Final Rule 20 CFR Part 667

[Federal Register: August 11, 2000 (Volume 65, Number 156)]

[Rules and Regulations]

[Page 49293-49342]

From the Federal Register Online via GPO Access [wais.access.gpo.gov]

[DOCID:fr11au00-7]

PART 667--ADMINISTRATIVE PROVISIONS UNDER TITLE I OF THE WORKFORCE

INVESTMENT ACT

Subpart A--Funding

Sec.

667.100 When do Workforce Investment Act grant funds become

available?

667.105 What award document authorizes the expenditure of

Workforce Investment Act funds under title I of the Act?

667.107 What is the period of availability for expenditure of WIA

funds?

667.110 What is the Governor/Secretary Agreement?

667.120 What planning information must a State submit in order to

receive a formula grant?

667.130 How are WIA title I formula funds allocated to local

workforce investment areas?

667.135 What ``hold harmless'' provisions apply to WIA adult and

youth allocations?

667.140 Does a Local Board have the authority to transfer funds

between programs?

667.150 What reallotment procedures does the Secretary use?

667.160 What reallocation procedures must the Governors use?

667.170 What responsibility review does the Department conduct for

awards made under WIA title I, subtitle D?

Subpart B--Administrative Rules, Costs and Limitations

667.200 What general fiscal and administrative rules apply to the

use of WIA title I funds?

667.210 What administrative cost limits apply to Workforce

Investment Act title I grants?

667.220 What Workforce Investment Act title I functions and

activities constitute the costs of administration subject to the

administrative cost limit?

667.250 What requirements relate to the enforcement of the

Military Selective Service Act?

667.255 Are there special rules that apply to veterans when income

is a factor in eligibility determinations?

667.260 May WIA title I funds be spent for construction?

667.262 Are employment generating activities, or similar

activities, allowable under WIA title I?

667.264 What other activities are prohibited under title I of WIA?

667.266 What are the limitations related to sectarian activities?

667.268 What prohibitions apply to the use of WIA title I funds to

encourage business relocation?

667.269 What procedures and sanctions apply to violations of

Secs. 667.260 through 667.268?

667.270 What safeguards are there to ensure that participants in

Workforce Investment Act employment and training activities do not

displace other employees?

667.272 What wage and labor standards apply to participants in

activities under title I of WIA?

667.274 What health and safety standards apply to the working

conditions of participants in activities under title I of WIA?

667.275 What are a recipient's obligations to ensure

nondiscrimination and equal opportunity, as well as nonparticipation

in sectarian activities?

Subpart C--Reporting Requirements

667.300 What are the reporting requirements for Workforce

Investment Act programs?

Subpart D--Oversight and Monitoring

667.400 Who is responsible for oversight and monitoring of WIA

title I grants?

667.410 What are the oversight roles and responsibilities of

recipients and subrecipients?

Subpart E--Resolution of Findings From Monitoring and Oversight Reviews

667.500 What procedures apply to the resolution of findings

arising from audits, investigations, monitoring and oversight

reviews?

667.505 How do we resolve investigative and monitoring findings?

667.510 What is the Grant Officer resolution process?

Subpart F--Grievance Procedures, Complaints, and State Appeals

Processes

667.600 What local area, State and direct recipient grievance

procedures must be established?

667.610 What processes do we use to review State and local

grievances and complaints?

667.630 How are complaints and reports of criminal fraud and abuse

addressed under WIA?

667.640 What additional appeal processes or systems must a State

have for the WIA program?

667.645 What procedures apply to the appeals of non-designation of

local areas?

667.650 What procedures apply to the appeals of the Governor's

imposition of sanctions for substantial violations or performance

failures by a local area?

Subpart G--Sanctions, Corrective Actions, and Waiver of Liability

667.700 What procedure do we use to impose sanctions and corrective

actions on recipients and subrecipients of WIA grant funds?

667.705 Who is responsible for funds provided under title I of WIA?

667.710 What actions are required to address the failure of a local

area to comply with the applicable uniform administrative

provisions?

667.720 How do we handle a recipient's request for waiver of

liability under WIA section 184(d)(2)?

667.730 What is the procedure to handle a recipient's request for

advance approval of contemplated corrective actions?

667.740 What procedure must be used for administering the offset/

deduction provisions at section 184(c) of the Act?

Subpart H--Administrative Adjudication and Judicial Review

667.800 What actions of the Department may be appealed to the

Office of Administrative Law Judges?

667.810 What rules of procedure apply to hearings conducted under

this subpart?

667.820 What authority does the Administrative Law Judge have in

ordering relief as an outcome of an administrative hearing?

667.825 What special rules apply to reviews of NFJP and WIAINA

grant selections?

667.830 When will the Administrative Law Judge issue a decision?

667.840 Is there an alternative dispute resolution process that may

be used in place of an OALJ hearing?

667.850 Is there judicial review of a final order of the Secretary

issued under section 186 of the Act?

667.860 Are there other remedies available outside of the Act?

Subpart I--Transition Planning

667.900 What special rules apply during the JTPA/WIA transition?

667.910 Are JTPA participants to be grandfathered into WIA?

Authority: Sec. 506(c), Pub. L. 105-220; 20 U.S.C. 9276(c).

Subpart A--Funding

Sec. 667.100 When do Workforce Investment Act grant funds become

available?

(a) Program year. Except as provided in paragraph (b) of this

section, fiscal year appropriations for programs and activities carried

out under title I of WIA are available for obligation on the basis of a

program year. A program year begins on July 1 in the fiscal year for

which the appropriation is made and ends on June 30 of the following

year.

(b) Youth fund availability. Fiscal year appropriations for a

program year's youth activities, authorized under chapter 4, subtitle

B, title I of WIA, may be made available for obligation beginning on

April 1 of the fiscal year for which the appropriation is made.

Sec. 667.105 What award document authorizes the expenditure of

Workforce Investment Act funds under title I of the Act?

(a) Agreement. All WIA title I funds that are awarded by grant,

contract or cooperative agreement are issued under an agreement between

the Grant Officer/Contracting Officer and the recipient. The agreement

describes the terms and conditions applicable to the award of WIA title

I funds.

(b) Grant funds awarded to States. Under the Governor/Secretary

Agreement described in Sec. 667.110, each program year, the grant

agreement described in paragraph (a) of this section will be executed

and signed by the Governor or the Governor's designated representative

and Secretary or the Grant Officer. The grant agreement and associated

Notices of Obligation are the basis for Federal obligation of funds

allotted to the States in accordance with WIA sections 127(b) and

132(b) for each program year.

contracts or cooperative agreements for the WIA Indian and Native

American program will be made to eligible entities on a competitive

basis every two program years for a two-year period, in accordance with

the provisions of 20 CFR part 668. An award for the succeeding two-year

period may be made to the same recipient on a non-competitive basis if

the recipient:

(i) Has performed satisfactorily; and

(ii) Submits a satisfactory two-year program plan for the

succeeding two-year grant, contract or agreement period.

(2) A grant, contract or cooperative agreement may be renewed under

the authority of paragraph (c)(1) of this section no more than once

during any four-year period for any single recipient.

(d) National Farmworker Jobs programs. (1) Awards of grants or

contracts for the National Farmworker Jobs program will be made to

eligible entities on a competitive basis every two program years for a

two-year period, in accordance with the provisions of 20 CFR part 669.

An award for the succeeding two-year period may be made to the same

recipient if the recipient:

(i) Has performed satisfactorily; and

(ii) Submits a satisfactory two-year program plan for the

succeeding two-year period.

(2) A grant or contract may be renewed under the authority of

paragraph (d)(1) of this section no more than once during any four-year

period for any single recipient.

(e) Job Corps. (1) Awards of contracts will be made on a

competitive basis between the Contracting Officer and eligible entities

to operate contract centers and provide operational support services.

(2) The Secretary may enter into interagency agreements with

Federal agencies for funding, establishment, and operation of Civilian

Conservation Centers for Job Corps programs.

(f) Youth Opportunity grants. Awards of grants for Youth

Opportunity programs will be made to eligible Local Boards and eligible

entities for a one-year period. The grants may be renewed for each of

the four succeeding years based on criteria that include successful

performance.

(g) Awards under WIA sections 171 and 172. (1) Awards of grants,

contracts or cooperative agreements will be made to eligible entities

for programs or activities authorized under WIA sections 171 or 172.

These funds are for:

(i) Demonstration;

(ii) Pilot;

(iii) Multi-service;

(iv) Research;

(v) Multi-State projects; and

(vi) Evaluations

(2) Grants and contracts under paragraphs (g)(1)(i) and (ii) of

this section will be awarded on a competitive basis, except that a

noncompetitive award may be made in the case of a project that is

funded jointly with other public or private entities that provide a

portion of the funding.

(3) Contracts and grants under paragraphs (g)(1)(iii), (iv), and

(v) of this section in amounts that exceed $100,000 will be awarded on

a competitive basis, except that a noncompetitive award may be made in

the case of a project that is funded jointly with other public or

private sector entities that provide a substantial portion of the

assistance under the grant or contract for the project.

(4) Grants or contracts for carrying out projects in paragraphs

(g)(1)(iii), (iv), and (v) of this section may not be awarded to the

same organization for more than three consecutive years, unless the

project is competitively reevaluated within that period.

(5) Entities with nationally recognized expertise in the methods,

techniques and knowledge of workforce investment activities will be

provided priority in awarding contracts or grants for the projects

under paragraphs (g)(1)(iii), (iv), and (v) of this section.

(6) A peer review process will be used for projects under

paragraphs (g)(1)(iii), (iv), and (v) of this section for grants that

exceed $500,000, and to designate exemplary and promising programs.

(h) Termination. Each grant terminates when the period of fund

availability has expired. The grant must be closed in accordance with

the closeout provisions at 29 CFR 95.71 or 97.50, as appropriate.

Sec. 667.107 What is the period of availability for expenditure of WIA

funds?

(a) Grant funds expended by States. Funds allotted to States under

WIA sections 127(b) and 132(b) for any program year are available for

expenditure by the State receiving the funds only during that program

year and the two succeeding program years.

(b) Grant funds expended by local areas. (1) Funds allocated by a

State to a local area under WIA sections 128(b) and 133(b), for any

program year are available for expenditure only during that program

year and the succeeding program year.

(2) Funds which are not expended by a local area in the two-year

period described in paragraph (b)(1) of this section, must be returned

to the State. Funds so returned are available for expenditure by State

and local recipients and subrecipients only during the third program

year of availability. These funds may:

(i) Be used for Statewide projects, or

(ii) Be distributed to other local areas which had fully expended

their allocation of funds for the same program year within the two-year

period.

Corps activity carried out under title I, subtitle C, of WIA may be

expended during that program year and the two succeeding program years.

(d) Funds awarded under WIA sections 171 and 172. Funds obligated

for any program year for a program or activity authorized under

sections 171 or 172 of WIA remain available until expended.

(e) Other programs under title I of WIA. For all other grants,

contracts and cooperative agreements issued under title I of WIA the

period of availability for expenditure is set in the terms and

conditions of the award document.

Sec. 667.110 What is the Governor/Secretary Agreement?

(a) To establish a continuing relationship under the Act, the

Governor and the Secretary will enter into a Governor/Secretary

Agreement. The Agreement will consist of a statement assuring that the

State will comply with:

(1) The Workforce Investment Act and all applicable rules and

regulations, and

(2) The Wagner-Peyser Act and all applicable rules and regulations.

(b) The Governor/Secretary Agreement may be modified, revised or

terminated at any time, upon the agreement of both parties.

Sec. 667.120 What planning information must a State submit in order to

receive a formula grant?

Each State seeking financial assistance under WIA sections 127

(youth) or 132 (adults and dislocated workers) or under the Wagner-

Peyser Act must submit a single State Plan. The requirements for the

plan content and the plan review process are described in WIA section

112, Wagner-Peyser Act section 8, and 20 CFR 661.220, 661.240 and

652.211 through 652.214.

Sec. 667.130 How are WIA title I formula funds allocated to local

workforce investment areas?

(a) General. The Governor must allocate WIA formula funds allotted

for services to youth, adults and dislocated workers in accordance with

WIA sections 128 and 133, and this section.

(1) State Boards must assist Governors in the development of any

discretionary within-State allocation formulas. (WIA sec. 111(d)(5).)

(2) Within-State allocations must be made:

(i) In accordance with the allocation formulas contained in WIA

sections 128(b) and 133(b) and in the State workforce investment plan,

and

(ii) After consultation with chief elected officials in each of the

workforce investment areas.

(b) State reserve. (1) Of the WIA formula funds allotted for

services to youth, adults and dislocated workers, the Governor must

reserve funds from each of these sources for Statewide workforce

investment activities. In making these reservations, the Governor may

reserve up to fifteen (15) percent from each of these sources. Funds

reserved under this paragraph may be combined and spent on Statewide

employment and training activities, for adults and dislocated workers,

and Statewide youth activities, as described in 20 CFR 665.200 and

665.210, without regard to the funding source of the reserved funds.

(2) The Governor must reserve a portion of the dislocated worker

funds for Statewide rapid response activities, as described in WIA

section 134(a)(2)(A) and 20 CFR 665.310 through 665.330. In making this

reservation, the Governor may reserve up to twenty-five (25) percent of

the dislocated worker funds.

distribute funds in accordance with the discretionary allocation

formula described in paragraph (c)(2) of this section, the remainder of

youth funds not reserved under paragraph (b)(1) of this section must be

allocated:

(i) 33\1/3\ percent on the basis of the relative number of

unemployed individuals in areas of substantial unemployment in each

workforce investment area, compared to the total number of unemployed

individuals in all areas of substantial unemployment in the State;

(ii) 33\1/3\ percent on the basis of the relative excess number of

unemployed individuals in each workforce investment area, compared to

the total excess number of unemployed individuals in the State; and

(iii) 33\1/3\ percent on the basis of the relative number of

disadvantaged youth in each workforce investment area, compared to the

total number of disadvantaged youth in the State. (WIA sec.

128(b)(2)(A)(i))

(2) Discretionary youth allocation formula. In lieu of making the

formula allocation described in paragraph (c)(1) of this section, the

State may allocate youth funds under a discretionary formula. Under

that formula, the State must allocate a minimum of 70 percent of youth

funds not reserved under paragraph (b)(1) of this section on the basis

of the formula in paragraph (c)(1) of this section, and may allocate up

to 30 percent on the basis of a formula that:

(i) Incorporates additional factors (other than the factors

described in paragraph (c)(1) of this section) relating to:

(A) Excess youth poverty in urban, rural and suburban local areas;

and

(B) Excess unemployment above the State average in urban, rural and

suburban local areas; and

(ii) Was developed by the State Board and approved by the Secretary

of Labor as part of the State workforce investment plan. (WIA sec.

128(b)(3).)

(d) Adult allocation formula. (1) Unless the Governor elects to

distribute funds in accordance with the discretionary allocation

formula described in paragraph (d)(2) of this section, the remainder of

adult funds not reserved under paragraph (b)(1) of this section must be

allocated:

(i) 33\1/3\ percent on the basis of the relative number of

unemployed individuals in areas of substantial unemployment in each

workforce investment area, compared to the total number of unemployed

individuals in areas of substantial unemployment in the State;

(ii) 33\1/3\ percent on the basis of the relative excess number of

unemployed individuals in each workforce investment area, compared to

the total excess number of unemployed individuals in the State; and

(iii) 33\1/3\ percent on the basis of the relative number of

disadvantaged adults in each workforce investment area, compared to the

total number of disadvantaged adults in the State. (WIA sec.

133(b)(2)(A)(i))

(2) Discretionary adult allocation formula. In lieu of making the

formula allocation described in paragraph (d)(1) of this section, the

State may allocate adult funds under an discretionary formula. Under

that formula, the State must allocate a minimum of 70 percent of adult

funds on the basis of the formula in paragraph (d)(1) of this section,

and may allocate up to 30 percent on the basis of a formula that:

(i) Incorporates additional factors (other than the factors

described in paragraph (d)(1) of this section) relating to:

(A) Excess poverty in urban, rural and suburban local areas; and

(B) Excess unemployment above the State average in urban, rural and

suburban local areas; and

(ii) Was developed by the State Board and approved by the Secretary

of Labor as part of the State workforce investment plan. (WIA sec.

133(b)(3).)

(e) Dislocated worker allocation formula. (1) The remainder of

dislocated worker funds not reserved under paragraph (b)(1) or (b)(2)

of this section must be allocated on the basis of a formula prescribed

by the Governor that distributes funds in a manner that addresses the

State's worker readjustment assistance needs. Funds so distributed must

not be less than 60 percent of the State's formula allotment.

(2)(i) The Governor's dislocated worker formula must use the most

appropriate information available to the Governor, including

information on:

(A) Insured unemployment data,

(B) Unemployment concentrations,

(D) Declining industries data,

(E) Farmer-rancher economic hardship data, and

(F) Long-term unemployment data.

(ii) The State Plan must describe the data used for the formula and

the weights assigned, and explain the State's decision to use other

information or to omit any of the information sources set forth in

paragraph (e)(2)(i) of this section.

(3) The Governor may not amend the dislocated worker formula more

than once for any program year.

(4)(i) Dislocated worker funds initially reserved by the Governor

for Statewide rapid response activities in accordance with paragraph

(b)(2) of this section may be:

(A) Distributed to local areas, and

(B) Used to operate projects in local areas in accordance with the

requirements of WIA section 134(a)(2)(A) and 20 CFR 665.310 through

665.330.

(ii) The State Plan must describe the procedures for any

distribution to local areas, including the timing and process for

determining whether a distribution will take place.

Sec. 667.135 What ``hold harmless'' provisions apply to WIA adult and

youth allocations?

(a)(1) For the first two fiscal years after the date on which a

local area is designated under section 116 of WIA, the State may elect

to apply the ``hold harmless'' provisions specified in paragraph (b) of

this section to local area allocations of WIA youth funds under

Sec. 667.130(c) and to allocations of WIA adult funds under

Sec. 667.130(d).

(2) Effective at the end of the second full fiscal year after the

date on which a local area is designated under section 116 of WIA the

State must apply the ``hold harmless'' specified in paragraph (b) of

this section to local area allocations of WIA youth funds under

Sec. 667.130(c) and to allocations of WIA adult funds under

Sec. 667.130(d).

(3) There are no ``hold harmless'' provisions that apply to local

area allocations of WIA dislocated worker funds.

(b)(1) If a State elects to apply a ``hold-harmless'' under

paragraph (a)(1) of this section, a local area must not receive an

allocation amount for a fiscal year that is less than 90 percent of the

average allocation of the local area for the two preceding fiscal

years.

(2) In applying the ``hold harmless'' under paragraph (a)(2) of

this section, a local area must not receive an allocation amount for a

fiscal year that is less than 90 percent of the average allocation of

the local area for the two preceding fiscal years.

(3) Amounts necessary to increase allocations to local areas must

be obtained by ratably reducing the allocations to be made to other

local areas.

(4) If the amounts of WIA funds appropriated in a fiscal year are

not sufficient to provide the amount specified in paragraph (b)(1) of

this section to all local areas, the amounts allocated to each local

area mustbe ratably reduced. (WIA secs. 128(b)(2)(A)(ii),

133(b)(2)(A)(ii), 506.)

Sec. 667.140 Does a Local Board have the authority to transfer funds

between programs?

(a) A Local Board may transfer up to 20 percent of a program year

allocation for adult employment and training activities, and up to 20

percent of a program year allocation for dislocated worker employment

and training activities between the two programs.

(b) Before making any such transfer, a Local Board must obtain the

Governor's approval.

program.

Sec. 667.150 What reallotment procedures does the Secretary use?

(a) The first reallotment of funds among States will occur during

PY 2001 based on obligations in PY 2000.

(b) The Secretary determines, during the first quarter of the

program year, whether a State has obligated its required level of at

least 80 percent of the funds allotted under WIA sections 127 and 132

for programs serving youth, adults, and dislocated workers for the

prior year, as separately determined for each of the three funding

streams. Unobligated balances are determined based on allotments

adjusted for any allowable transfer between the adult and dislocated

worker funding streams. The amount to be recaptured from each State for

reallotment, if any, is based on State obligations of the funds

allotted to each State under WIA sections 127 and 132 for programs

serving youth, adults, or dislocated workers, less any amount reserved

(up to 5 percent at the State level and up to 10 percent at the local

level) for the costs of administration. This amount, if any, is

separately determined for each funding stream.

among eligible States in accordance with the provisions of WIA sections

127(c) and 132(c), respectively. To be eligible to receive a

reallotment of youth, adult, or dislocated worker funds under the

reallotment procedures, a State must have obligated at least 80 percent

of the prior program year's allotment, less any amount reserved for the

costs of administration of youth, adult, or dislocated worker funds. A

State's eligibility to receive a reallotment is separately determined

for each funding stream.

(d) The term ``obligation'' is defined at 20 CFR 660.300. For

purposes of this section, the Secretary will also treat as State

obligations:

(1) Amounts allocated by the State, under WIA sections 128(b) and

133(b), to the single State local area if the State has been designated

as a single local area under WIA section 116(b) or to a balance of

State local area administered by a unit of the State government, and

(2) Inter-agency transfers and other actions treated by the State

as encumbrances against amounts reserved by the State under WIA

sections 128(a) and 133(a) for Statewide workforce investment

activities.

Sec. 667.160 What reallocation procedures must the Governors use?

(a) The Governor may reallocate youth, adult, and dislocated worker

funds among local areas within the State in accordance with the

provisions of sections 128(c) and 133(c) of the Act. If the Governor

chooses to reallocate funds, the provisions in paragraphs (b) and (c)

of this section apply.

(b) For the youth, adult and dislocated worker programs, the amount

to be recaptured from each local area for purposes of reallocation, if

any, must be based on the amount by which the prior year's unobligated

balance of allocated funds exceeds 20 percent of that year's allocation

for the program, less any amount reserved (up to 10 percent) for the

costs of administration. Unobligated balances must be determined based

on allocations adjusted for any allowable transfer between funding

streams. This amount, if any, must be separately determined for each

funding stream.

funds under the reallocation procedures, a local area must have

obligated at least 80 percent of the prior program year's allocation,

less any amount reserved (up to 10 percent) for the costs of

administration, for youth, adult, or dislocated worker activities, as

separately determined. A local area's eligibility to receive a

reallocation must be separately determined for each funding stream.

Sec. 667.170 What responsibility review does the Department conduct

for awards made under WIA title I, subtitle D?

(a) Before final selection as a potential grantee, we conduct a

review of the

available records to assess the organization's overall responsibility

to administer Federal funds. As part of this review, we may consider

any information that has come to our attention and will consider the

organization's history with regard to the management of other grants,

including DOL grants. The failure to meet any one responsibility test,

except for those listed in paragraphs (a)(1) and (a)(2) of this

section, does not establish that the organization is not responsible

unless the failure is substantial or persistent (for two or more

consecutive years). The responsibility tests include:

(1) The organization's efforts to recover debts (for which three

demand letters have been sent) established by final agency action have

been unsuccessful, or that there has been failure to comply with an

approved repayment plan;

(2) Established fraud or criminal activity of a significant nature

within the organization.

(3) Serious administrative deficiencies that we identify, such as

failure to maintain a financial management system as required by

Federal regulations;

(4) Willful obstruction of the audit process;

(5) Failure to provide services to applicants as agreed to in a

current or recent grant or to meet applicable performance standards;

(6) Failure to correct deficiencies brought to the grantee's

attention in writing as a result of monitoring activities, reviews,

assessments, or other activities;

(7) Failure to return a grant closeout package or outstanding

advances within 90 days of the grant expiration date or receipt of

closeout package, whichever is later, unless an extension has been

requested and granted; final billings reflecting serious cost category

or total budget cost overrun;

(8) Failure to submit required reports;

(9) Failure to properly report and dispose of government property

as instructed by DOL;

(10) Failure to have maintained effective cash management or cost

controls resulting in excess cash on hand;

(11) Failure to ensure that a subrecipient complies with its OMB

Circular A-133 audit requirements specified at Sec. 667.200(b);

(12) Failure to audit a subrecipient within the required period;

(13) Final disallowed costs in excess of five percent of the grant

or contract award if, in the judgement of the grant officer, the

disallowances are egregious findings and;

(14) Failure to establish a mechanism to resolve a subrecipient's

audit in a timely fashion.

(b) This responsibility review is independent of the competitive

process. Applicants which are determined to be not responsible will not

be selected as potential grantees irrespective of their standing in the

competition.

Subpart B--Administrative Rules, Costs and Limitations

Sec. 667.200 What general fiscal and administrative rules apply to the

use of WIA title I funds?

(a) Uniform fiscal and administrative requirements. (1) Except as

provided in paragraphs (a)(3) through (6) of this section, State,

local, and Indian tribal government organizations that receive grants

or cooperative agreements under WIA title I must follow the common rule

``Uniform Administrative Requirements for Grants and Cooperative

Agreements to State and Local Governments'' which is codified at 29 CFR

part 97.

(2) Except as provided in paragraphs (a)(3) through (7) of this

section, institutions of higher education, hospitals, other non-profit

organizations, and commercial organizations must the follow the common

rule implementing OMB Circular A-110 which is codified at 29 CFR part

95.

(3) In addition to the requirements at 29 CFR 95.48 or 29 CFR

97.36(i) (as appropriate), all procurement contracts and other

transactions between Local Boards and units of State or local

governments must be conducted only on a cost reimbursement basis. No

provision for profit is allowed. (WIA sec. 184(a)(3)(B).)

(4) In addition to the requirements at 29 CFR 95.42 or 29 CFR

97.36(b)(3) (as appropriate), which address codes of conduct and

conflict of interest issues related to employees:

(i) A State Board member or a Local Board member or a Youth Council

member must neither cast a vote on, nor participate in any decision-

making capacity, on the provision of services by such member (or any

organization which that member directly represents), nor on any matter

which would provide any direct financial benefit to that member or a

member of his immediate family.

(ii) Neither membership on the State Board, the Local Board, the

Youth Council nor the receipt of WIA funds to provide training and

related services, by itself, violates these conflict of interest

provisions.

(5) The addition method, described at 29 CFR 95.24 or 29 CFR

97.25(g)(2) (as appropriate), must be used for the all program income

earned under WIA title I grants. When the cost of generating program

income has been charged to the program, the gross amount earned must be

added to the WIA program. However, the cost of generating program

income must be subtracted from the amount earned to establish the net

amount of program income available for use under the grants when these

costs have not been charged to the WIA program.

(6) Any excess of revenue over costs incurred for services provided

by a governmental or non-profit entity must be included in program

income. (WIA sec. 195(7)(A) and (B).)

(7) Interest income earned on funds received under WIA title I must

be included in program income. (WIA sec. 195(7)(B)(iii).)

(8) On a fee-for-service basis, employers may use local area

services, facilities, or equipment funded under title I of WIA to

provide employment and training activities to incumbent workers:

(i) When the services, facilities, or equipment are not being used

by eligible participants;

(ii) If their use does not affect the ability of eligible

participants to use the services, facilities, or equipment; and

(iii) If the income generated from such fees is used to carry out

programs authorized under this title.

(b) Audit requirements. (1) All governmental and non-profit

organizations must follow the audit requirements of OMB Circular A-133.

These requirements are found at 29 CFR 97.26 for governmental

organizations and at 29 CFR 95.26 for institutions of higher education,

hospitals, and other non-profit organizations.

(2)(i) We are responsible for audits of commercial organizations

which are direct recipients of Federal financial assistance under WIA

title I.

(ii) Commercial organizations which are subrecipients under WIA

title I and which expend more than the minimum level specified in OMB

Circular A-133 ($300,000 as of August 11, 2000) must have either an

organization-wide audit conducted in accordance with A-133 or a program

specific financial and compliance audit.

subrecipients must follow the Federal allowable cost principles that

apply to their kind of organizations. The DOL regulations at 29 CFR

95.27 and 29 CFR 97.22 identify the Federal principles for determining

allowable costs which each kind of recipient and subrecipient must

follow. The applicable Federal principles for each kind of recipient

are described in

paragraphs (c)(1) through (5) of this section; all recipients must

comply with paragraphs (c)(6) and (c)(7) of this section. For those

selected items of cost requiring prior approval, the authority to grant

or deny approval is delegated to the Governor for programs funded under

sections 127 or 132 of the Act.

(1) Allowable costs for State, local, and Indian tribal government

organizations must be determined under OMB Circular A-87, ``Cost

Principles for State, Local and Indian Tribal Governments.''

(2) Allowable costs for non-profit organizations must be determined

under OMB Circular A-122, ``Cost Principles for Non-Profit

Organizations.''

(3) Allowable costs for institutions of higher education must be

determined under OMB Circular A-21, ``Cost Principles for Educational

Institutions.''

(4) Allowable costs for hospitals must be determined in accordance

under appendix E of 45 CFR part 74, ``Principles for Determining Costs

Applicable to Research and Development Under Grants and Contracts with

Hospitals.''

(5) Allowable costs for commercial organizations and those non-

profit organizations listed in Attachment C to OMB Circular A-122 must

be determined under the provisions of the Federal Acquisition

Regulation (FAR), at 48 CFR part 31.

(6) For all types of entities, legal expenses for the prosecution

of claims against the Federal Government, including appeals to an

Administrative Law Judge, are unallowable.

(7) In addition to the allowable cost provisions identified in

paragraphs (c)(1) through (6) of this section, the cost of information

technology--computer hardware and software--will only be allowable

under WIA title I grants when such computer technology is ``Year 2000

compliant.'' To meet this requirement, information technology must be

able to accurately process date/time (including, but not limited to,

calculating, comparing and sequencing) from, into and between the

twentieth and twenty-first centuries, and the years 1999 and 2000. The

information technology must also be able to make leap year

calculations. Furthermore, ``Year 2000 compliant'' information

technology, when used in combination with other information technology,

must accurately process date/time data if the other information

technology properly exchanges date/time with it.

(d) Government-wide debarment and suspension, and government-wide

drug-free workplace requirements. All WIA title I grant recipients and

subrecipients must comply with the government-wide requirements for

debarment and suspension, and the government-wide requirements for a

drug-free workplace, codified at 29 CFR part 98.

(e) Restrictions on lobbying. All WIA title I grant recipients and

subrecipients must comply with the restrictions on lobbying which are

codified in the DOL regulations at 29 CFR part 93.

(f) Nondiscrimination. All WIA title I recipients, as the term is

defined in 29 CFR 37.4, must comply with the nondiscrimination and

equal opportunity provisions of WIA section 188 and its implementing

regulations found at 29 CFR part 37. Information on the handling of

discrimination complaints by participants and other interested parties

may be found in 29 CFR 37.70 through 37.80, and in Sec. 667.600(g).

(g) Nepotism. (1) No individual may be placed in a WIA employment

activity if a member of that person's immediate family is directly

supervised by or directly supervises that individual.

(2) To the extent that an applicable State or local legal

requirement regarding nepotism is more restrictive than this provision,

such State or local requirement must be followed.

Sec. 667.210 What administrative cost limits apply to Workforce

Investment Act title I grants?

(a) Formula grants to States:

(1) As part of the 15 percent that a State may reserve for

Statewide activities, the State may spend up to five percent (5%) of

the amount allotted under sections 127(b)(1), 132(b)(1) and 132(b)(2)

of the Act for the administrative costs of Statewide workforce

investment activities.

(2) Local area expenditures for administrative purposes under WIA

formula grants are limited to no more than ten percent (10%) of the

amount allocated to the local area under sections 128(b) and 133(b) of

the Act.

(3) Neither the five percent (5%) of the amount allotted that may

be reserved for Statewide administrative costs nor the ten percent

(10%) of the amount allotted that may be reserved for local

administrative costs needs to be allocated back to the individual

funding streams.

(b) Limits on administrative costs for programs operated under

subtitle D of title I will be identified in the grant or contract award

document.

sources of funds, such as the Wagner-Peyser Act, are not included in

the administrative cost limit calculation. Each program's

administrative activities area chargeable to its own grant and subject

to its own administrative cost limitations.

Sec. 667.220 What Workforce Investment Act title I functions and

activities constitute the costs of administration subject to the

administrative cost limit?

(a) The costs of administration are that allocable portion of

necessary and reasonable allowable costs of State and local workforce

investment boards, direct recipients, including State grant recipients

under subtitle B of title I and recipients of awards under subtitle D

of title I, as well as local grant recipients, local grant

subrecipients, local fiscal agents and one-stop operators that are

associated with those specific functions identified in paragraph (b) of

this section and which are not related to the direct provision of

workforce investment services, including services to participants and

employers. These costs can be both personnel and non-personnel and both

direct and indirect.

(b) The costs of administration are the costs associated with

performing the following functions:

(1) Performing the following overall general administrative

functions and coordination of those functions under WIA title I:

(i) Accounting, budgeting, financial and cash management functions;

(ii) Procurement and purchasing functions;

(iii) Property management functions;

(iv) Personnel management functions;

(v) Payroll functions;

(vi) Coordinating the resolution of findings arising from audits,

reviews, investigations and incident reports;

(vii) Audit functions;

(viii) General legal services functions; and

(ix) Developing systems and procedures, including information

systems, required for these administrative functions;

(2) Performing oversight and monitoring responsibilities related to

WIA administrative functions;

(3) Costs of goods and services required for administrative

functions of the program, including goods and services such as rental

or purchase of equipment, utilities, office supplies, postage, and

rental and maintenance of office space;

(4) Travel costs incurred for official business in carrying out

administrative activities or the overall management of the WIA system;

and

(5) Costs of information systems related to administrative

functions (for example, personnel, procurement, purchasing, property

management, accounting and payroll systems) including the purchase,

systems development and operating costs of such systems.

(c)(1) Awards to subrecipients or vendors that are solely for the

performance of administrative functions are classified as

administrative costs.

(2) Personnel and related non-personnel costs of staff who perform

both administrative functions specified in paragraph (b) of this

section and programmatic services or activities must be allocated as

administrative or program costs to the benefitting cost objectives/

categories based on documented distributions of actual time worked or

other equitable cost allocation methods.

(3) Specific costs charged to an overhead or indirect cost pool

that can be identified directly as a program cost are to be charged as

a program cost. Documentation of such charges must be maintained.

(4) Except as provided at paragraph (c)(1), all costs incurred for

functions and activities of subrecipients and vendors are program

costs.

(5) Costs of the following information systems including the

purchase, systems development and operating (e.g., data entry) costs

are charged to the program category:

(i) Tracking or monitoring of participant and performance

information;

(ii) Employment statistics information, including job listing

information, job skills information, and demand occupation information;

(iii) Performance and program cost information on eligible

providers of training services, youth activities, and appropriate

education activities;

(iv) Local area performance information; and

(v) Information relating to supportive services and unemployment

insurance claims for program participants;

(6) Continuous improvement activities are charged to administration

or program category based on the purpose or nature of the activity to

be improved. Documentation of such charges must be maintained.

Sec. 667.250 What requirements relate to the enforcement of the

Military Selective Service Act?

The requirements relating to the enforcement of the Military

Selective Service Act are found at WIA section 189(h).

Sec. 667.255 Are there special rules that apply to veterans when

income is a factor in eligibility determinations?

Yes, under 38 U.S.C. 4213, when past income is an eligibility

determinant for Federal employment or training programs, any amounts

received as military pay or allowances by any person who served on

active duty, and certain other specified benefits must be disregarded.

This applies when determining if a person is a ``low-income

individual'' for eligibility purposes, (for example, in the WIA youth,

Job Corps, or NFJP programs) and applies if income is used as a factor

in applying the priority provision, under 20 CFR 663.600, when WIA

adult funds are limited. Questions regarding the application of 38

U.S.C. 4213 should be directed to the Veterans Employment and Training

Service.

Sec. 667.260 May WIA title I funds be spent for construction?

WIA title I funds must not be spent on construction or purchase of

facilities or buildings except:

(a) To meet a recipient's, as the term is defined in 29 CFR 37.4,

obligation to provide physical and programmatic accessibility and

reasonable accommodation, as required by section 504 of the

Rehabilitation Act of 1973, as amended, and the Americans with

Disabilities Act of 1990, as amended;

(b) To fund repairs, renovations, alterations and capital

improvements of property, including:

(1) SESA real property, identified at WIA section 193, using a

formula that assesses costs proportionate to space utilized;

(2) JTPA owned property which is transferred to WIA title I

programs;

and

(d) To fund disaster relief employment on projects for demolition,

cleaning, repair, renovation, and reconstruction of damaged and

destroyed structures, facilities, and lands located within a disaster

area. (WIA sec. 173(d).)

Sec. 667.262 Are employment generating activities, or similar

activities, allowable under WIA title I?

(a) Under WIA section 181(e), WIA title I funds may not be spent on

employment generating activities, economic development, and other

similar activities, unless they are directly related to training for

eligible individuals. For purposes of this section, employer outreach

and job development activities are directly related to training for

eligible individuals.

(b) These employer outreach and job development activities include:

(1) Contacts with potential employers for the purpose of placement

of WIA participants;

(2) Participation in business associations (such as chambers of

commerce); joint labor management committees, labor associations, and

resource centers;

(3) WIA staff participation on economic development boards and

commissions, and work with economic development agencies, to:

(i) Provide information about WIA programs,

(ii) Assist in making informed decisions about community job

training needs, and

(iii) Promote the use of first source hiring agreements and

enterprise zone vouchering services,

(4) Active participation in local business resource centers

(incubators) to provide technical assistance to small and new business

to reduce the rate of business failure;

(5) Subscriptions to relevant publications;

(6) General dissemination of information on WIA programs and

activities;

(7) The conduct of labor market surveys;

(8) The development of on-the-job training opportunities; and

(9) Other allowable WIA activities in the private sector. (WIA sec.

181(e).)

Sec. 667.264 What other activities are prohibited under title I of

WIA?

(a) WIA title I funds must not be spent on:

(1) The wages of incumbent employees during their participation in

economic development activities provided through a Statewide workforce

investment system, (WIA sec. 181(b)(1).);

(2) Public service employment, except to provide disaster relief

employment, as specifically authorized in section 173(d) of WIA, (WIA

sec. 195(10));

(3) Expenses prohibited under any other Federal, State or local law

or regulation.

(b) WIA formula funds available to States and local areas under

subtitle B, title I of WIA must not be used for foreign travel. (WIA

sec. 181(e).)

Sec. 667.266 What are the limitations related to sectarian activities?

(a) Limitations related to sectarian activities are set forth at

WIA section 188(a)(3) and 29 CFR 37.6(f).

(b) Under these limitations:

(1) WIA title I financial assistance may not be spent on the

employment or training of participants in sectarian activities. This

limitation is more fully described at 29 CFR 37.6(f)(1).

(2) Under 29 CFR 37.6(f)(1), participants must not be employed

under title I of WIA to carry out the construction, operation, or

maintenance

of any part of any facility that is used or to be used for sectarian

instruction or as a place for religious worship. However, as discussed

in 29 CFR 37.6(f)(2), WIA financial assistance may be used for the

maintenance of a facility that is not primarily or inherently devoted

to sectarian instruction or religious worship if the organization

operating the facility is part of a program or activity providing

services to WIA participants. (WIA sec. 188(a)(3).)

Sec. 667.268 What prohibitions apply to the use of WIA title I funds

to encourage business relocation?

(a) WIA funds may not be used or proposed to be used for:

(1) The encouragement or inducement of a business, or part of a

business, to relocate from any location in the United States, if the

relocation results in any employee losing his or her job at the

original location;

(2) Customized training, skill training, or on-the-job training or

company specific assessments of job applicants or employees of a

business or a part of a business that has relocated from any location

in the United States, until the company has operated at that location

for 120 days, if the relocation has resulted in any employee losing his

or her jobs at the original location.

(b) Pre-award review. To verify that an establishment which is new

or expanding is not, in fact, relocating employment from another area,

standardized pre-award review criteria developed by the State must be

completed and documented jointly by the local area with the

establishment as a prerequisite to WIA assistance.

(1) The review must include names under which the establishment

does business, including predecessors and successors in interest; the

name, title, and address of the company official certifying the

information, and whether WIA assistance is sought in connection with

past or impending job losses at other facilities, including a review of

whether WARN notices relating to the employer have been filed.

(2) The review may include consultations with labor organizations

and others in the affected local area(s). (WIA sec. 181(d).)

Sec. 667.269 What procedures and sanctions apply to violations of

Secs. 667.260 through 667.268?

(a) We will promptly review and take appropriate action on alleged

violations of the provisions relating to:

(1) Employment generating activities (Sec. 667.262);

(2) Other prohibited activities (Sec. 667.264);

(3) The limitation related to sectarian activities (Sec. 667.266);

(4) The use of WIA title I funds to encourage business relocation

(Sec. 667.268).

(b) Procedures for the investigation and resolution of the

violations are provided for under the Grant Officer's resolution

process at Sec. 667.510. Sanctions and remedies are provided for under

WIA section 184(c) for violations of the provisions relating to:

(1) Construction (Sec. 667.260);

(2) Employment generating activities (Sec. 667.262);

(3) Other prohibited activities (Sec. 667.264); and

(4) The limitation related to sectarian activities

(Sec. 667.266(b)(1)).

181(d)(3) for violations of Sec. 667.268, which addresses business

relocation.

(d) Violations of Sec. 667.266(b)(2) will be handled in accordance

with the DOL nondiscrimination regulations implementing WIA section

188, codified at 29 CFR part 37.

Sec. 667.270 What safeguards are there to ensure that participants in

Workforce Investment Act employment and training activities do not

displace other employees?

(a) A participant in a program or activity authorized under title I

of WIA must not displace (including a partial displacement, such as a

reduction in the hours of non-overtime work, wages, or employment

benefits) any currently employed employee (as of the date of the

participation).

(b) A program or activity authorized under title I of WIA must not

impair existing contracts for services or collective bargaining

agreements. When a program or activity authorized under title I of WIA

would be inconsistent with a collective bargaining agreement, the

appropriate labor organization and employer must provide written

concurrence before the program or activity begins.

not be employed in or assigned to a job if:

(1) Any other individual is on layoff from the same or any

substantially equivalent job;

(2) The employer has terminated the employment of any regular,

unsubsidized employee or otherwise caused an involuntary reduction in

its workforce with the intention of filling the vacancy so created with

the WIA participant; or

(3) The job is created in a promotional line that infringes in any

way on the promotional opportunities of currently employed workers.

(d) Regular employees and program participants alleging

displacement may file a complaint under the applicable grievance

procedures found at Sec. 667.600. (WIA sec. 181.)

Sec. 667.272 What wage and labor standards apply to participants in

activities under title I of WIA?

(a) Individuals in on-the-job training or individuals employed in

activities under title I of WIA must be compensated at the same rates,

including periodic increases, as trainees or employees who are

similarly situated in similar occupations by the same employer and who

have similar training, experience and skills. Such rates must be in

accordance with applicable law, but may not be less than 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)) or the applicable State or local minimum

wage law.

(b) Individuals in on-the-job training or individuals employed in

programs and activities under Title I of WIA must be provided benefits

and working conditions at the same level and to the same extent as

other trainees or employees working a similar length of time and doing

the same type of work.

in programs under Title I of WIA are not considered as income for

purposes of determining eligibility for and the amount of income

transfer and in-kind aid furnished under any Federal or Federally

assisted program based on need other than as provided under the Social

Security Act (42 U.S.C. 301 et seq.). (WIA sec. 181(a)(2).)

Sec. 667.274 What health and safety standards apply to the working

conditions of participants in activities under title I of WIA?

(a) Health and safety standards established under Federal and State

law otherwise applicable to working conditions of employees are equally

applicable to working conditions of participants engaged in programs

and activities under Title I of WIA.

(b)(1) To the extent that a State workers' compensation law

applies, workers' compensation must be provided to participants in

programs and activities under Title I of WIA on the same basis as the

compensation is provided to other individuals in the State in similar

employment.

(2) If a State workers' compensation law applies to a participant

in work experience, workers' compensation benefits must be available

for injuries suffered by the participant in such work experience. If a

State workers'

compensation law does not apply to a participant in work experience,

insurance coverage must be secured for injuries suffered by the

participant in the course of such work experience.

Sec. 667.275 What are a recipient's obligations to ensure

nondiscrimination and equal opportunity, as well as nonparticipation in

sectarian activities?

(a)(1) Recipients, as defined in 29 CFR 37.4, must comply with the

nondiscrimination and equal opportunity provisions of WIA section 188

and its implementing regulations, codified at 29 CFR part 37. Under

that definition, the term ``recipients'' includes State and Local

Workforce Investment Boards, One-Stop operators, service providers,

vendors, and subrecipients, as well as other types of individuals and

entitites.

(2) Nondiscrimination and equal opportunity requirements and

procedures, including complaint processing and compliance reviews, are

governed by the regulations implementing WIA section 188, codified at

29 CFR part 37, and are administered and enforced by the DOL Civil

Rights Center.

(3) As described in Sec. 667.260(a), financial assistance provided

under WIA title I may be used to meet a recipient's obligation to

provide physical and programmatic accessibility and reasonable

accommodation/modification in regard to the WIA program, as required by

section 504 of the Rehabilitation Act of 1973, as amended, the

Americans with Disabilities Act of 1990, as amended, section 188 of

WIA, and the regulations implementing these statutory provisions.

(b) Under 29 CFR 37.6(f), the employment or training of

participants in sectarian activities is prohibited, except with respect

to the maintenance of a facility that is not primarily or inherently

devoted to sectarian instruction or religious worship, in a case in

which the organization operating the facility is part of a program or

activity providing services to participants.

Subpart C--Reporting Requirements

Sec. 667.300 What are the reporting requirements for Workforce

Investment Act programs?

(a) General. All States and other direct grant recipients must

report financial, participant, and performance data in accordance with

instructions issued by DOL. Required reports must be submitted no more

frequently than quarterly within a time period specified in the

reporting instructions.

(b) Subrecipient reporting. (1) A State or other direct grant

recipient may impose different forms or formats, shorter due dates, and

more frequent reporting requirements on subrecipients. However, the

recipient is required to meet the reporting requirements imposed by

DOL.

(2) If a State intends to impose different reporting requirements,

it must describe those reporting requirements in its State WIA plan.

financial reports.

(2) Reports must include any income or profits earned, including

such income or profits earned by subrecipients, and any costs incurred

(such as stand-in costs) that are otherwise allowable except for

funding limitations. (WIA sec. 185(f)(2))

(3) Reported expenditures and program income, including any profits

earned, must be on the accrual basis of accounting and cumulative by

fiscal year of appropriation. If the recipient's accounting records are

not normally kept on the accrual basis of accounting, the recipient

must develop accrual information through an analysis of the

documentation on hand.

(d) Due date. Financial reports and participant data reports are

due no later than 45 days after the end of each quarter unless

otherwise specified in reporting instructions. A final financial report

is required 90 days after the expiration of a funding period or the

termination of grant support.

(e) Annual performance progress report. An annual performance

progress report for each of the three programs under title I, subpart B

is required by WIA section 136(d).

(1) A State failing to submit any of these annual performance

progress reports within 45 days of the due date may have its grant (for

that program or all title I, subpart B programs) for the succeeding

year reduced by as much as five percent, as provided by WIA section

136(g)(1)(B).

(2) States submitting annual performance progress reports that

cannot be validated or verified as accurately counting and reporting

activities in accordance with the reporting instructions, may be

treated as failing to submit annual reports, and be subject to

sanction. Sanctions related to State performance or failure to submit

these reports timely cannot result in a total grant reduction of more

than five percent. Any sanction would be in addition to having to repay

the amount of any incentive funds granted based on the invalid report.

Subpart D--Oversight and Monitoring

Sec. 667.400 Who is responsible for oversight and monitoring of WIA

title I grants?

(a) The Secretary is authorized to monitor all recipients and

subrecipients of all grants awarded and funds expended under WIA title

I to determine compliance with the Act and the WIA regulations, and may

investigate any matter deemed necessary to determine such compliance.

Federal oversight will be conducted primarily at the recipient level.

(b) In each fiscal year, we will also conduct in-depth reviews in

several States, including financial and performance audits, to assure

that funds are spent in accordance with the Act. Priority for such in-

depth reviews will be given to States not meeting annual adjusted

levels of performance.

(c)(1) Each recipient and subrecipient must continuously monitor

grant-supported activities in accordance with the uniform

administrative requirements at 29 CFR parts 95 and 97, as applicable,

including the applicable cost principles indicated at 29 CFR 97.22(b)

or 29 CFR 95.27, for all entities receiving WIA title I funds. For

governmental units, the applicable requirements are at 29 CFR part 97.

For non-profit organizations, the applicable requirements are at 29 CFR

part 95.

(2) In the case of grants under WIA sections 127 and 132, the

Governor must develop a State monitoring system that meets the

requirements of Sec. 667.410(b). The Governor must monitor Local Boards

annually for compliance with applicable laws and regulations in

accordance with the State monitoring system. Monitoring must include an

annual review of each local area's compliance with the uniform

administrative requirements.

Sec. 667.410 What are the oversight roles and responsibilities of

recipients and subrecipients?

(a) Roles and responsibilities for all recipients and subrecipients

of funds under WIA title I in general. Each recipient and subrecipient

must conduct regular oversight and monitoring of its WIA activities and

those of its subrecipients and contractors in order to:

(1) Determine that expenditures have been made against the cost

categories and within the cost limitations specified in the Act and the

regulations in this part;

(2) Determine whether or not there is compliance with other

provisions of the Act and the WIA regulations and other applicable laws

and regulations; and

(3) Provide technical assistance as necessary and appropriate.

(b) State roles and responsibilities for grants under WIA sections

127 and 132.

(1) The Governor is responsible for the development of the State

monitoring system. The Governor must be able to demonstrate, through a

monitoring plan or otherwise, that the State monitoring system meets

the requirements of paragraph (b)(2) of this section.

(2) The State monitoring system must:

(i) Provide for annual on-site monitoring reviews of local areas'

compliance with DOL uniform administrative requirements, as required by

WIA section 184(a)(4);

(ii) Ensure that established policies to achieve program quality

and outcomes meet the objectives of the Act and the WIA regulations,

including policies relating to: the provision of services by One-Stop

Centers; eligible providers of training services; and eligible

providers of youth activities;

(iii) Enable the Governor to determine if subrecipients and

contractors have demonstrated substantial compliance with WIA

requirements; and

(iv) Enable the Governor to determine whether a local plan will be

disapproved for failure to make acceptable progress in addressing

deficiencies, as required in WIA section 118(d)(1).

(v) Enable the Governor to ensure compliance with the

nondiscrimination and equal opportunity requirements of WIA section 188

and 29 CFR part 37. Requirements for these aspects of the monitoring

system are set forth in 29 CFR 37.54(d)(2)(ii).

(3) The State must conduct an annual on-site monitoring review of

each local area's compliance with DOL uniform administrative

requirements, including the appropriate administrative requirements for

subrecipients and the applicable cost principles indicated at

Sec. 667.200 for all entities receiving WIA title I funds.

(4) The Governor must require that prompt corrective action be

taken if any substantial violation of standards identified in

paragraphs (b) (2) or (3) of this section is found. (WIA sec.

184(a)(5).)

(5) The Governor must impose the sanctions provided in WIA section

184 (b) and (c) in the event of a subrecipient's failure to take

required corrective action required under paragraph (b)(4) of this

section.

(6) The Governor may issue additional requirements and instructions

to subrecipients on monitoring activities.

(7) The Governor must certify to the Secretary every two years

that:

(i) The State has implemented uniform administrative requirements;

(ii) The State has monitored local areas to ensure compliance with

uniform administrative requirements; and

(iii) The State has taken appropriate corrective action to secure

such compliance. (WIA sec. 184(a)(6)(A), (B), and (C).)

Subpart E--Resolution of Findings from Monitoring and Oversight

Reviews

Sec. 667.500 What procedures apply to the resolution of findings

arising from audits, investigations, monitoring and oversight reviews?

(a) Resolution of subrecipient-level findings. (1) The Governor is

responsible for resolving findings that arise from the State's

monitoring reviews, investigations and audits (including OMB Circular

A-133 audits) of subrecipients.

(2) A State must utilize the audit resolution, debt collection and

appeal procedures that it uses for other Federal grant programs.

(3) If a State does not have such procedures, it must prescribe

standards and procedures to be used for this grant program.

(b) Resolution of State and other direct recipient level findings.

(1) The Secretary is responsible for resolving findings that arise from

Federal audits, monitoring reviews, investigations, incident reports,

and recipient level OMB Circular A-133 audits.

(2) The Secretary uses the DOL audit resolution process, consistent

with the Single Audit Act of 1996 and OMB Circular A-133, and Grant

Officer Resolution provisions of Sec. 667.510, as appropriate.

(3) A final determination issued by a Grant Officer under this

process may be appealed to the DOL Office of Administrative Law Judges

under the procedures at Sec. 667.800.

investigations or reviews conducted under nondiscrimination laws will

be resolved in accordance with WIA section 188 and the Department of

Labor nondiscrimination regulations implementing WIA section 188,

codified at 29 CFR part 37.

Sec. 667.505 How do we resolve investigative and monitoring findings?

(a) As a result of an investigation, on-site visit or other

monitoring, we notify the recipient of the findings of the

investigation and gives the recipient a period of time (not more than

60 days) to comment and to take appropriate corrective actions.

(b) The Grant Officer reviews the complete file of the

investigation or monitoring report and the recipient's actions under

paragraph (a) of this section. The Grant Officer's review takes into

account the sanction provisions of WIA section 184(b) and (c). If the

Grant Officer agrees with the recipient's handling of the situation,

the Grant Officer so notifies the recipient. This notification

constitutes final agency action.

the matter, the Grant Officer proceeds under Sec. 667.510.

Sec. 667.510 What is the Grant Officer resolution process?

(a) General. When the Grant Officer is dissatisfied with the

State's disposition of an audit or other resolution of violations

(including those arising out of incident reports or compliance

reviews), or with the recipient's response to findings resulting from

investigations or monitoring report, the initial and final

determination process, set forth in this section, is used to resolve

the matter.

(b) Initial determination. The Grant Officer makes an initial

determination on the findings for both those matters where there is

agreement and those where there is disagreement with the recipient's

resolution, including the allowability of questioned costs or

activities. This initial determination is based upon the requirements

of the Act and regulations, and the terms and conditions of the grants,

contracts, or other agreements under the Act.

Secretary invokes the authority described in WIA section 184(e), the

Grant Officer may not revoke a recipient's grant in whole or in part,

nor institute corrective actions or sanctions, without first providing

the recipient with an opportunity to present documentation or arguments

to resolve informally those matters in controversy contained in the

initial determination. The initial determination must provide for an

informal resolution period of at least 60 days from issuance of the

initial determination. If the matters are resolved informally, the

Grant Officer must issue a final determination under paragraph (d) of

this section which notifies the parties in writing of the nature of the

resolution and may close the file.

(d) Grant Officer's final determination. (1) If the matter is not

fully resolved informally, the Grant Officer provides each party with a

written final determination by certified

mail, return receipt requested. For audits of recipient-level entities

and other recipients which receive WIA funds directly from DOL,

ordinarily, the final determination is issued not later than 180 days

from the date that the Office of Inspector General (OIG) issues the

final approved audit report to the Employment and Training

Administration. For audits of subrecipients conducted by the OIG,

ordinarily the final determination is issued not later than 360 days

from the date the OIG issues the final approved audit report to ETA.

(2) A final determination under this paragraph (d) must:

(i) Indicate whether efforts to informally resolve matters

contained in the initial determination have been unsuccessful;

(ii) List those matters upon which the parties continue to

disagree;

(iii) List any modifications to the factual findings and

conclusions set forth in the initial determination and the rationale

for such modifications;

(iv) Establish a debt, if appropriate;

(v) Require corrective action, when needed;

(vi) Determine liability, method of restitution of funds and

sanctions; and

(vii) Offer an opportunity for a hearing in accordance with

Sec. 667.800 of this part.

(3) Unless a hearing is requested, a final determination under this

paragraph (d) is final agency action and is not subject to further

review.

(e) Nothing in this subpart precludes the Grant Officer from

issuing an initial determination and/or final determination directly to

a subrecipient, in accordance with section 184(d)(3) of the Act. In

such a case, the Grant Officer will inform the recipient of this

action.

Subpart F--Grievance Procedures, Complaints, and State Appeals

Processes

Sec. 667.600 What local area, State and direct recipient grievance

procedures must be established?

(a) Each local area, State and direct recipient of funds under

title I of WIA, except for Job Corps, must establish and maintain a

procedure for grievances and complaints according to the requirements

of this section. The grievance procedure requirements applicable to Job

Corps are set forth at 20 CFR 670.990.

(b) Each local area, State, and direct recipient must:

(1) Provide information about the content of the grievance and

complaint procedures required by this section to participants and other

interested parties affected by the local Workforce Investment System,

including One-Stop partners and service providers;

(2) Require that every entity to which it awards Title I funds must

provide the information referred to in paragraph (b)(1) of this section

to participants receiving Title I-funded services from such entities;

and

(3) Must make reasonable efforts to assure that the information

referred to in paragraph (b)(1) of this section will be understood by

affected participants and other individuals, including youth and those

who are limited-English speaking individuals. Such efforts must comply

with the language requirements of 29 CFR 37.35 regarding the provision

of services and information in languages other than English.

(1) A process for dealing with grievances and complaints from

participants and other interested parties affected by the local

Workforce Investment System, including One-Stop partners and service

providers;

(2) An opportunity for an informal resolution and a hearing to be

completed within 60 days of the filing of the grievance or complaint;

(3) A process which allows an individual alleging a labor standards

violation to submit the grievance to a binding arbitration procedure,

if a collective bargaining agreement covering the parties to the

grievance so provides; and

(4) An opportunity for a local level appeal to a State entity when:

(i) No decision is reached within 60 days; or

(ii) Either party is dissatisfied with the local hearing decision.

(d) State procedures must provide:

(1) A process for dealing with grievances and complaints from

participants and other interested parties affected by the Statewide

Workforce Investment programs;

(2) A process for resolving appeals made under paragraph (c)(4) of

this section;

(3) A process for remanding grievances and complaints related to

the local Workforce Investment Act programs to the local area grievance

process; and

(4) An opportunity for an informal resolution and a hearing to be

completed within 60 days of the filing of the grievance or complaint.

(e) Procedures of direct recipients must provide:

(1) A process for dealing with grievance and complaints from

participants and other interested parties affected by the recipient's

Workforce Investment Act programs; and

(2) An opportunity for an informal resolution and a hearing to be

completed within 60 days of the filing of the grievance or complaint.

(f) The remedies that may be imposed under local, State and direct

recipient grievance procedures are enumerated at WIA section 181(c)(3).

(g)(1) The provisions of this section on grievance procedures do

not apply to discrimination complaints brought under WIA section 188

and/or 29 CFR part 37. Such complaints must be handled in accordance

with the procedures set forth in that regulatory part.

(2) Questions about or complaints alleging a violation of the

nondiscrimination provisions of WIA section 188 may be directed or

mailed to the Director, Civil Rights Center, U.S. Department of Labor,

Room N4123, 200 Constitution Avenue, NW, Washington, D.C. 20210, for

processing.

(h) Nothing in this subpart precludes a grievant or complainant

from pursuing a remedy authorized under another Federal, State or local

law.

Sec. 667.610 What processes do we use to review State and local

grievances and complaints?

(a) We investigate allegations arising through the grievance

procedures described in Sec. 667.600 when:

(1) A decision on a grievance or complaint under Sec. 667.600(d)

has not been reached within 60 days of receipt of the grievance or

complaint or within 60 days of receipt of the request for appeal of a

local level grievance and either party appeals to the Secretary; or

(2) A decision on a grievance or complaint under Sec. 667.600(d)

has been reached and the party to which such decision is adverse

appeals to the Secretary.

(b) We must make a final decision on an appeal under paragraph (a)

of this section no later than 120 days after receiving the appeal.

filed within 60 days of the receipt of the decision being appealed.

Appeals made under paragraph (a)(1) of this section must be filed

within 120 days of the filing of the grievance with the State, or the

filing of the appeal of a local grievance with the State. All appeals

must be submitted by certified mail, return receipt requested, to the

Secretary, U.S. Department of Labor, Washington, DC 20210, Attention:

ASET. A copy of the appeal must be simultaneously provided to the

appropriate ETA Regional Administrator and the opposing party.

(d) Except for complaints arising under WIA section 184(f) or

section 188, grievances or complaints made directly to the Secretary

will be referred to the appropriate State or local area for resolution

in accordance with this section, unless we notify the parties that the

Department of Labor will investigate the grievance under the procedures

at Sec. 667.505. Discrimination complaints brought under WIA section

188 or 29 CFR part 37 will be referred to the Director of the Civil

Rights Center.

Sec. 667.630 How are complaints and reports of criminal fraud and

abuse addressed under WIA?

Information and complaints involving criminal fraud, waste, abuse

or other criminal activity must be reported immediately through the

Department's Incident Reporting System to the DOL Office of Inspector

General, Office of Investigations, Room S5514, 200 Constitution Avenue

NW., Washington, D.C. 20210, or to the corresponding Regional Inspector

General for Investigations, with a copy simultaneously provided to the

Employment and Training Administration. The Hotline number is 1-800-

347-3756. Complaints of a non-criminal nature are handled under the

procedures set forth in Sec. 667.505 or through the Department's

Incident Reporting System.

Sec. 667.640 What additional appeal processes or systems must a State

have for the WIA program?

(a) Non-designation of local areas: (1) The State must establish,

and include in its State Plan, due process procedures which provide

expeditious appeal to the State Board for a unit or combination of

units of general local government or a rural concentrated employment

program grant recipient (as described at WIA section 116(a)(2)(B)) that

requests, but is not granted, automatic or temporary and subsequent

designation as a local workforce investment area under WIA section

116(a)(2) or 116(a)(3).

(2) These procedures must provide an opportunity for a hearing and

prescribe appropriate time limits to ensure prompt resolution of the

appeal.

(3) If the appeal to the State Board does not result in

designation, the appellant may request review by the Secretary under

Sec. 667.645.

(4) If the Secretary determines that the appellant was not accorded

procedural rights under the appeal process established in paragraph

(a)(1) of this section, or that the area meets the requirements for

designation at WIA section 116(a)(2) or 116(a)(3), the Secretary may

require that the area be designated as a workforce investment area.

(b) Denial or termination of eligibility as a training provider.

(1) A State must establish procedures which allow providers of training

services the opportunity to appeal:

(i) Denial of eligibility by a Local Board or the designated State

agency under WIA section 122 (b), (c) or (e);

(ii) Termination of eligibility or other action by a Local Board or

State agency under WIA section 122(f); or

(iii) Denial of eligibility as a provider of on-the-job training

(OJT) or customized training by a One-Stop operator under WIA section

122(h).

(2) Such procedures must provide an opportunity for a hearing and

prescribe appropriate time limits to ensure prompt resolution of the

appeal.

(3) A decision under this State appeal process may not be appealed

to the Secretary.

State must establish due process procedures which provide expeditious

appeal for:

(i) WIA participants subject to testing for use of controlled

substances, imposed under a State policy established under WIA section

181(f); and

(ii) WIA participants who are sanctioned after testing positive for

the use of controlled substances, under the policy described in

paragraph (c)(1)(i) of this section.

(2) A decision under this State appeal process may not be appealed

to the Secretary.

Sec. 667.645 What procedures apply to the appeals of non-designation

of local areas?

(a) A unit or combination of units of general local government or

rural concentrated employment program grant recipient (as described in

WIA section 116(a)(2)(B)) whose appeal of the denial of a request for

automatic or temporary and subsequent designation as a local workforce

investment area to the State Board has not resulted in designation may

appeal the denial of local area designation to the Secretary.

(b) Appeals made under paragraph (a) of this section must be filed

no later than 30 days after receipt of written notification of the

denial from the State Board, and must be submitted by certified mail,

return receipt requested, to the Secretary, U.S. Department of Labor,

Washington, DC 20210, Attention: ASET. A copy of the appeal must be

simultaneously provided to the State Board.

procedural rights under the appeal process set forth in the State Plan,

or establish that it meets the requirements for designation in WIA

section 116(a)(2) or (a)(3). The Secretary may consider any comments

submitted in response by the State Board.

(d) If the Secretary determines that the appellant has met its

burden of establishing that it was not accorded procedural rights under

the appeal process set forth in the State Plan, or that it meets the

requirements for designation in WIA section 116(a)(2) or (a)(3), the

Secretary may require that the area be designated as a local workforce

investment area.

(e) The Secretary must issue a written decision to the Governor and

the appellant.

Sec. 667.650 What procedures apply to the appeals of the Governor's

imposition of sanctions for substantial violations or performance

failures by a local area?

(a) A local area which has been found in substantial violation of

WIA title I, and has received notice from the Governor that either all

or part of the local plan will be revoked or that a reorganization will

occur, may appeal such sanctions to the Secretary under WIA section

184(b). The sanctions do not become effective until:

(1) The time for appeal has expired; or

(2) The Secretary has issued a decision.

(b) A local area which has failed to meet local performance

measures for two consecutive years, and has received the Governor's

notice of intent to impose a reorganization plan, may appeal such

sanctions to the Secretary under WIA section 136(h)(1)(B).

filed no later than 30 days after receipt of written notification of

the revoked plan or imposed reorganization, and must be submitted by

certified mail, return receipt requested, to the Secretary, U.S.

Department of Labor, Washington, DC 20210, Attention: ASET. A copy of

the appeal must be simultaneously provided to the Governor.

(d) The Secretary may consider any comments submitted in response

by the Governor.

(e) The Secretary will notify the Governor and the appellant in

writing of the Secretary's decision under paragraph (a) of this section

within 45 days after receipt of the appeal. The Secretary will notify

the Governor and the appellant in writing of the Secretary's decision

under paragraph (b) of this section within 30 days after receipt of the

appeal.

Subpart G--Sanctions, Corrective Actions, and Waiver of Liability

Sec. 667.700 What procedure do we use to impose sanctions and

corrective actions on recipients and subrecipients of WIA grant funds?

(a)(1) Except for actions under WIA section 188(a) or 29 CFR part

37 (relating to nondiscrimination requirements), the Grant Officer uses

the initial and final determination procedures outlined in Sec. 667.510

to impose a sanction or corrective action.

(2) To impose a sanction or corrective action for a violation of

WIA section 188(a) or 29 CFR part 37, the Department will use the

procedures set forth in that regulatory part.

(b) To impose a sanction or corrective action for noncompliance

with the uniform administrative requirements set forth at section

184(a)(3) of WIA, and Sec. 667.200(a), when the Grant Officer

determines that the Governor has not taken corrective action to remedy

the violation as required by WIA section 184(a)(5), the Grant Officer,

under the authority of WIA section 184(a)(7) and Sec. 667.710(c), must

require the Governor to impose any of the corrective actions set forth

at WIA section 184(b)(1). If the Governor fails to impose the

corrective actions required by the Grant Officer, the Secretary may

immediately suspend or terminate financial assistance in accordance

with WIA section 184(e).

requirements, if the Governor fails to promptly take the actions

specified in WIA section 184(b)(1), the Grant Officer may impose such

actions directly against the local area.

(d) The Grant Officer may also impose a sanction directly against a

subrecipient, as authorized in section 184(d)(3) of the Act. In such a

case, the Grant Officer will inform the recipient of the action.

Sec. 667.705 Who is responsible for funds provided under title I of

WIA?

(a) The recipient is responsible for all funds under its grant(s).

(b) The political jurisdiction(s) of the chief elected official(s)

in a local workforce investment area is liable for any misuse of the

WIA grant funds allocated to the local area under WIA sections 128 and

133, unless the chief elected official(s) reaches an agreement with the

Governor to bear such liability.

of general local government, the liability of the individual

jurisdictions must be specified in a written agreement between the

chief elected officials.

Sec. 667.710 What actions are required to address the failure of a

local area to comply with the applicable uniform administrative

provisions?

(a) If, as part of the annual on-site monitoring of local areas,

the Governor determines that a local area is not in compliance with the

uniform administrative requirements found at 29 CFR part 95 or part 97,

as appropriate, the Governor must:

(1) Require corrective action to secure prompt compliance; and

(2) Impose the sanctions provided for at section 184(b) if the

Governor finds that the local area has failed to take timely corrective

action.

(b) An action by the recipient to impose a sanction against a local

area, in accordance with this section, may be appealed to the Secretary

in accordance with Sec. 667.650, and will not become effective until:

(1) The time for appeal has expired; or

(2) The Secretary has issued a decision.

(c)(1) If the Secretary finds that the Governor has failed to

monitor and certify compliance of local areas with the administrative

requirements, under WIA section 184(a), or that the Governor has failed

to promptly take the actions required upon a determination under

paragraph (a) of this section that a local area is not in compliance

with the uniform administrative requirements, the Secretary will

require the Governor to take corrective actions against the State

recipient or the local area, as appropriate to ensure prompt

compliance.

(2) If the Governor fails to take the corrective actions required

by the Secretary under paragraph (c)(1) of this section, the Secretary

may immediately suspend or terminate financial assistance under WIA

section 184(e).

Sec. 667.720 How do we handle a recipient's request for waiver of

liability under WIA section 184(d)(2)?

(a) A recipient may request a waiver of liability, as described in

WIA section 184(d)(2), and a Grant Officer may approve such a waiver

under WIA section 184(d)(3).

(b)(1) When the debt for which a waiver of liability is desired was

established in a non-Federal resolution proceeding, the resolution

report must accompany the waiver request.

(2) When the waiver request is made during the ETA Grant Officer

resolution process, the request must be made during the informal

resolution period described in Sec. 667.510(c).

the Grant Officer only when:

(1) The misexpenditure of WIA funds occurred at a subrecipient's

level;

(2) The misexpenditure was not due to willful disregard of the

requirements of title I of the Act, gross negligence, failure to

observe accepted standards of administration, or did not constitute

fraud;

(3) If fraud did exist, it was perpetrated against the recipient/

subrecipients; and

(i) The recipient/subrecipients discovered, investigated, reported,

and cooperated in any prosecution of the perpetrator of the fraud; and

(ii) After aggressive debt collection action, it has been

documented that further attempts at debt collection from the

perpetrator of the fraud would be inappropriate or futile;

(4) The recipient has issued a final determination which disallows

the misexpenditure, the recipient's appeal process has been exhausted,

and a debt has been established; and

(5) The recipient requests such a waiver and provides documentation

to demonstrate that it has substantially complied with the requirements

of section 184(d)(2) of the Act, and this section.

(d) The recipient will not be released from liability for misspent

funds under the determination required by section 184(d) of the Act

unless the Grant Officer determines that further collection action,

either by the recipient or subrecipients, would be inappropriate or

would prove futile.

Sec. 667.730 What is the procedure to handle a recipient's request for

advance approval of contemplated corrective actions?

(a) The recipient may request advance approval from the Grant

Officer for contemplated corrective actions, including debt collection

actions, which the recipient plans to initiate or to forego. The

recipient's request must include a description and an assessment of all

actions taken by the subrecipients to collect the misspent funds.

(b) Based on the recipient's request, the Grant Officer may

determine that the recipient may forego certain collection actions

against a subrecipient when:

(1) The subrecipient meets the criteria set forth in section

184(d)(2) of the Act;

(2) The misexpenditure of funds:

(i) Was not made by that subrecipient but by an entity that

received WIA funds from that subrecipient;

(ii) Was not a violation of section 184(d)(1) of the Act, and did

not constitute fraud; or

(iii) If fraud did exist,

(A) It was perpetrated against the subrecipient; and:

(B) The subrecipient discovered, investigated, reported, and

cooperated in any prosecution of the perpetrator of the fraud; and

that further attempts at debt collection from the perpetrator of the

fraud would be inappropriate or futile;

(3) A final determination which disallows the misexpenditure and

establishes a debt has been issued at the appropriate level;

(4) Final action within the recipient's appeal system has been

completed; and

(5) Further debt collection action by that subrecipient or the

recipient would be either inappropriate or futile.

Sec. 667.740 What procedure must be used for administering the offset/

deduction provisions at section 184(c) of the Act?

(a)(1) For recipient level misexpenditures, we may determine that a

debt, or a portion thereof, may be offset against amounts that are

allotted to the recipient. Recipients must submit a written request for

an offset to the Grant Officer. Generally, we will apply the offset

against amounts that are available at the recipient level for

administrative costs.

(2) The Grant Officer may approve an offset request, under

paragraph (a)(1) of this section, if the misexpenditures were not due

to willful disregard of the requirements of the Act and regulations,

gross negligence, failure to observe accepted standards of

administration or a pattern of misexpenditure.

(b) For subrecipient level misexpenditures that were not due to

willful disregard of the requirements of the Act and regulations, gross

negligence, failure to observe accepted standards of administration or

a pattern of misexpenditure, if we have required the State to repay

such amount the State may deduct an amount equal to the misexpenditure

from its subsequent year's allocations to the local area from funds

available for the administrative costs of the local programs involved.

until the Grant Officer reduces amounts allotted to the State by the

amount of the misexpenditure.

(d) A State may not make a deduction under paragraph (b) of this

section until the State has taken appropriate corrective action to

ensure full compliance within the local area with regard to appropriate

expenditure of WIA funds.

Subpart H--Administrative Adjudication and Judicial Review

Sec. 667.800 What actions of the Department may be appealed to the

Office of Administrative Law Judges?

(a) An applicant for financial assistance under title I of WIA

which is dissatisfied because we have issued a determination not to

award financial assistance, in whole or in part, to such applicant; or

a recipient, subrecipient, or a vendor against which the Grant Officer

has directly imposed a sanction or corrective action, including a

sanction against a State under 20 CFR part 666, may appeal to the U.S.

Department of Labor, Office of Administrative Law Judges (OALJ) within

21 days of receipt of the final determination.

(b) Failure to request a hearing within 21 days of receipt of the

final determination constitutes a waiver of the right to a hearing.

specifically those issues in the final determination upon which review

is requested. Those provisions of the final determination not specified

for review, or the entire final determination when no hearing has been

requested within the 21 days, are considered resolved and not subject

to further review. Only alleged violations of the Act, its regulations,

grant or other agreement under the Act fairly raised in the

determination, and the request for hearing are subject to review.

(d) A request for a hearing must be transmitted by certified mail,

return receipt requested, to the Chief Administrative Law Judge, U.S.

Department of Labor, Suite 400, 800 K Street, NW., Washington, DC

20001, with one copy to the Departmental official who issued the

determination.

(e) The procedures in this subpart apply in the case of a

complainant who has not had a dispute adjudicated under the alternative

dispute resolution process set forth in Sec. 667.840 within the 60

days, except that the request for hearing before the OALJ must be filed

within 15 days of the conclusion of the 60-day period provided in

Sec. 667.840. In addition to including the final determination upon

which review is requested, the complainant must include a copy of any

Stipulation of Facts and a brief summary of proceedings.

Sec. 667.810 What rules of procedure apply to hearings conducted under

this subpart?

(a) Rules of practice and procedure. The rules of practice and

procedure promulgated by the OALJ at subpart A of 29 CFR part 18,

govern the conduct of hearings under this subpart. However, a request

for hearing under this subpart is not considered a complaint to which

the filing of an answer by DOL or a DOL agency or official is required.

Technical rules of evidence will not apply to hearings conducted

pursuant to this part. However, rules or principles designed to assure

production of the most credible evidence available and to subject

testimony to cross-examination will apply.

(b) Prehearing procedures. In all cases, the Administrative Law

Judge (ALJ) should encourage the use of prehearing procedures to

simplify and clarify facts and issues.

witnesses and the production of documents or other items at hearings

must be obtained from the ALJ and must be issued under the authority

contained in section 183(c) of the Act, incorporating 15 U.S.C. 49.

(d) Timely submission of evidence. The ALJ must not permit the

introduction at the hearing of any documentation if it has not been

made available for review by the other parties to the proceeding either

at the time ordered for any prehearing conference, or, in the absence

of such an order, at least 3 weeks prior to the hearing date.

(e) Burden of production. The Grant Officer has the burden of

production to support her or his decision. To this end, the Grant

Officer prepares and files an administrative file in support of the

decision which must be made part of the record. Thereafter, the party

or parties seeking to overturn the Grant Officer's decision has the

burden of persuasion.

Sec. 667.820 What authority does the Administrative Law Judge have in

ordering relief as an outcome of an administrative hearing?

In ordering relief, the ALJ has the full authority of the Secretary

under the Act.

Sec. 667.825 What special rules apply to reviews of NFJP and WIA INA

grant selections?

(a) An applicant whose application for funding as a WIA INA grantee

under 20 CFR part 668 or as an NFJP grantee under 20 CFR part 669 is

denied in whole or in part may request an administrative review under

Sec. 667.800(a) with to determine whether there is a basis in the

record to support the decision. This appeal will not in any way

interfere with the designation and funding of another organization to

serve the area in question during the appeal period. The available

remedy in such an appeal is the right to be designated in the future as

the WIA INA or NFJP grantee for the remainder of the current grant cycle.

Neither retroactive nor immediately effective selection status may be

awarded as relief in a non-selection appeal under this section.

(b) If the ALJ rules that the organization should have been

selected and the organization continues to meet the requirements of 20

CFR part 668 or part 669, we will select and fund the organization

within 90 days of the ALJ's decision unless the end of the 90-day

period is within six (6) months of the end of the funding period. An

applicant so selected is not entitled to the full grant amount, but

will only receive the funds remaining in the grant that have not been

expended by the current grantee through its operation of the grant and

its subsequent closeout.

grantee is subject to being removed as grantee in the event an ALJ

decision so orders. The Grant Officer provides instructions on

transition and close-out to a grantee which is removed. All parties

must agree to the provisions of this paragraph as a condition for WIA

INA or NFJP funding.

(d) A successful appellant which has not been awarded relief

because of the application of paragraph (b) of this section is eligible

to compete for funds in the immediately subsequent two-year grant

cycle. In such a situation, we will not issue a waiver of competition

and for the area and will select a grantee through the normal

competitive process.

Sec. 667.830 When will the Administrative Law Judge issue a decision?

(a) The ALJ should render a written decision not later than 90 days

after the closing of the record.

(b) The decision of the ALJ constitutes final agency action unless,

within 20 days of the decision, a party dissatisfied with the ALJ's

decision has filed a petition for review with the Administrative Review

Board (ARB) (established under Secretary's Order No. 2-96),

specifically identifying the procedure, fact, law or policy to which

exception is taken. Any exception not specifically urged is deemed to

have been waived. A copy of the petition for review must be sent to the

opposing party at that time. Thereafter, the decision of the ALJ

constitutes final agency action unless the ARB, within 30 days of the

filing of the petition for review, notifies the parties that the case

has been accepted for review. Any case accepted by the ARB must be

decided within 180 days of acceptance. If not so decided, the decision

of the ALJ constitutes final agency action.

Sec. 667.840 Is there an alternative dispute resolution process that

may be used in place of an OALJ hearing?

(a) Parties to a complaint which has been filed according to the

requirements of Sec. 667.800 may choose to waive their rights to an

administrative hearing before the OALJ. Instead, they may choose to

transfer the settlement of their dispute to an individual acceptable to

all parties who will conduct an informal review of the stipulated facts

and render a decision in accordance with applicable law. A written

decision must be issued within 60 days after submission of the matter

for informal review.

(b) The waiver of the right to request a hearing before the OALJ

will automatically be revoked if a settlement has not been reached or a

decision has not been issued within the 60 days provided in paragraph

(a) of this section.

be treated as a final decision of an Administrative Law Judge under

section 186(b) of the Act.

Sec. 667.850 Is there judicial review of a final order of the

Secretary issued under section 186 of the Act?

(a) Any party to a proceeding which resulted in a Secretary's final

order under section 186 of the Act may obtain a review in the United

States Court of Appeals having jurisdiction over the applicant or

recipient of funds involved, by filing a review petition within 30 days

of the issuance of the Secretary's final order.

(b) The court has jurisdiction to make and enter a decree

affirming, modifying, or setting aside the order of the Secretary, in

whole or in part.

court unless the objection was specifically urged, in a timely manner,

before the Secretary. The review is limited to questions of law, and

the findings of fact of the Secretary are conclusive if supported by

substantial evidence.

(d) The judgment of the court is final, subject to certiorari

review by the United States Supreme Court.

Sec. 667.860 Are there other remedies available outside of the Act?

Nothing contained in this subpart prejudices the separate exercise

of other legal rights in pursuit of remedies and sanctions available

outside the Act.

Subpart I--Transition Planning

Sec. 667.900 What special rules apply during the JTPA/WIA transition?

(a)(1) To facilitate planning for the implementation of WIA, a

Governor may reserve an amount equal to no more than 2 percent of the

total amount of JTPA formula funds allotted to the State for fiscal

years 1998 and 1999 for expenditure on transition planning activities.

The funds may be from any one or more of the JTPA titles and subparts,

that is, funds do not have to be drawn proportionately from all titles

and subparts. The Governor must report the expenditure of these funds

for transition planning separately in accordance with instructions we

issued, but the expenditure is not required to be allocated to the

various titles and subparts;

(2) These reserved transition funds may be excluded from any

calculation of compliance with JTPA cost limitations.

(b) Not less than 50 percent of the funds reserved by the Governor

in paragraph (a) of this section must be made available to local

entities.

and appropriate.

Sec. 667.910 Are JTPA participants to be grandfathered into WIA?

Yes, all JTPA participants who are enrolled in JTPA must be

grandfathered into WIA. These participants can complete the JTPA

services specified in their individual service strategy, even if that

service strategy is not allowable under WIA, or if the participant is

not eligible to receive these services under WIA.