline by 
which a reviewing official must render a decision.
    Finally, we received several comments asking that the final 
regulations include a time limit (e.g., 30 days) for the filing of 
civil actions under Sec. 361.57(i) of the proposed regulations.
    Discussion: The issue concerning requiring that all agency 
decisions that result in a suspension, termination, or denial of 
services be provided in writing has been brought to our attention 
many times since the adoption of the 1998 Amendments. Section 
361.57(a) conforms to the statutory requirements in section 102(c) 
of the Act. The Act does not require a written decision in order for 
an individual to initiate an appeal under this section. An 
individual may appeal ``any determination.'' Therefore, we do not 
require designated State unit personnel to issue decisions 
pertaining to the provision of services in writing, but we encourage 
the use of written decisions whenever practicable.
    With respect to the comments pertaining to legal representation, 
we share the concern that individuals sometimes are at a 
disadvantage if they are not represented by an attorney during the 
formal hearing process, especially if the designated State unit is 
represented by an attorney. However, we do not share the concern 
that attorneys used during the mediation process necessarily change 
the nature of mediation. Nonetheless, the proposed requirements 
regarding representation during the mediation and hearing stages 
reflect the broad authority in section 102(c)(3)(B) of the Act for 
individuals to select the representative of their choice.
    The 1998 Amendments to the Act added mediation as a new method 
of resolving disputes between individuals and the State unit. Thus, 
it is not surprising that many commenters sought further 
clarification of the requirements in the proposed regulations that 
impact the States' implementation of mediation procedures.
    Section 361.57(d)(2)(i) conforms to the statutory language of 
section 102(c)(4)(B)(i) of the Act, which requires that the DSU's 
mediation procedures ensure that the mediation process ``is 
voluntary on the part of the parties. . . . '' (emphasis added). 
Therefore, Congress intended the mediation process to be voluntary 
on the part of both parties rather than giving only the individual 
the discretion to participate in mediation as one commenter 
suggested. We also believe that allowing mediation to be voluntary 
on the part of both parties is necessary since mediation is 
successful only if both parties participate willingly in an effort 
to resolve their dispute. We do note, however, that the State unit's 
decision to agree to pursue mediation should be made on a case-by-
case basis. It is neither appropriate nor consistent with the intent 
of the Act for a DSU to follow a general policy of never 
participating in mediation.
    Our intent behind Sec. 361.57(d)(2)(ii) of the proposed 
regulations was to ensure that either party may change its mind 
about participating in mediation, even after the mediation process 
has begun, and at that point pursue a due process hearing. We sought 
to ensure that individuals in particular are never locked into a 
less formal dispute resolution process that they believe to be 
futile. Consistent with this approach, we also agree with the 
suggestion that mediators should be allowed to terminate the 
mediation process and that amending the regulations to reflect that 
point would not alter the intended effect of this proposed section.
    We proposed a process in Sec. 361.57(d)(2)(iii) of the proposed 
regulations that is similar to that which the Act applies to the 
selection of impartial hearing officers. In particular, we sought to 
ensure the same neutrality on the part of the mediators that exists 
for hearing officers. However, we believe that States with 
established processes for assigning mediators to a case should be 
allowed to continue appointing mediators in that fashion, provided 
that the process used ensures neutrality.
    In response to the comments on proposed Sec. 361.57(d)(2)(iii) 
and the development of the State's list of available mediators, we 
note that section 102(c)(4)(C) of the Act does not require the State 
to develop the list of mediators through the joint efforts of the 
State unit and the Council. Many States have developed an ``Office 
of Dispute Resolution'' or similar office to handle all mediations 
across multiple State agencies. These offices typically employ 
mediators or contract with private mediators to conduct mediations 
involving State-administered programs. The proposed regulations were 
intended to give States as much flexibility as possible in 
establishing mediation policies and using existing mediation 
processes.
    Many individuals representing CAPs and DSUs have urged us to 
interpret section 102(c)(4) of the Act to require that a mediation 
agreement be binding on all parties. We believe that, if the outcome 
of mediation (i.e., a mediation agreement) were binding, then 
conceivably neither party could pursue a formal hearing afterward. 
That type of restriction would be contrary to the scope of due 
process procedures that are available under the Act.
    In light of the overwhelming support for extending the 45-day 
period for holding due process hearings under proposed 
Sec. 361.57(e)(1), we agree that the period should be extended to 60 
days in the final regulations. We do not believe that the time 
period should be extended any longer since section 102(c) of the Act 
clearly envisions a due process system that is timely, quick, and 
equitable.
    We believe that the 30-day period for an appropriate official to 
review a hearing officer's decision under proposed 
Sec. 361.57(g)(3)(iii) is reasonable. This is the same time period 
that applied to the review of hearing decisions by the State unit 
director under the previous regulations. Although State-level review 
of hearing decisions, if established by the State, now must be 
conducted by an official of an entity overseeing the DSU, we see no 
reason for modifying the current time period.
    We consider it inappropriate for us to establish a time limit 
for the filing of civil actions in disputes arising under the VR 
program. The State's Rules of Civil Procedure or the Federal Rules 
of Civil Procedure, depending on the appropriate forum, dictate the 
applicable deadline for filing an action in civil court.
    Changes: We have made the following modifications to proposed 
Sec. 361.57(d): authorizing mediators to terminate mediations 
(Sec. 361.57(d)(2)(ii)); authorizing States with an established 
method of assigning mediators to use that process in assigning 
mediators for the VR program provided the process ensures neutrality 
on the part of mediators (Sec. 361.57(d)(2)(iii)); and, in adopting 
a technical but important revision suggested by some commenters, 
clarifying that mediators assist in developing rather than ``issue'' 
mediation agreements (Sec. 361.57(d)(4)). We also have modified 
proposed Sec. 361.57(e)(1) to require that hearings be conducted 
within 60, rather than 45, days from the individual's request for 
review of a DSU decision.

Section 361.60  Matching Requirements

    Comments: One commenter wrote in support of the proposed change 
in Sec. 361.60(b)(3)(ii) that would authorize a State to use funds 
that are earmarked for a particular geographic area within the State 
as part of its non-Federal share without obtaining a waiver of 
statewideness if the State determines and informs the RSA 
Commissioner that it cannot provide the full amount of its non-
Federal share without using the earmarked funds. This commenter 
indicated that the provision was needed

[[Page 4435]]

since many State legislatures appropriate most, but not all, of the 
funds needed to match the full amount of Federal funds available 
under the program.
    Discussion: Although section 101(a)(4)(B) of the Act is intended 
to assist some States in meeting their matching obligations, we wish 
to reemphasize that statewideness requirements still apply to the 
Federal VR program funds that the State receives in return for 
contributing geographically limited earmarked funds to its non-
Federal share. For further discussion of the effect of this change 
from the previous regulations, please refer to the preamble to the 
NPRM (65 FR 10630).
    Changes: None.

Sections 361.80-361.89  Evaluation Standards and Performance 
Indicators

    Comments: None.
    Discussion: The Evaluation Standards and Performance Indicators 
for the VR program were published in the Federal Register on June 5, 
2000 (65 FR 35792) and became effective on July 5, 2000. Because 
these performance measures are part of the regulations implementing 
the VR program (34 CFR 361), we have added the measures and their 
corresponding requirements to the final regulations in this 
publication. The Evaluation Standards and Performance Indicators are 
located in Secs. 361.80 through 361.89 of Subpart E. For guidance in 
implementing the performance measures, we suggest you consult the 
preamble to the prior Federal Register publication of the measures 
(65 FR 35792).
    Changes: We have amended the proposed regulations to include 
Subpart E, ``Evaluation Standards and Performance Indicators,'' and 
the corresponding provisions in Secs. 361.80 through 361.89 that 
were previously published. The requirements in these sections are 
the same as those published in the Federal Register on June 5, 2000.
[FR Doc. 01-512 Filed 1-16-01; 8:45 am]
BILLING CODE 4000-01-U