The State Vocational Rehabilitation Services Program

SUMMARY: The Secretary proposes to amend the regulations governing The

State Vocational Rehabilitation Services Program. These amendments are

needed to implement changes to the Rehabilitation Act of 1973 (Act)

made by the Rehabilitation Act Amendments of 1992, enacted on October

29, 1992, as amended by the 1993 technical amendments (hereinafter

collectively referred to as the 1992 Amendments).

DATES: Comments must be received on or before February 23, 1996.

ADDRESSES: All comments concerning these proposed regulations should be

addressed to Fredric K. Schroeder, U.S. Department of Education, 600

Independence Avenue SW., Room 3028, Mary E. Switzer Building,

Washington, D.C. 20202-2531. Comments transmitted by facsimile should

be sent to (202) 205-9772. Comments can be transmitted in an electronic

format either through the electronic bulletin board system (BBS) of the

Rehabilitation Services Administration (RSA) or through internet. The

internet address is ``[email protected]''. The access number for the RSA

BBS is (202) 205-5574 for low speed (2400 BPS or lower) modems and

(202) 205-6174 for high speed (9600 BPS and higher) modems. Comments

can also be transmitted to the RSA BBS through Fedworld via internet

using the telnet command. Telnet to: ``Fedworld.gov''. All comments

transmitted in an electronic format should be sent to the following RSA

BBS mailbox: ``RSADPPES''. To facilitate the analysis of comments,

electronic transmission of comments is preferred. Also, comments should

be specific and identified by proposed regulatory citation. Comments

received by RSA after the due date for comments will not be considered.

A copy of any comments that concern information collection

requirements should also be sent to the Office of Management and Budget

at the address listed in the Paperwork Reduction Act section of this

preamble.

FOR FURTHER INFORMATION CONTACT: Beverlee Stafford, U.S. Department of

Education, 600 Independence Avenue SW., Room 3014, Mary E. Switzer

Building, Washington, D.C. 20202-2531. Telephone (202) 205-8831.

Individuals who use a telecommunications device for the deaf (TDD) may

call (202) 205-5538.

SUPPLEMENTARY INFORMATION: The State Vocational Rehabilitation Services

Program (program) is authorized by Title I of the Act (29 U.S.C. 701-

744). This program provides support to each State to assist it in

operating a comprehensive, coordinated, effective, efficient, and

accountable State program to assess, plan, develop, and provide

vocational rehabilitation (VR) services to individuals with

disabilities so that those individuals may prepare for and engage in

gainful employment, consistent with their strengths, resources,

priorities, concerns, abilities, capabilities, and informed choice. The

program supports the National Education Goal that, by the year 2000,

every adult American, including individuals with disabilities, will

possess the knowledge and skills necessary to compete in a global

economy and exercise the rights and responsibilities of citizenship.

Regulations for this program were last published in their entirety

on May 12, 1988 (53 FR 16978) to implement the 1986 amendments to the

Act and are codified in 34 CFR Part 361. In addition, a notice of

proposed rulemaking (NPRM) for this program was published on July 3,

1991 (56 FR 30620) (1991 NPRM), but it was never finalized.

In the 1991 NPRM, the Secretary proposed amendments to the

regulations for this program that were designed to reduce regulatory

burden on States and to place greater administrative discretion at the

State level. More specifically, the 1991 NPRM proposed to remove or

reduce certain State plan, paperwork, and reporting requirements not

mandated by statute, to clarify the regulations through more precise

definitions, and generally to simplify and condense the regulations. At

the request of the Congress, the proposed regulations in the 1991 NPRM

were not finalized because the Rehabilitation Act Amendments of 1992

were being developed at that time.

The 1992 Amendments made extensive changes to Title I of the Act

that have far-reaching implications for the program. One of the major

themes of the 1992 Amendments is the empowerment of individuals with

disabilities in terms of influence on the State plan and State

vocational rehabilitation policy through membership on the State

Rehabilitation Advisory Council or an independent commission and

increased participation in the development, implementation, and

evaluation of their individualized written rehabilitation programs

through informed choice. The statute also requires that designated

State units (DSUs) provide for the use of appropriate modes of

communication and accessible formats to ensure equal access for

individuals with disabilities who need this assistance.

A related theme is the integration of individuals with disabilities

into the full spectrum of American life. The 1992 Amendments requires

both that vocational rehabilitation services be provided in the most

integrated settings possible and that employment outcomes be in the

most integrated settings possible.

Another key theme of the 1992 Amendments is to improve access to

the vocational rehabilitation system. The amendments streamline the

process for making eligibility determinations by requiring the use of

existing information to the extent possible, by adding a presumption of

benefit from services, and by providing a 60-day time limit for making

eligibility determinations.

The 1992 Amendments also focuses on expanding and improving the

quality of services by requiring States to develop a strategic plan, by

requiring States to develop a comprehensive system of personnel

development to ensure that DSU personnel are adequately trained and

meet the State's highest standards, and by requiring the development of

standards and indicators to evaluate the performance of State programs.

The evaluation standards and performance indicators are being developed

separately and are not addressed in this NPRM.

Finally, the 1992 Amendments focuses on expanding and improving

services to certain groups of individuals with disabilities. The

amendments include new order of selection and eligibility provisions

that are designed to increase and improve services for individuals with

severe disabilities, particularly individuals with the most severe

disabilities. The amendments also contain new outreach requirements

that are designed to increase services to individuals with disabilities

who are members of groups that are currently unserved and underserved,

including members of minority groups. In addition, the amendments

contain provisions that are designed to increase coordination between

education agencies and DSUs to better serve individuals with

disabilities who are transitioning students.

This NPRM proposes changes to implement the 1992 Amendments to

Title I Parts A, B, and C of the Act (with the exception of the

strengthened order

[[Page 64477]]

of selection requirements in sections 12(d) and 101(a)(5)(A) of the

Act, the evaluation standards and performance indicator requirements in

section 106 of the Act, and the client assistance program requirements

in section 112 of the Act, which are being implemented in separate

rulemaking documents) and proposes to incorporate some of the changes

that were previously proposed in the 1991 NPRM to reduce the

administrative burden on States. This NPRM also proposes other changes

that the Secretary believes are important to update, consolidate,

clarify, and in other ways improve the regulations for this program.

Executive Order 12866 encourages Federal agencies to facilitate

meaningful participation in the regulatory development process.

Accordingly, prior to drafting this NPRM, RSA, on March 31, 1994, made

draft proposed regulations (draft regulations) available in accessible

formats, including an electronic format, to a broad spectrum of parties

for informal review and comment. Over 600 letters of comments on the

draft regulations were analyzed. RSA also gathered public input on the

draft regulations through public meetings held in Washington, D.C. on

April 19, May 12, and May 17, 1994; Chicago on April 26, 1994; and

Oakland, California on May 4 and May 5, 1994; and through public

teleconferences on April 20, May 13, May 18, and June 8, 1994. In

addition, three separate focus groups were convened in June 1994 to

allow for further discussion of three discrete issues: eligibility

under the program, informed choice in the selection of services and

service providers, and the standards related to the achievement and

maintenance of an employment outcome.

The following is a section-by-section summary of the regulations

proposed in this NPRM, including an explanation of the major

provisions, how they differ from the existing and the draft

regulations, and the reasons the Secretary is proposing them. In

addition, in order to clarify proposed organizational changes, the

summary identifies the sections of the current regulations, as well as

the sections of the statute, on which every section of the proposed

regulations is based.

Changes to the draft regulations that appear in this NPRM were made

in response to public comments received by RSA and input provided

during the public meetings, teleconferences, and focus groups.

Significant changes to the draft regulations are discussed in the

section-by-section summary. However, minor technical and structural

changes that do not significantly alter the provisions of the draft

regulations are not discussed.

In response to public commenters who viewed some of the paperwork

requirements in the draft regulations as unduly burdensome, the

Secretary has proposed in the NPRM eliminating or consolidating

documentation requirements wherever feasible. Those requirements that

would remain in the proposed regulations are considered essential to

the proper administration of the program. Paperwork requirements in the

following sections of the draft regulations have been removed or

reduced: Secs. 361.13(c), 361.19, 361.20(b), 361.21 (a) and (b),

361.22(a)(1), 361.29 (a)(2) and (a)(4), 361.33(b), 361.46, 361.47,

361.52, and 361.53(a)(3).

In addition, the draft regulations have been reviewed and revised

in accordance with the Department's principles for regulating, which

were developed as part of the Administration's regulatory reinvention

initiative under the National Performance Review II. The principles are

designed to ensure that the Department regulates in the most flexible,

most equitable, and least burdensome way possible. As a result of that

review, additional non-statutory requirements in the draft regulations

have been eliminated or modified to reduce paperwork or process

requirements on States and to increase State flexibility in meeting

statutory requirements. These proposed changes are identified in the

section-by-section summary.

The proposed regulations, like the draft regulations, provide

guidance through examples in the following three areas: permissible

expenses under the definition of ``maintenance''; permissible expenses

under the definition of ``transportation''; and meeting the final

eligibility criterion (an individual with a disability must require VR

services) under Sec. 361.42. Some public commenters on the draft

regulations opposed the use of examples on the grounds that they would

interfere with individual counselor judgment, whereas other commenters

supported their use as an effective means of ensuring that counselors

had ready access to information typically found in guidance materials.

By including the examples in the regulations, the Secretary intends to

make the regulations more comprehensive and useful. The Secretary

emphasizes, both here and throughout the section-by-section summary,

that the examples are provided solely for the purposes of illustration,

do not address all situations that a rehabilitation counselor may face,

and are not intended to preclude individual counselor judgment on a

case-by-case basis. The examples are merely guidance material to which

rehabilitation professionals can quickly refer.

References in the section-by-section summary to the ``proposed

regulations,'' as opposed to the ``draft regulations,'' refer to

regulatory provisions included in this NPRM.

Section-by-Section Summary

Section 361.1--Purpose

This proposed new section of the regulations would incorporate the

language in section 100(a)(2) of the statute, which emphasizes the goal

of gainful employment for individuals with disabilities and the

responsibility of States to operate comprehensive, coordinated,

effective, efficient, and accountable programs that are designed to

assess, plan, develop, and provide vocational rehabilitation services.

The Secretary interprets the statutory term ``gainful employment'' to

have the same meaning as the term ``employment outcome,'' as it is

defined in the proposed regulations.

Section 361.2--Eligibility for a Grant

This new section is proposed for clarification. A similar section

was proposed in the 1991 NPRM.

Section 361.3--Authorized Activities

This new section is proposed to clarify how the funds under this

program can be used. A similar section was proposed in the 1991 NPRM.

It also incorporates the new statutory provision in section 111(a)(1)

of the Act that funds may be used to develop and implement the

strategic plan.

Section 361.4--Applicable Regulations

This proposed section would revise Sec. 361.1(b)(1) of the existing

regulations to clarify that the reference to 34 CFR Part 74

(Administration of Grants to Institutions of Higher Education,

Hospitals, and Nonprofit Organizations) applies only to the award of

subgrants by vocational rehabilitation agencies to entities that are

not State or local governments or Indian tribal organizations and to

remove the reference to 34 CFR Part 78 (The Education Appeal Board)

because it has been deleted from the Education Department General

Administrative Regulations (EDGAR). In addition, the proposed section

would add references to 34 CFR Parts 80, 81, 82, 85, and 86 because

those parts have been added to EDGAR since the regulations for this

program were last revised, and they are applicable to this program.

[[Page 64478]]

Section 361.5--Applicable Definitions

This proposed section is taken from Sec. 361.1(c) of the existing

regulations. It has been revised to incorporate changes in the

definitions in section 7 of the Act that were made by the 1992

Amendments. The definitions are organized alphabetically and are

numbered for purposes of quick identification.

The following definitions from the current regulations are not

included in the proposed regulations since the terms have been removed

or replaced in the Act: ``employability,'' ``evaluation of vocational

rehabilitation potential,'' ``initial expenditure,'' ``rehabilitation

facility,'' and ``time-limited services.'' In addition, the term

``workshop'' is not used or defined in the proposed regulations.

Statutory definitions of the following terms have been added to the

proposed regulations without substantive change: ``assistive technology

device,'' ``assistive technology service,'' ``extended services,''

``impartial hearing officer,'' ``ongoing support services,'' ``personal

assistance services,'' ``rehabilitation technology,'' ``supported

employment,'' ``supported employment services,'' and ``transition

services. In addition, definitions of ``American Indian'' and ``State''

have been revised to reflect statutory changes made by the 1992

Amendments.

Definitions of the terms ``community rehabilitation program'' and

``employment outcome,'' which are defined in the Act, have been revised

to clarify or elaborate on the statutory definitions. The proposed

definition of ``community rehabilitation program'' incorporates the

definition in section 7(25) of the Act, but would add a definition of

the word ``program'' to clarify that community rehabilitation programs

do not include individual practitioners, such as physicians or physical

therapists, who provide VR services but are not affiliated with an

agency, organization, or institution that provides VR services as one

of its major functions. This clarification is based on the Secretary's

view that Congress did not intend for the assessment of the capacity

and effectiveness of community rehabilitation programs and related

requirements to include every individual person who provides VR

services. However, the Secretary interprets the term community

rehabilitation program and the associated requirements to apply to a

vocational rehabilitation services unit of a hospital. In addition, in

response to public comment on the draft regulations, the Secretary

proposes to broaden the meaning of the term ``program'' from an entity

that provides or facilitates the provision of VR services as its

primary function to an entity that provides or facilitates the

provision of VR services as one of its major functions. This change

would enable, for example, a local affiliate of the United Cerebral

Policy Foundation that provides VR services, in addition to

disseminating information and providing educational services, to be

considered a ``community rehabilitation program'' under the definition.

The proposed definition of ``employment outcome'' elaborates on the

definition in section 7(5) of the Act by incorporating into the

definition the concept in the Act that an employment outcome must be

consistent with an individual's strengths, resources, priorities,

concerns, abilities, capabilities, interests, and informed choice. The

proposed definition would replace the definition of ``employability''

in Sec. 361.1 of the existing regulations. In response to the draft

regulations, several commenters expressed concern about the scope of

permissible employment outcomes under the definition. Although the

proposed definition, unlike the current regulatory definition of

``employability,'' does not identify a full range of permissible

employment outcomes under the vocational rehabilitation services

program, the Secretary does not intend the proposed definition to

exclude any employment outcome that has been permitted in the past.

Thus, for example, homemaker, extended employment, and self-employment

remain acceptable employment outcomes. The proposed definition does,

however, recognize competitive employment as the optimal employment

outcome under the program, and language emphasizing this has been added

to the definition.

The Secretary proposes new definitions or revisions to the

definitions in the existing regulations for the following terms that

are not defined in the Act: ``administrative costs,'' ``applicant,''

``appropriate modes of communication,'' ``comparable services and

benefits,'' ``competitive employment,'' ``construction of a facility

for a public or nonprofit community rehabilitation program,''

``establishment, development, or improvement of a public or nonprofit

community rehabilitation program,'' ``establishment of a facility for a

public or nonprofit community rehabilitation program,'' ``extended

employment,'' ``family member,'' ``individual's representative,''

``integrated setting,'' ``maintenance,'' ``post-employment services,''

``transitioning student,'' and ``transportation.''

The proposed definition of ``administrative costs'' is based on

existing RSA subregulatory guidance and definitions of the term that

are used in other RSA programs. The definition, which is substantially

the same as the definition of ``administrative costs'' in the draft

regulations, lists, as examples, certain types of expenses that would

constitute administrative costs. Several commenters on the draft

regulations suggested adding other items to the definition. In

response, the Secretary has amended the definition of ``administrative

costs'' to clarify that the types of expenses listed in the definition

are intended only as examples and that other expenditures would be

considered administrative costs as long as those expenditures relate to

program planning, development, monitoring, and evaluation.

The Secretary proposes to define ``applicant'' for clarification by

referencing the requirements for submitting an application in

Sec. 361.41(b)(2) of the proposed regulations.

In response to public comment on the draft regulations, the

Secretary proposes to change the term ``special modes of

communication'' to ``appropriate modes of communication'' to ensure

consistency with the Americans with Disabilities Act (ADA). In

addition, the Secretary proposes to eliminate references in the

definition to individuals who are blind, deaf, or hearing-impaired to

clarify that the proposed definition is not limited by type of

disability and that it includes all appropriate modes of communication

necessary to enable any individual with a disability to comprehend

information being communicated.

Finally, the Secretary has expanded the list of examples of

communication services and materials in the proposed definition.

However, the Secretary does not consider the list to be all-inclusive

and emphasizes that other appropriate modes of communication not

specified in the proposed definition are also available.

The proposed definition of ``comparable services and benefits'' is

based on a definition of that term that was proposed in the 1991 NPRM.

It is intended to support the statutory purpose of conserving

rehabilitation funds, while ensuring the provision of appropriate and

timely services in lieu of those provided by the DSU. The proposed

definition revises the definition proposed in the 1991 NPRM to remove

private agencies (i.e., community, philanthropic, and other

[[Page 64479]]

private entities that are not VR service providers but do provide

financial or other assistance to individuals with disabilities to help

meet VR needs, such as scholarship assistance from a local Lions Club)

as one of the sources of comparable services and benefits because the

Secretary interprets the reference in the statute to ``other programs''

to mean other public programs. In addition, the Secretary believes it

would be too burdensome to require State agencies to determine the

availability of comparable services and benefits from private agencies

prior to providing services and benefits under this program. The

Secretary would, however, continue to encourage State agencies to use

services and benefits that are available from private agencies to the

extent they are known. In response to public comment on the draft

regulations, the Secretary has further amended the term by clarifying

that comparable services and benefits must be available ``within a

reasonable period of time'' and must be commensurate with the services

that the individual would otherwise receive from the VR agency.

In response to public comment on the draft regulations, the

Secretary has consolidated the definitions of ``competitive

employment'' and ``competitive work'' from the draft regulations into a

single proposed definition of ``competitive employment.'' The

consolidated definition recognizes that integration (i.e., an

employment outcome in an integrated job setting) is an element of

competitive employment, rather than a separate concept. It would

establish a general requirement that individuals must receive

compensation that is at or above the minimum wage, but not less than

the prevailing community wage for non-disabled individuals performing

the same or similar work.

The consolidated definition would apply to supported employment as

well as to other kinds of competitive employment outcomes. Under the

proposed definition, however, an employment outcome in a supported

employment setting in which an individual receives wages below the

minimum wage in accordance with section 14(c) of the Fair Labor

Standards Act (FLSA) (i.e., wages based on individual productivity)

would no longer be considered competitive employment. Although this

proposed change would represent a significant departure from

longstanding RSA regulatory policy, the Secretary agrees with those

public commenters who suggested that competitive employment outcomes

should be limited to those in which individuals are compensated at or

above the minimum wage. In addition, this proposed change is consistent

with section 101(a)(16) of the Act, which requires DSUs annually to

review and reevaluate the status of each individual in an employment

setting under section 14(c) of the FLSA in order to determine the

individual's readiness for competitive employment. This statutory

requirement indicates that supported employment settings in which

individuals are compensated below minimum wage in accordance with the

FLSA do not constitute competitive employment. The Secretary also notes

that the proposed change would have the effect of requiring individuals

in supported employment to earn at least the minimum wage in order to

receive services under Title VI, Part C of the Act. Finally, so that

the impact of this proposed change can be appropriately evaluated, the

Secretary requests public comment on the extent to which individuals

currently in supported employment earn less than the minimum wage.

The proposed definition of the term ``construction of a facility

for a public or nonprofit community rehabilitation program'' is based

on the definition of the term ``construction of a rehabilitation

facility'' in Sec. 361.1(c) of the existing regulations and the

definition of the term ``construction'' in section 7(1) of the Act. The

proposed regulations also incorporate the 1992 Amendments, which

replaced the concept of rehabilitation facilities with ``community

rehabilitation programs.'' The word ``facility'' is used in the

proposed regulations only to refer to a ``building'' or ``structure.''

In addition, the Secretary proposes to fold into this definition all

authorized construction expenditures under this program, which are

currently contained in Sec. 361.74(a) of the existing regulations.

The Secretary proposes to define the term ``eligible individual''

for clarification throughout the regulations by referencing the basic

eligibility criteria in proposed Sec. 361.42(a).

The proposed definition of the term ``establishment, development,

or improvement of a public or nonprofit community rehabilitation

program'' elaborates on the statutory definition of the term

``establishment of a community rehabilitation program'' by

incorporating all of the types of expenditures for which a State unit

can receive Federal financial participation. These provisions are taken

from Sec. 361.73(a) of the existing regulations and include the

limitations on staffing costs initially proposed in the 1991 NPRM.

The Secretary proposes to define separately the term

``establishment of a facility for a public or nonprofit community

rehabilitation program'' for purposes of clarification. The proposed

definition covers only those authorized activities contained in the

definition of ``establishment, development, or improvement of a public

or nonprofit community rehabilitation program'' that involve

facilities. In response to public comment about these three terms, the

Secretary wishes to emphasize that funds under this program cannot be

used to support community rehabilitation programs that are profitmaking

organizations.

In response to public comment on the draft regulations, the

Secretary has amended the proposed definition of the term ``extended

employment'' to clarify that it means work in a non-integrated or

sheltered setting for a public or private nonprofit agency or

organization that provides compensation in accordance with the Fair

Labor Standards Act as well as any on-the-job support services the

individual might require. In response to several commenters who

expressed concern with language in the draft definition that stated

that some individuals in extended employment ``are not ready for

competitive employment,'' the Secretary has modified the proposed

definition to clarify that the purpose of extended employment is to

enable individuals to continue to train or otherwise prepare for

competitive employment, unless the individual makes an informed choice

to remain in extended employment.

In response to public comment, the definition of the term ``family

member'' has been revised to mean any individual (1) who is a relative

or guardian, or who lives in the same household as an applicant or

eligible individual regardless of their interpersonal relationship; (2)

who has a substantial interest in the well-being of that individual;

and (3) who needs vocational rehabilitation services to enable the

applicant or eligible individual to achieve an employment outcome.

In response to public comment on the draft regulations, the

Secretary proposes to amend the definition of the term ``impartial

hearing officer'' to clarify that a member of the DSU's rehabilitation

advisory council may not serve as an impartial hearing officer for that

same DSU. Under the proposed definition, however, a member of the State

Rehabilitation Advisory Council could serve as an impartial hearing

officer in cases involving another DSU within the same State. For

example, a member of the State Rehabilitation

[[Page 64480]]

Advisory Council for a State unit serving individuals who are blind

would not be precluded, solely on the basis of that membership, from

serving as an impartial hearing officer in cases involving the State

unit that serves individuals other than individuals with visual

disabilities.

The Secretary proposes to include the term ``individual with a most

severe disability'' in the definitions to clarify that States are

required to define the term as a subset of and consistent with the

definition of the statutory term ``individual with a severe

disability.''

The Secretary proposes to define the term ``individual's

representative,'' consistent with the list of potential representatives

in the Act, so that the defined term, rather than the long list of

potential representatives, can be referenced throughout the

regulations. In response to public comment on the draft regulations,

the Secretary proposes to amend the definition to clarify that it means

any representative chosen by an applicant or eligible individual,

including a parent, guardian, other family member, or advocate, unless

a representative has been appointed by a court to represent the

interests of the individual, in which case the court-appointed

representative is the individual's representative.

The proposed definition of the term ``integrated setting'' is

designed to implement the intent of the statute that individuals

receive VR services and achieve employment outcomes in the most

integrated settings possible, consistent with the individual's informed

choice. In the draft regulations the term was defined broadly to mean a

setting in which the majority of individuals with whom individuals with

disabilities interact meaningfully, excluding service providers, are

non-disabled individuals. In response to public comment on the draft

regulations, the Secretary proposes to amend the term by requiring that

applicants or eligible individuals need only be given the opportunity

to interact with non-disabled individuals, excluding service providers,

on a regular basis for a setting to be considered integrated. This

proposed change would permit employment at a center for independent

living, for example, to be considered integrated as long as the

employee has the opportunity to regularly interact with non-disabled

persons, even though the Act requires that a majority of a center's

employees be disabled. The proposed definition also applies to

supported employment placements. A separate definition of

``integration'' for supported employment placements is, therefore, no

longer needed and is not included in the proposed regulations.

``Maintenance'' would be defined to clarify that it includes living

expenses (e.g., food, shelter, and clothing) only to the extent that

they are in excess of an individual's normal expenses and that it is

available only for eligible individuals and individuals receiving

extended evaluation services. The proposed definition reflects

statutory language in section 103(a)(5) of the Act that limits the

provision of maintenance to ``additional costs while participating in

rehabilitation.'' The Secretary considers an individual to be

participating in rehabilitation if the individual is receiving services

under an individualized written rehabilitation program (IWRP) or under

a written plan for providing extended evaluation services. The

provision of maintenance must be tied to other needed services.

Maintenance, however, cannot be used to pay the expenses of all

applicants receiving assessment services, as several commenters urged.

As discussed later in the definitions section of the preamble, the

Secretary believes, however, that the short-term costs of food and

shelter of applicants who are required to travel to receive assessment

services, and who are not receiving extended evaluation services, could

be covered as a transportation expense. In addition, the Secretary

proposes a note following the proposed definition of maintenance that

provides examples of permissible maintenance expenses. The last example

was added in response to public comment and indicates that maintenance

can be used to cover the costs of food, shelter, and clothing of

homeless or recently deinstitutionalized individuals until other

financial assistance can be secured for those costs. The Secretary

emphasizes that the examples are provided solely for the purposes of

illustration and do not preclude designated State units from providing

maintenance in other appropriate situations.

In response to public comment on the draft regulations, the

Secretary proposes to amend the definition of the term ``ongoing

support services'' by removing the requirement that the assessment of

an individual's employment stability include one monthly contact with

the individual's employer whenever the IWRP of an individual in

supported employment provides for off-site monitoring. The Secretary

emphasizes, however, that contacts with employers are authorized as

follow-up services under paragraph (iii)(F) of the proposed definition

and could be provided as often as necessary to reinforce a supported

employment placement.

In response to public comment on the draft regulations, the

Secretary proposes to amend the definition of the term ``physical and

mental restoration service'' by deleting from the proposed definition

certain services that are not specifically identified in the statute.

For example, ``convalescent or nursing home care'' has been deleted

since it is not specified in section 103(a)(4) of the Act and is viewed

as a type of long-term care rather than a restoration service.

In response to public comment on the draft regulations, the

Secretary proposes to amend the definition of the term ``physical or

mental impairment'' to mean an injury, disease, or other condition that

materially limits, or if not treated will result in materially

limiting, mental or physical functioning.

The Secretary proposes to define ``post-employment services'' based

on existing subregulatory guidance. In response to public comment on

the draft regulations, the Secretary has amended the proposed

definition to clarify that post-employment services are any vocational

rehabilitation services for individuals that are provided subsequent to

the achievement of an employment outcome and that are necessary to

enable the individual to maintain, regain, or advance in employment

consistent with the individual's strengths, resources, priorities,

concerns, abilities, capabilities, and interests. In addition, the

Secretary proposes to amend the note following the proposed definition

in order to further explain the circumstances under which post-

employment services may be provided.

In response to public comment on the draft regulations, the

Secretary has amended the definition of the term ``substantial

impediment to employment,'' as used in the criteria for determining

eligibility under Sec. 361.42(a)(1), to mean a physical or mental

impairment that hinders (rather than ``prevents'') an individual from

preparing for, entering into, engaging in, or retaining employment

consistent with the individual's abilities and capabilities. The

Secretary proposes to delete the provision in the draft regulations

that the impairment hinder the individual from employment that is

consistent with the individual's interests. The purpose of this change

is to clarify that an individual with an impairment who is not

interested in his or her current employment does not, based on that

lack of interest alone, have a substantial impediment to employment.

In response to public comment on the draft regulations and

consistent with section 103(a)(14) of the Act, the

[[Page 64481]]

Secretary proposes to amend the definition of the term ``transition

services'' to clarify that transition services must promote or

facilitate the accomplishment of long-term rehabilitation goals and

intermediate rehabilitation objectives identified in the transitioning

student's IWRP.

In response to public commenters who sought further clarification

of the term ``transitioning student'' in the draft regulations, the

Secretary proposes to define the term to mean a student who is eligible

to receive vocational rehabilitation services and is receiving

``transition services'' as defined in the regulations.

The Secretary proposes to define the term ``transportation'' on the

basis of existing subregulatory guidance. In addition, the Secretary

has included a note following the proposed definition that provides

examples of permissible transportation expenses. One of these examples

covers the short-term, travel-related expenses (i.e., food and shelter)

of applicants receiving assessment services. These expenses, as

discussed previously, cannot be provided under the maintenance

authority. The Secretary also emphasizes that these examples are

provided solely for the purposes of illustration and do not preclude

DSUs from providing transportation costs in other appropriate

situations.

Finally, the following nomenclature changes from the Act have been

incorporated into the definitions and throughout the regulations:

references to all forms of the word ``handicap'' have been changed to

the corresponding form of the word ``disability;'' certain references

to the word ``disability'' have been replaced by the word

``impairment'' (e.g., physical or mental impairment); and the word

``client'' has been removed and replaced with other appropriate terms,

including ``applicant,'' ``eligible individual,'' ``individual,'' or

``individual with a disability.''

The Secretary also notes that proposed changes to supported

employment definitions included in this NPRM would also affect those

definitions in 34 CFR Parts 363, 376, and 380.

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

Proposed Sec. 361.10 contains certain requirements from Secs. 361.2

and 361.3 of the existing regulations relating to the purpose,

duration, development, submission, and approval of the State plan. Many

of the other requirements in Secs. 361.2 and 361.3 of the existing

regulations have been relocated to other sections of the proposed

regulations because they deal with the substance and administration of

the State plan. Proposed Sec. 361.10 also incorporates the new

statutory provision that authorizes the Secretary to approve the

submission of a State plan for a period other than three years if it

corresponds to the period required for another plan required under

Federal law. Proposed paragraph (j) of this section provides the

procedures for disapproval of the State plan. The procedural

protections would be the same as those that are currently provided when

the Secretary withholds funds.

Paragraphs (e) and (f) of Sec. 361.2 of the existing regulations,

which contain provisions regarding the designation of and transition to

a new State agency or State unit, would be removed from the proposed

regulations. The 1991 NPRM proposed removal of these requirements

because of the paperwork burden, and they have been omitted in this

NPRM for the same reason.

Section 361.11--Withholding of Funds

Proposed Sec. 361.11 revises Sec. 361.4 of the existing regulations

to make withholding hearings under this program subject to the

jurisdiction of and the procedural requirements governing the

Department's Office of Administrative Law Judges in EDGAR, 34 CFR Part

81, rather than program specific hearing procedures in current

Secs. 361.170 through 361.186, which would be repealed. This is

consistent with the changes proposed in the 1991 NPRM.

Section 361.12--Methods of Administration

This proposed section is taken from Sec. 361.10 of the existing

regulations. The proposed regulations add a clause to clarify that

proper and efficient administration of the State plan includes

procedures to ensure accurate data collection and financial

accountability.

Section 361.13--State Agency for Administration

This proposed section consolidates information contained in

Secs. 361.5, 361.6, and 361.8 of the existing regulations regarding the

designation of the State agency, the organizational level and status of

the State unit, and the full-time director requirement.

In an effort to reduce the regulatory burden and increase State

flexibility in accordance with the Department's principles for

regulating, the Secretary proposes to delete the requirement in

Sec. 361.13(a)(1)(i) of the draft regulations and Sec. 361.5(b)(1) of

the current regulations that a designated State agency that has as its

major function vocational rehabilitation or vocational and other

rehabilitation of individuals with disabilities also ``have the

authority, subject to the supervision of the Governor, if appropriate,

to define the scope of the program within the provisions of State and

Federal law and to direct its administration without external

administrative controls.'' Elimination of this non-statutory

requirement, which applies currently to only one of the three sole

State agency options identified in the regulations, is intended to

increase State flexibility in locating and administering its vocational

rehabilitation program.

Several commenters on the draft regulations requested clarification

of the requirement in Sec. 361.13(b)(1)(iii) that at least 90 percent

of the State unit staff work full-time on the rehabilitation work of

the organizational unit, which must be primarily concerned with

vocational rehabilitation or vocational rehabilitation and other

rehabilitation. This requirement means that if the organizational unit

provides other rehabilitation services, in addition to vocational

rehabilitation, the 90 percent staffing requirement applies to all unit

staff providing rehabilitation services, not to just the vocational

rehabilitation staff. ``Other rehabilitation'' includes, but is not

limited to, other programs that provide medical, psychological,

educational, or social services to individuals with disabilities. For

example, a State unit with 90 percent of its staff working on

independent living services, programs for the developmentally disabled,

disabled children's services, services for individuals who are deaf or

hearing-impaired, services for individuals who are blind or visually

impaired, Social Security disability determinations, or some other type

of program related to individuals with disabilities, in addition to

vocational rehabilitation, would satisfy the 90 percent requirement.

The Secretary also notes that Federal funds under this program may be

used only to pay the salaries of the State unit staff that are working

full-time or part-time on vocational rehabilitation.

In accordance with the Department's principles for regulating, the

Secretary also proposes to delete the requirement in Sec. 361.13(c) of

the draft regulations and Sec. 361.6(a) of the current regulations that

the State plan describe the organizational structure of the State

agency and its organizational units. The Secretary instead would rely

on an assurance, required by statute, that a State agency that is

required to have a vocational rehabilitation unit locate that

[[Page 64482]]

unit at an organizational level comparable to other organizational

units within the State agency. This proposed change is intended to

reduce paperwork burdens on State agencies in developing their State

plans.

The Secretary is not proposing any substantive changes in paragraph

(d) of this section to the requirements in current Sec. 361.5(e) with

regard to the responsibility of the designated State unit for

administration of the vocational rehabilitation program, but is

soliciting public comment on the need for changes.

The current regulations specify certain program functions or

activities (determinations of eligibility, development of IWRPs, and

decisions regarding the provision of services) that must be the

responsibility of the DSU and that cannot be delegated to any other

agency or individual. This non-delegation provision has been

interpreted by RSA to mean that the DSU must carry out these functions

or activities using its own staff. The draft proposed regulations,

consistent with RSA subregulatory policy, specified additional program

functions that must be carried out by the DSU: determinations that

service recipients have achieved appropriate employment outcomes, the

formulation and implementation of program policy, and the allocation

and expenditure of program funds. The draft proposed regulations also

would have strengthened the role of the State unit by requiring that

the unit have a substantial role in all decisions affecting the

administration of the VR program whenever management functions within

the State agency are centralized.

Public comment on these draft proposed changes was neither

extensive nor consistent. Some State VR directors supported a

strengthening of the role and authority of the DSU but thought the

draft proposed regulations were not strong enough, while other

commenters thought the regulations were too prescriptive and believed

that the only program function that must be carried out directly by DSU

staff is eligibility determinations.

In light of the mixed public comment received thus far and the

Administration's regulatory reinvention initiative, which is intended

to increase State flexibility in administering Federally funded

programs whenever permitted by statute, the Department is soliciting

additional public comment on the following questions: Should the

regulations expand or otherwise clarify essential program functions for

which the DSU must be responsible in order to meet the statutory

requirement in section 101(a)(2)(A) that it be responsible for the VR

program? Must these essential program functions be carried out by DSU

staff or should the regulations provide States as much flexibility as

possible to determine how to carry out these functions as long as the

DSU retains administrative oversight in these areas? Any changes made

to provide increased flexibility to States would not require DSUs to

change their current administrative practices but would provide States

additional flexibility to restructure, consolidate, or contract out

program operations as long as the DSU retains ultimate responsibility.

Section 361.14--Substitute State Agency

This proposed section revises certain requirements regarding the

selection of a substitute State agency (Sec. 361.7 of the existing

regulations) in order to simplify the process and reduce the paperwork

burden. The existing regulations permit applications from a potentially

unlimited number of substitute State agency applicants, from which the

Secretary selects the substitute State agency based on detailed

criteria in the existing regulations. The proposed regulations place

the authority and responsibility for the selection of a substitute

State agency on the State so that the Secretary would need only to

review and approve a State plan from one substitute State agency prior

to providing funds.

Section 361.15--Local Administration

This proposed section simplifies Sec. 361.9 of the current

regulations by removing the requirements related to a written agreement

between a sole local agency and the State unit in order to reduce the

paperwork burden on States. It proposes to replace the written

agreement requirements with assurances from the State unit in the State

plan relating to the administration and supervision of a sole local

agency.

Section 361.16--Establishment of an Independent Commission or a State

Rehabilitation Advisory Council

This proposed new section implements the new requirements related

to the State Rehabilitation Advisory Council (Council) in section

101(a)(36) of the Act. The proposed section clarifies that a State does

not need to establish a Council or meet the requirements related to a

Council if the State agency is a consumer-controlled independent

commission. The proposed section also clarifies that if the State has a

separate State agency for individuals who are blind, four options

regarding the possible combinations of the two State agencies exist.

Although only three options are identified in the Act, the section-by-

section analysis of the Act in the Conference Report clarifies that the

fourth option, a mirror image of the third combination identified in

the Act, is also acceptable. This option is contained in proposed

paragraph (b)(4) of this section.

Section 361.17--Requirements for a State Rehabilitation Advisory

Council

This proposed new section incorporates the new statutory

requirements in section 105 of the Act with the clarification that the

director of the DSU is a nonvoting member of the State Rehabilitation

Advisory Council. Since the purpose of the Council is to advise the

State unit, and the statute is clear that the director is an ex-officio

member of the Council, the Secretary does not believe that Congress

intended that the director of the State unit provide advice to herself

or himself by voting on Council decisions. Similarly, the Secretary has

clarified the regulations to state that any employee of the designated

State agency may serve only as a nonvoting member of the Council.

Several commenters on the draft regulation sought clarification

with respect to the appointment of Council representatives from the

Client Assistance Program (CAP) and the Statewide Independent Living

Council (SILC). In response, the Secretary proposes to amend the

regulations to clarify that the role of the CAP and SILC is to

recommend to the Governor, or other appropriate appointment authority

designated by State law, Council representatives for their respective

organizations. Based on these recommendations, the Governor or other

State-designated authority determines who will be the Council

appointees, since the statute clearly vests appointment authority in

those entities. The Secretary also notes that those individuals

recommended for Council membership by the CAP or SILC need not be CAP

or SILC members.

In addition, in response to public comment on the draft

regulations, the Secretary emphasizes that, although the Council must

be composed of at least 13 members (unless the State qualifies for an

exception under paragraph (b)(4) of this section), a State is not

precluded from having more than 13 individuals serve on its Council.

The Secretary also encourages States to consider appointing Council

members from minority backgrounds consistent with the 1992 Amendments

to the Act, which emphasizes outreach

[[Page 64483]]

to individuals from minority backgrounds and the need for

rehabilitation programs to better reflect the culturally diverse

population of the United States.

Finally, in response to public comment on the draft regulations,

the Secretary proposes to amend the annual reporting requirements of

the Council by requiring the Council to submit to the Governor, or

other appropriate State entity, and to the Secretary an annual report

of the status of the State's vocational rehabilitation programs within

90, rather than 60, days from the end of the fiscal year and by

requiring that the report be available through appropriate modes of

communication.

Section 361.18--Comprehensive System of Personnel Development

This proposed new section incorporates the new statutory

requirements in sections 101(a)(7) and 101(a)(35) of the Act. The

requirements in section 101(a)(7) of the Act are virtually identical to

requirements for a comprehensive system of personnel development under

the Individuals with Disabilities Education Act (IDEA). For this

reason, this section of the proposed regulations closely tracks the

regulations implementing the IDEA requirements (34 CFR 300.380 through

300.383), with modifications to better reflect the context of the State

Vocational Rehabilitation Services Program.

Some commenters on the draft regulations questioned the basis for

requiring the involvement of the State Rehabilitation Advisory Council

in the development of personnel standards. The Act requires that the

Council generally advise the State unit in connection with the carrying

out of its programmatic responsibilities. In addition, the State agency

is required to consult, and seek advice from, the Council on issues

affecting the development of the State plan. Because an effective

system of personnel development is an essential part of the State plan

and a critical element to the success of the State Vocational

Rehabilitation Services Program, the Secretary considers it necessary

for the Council to participate in the development of State personnel

standards.

Paragraph (a) of this section requires that the State plan include,

on an annual basis, a description of a system for collecting and

analyzing personnel data. Several commenters on the draft regulations

expressed concern about the amount of data that must be provided to the

Secretary under this provision. In response, the Secretary emphasizes

that, although annual data collection and analysis requirements are

statutorily imposed, the proposed regulations require only that the

State plan include a description of the system used to collect the data

on personnel needs and personnel development and do not require the

State to submit the actual data to the Secretary.

In response to public comment on the draft regulations, the

Secretary proposes to broaden the definition of the term ``highest

requirements in the State applicable to that profession or

discipline,'' as used in the development and maintenance of personnel

standards by the State, to mean the highest entry-level academic degree

or equivalent experience needed to meet any national- or State-

recognized certification, licensing, registration, or other comparable

requirements that apply to a profession or discipline. The purpose of

this change is to recognize that some States base their personnel

standards, in part, on relevant work experience by substituting

equivalent work experience for certain academic credentials. State

standards of this type would meet this definition. This change,

however, would not allow work experience to substitute for academic

requirements if the existing State standard is based only on academic

credentials.

The Secretary also believes that permitting States to base highest

personnel standards in the State on equivalent experience, as well as

on academic degrees, stresses the significance of relevant work

experience and will diversify further the pool from which qualified

personnel can be selected.

Several commenters on the draft regulations suggested areas of

training in addition to rehabilitation technology that should be

required in the regulations as part of the State's program of staff

development. The Secretary believes that the specific training areas

for staff development adopted by a State unit must be based on the

particular needs of that State unit. The Secretary recognizes, however,

that staff development may include, but is not limited to, training

with respect to the requirements of the Americans with Disabilities

Act, IDEA, and Social Security incentive programs, training to

facilitate informed choice under this program, and training to improve

the provision of services to culturally diverse populations. A

provision to this effect has been added to the proposed regulations.

In response to public comment on the draft regulations, the

Secretary proposes to change the reference in paragraph (e) of this

section from ``special communication needs personnel'' to ``personnel

to address individual communication needs'' and has clarified this

provision by requiring the State unit to describe in the State plan how

it includes among its personnel, or obtains the services of,

individuals able to communicate in the native languages of applicants

and eligible individuals who have limited English speaking ability.

That personnel may include State agency staff, family members of an

applicant or eligible individual, community volunteers, and other

individuals able to communicate in the appropriate native language. The

State unit also must describe how it ensures that appropriate modes of

communication are used for all applicants and eligible individuals.

In response to public comment on the draft regulations, the

Secretary wishes to stress the importance of requiring in the State

plan a description of the State's personnel performance evaluation

system that facilitates, and does not impede, the purposes and policies

of the vocational rehabilitation services program outlined in the Act.

More precisely, the proposed regulations require that the evaluation

system further the statutory policy of serving individuals with the

most severe disabilities. In support of this requirement, the Senate

Committee on Labor and Human Resources states in its report that it

``is concerned that in some States, procedures used for evaluating

performance of counselors may have the unintended consequence of

providing a disincentive to serve individuals with the most severe

disabilities and those clients requiring complex services.'' The

performance evaluation system required under the Act and included in

the proposed regulations is designed to address these disincentives.

The Secretary proposes to modify paragraph (g) of this section to

track section 101(a)(7)(A)(ii) of the Act, which requires the State

agency to describe the activities it will undertake to coordinate its

comprehensive system of personnel development with personnel

development under IDEA. This proposed change is intended to increase

the flexibility of State agencies to implement the most effective

procedures for coordinating the development of personnel under both

statutes. An example of how a State may address this coordination

requirement would be to establish a joint continuing education program

for both DSU personnel and personnel under IDEA that deals with the

provision of VR services, including transition services, to

transitioning students.

[[Page 64484]]

Section 361.19--Affirmative Action for Individuals With Disabilities

This proposed section, which is based on section 101(a)(6)(A) of

the Act and Sec. 361.15 of the existing regulations, requires the State

agency to take affirmative action to employ and advance in employment

qualified individuals with disabilities. In accordance with the

Department's principles for regulating, the Secretary proposes to

delete the non-statutory requirement in the draft regulations and the

current regulations that the State unit develop an affirmative action

plan that provides for specific goals, action steps, timetables,

evaluation criteria for measuring progress, and complaint and

enforcement procedures. By not requiring a formal affirmative action

plan or specifying the minimum requirements a State must incorporate

into that plan, the proposed provision would give State agencies

greater flexibility to take those steps it considers most appropriate

for increasing the number of qualified individuals with disabilities

that it employs or advances in employment. The proposed changes also

would reduce State paperwork burdens.

Section 361.20--State Plan Development

This proposed section revises Sec. 361.18 of the existing

regulations to implement new requirements in section 101(a)(23) of the

Act.

Consistent with section 101(a)(23) of the Act, paragraph (a)(1) of

this section of the regulations would require the State unit to conduct

public meetings throughout the State to provide all segments of the

public, including interested groups, organizations, and individuals, an

opportunity to comment on the State plan prior to its development and

to comment on any revisions to the State plan. In accordance with the

Department's principles for regulating, the Secretary believes that

States should have the latitude to develop their own procedures for

ensuring that interested parties are afforded a meaningful opportunity

to comment on the State plan before it is developed and when it is

revised. Additionally, in order to satisfy the statutory requirement

that the State unit, prior to conducting public meetings throughout the

State, provide appropriate and sufficient notice of the public

meetings, the proposed regulations would require the State unit to

follow notice requirements established under State law or, in the

absence of those requirements, to consult with the State Rehabilitation

Advisory Council to develop notice procedures. The proposed regulations

would not impose any specific minimum Federal requirements for what

constitutes ``appropriate and sufficient notice.''

In response to those commenters who sought regulatory clarification

of the public participation and notice requirements of this section,

the Secretary provides the following examples as suggested ways a DSU

might meet these requirements. A State unit could satisfy the public

participation requirement, for example, by soliciting input from the

public before developing a preliminary draft State plan and making the

preliminary draft plan available to the public 30 days prior to the

public meetings. An example of ``appropriate and sufficient notice'' of

public meetings would be notice that is provided at least 30 days prior

to a public meeting through various media available to the general

public, such as newspapers and public service announcements, and

through specific contacts with appropriate constituency groups and

organizations identified by the State unit, in consultation with the

State Rehabilitation Advisory Council. An example of how a State unit

could meet the statutory requirement that it ``conduct public meetings

throughout the State,'' would be to hold public meetings in at least

two different geographic locations that are among the State's most

densely populated areas and at sites that are accessible to individuals

with disabilities.

Some commenters on the draft regulations suggested that larger

States be required to hold a greater number of public meetings than

smaller States, while other commenters suggested that States make use

of emerging technologies that enable individuals to participate in

public meetings without having to be in attendance. The Secretary

encourages each State to hold as many public meetings as are necessary

to ensure meaningful participation of all interested persons and

organizations in that State. The Secretary also urges States to

consider using alternative or emerging technologies that allow for

wider public participation. The proposed regulations are intended to

provide each State with the flexibility to choose the manner in which

it conducts public meetings (e.g., in person, satellite broadcasts,

teleconferences, or a combination thereof) as long as the meetings are

truly interactive and are designed to maximize the opportunity for

meaningful participation.

The proposed section also would implement the new statutory

provision in section 105(c)(2) of the Act that requires the State

Rehabilitation Advisory Council to advise the State unit on the

preparation of the State plan by requiring the State unit to consult

with the Council in the development of the State plan. Finally, the

proposed section implements the new statutory requirement in section

101 (a)(32) of the Act that the State plan describe the manner in which

it will modify State policy and procedures in response to consumer

satisfaction surveys.

Section 361.21--Consultations Regarding the Administration of the State

Plan

This proposed section is also taken from Sec. 361.18 of the

existing regulations. It incorporates section 101(a)(18) of the Act,

including the new statutory requirement regarding consultation with the

director of the CAP. It would also require consultation with the State

Rehabilitation Advisory Council, consistent with the Council functions

in new section 105(c) of the Act. It proposes to remove provisions in

the existing regulations that list examples of matters of general

policy development and implementation. Finally, this proposed section,

as well as the previous section, would implement new section 101(a)(32)

of the Act, which requires the State plan to describe the manner in

which the State will modify State policy and procedures in response to

consumer satisfaction surveys.

Section 361.22--Cooperation With Agencies Responsible for Transitioning

Students

This proposed new section combines Sec. 361.19(b) of the existing

regulations, which requires the State plan to provide for the

coordination of services for individuals who are eligible both for

vocational rehabilitation services and for services under IDEA, with

the new statutory provisions in sections 101(a)(11) and (a)(24) of the

Act. The new statutory provisions require formal interagency agreements

to facilitate the transfer of responsibilities for transitioning

students who are receiving special education services from the agency

responsible for providing a free appropriate public education to the

State unit responsible for providing vocational rehabilitation

services. In addition, proposed paragraph (b) of this section

implements the new requirement in section 101(a)(30) of the Act

regarding the availability of vocational rehabilitation services to

students who are individuals with

[[Page 64485]]

disabilities and who are not in special education programs.

Some commenters on the draft regulations viewed the required

content of formal interagency agreements between State units and State

educational agencies as unduly burdensome. In response, the Secretary

proposes to amend the regulations to require that formal interagency

agreements need only identify provisions for determining State lead

agencies and qualified personnel responsible for transition services,

in addition to identifying those policies and practices that can be

coordinated between the agencies, including eligibility standards,

referral policies, outreach procedures, and evaluation procedures. The

formal interagency agreement may, as appropriate, identify available

resources, the financial responsibilities of each agency, dispute

resolution procedures, and other cooperative policies.

Other commenters expressed concern that the draft regulations

required State agencies to shoulder more of the responsibility for

transitioning students than is contemplated under the Act. In response,

the Secretary proposes to add a note in the regulations to clarify the

roles of the rehabilitation and educational agencies in facilitating

the transition of students who are eligible for VR services. As stated

by the Senate Committee on Labor and Human Resources, the role of the

State agency is primarily one of planning for the student's years after

leaving school.

Section 361.23--Cooperation With Other Public Agencies

This proposed section is taken from paragraphs (a), (c), and (d) of

Sec. 361.19 of the existing regulations and has been revised to

incorporate the new requirements in section 101(a)(11) of the Act

regarding the content of formal interagency cooperative agreements. The

proposed section is also reorganized to clarify that the long list of

programs under existing Sec. 361.19(a) refers to Federal, State, and

local public programs and agencies providing services related to the

rehabilitation of individuals with disabilities.

Section 361.24--Coordination With the Statewide Independent Living

Council

This proposed new section incorporates the new requirement in

section 101(a)(33) of the Act that the State unit coordinate and

establish working relationships with the Statewide Independent Living

Council and independent living centers within the State.

Section 361.25--Statewideness

This proposed new section contains the requirement in Sec. 361.2(a)

of the existing regulations that the State plan be in effect in all

political subdivisions of the State.

Section 361.26--Waiver of Statewideness

This proposed section revises Sec. 361.12 of the existing

regulations to clarify that a waiver of statewideness is necessary if

the State unit wants to provide through local financing increased

services or an expanded scope of services that is different from the

services available statewide. The procedural requirements relating to a

request for a waiver would remain substantially the same.

Section 361.27--Shared Funding and Administration of Joint Programs

This proposed section revises Sec. 361.11 of the existing

regulations to clarify that these programs involve shared funding and

administrative responsibility, that a request for the Secretary's

approval must be included in the State plan, and that a request for

waiver of statewideness also must be included in the State plan, if

necessary. The proposed regulations would also remove the specific

requirements relating to a written agreement that are in the existing

regulations. The 1991 NPRM proposed to remove the written agreement

requirements as part of the effort to reduce paperwork burden, and the

requirements are omitted in this NPRM for the same reason.

Section 361.28--Third-Party Cooperative Arrangements Involving Funds

From Other Agencies

This proposed section revises Sec. 361.13 of the existing

regulations to reduce the requirements related to third-party

cooperative arrangements, including the requirements for a written

agreement, an annual program budget, and an annual review of program

operations. The proposed regulations would also clarify that

applicants, as well as eligible individuals, can receive services under

these cooperative arrangements. This section would be placed

organizationally in the regulations next to the proposed section on

shared funding and administration to emphasize the differences between

joint programs and third-party cooperative arrangements.

Some commenters on the draft regulations suggested that third-party

cooperative arrangements be jointly administered by the State unit and

the cooperating agency, i.e., administered in the same way as joint

programs under proposed Sec. 361.27. In response, the Secretary notes

that section 101(a)(2) of the Act requires the designated State unit to

be responsible for the vocational rehabilitation program. Third-party

cooperative arrangements provide a framework for cooperating agencies

to provide vocational rehabilitation services and contribute to the

State's non-Federal financial share under the program. Thus, third-

party arrangements are considered part of the vocational rehabilitation

program for which the State unit must retain administrative

responsibility. In contrast, State units that are parties to joint

programs share funding and administrative responsibility with other

agencies.

In response to public comment on the draft regulations, the

Secretary has clarified that services provided by the cooperating

agency under a cooperative arrangement must either be new services that

have a vocational rehabilitation focus or existing services that have

been modified, adapted, expanded, or reconfigured to have a VR focus.

These requirements are consistent with longstanding RSA subregulatory

guidance.

Section 361.29--Statewide Studies and Evaluations

This proposed section revises and expands Sec. 361.17 of the

existing regulations to identify and clarify the timelines for all of

the study and evaluation requirements, some of which are currently

contained in other sections. It also expands the requirement in

Sec. 361.2(a)(2)(i) of existing regulations that the State plan

describe changes in policy resulting from the statewide studies and the

annual evaluation to also require a description of activities

undertaken and changes in the State plan, the strategic plan, and plan

amendments that result from the studies and evaluations. Proposed

paragraph (d) of this section incorporates the new requirement in

section 105(c)(2) of the Act regarding the role of the State

Rehabilitation Advisory Council in the preparation of the statewide

studies and evaluation.

Section 361.30--Services to Special Groups of Individuals With

Disabilities

This proposed section combines Secs. 361.37 and 361.38 of the

existing regulations regarding special services for civil employees of

the United States and for American Indians, along with paragraph (c) of

Sec. 361.36 of the existing regulations, which provides for special

consideration for public safety officers. In addition, the Secretary

proposes to clarify in this section that special consideration means

that a public safety

[[Page 64486]]

officer would receive priority for services over other individuals in

the same priority category of an order of selection. The proposed

section would also incorporate the statutory definitions of ``criminal

act'' and ``public safety officer'' from section 7 of the Act.

Section 361.31--Utilization of Community Resources

This proposed section is substantially the same as Sec. 361.56 of

the existing regulations. It has been relocated to group it with other

utilization sections in the part of the regulations that contains

general administration requirements, rather than in the part of the

regulations that addresses provision of services requirements.

Section 361.32--Utilization of Profitmaking Organizations for On-The-

Job Training in Connection With Selected Projects

This proposed section revises Sec. 361.57 of the existing

regulations to increase State unit flexibility by authorizing, rather

than requiring, a State unit to use profitmaking organizations if it

determines that those organizations are better qualified to provide

needed services than nonprofit agencies, organizations, or facilities

in the State.

Section 361.33--Utilization of Community Rehabilitation Programs

This proposed section revises Secs. 361.21 and 361.22 of the

existing regulations and replaces the term ``rehabilitation

facilities'' with the term ``community rehabilitation programs,''

consistent with the 1992 Amendments. It also incorporates changes in

the State plan requirements in sections 101(a)(5) and 101(a)(15) of the

Act and new requirements in sections 101(a)(27) and 101(a)(28) of the

Act.

In accordance with the Department's principles for regulating, the

Secretary proposes to eliminate current non-statutory requirements for

a rehabilitation facilities plan and for an inventory of community

rehabilitation programs and requirements in the draft regulations for a

justification in the State plan for using funds for the support of

community rehabilitation programs, including the construction of

facilities, and for a prioritized list in the State plan of proposed

activities. The removal of these provisions would substantially reduce

paperwork burdens on designated State units.

Section 361.34--Supported Employment Plan

This proposed new section incorporates sections 101(a)(25) and

635(a) of the Act, which require a State to assure that it has an

acceptable plan for providing supported employment services and to

submit that plan as a State plan supplement.

Section 361.35--Strategic Plan

This proposed new section would require that the strategic plan to

expand and improve vocational rehabilitation services be provided as a

supplement to the State plan. Section 101(a)(34)(A) of the Act requires

the State plan to include an assurance that the State has a strategic

plan to expand vocational rehabilitation services in accordance with

Part C of Title I. In addition, section 120 of the Act requires States

to submit their strategic plans to the Secretary prior to receiving

funding under Part B of the Act, which includes the allotment for this

program. The Secretary believes that requiring the strategic plan as a

supplement to the State plan is the simplest and least burdensome

approach.

Section 361.36--Reserved

This section is reserved for the order of selection regulations,

which are being implemented in a separate rulemaking document.

Section 361.37--Establishment and Maintenance of Information and

Referral Resources

The provision proposed in the draft regulations was substantially

the same as Sec. 361.20 of the existing regulations. However,

commenters on both the draft regulations and the July 16, 1993 NPRM on

order of selection have requested that State units operating under an

order of selection be permitted to provide non-purchased services

(e.g., information and referral) to eligible individuals who do not

qualify for services under the State unit's priority categories. An

order of selection is required under section 101(a)(5)(A) of the Act if

a State unit determines that it is unable to provide services to all

eligible individuals who apply for services. In response to public

comment, the Secretary proposes to address this concern by amending the

regulations to authorize any State unit that has implemented an order

of selection to establish an expanded information and referral program

that includes the provision of job referral services to eligible

individuals who are not being served under a State unit's order of

selection, provided that certain State plan requirements are met. These

requirements include a description in the State plan of the level of

commitment of staff and other resources for this purpose and an

assurance that in carrying out this program, the State unit will not

use case services funds that are needed to provide VR services to

eligible individuals who are able to be served under the State unit's

order of selection.

Section 361.38--Protection, Use, and Release of Personal Information

This proposed section is substantially the same as Sec. 361.49 of

the existing regulations with the clarification in proposed paragraph

(e)(3) that a State unit is required to release personal information if

required by Federal regulations or Federal law.

In addition, some commenters on the draft regulations expressed

concern that the State unit could release harmful personal information

to a representative not chosen by the applicant or eligible individual.

In response, the Secretary has clarified that the State unit may

release information that it determines to be harmful to the individual

only to a third party chosen by the individual, which may include,

among others, an advocate, a family member, or a qualified medical or

mental health professional.

In response to public comment on the draft regulations, the

Secretary also proposes to amend the regulations by clarifying that

State units shall release personal information in response to an

``order issued by a judicial officer.'' The Secretary believes that the

use of the term ``judicial order'' in both the current and draft

regulations is confusing and that the clarification is necessary to

ensure that a judge, magistrate, or other authorized judicial officer

appropriately weighs the factors necessitating release of personal

information against the individual's rights to privacy and protection

from unauthorized use before ordering a State unit to release the

information.

In addition, the proposed section has been relocated to group it

with other sections of the regulations that contain the administrative

requirements since it does not relate to the provision and scope of

services.

While the confidentiality of personal information from applicants

and eligible individuals under this program is considered essential to

protect individual privacy, the Secretary specifically requests public

comment on whether the provisions of this section are unduly burdensome

or inconsistent with State laws governing the protection, use, or

release of personal information.

Section 361.39--State-Imposed Requirements

This proposed section is taken from Sec. 361.25 of the existing

regulations. The

[[Page 64487]]

draft regulations would have required State units to identify State-

imposed requirements at the public meetings to develop and revise the

State plan. In response to public comment, the Secretary proposes to

clarify this section of the regulations by requiring State units to

identify upon request those regulations and policies relating to the

administration or operation of the vocational rehabilitation program

that are State-imposed. In making these changes the Secretary

recognizes that the scope of State-imposed requirements is broader than

those included in the State plan and that the Act requires the

application of any State rule or policy relating to the administration

or operation of the vocational rehabilitation program to be identified

as a State-imposed requirement. The proposed section would require

State units to identify those requirements upon request, including, but

not limited to, requests made at public meetings.

Section 361.40--Reports

This proposed section is substantially the same as Sec. 361.23 of

the current regulations, except that it would add cross-references to

sections 13, 14, and 101(a)(10) of the Act to distinguish the reporting

requirements under this section from the reporting requirements related

to statewide studies and evaluations under proposed Sec. 361.29.

Section 361.41--Processing Referrals and Applications

This section expands Sec. 361.30 of the current regulations to

incorporate the new statutory requirement in section 102(a)(5)(A) of

the Act that an eligibility determination be made within 60 days of the

date on which an application is submitted, with limited exceptions. The

Secretary proposes to require the State unit to establish timelines for

making good faith efforts to contact individuals who have been referred

for services to minimize delay at the pre-application stage.

Under the draft regulations, an individual was considered to have

``submitted an application'' if the individual, or the individual's

representative, as appropriate, had submitted a completed agency

application or a signed written request for services. In an effort to

ensure that agencies are provided with all information necessary to

make eligibility determinations, some commenters on the draft

regulations stated that completion of an agency application should be

the sole method for requesting services. In contrast, other commenters

supported the use of alternative methods for requesting services as a

means of avoiding unnecessary delays if a particular application form

was not used. In response, the Secretary proposes to clarify the

regulations by interpreting the term ``submitted an application'' to

include any request for services as long as the individual has provided

information necessary for the DSU to initiate an assessment to

determine eligibility and priority for services. Once an individual or

the individual's representative, as appropriate, requests services, it

is expected that State units will make good faith efforts to obtain

this information as quickly as possible. For example, if a potential

applicant has requested services in writing, the State unit may need to

telephone the individual in order to obtain the necessary information

in a timely manner. In addition, the proposed regulations require State

units to make application forms readily available throughout the State.

Section 361.42--Assessment for Determining Eligibility and Priority for

Services

This section combines Secs. 361.31 and 361.32 of the existing

regulations, which are the sections on eligibility and preliminary

diagnostic study. The 1992 Amendments combined in the statute all of

the evaluation steps that are currently required by those sections and

by Secs. 361.33 and 361.40 of the existing regulations into one

assessment for determining eligibility and vocational rehabilitation

needs, which is defined in section 7(22) of the Act. The Secretary

proposes to divide that assessment into two steps in the regulations--

an assessment for determining eligibility and priority for services,

addressed in this section, and an assessment for determining vocational

rehabilitation needs through the development of the IWRP, addressed by

proposed Sec. 361.45.

In response to public comment on the draft regulations, the

Secretary proposes to amend this section by requiring that the

assessment for determining eligibility and priority for services be

conducted in the most integrated setting possible, consistent with the

individual's needs and informed choice.

Proposed paragraph (a) of this section incorporates the changes in

the eligibility criteria that were made by the 1992 Amendments,

including the presumption that an individual with an impairment that

constitutes a substantial impediment to employment can benefit from

vocational rehabilitation services, the presumption that Social

Security beneficiaries meet the first two eligibility criteria, and the

new requirement that an individual with a disability require vocational

rehabilitation services in order to achieve an employment outcome

consistent with the individual's strengths, resources, priorities,

concerns, abilities, capabilities, and informed choice.

Some commenters questioned the absence of a regulatory provision

identifying who is qualified to determine the existence of a physical

or mental impairment. Section 361.32 of the existing regulations

requires that the preliminary diagnostic study, for purposes of

determining an individual's eligibility for services, must include

medical information and, in the case of individuals with mental and

emotional disorders, an examination by a physician or by a licensed or

certified psychologist. Proposed paragraph (a)(1)(i) of this section is

based on amendments to section 103(a) of the Act, which substituted the

standard that ``qualified personnel in accordance with State licensure

laws'' make these determinations in lieu of particular medical

professionals. The proposed regulatory provision broadens this concept

to also encompass individuals who are certified under State law and

individuals licensed or certified under State regulations. The

Secretary believes that this broader interpretation is necessary to

ensure that existing data and determinations made by other agencies,

particularly education agencies, are used by DSUs in determining

whether an individual is an individual with a disability under section

7(8)(A) of the Act or an individual with a severe disability under

section 7(15)(A) of the Act. Under the proposed regulations, the

determination of who is qualified to determine the existence of an

impairment will vary from State to State depending on State licensure

and certification requirements. Although the proposed regulations do

not require a medical diagnosis for a DSU to determine that an

impairment exists, the Secretary anticipates that in most instances

those determinations will be supported by medical documentation.

Paragraph (a)(2) of Sec. 361.42 in the draft regulations required a

DSU to presume that an applicant can benefit in terms of an employment

outcome unless it determines, based on clear and convincing evidence,

that the applicant is incapable of benefitting from VR services as a

result of the severity of his or her disability. In response to public

comment, the Secretary proposes to delete the phrase ``as a result of

the severity of his or her disability'' from the NPRM in order to

clarify that individuals may be found incapable of

[[Page 64488]]

benefitting from VR services for reasons other than severity of

disability. This change is consistent with section 102(a)(4)(A) of the

Act. Nevertheless, the Secretary expects that the overwhelming majority

of determinations under this requirement will be based on the severity

of the individual's disability and specifically requests public

commenters to identify reasons other than severity of disability that

would support a determination that an individual is incapable of

benefitting from VR services. If a determination that an individual

cannot benefit from VR services is based on the severity of the

individual's disability, section 102(a)(4)(B) of the Act and proposed

paragraph (d)(1) of this section would also require the DSU to conduct

an extended evaluation before reaching this conclusion. Finally, the

Secretary proposes to further amend paragraph (a)(2) of this section to

clarify that the presumption of benefit applies only to those

applicants who meet the first two eligibility criteria.

In response to public comment on paragraph (b)(1) of this section

of the draft regulations, the Secretary proposes to amend the

regulations to prohibit States from imposing any duration of residence

requirement for the receipt of services on any applicant who is

present, rather than resides, in the State. The amended provision

closely tracks the statutory language of section 101(a)(14) of the Act.

Paragraph (c) of this section incorporates the new statutory

provisions that require the State unit to use existing data, to the

extent possible, to determine eligibility and vocational rehabilitation

needs.

Some public commenters on the draft regulations inquired as to the

scope of vocational rehabilitation services that DSUs must provide

during an extended evaluation. In response, the Secretary proposes to

amend the regulations to require the State unit to develop a written

plan during the extended evaluation period for determining eligibility

and for determining the nature and scope of services required to

achieve an employment outcome. The provision of services under the plan

must be limited to those services needed to make these two

determinations. It should be noted that this change represents a

departure from the current regulations, which required DSUs to develop

an IWRP for individuals in extended evaluation. The Act, however,

requires only that IWRPs be developed for eligible individuals. The

written plan requirements of this section are, therefore, intended to

lessen the burden on State units of developing IWRPS for individuals in

an extended evaluation, while ensuring that the specific services to be

provided during an extended evaluation are clearly identified.

The proposed regulations also contain a note on clear and

convincing evidence that is based on legislative history from the

Senate Committee Report. In response to public comment, the Secretary

proposes to amend the note to clarify that determinations under the

``clear and convincing evidence'' standard must be made on a case-by-

case basis.

Finally, the Secretary views the new eligibility criterion that an

individual must require vocational rehabilitation services in order to

achieve or retain an employment outcome as a limiting factor that is

intended to screen out individuals who can prepare for, enter into,

engage in, or retain gainful employment consistent with their

strengths, resources, priorities, concerns, abilities, and capabilities

without assistance from the vocational rehabilitation program. The

proposed regulations contain a second note that provides several

examples for guidance to State agencies regarding situations in which

an individual may or may not require vocational rehabilitation

services. The Secretary emphasizes that the examples are provided

solely for the purposes of illustration, do not address all situations

under which an individual may be eligible or ineligible for services,

and are not intended to substitute for individual counselor judgment on

a case-by-case basis.

Section 361.43--Procedures for Ineligibility Determination

The Secretary proposes this new section to consolidate overlapping

provisions relating to procedures for ineligibility determinations that

are currently contained in several different sections of the

regulations. Specifically, it would consolidate paragraph (e) of

current Sec. 361.34, which contains termination provisions for an

extended evaluation to determine rehabilitation potential, paragraph

(c) of current Sec. 361.35, which contains the requirements for a

certification of ineligibility, and paragraph (d) of current

Sec. 361.40, which contains the requirements regarding review of

ineligibility determinations.

The Secretary proposes to require DSUs to review all ineligibility

determinations once within 12 months unless exceptions apply. In

response to public comment on the draft regulations, the Secretary also

proposes to amend paragraph (d) of this section to clarify that each

year after the initial review, DSUs must, upon request, review any

ineligibility determination that is based on the inability of the

individual to achieve an employment outcome.

Section 361.44--Closure Without Eligibility Determination

The Secretary proposes to create this new section from the

provisions contained in paragraph (e) of Sec. 361.35 of the current

regulations, which is the section that contains the certification

requirements. Although the certification requirements have been removed

from the proposed regulations because they overlap with the

documentation requirements in the case record (referred to as record of

services in proposed Sec. 361.47), the substantive requirements related

to closure without an eligibility determination are substantially the

same as they are in existing Sec. 361.35(e).

In response to public comment on the draft regulations, the

Secretary has clarified the regulations to authorize the State unit to

close an applicant's case if the applicant declines to participate in,

or is unavailable to complete, an assessment for determining

eligibility and priority for services. In either situation, the State

unit is required to make a reasonable number of attempts to contact the

individual or, if appropriate, the individual's representative prior to

closing the applicant's case.

Sec. 361.45--Development of the Individualized Written Rehabilitation

Program

In response to public comment, this section, entitled ``Assessment

for determining vocational rehabilitation needs'' in the draft

regulations, has been renamed for purposes of clarification. The

Secretary believes this proposed retitling better reflects the full

scope of requirements under the IWRP development process, of which the

assessment represents an essential part. The Secretary also proposes to

clarify the purpose clause under paragraph (a) of this section for the

same reason.

This proposed section would combine the provisions in Secs. 361.33

and 361.40 of the current regulations regarding thorough diagnostic

study and IWRP procedures. It incorporates new statutory requirements

created by the 1992 Amendments, including requirements regarding

informed choice, integrated settings, and the use of existing data.

Some public commenters suggested that the term ``counseling and

guidance'' be defined in the proposed regulations. The Secretary

declines to define the term, but proposes to revise paragraph (b)(1) of

this section to

[[Page 64489]]

emphasize the development of a counseling and guidance relationship

between the vocational rehabilitation counselor and the individual

during assessment. That relationship is intended as a means of

fostering collaboration between the counselor and the individual in

identifying, preparing for, and achieving meaningful vocational

outcomes for the individual. The Secretary envisions that the

counselor, based on his or her expertise, will provide the individual

with comprehensive information relevant to the individual needs of the

individual and that the counselor and individual will jointly discuss

the values, needs, desires, and realities facing both individuals. It

also should be noted that, in response to public comment, the Secretary

has deleted the requirement in the draft regulations that counseling

and guidance be provided throughout the development and implementation

of the IWRP. As discussed in the following paragraph, IWRPs are

developed on an individual basis, and while some individuals may

request or require counseling and guidance services throughout the

development and implementation of their IWRPs, others may not. By

making this change, the Secretary emphasizes that the provision of

counseling and guidance during the development and implementation of

the IWRP is dependent on the particular circumstances affecting each

individual.

Several commenters on the draft regulations were concerned that

this section required State units to impose strict timelines for

developing IWRPs without considering the particular needs of the

individual. In response, the Secretary proposes to amend the

regulations to require State units to establish and implement standards

for the prompt development of IWRPs, including timelines that take

individual needs into consideration. The Secretary agrees that the

development of the IWRP is a highly individualized process and must be

conducted in a manner consistent with the individual's strengths,

priorities, concerns, abilities, capabilities, and career interests.

Nevertheless, the Secretary believes that these timelines, which are

not absolute and operate as guidelines, are consistent with the

legislative intent that individuals with disabilities receive services

as quickly as possible and, therefore, are necessary to guard against

delays in the development of the IWRP once an individual is determined

eligible for VR services.

Section 361.46--Content of the IWRP

This proposed section contains the IWRP content requirements, which

are in Sec. 361.41 of the existing regulations.

Several commenters on the draft regulations viewed certain

requirements under this section and Sec. 361.47 (Record of services) as

duplicative of one another and, therefore, unduly burdensome. In

response, the Secretary proposes to reduce the paperwork requirements

in each section of the regulations by eliminating certain requirements

that are non-statutory or redundant. The Secretary emphasizes, however,

that the elimination of certain documentation requirements in these

sections is intended solely as a means of reducing paperwork burdens on

the State unit and does not diminish the responsibility of the State

unit to fully develop the IWRP and to be able to document or otherwise

support its determinations affecting each individual should those

determinations be questioned within the context of a compliance review

or audit. Each IWRP content or record of services requirement

eliminated from the draft regulations is, the Secretary believes,

sufficiently addressed elsewhere in the regulations.

For example, the Secretary proposes to delete the requirement that

the IWRP include statements supporting the basis on which individuals

are determined eligible or ineligible for services. The Secretary

agrees that those statements are burdensome given comparable case

record requirements in proposed Sec. 361.47 (a) and (b) that the State

unit maintain documentation supporting determinations of eligibility

and ineligibility.

In paragraph (c) of this section, the Secretary proposes to clarify

the regulations by consolidating the IWRP content requirements that

relate to post-employment services.

Some public commenters on the draft regulations suggested that the

State unit attach the Individualized Education Plan (IEP) to the IWRP,

rather than summarize the IEP, when coordinating with education

agencies to serve transitioning students. In response, the Secretary

emphasizes that the Secretary does not consider coordination between

the IWRP and IEP to represent a documentation requirement. Rather, the

requirement in the draft regulations that the IWRP include a summary of

the transitioning student's IEP was intended to ensure that the State

unit review the vocational goals, rehabilitation objectives, and nature

and scope of services identified in the transitioning student's IEP

during the course of developing the IWRP. Requiring that review is

consistent with the legislative intent that State units coordinate with

education agencies to serve transitioning students in the most

effective and efficient manner possible. In an effort to clarify the

regulations, however, the Secretary proposes to amend this section to

require the State unit to ensure that the transitioning student's IWRP

is consistent with the student's IEP in terms of goals, objectives, and

services. Although the IWRP need not include a summary or an attached

copy of the IEP, it is expected that, for transitioning students, State

units will closely review the IEP in the course of IWRP development. In

addition, the Secretary proposes to amend Sec. 361.47(f) to require the

State unit to maintain documentation from the needs assessment to

support the goals, objectives, and services identified in the IWRP and

in the IEP of transitioning students.

Finally, in response to public comment, the Secretary proposes to

add paragraph (e) to this section to require State units to ensure that

a determination that an individual is ineligible for services after an

IWRP has been developed is made in accordance with the procedures in

proposed Sec. 361.43 and is included as an amendment to the IWRP.

Section 361.47--Record of Services

This proposed section revises Sec. 361.39 of the existing

regulations. References to the ``case record'' would be replaced with

the term ``record of services'' to discourage characterizing

individuals with disabilities as ``cases.'' The proposed section would

incorporate the choice and integration requirements in the 1992

Amendments.

As previously discussed, the Secretary has significantly revised

this section to reduce paperwork requirements in response to commenters

on the draft regulations who viewed many of the record of services

requirements as unduly burdensome or duplicative of other requirements

in the regulations.

In response to public comment, the Secretary proposes to simplify

paragraphs (a) and (b) of this section to require State units to

maintain documentation to support determinations of eligibility or non-

eligibility made in accordance with proposed Sec. 361.42 or

Sec. 361.43. The Secretary also proposes to require State units to

include, as part of an individual's record, documentation supporting

the determination that an individual has a severe or most severe

disability. This requirement is

[[Page 64490]]

particularly important to support an individual's receipt of services

from a State unit operating under an order of selection or to support

the individual's placement in a supported employment setting. In

addition, this requirement is consistent with the intent of the Act to

expand and improve services to individuals with the most severe

disabilities.

In paragraph (d) of this section, the Secretary proposes to

simplify the requirements relating to extended evaluations by requiring

State units to maintain documentation to support the need for an

extended evaluation and to support the periodic assessments conducted

during the extended evaluation. Documentation maintained under this

paragraph would also include the written plan developed during the

extended evaluation in accordance with Sec. 361.42(d)(3).

In an effort to better coordinate rehabilitation services for

transitioning students, the Secretary also proposes to amend paragraph

(f) of this section to specify that the State unit must document the

development of the individual's long-term vocational goal, intermediate

rehabilitation objectives, and nature and scope of services, as

identified in the transitioning student's IWRP and IEP.

Finally, the Secretary proposes to delete a number of requirements

from the draft regulations on the basis that the requirements are

unduly burdensome or unnecessarily duplicative of other provisions in

the regulations. For example, because the IWRP is included as part of

the individual's record of services that must be maintained under this

section, requirements that are duplicative of IWRP content requirements

in proposed Sec. 361.46 have been deleted from the record of services.

For each record of services requirement that the Secretary considers

duplicative of other requirements in the regulations, specific

references to those other requirements are provided.

Accordingly, the Secretary proposes to delete the following

documentation requirements from this section of the draft regulations:

(1) Documentation of the manner in which the individual was provided

information necessary to make informed choices as to vocational goals,

rehabilitation services, and service providers (addressed by

Sec. 361.46(a)(6) and Sec. 361.52). (2) Documentation of the manner in

which the individual was provided information regarding the level of

integration of service provision and job placement options (addressed

by Sec. 361.46(a)(7)(iii) and Sec. 361.52). (3) Documentation

supporting the determination that the clinical status of the individual

is stable or slowly progressive if physical and mental restoration

services are provided (addressed by Sec. 361.46(a)(3)). (4)

Documentation to support any decision to provide services to family

members (addressed by Sec. 361.46(a)(3)). (5) Documentation relating to

the individual's participation in the cost of any vocational

rehabilitation services, the eligibility of the individual for any

comparable services and benefits, and the availability and use of those

comparable service and benefits (addressed by Sec. 361.46(a)(7)). (6)

Documentation that the individual has been advised of the

confidentiality of all information pertaining to the individual and

that any information about the individual has been released with the

individual's informed written consent (addressed by Sec. 361.46(a)(7)

and Sec. 361.38). (7) Documentation of any plans to provide post-

employment services after the employment outcome has been achieved

(addressed by Sec. 361.46(c)). (8) Documentation of any review of the

determination that an individual is no longer capable of achieving an

employment outcome after services under an IWRP have already been

provided (addressed by Sec. 361.43(d)).

The Secretary is particularly interested in public comment on

whether the proposed provisions cover all key decision points in the

rehabilitation process for which documentation is needed.

Section 361.48--Scope of Vocational Rehabilitation Services for

Individuals With Disabilities

This proposed section revises Sec. 361.42 of the existing

regulations.

The phrase ``counseling and guidance'' in the current regulations

has been changed in proposed Sec. 361.48(a)(3) to ``vocational

counseling and guidance'' in order to clarify that counseling and

guidance services that are provided as discrete vocational

rehabilitation services are vocational in nature and specifically

designed to assist the individual in reaching an employment outcome.

Vocational counseling and guidance is, therefore, distinguishable from

the more generalized counseling and guidance that an individual may

need at any point during the rehabilitation process in connection with

the provision of services.

A number of paragraphs from the current regulatory section have

been revised to remove definitional text, and definitions for those

services have been added to proposed Sec. 361.5. For example, proposed

Sec. 361.48(a)(5), providing for physical and mental restoration

services, has been revised to remove all definitional material, which

is now in proposed Sec. 361.5(b)(35). Proposed paragraph (a)(7) of this

section, providing for maintenance, has been modified to remove the

current regulatory provisions that describe maintenance in terms of

subsistence or basic living expenses, and a proposed definition of

maintenance has been included in proposed Sec. 361.5(b)(31) to clarify

that maintenance costs are those expenses that are in excess of normal

living expenses and that are necessitated by participation in a

vocational rehabilitation program. Similarly, proposed paragraph (a)(8)

of this section provides for transportation in connection with the

rendering of any vocational rehabilitation service, and a definition of

transportation has been added to proposed Sec. 361.5(b)(49), which

clarifies that transportation must be necessary to enable an applicant

or eligible individual to participate in a program of vocational

rehabilitation services. This change was proposed in the 1991 NPRM.

Proposed paragraph (a)(9) of this section clarifies that the

services available to family members are vocational rehabilitation

services necessary to enable the applicant or eligible individual to

achieve an employment outcome.

Some commenters on the draft regulations requested that the

provision of ``note-taking services'' not be limited to individuals who

are deaf or blind. In response, the Secretary agrees that note-taking

services should be available to any eligible individual in need of

those services to achieve an employment outcome. Therefore, the

Secretary proposes to delete ``note-taking'' from proposed paragraphs

(a)(10) and (a)(11) of this section and emphasizes that these services

are available under proposed paragraph (a)(20) of this section as

``other services'' whenever necessary for an eligible individual to

achieve an employment outcome.

Proposed paragraph (a)(13) of this section, which provides for job

search, placement assistance, and job retention services, clarifies the

scope of services currently available under existing paragraph (a)(12)

of Sec. 361.42, which provides for placement in suitable employment.

Proposed paragraphs (a)(14) and (a)(15) of this section incorporate new

requirements in the statute for supported employment and personal

assistance services. Proposed paragraph (a)(16) of this section revises

the paragraph in the existing regulations on post-employment services

by

[[Page 64491]]

referring to the proposed definition of post-employment services in

Sec. 361.5(b)(37). That definition incorporates the language in the

1992 Amendments regarding advancement in employment and individual

choice. Finally, proposed paragraph (a)(18) of this section revises the

paragraph in the existing regulations on rehabilitation engineering

services, consistent with the 1992 Amendments, to provide for

rehabilitation technology services.

Section 361.49--Scope of Vocational Rehabilitation Services for Groups

of Individuals With Disabilities

This proposed section would consolidate provisions from several

sections of the existing regulations, including the definition of

vocational rehabilitation services for the benefit of groups of

individuals in Sec. 361.1(c) of the existing regulations and

Secs. 361.50, 361.51, 361.52, and 361.53 of the existing regulations.

In addition, it would incorporate new requirements imposed by the 1992

Amendments, such as replacing the concept of the ``establishment of a

rehabilitation facility'' with the concept of the ``establishment,

development, or improvement of a public or other nonprofit community

rehabilitation program,'' restricting the construction of a

rehabilitation facility to special circumstances, and adding the newly

authorized service of technical assistance and support services for

businesses that are not subject to the Americans with Disabilities Act

and are seeking to employ individuals with disabilities.

In response to public comment on the draft regulations, the

Secretary proposes to amend paragraph (a)(5) of this section to clarify

that the establishment of small business enterprises operated by

individuals with the most severe disabilities under the State unit's

supervision includes vending facilities established under the Randolph-

Sheppard program. In addition, the Secretary proposes to amend this

paragraph to clarify that management services and supervision in

support of a small business enterprise may be provided by the State

unit beyond the initial establishment period of six months. The

Secretary also proposes to clarify the draft regulations to state that

initial stock and supplies and operational costs for small business

enterprises may be provided only during the initial six-month

establishment period. These changes are consistent with section

103(b)(1) of the Act, as well as with the Randolph-Sheppard Act and its

implementing regulations in 34 CFR Part 395.

Section 361.50--Written Policies Governing the Provision of Services

This section contains material from paragraph (b) of Sec. 361.42 of

the existing regulations, which requires written State policies on the

scope of vocational rehabilitation services for individuals, and

Sec. 361.44 of the existing regulations, which is the section on

authorization of services. The Secretary proposes to require that a

State unit have policies regarding the provision of services for groups

of individuals with disabilities, as well as the availability of

services for individuals with disabilities.

In the draft regulations, this proposed section incorporated new

provisions, based on existing policy and subregulatory guidance, to

clarify that no absolute caps or limits, in terms of location, cost, or

duration, could be placed on the availability of services that would

effectively deny an individual a necessary service. Although these

provisions are maintained in the proposed regulations, some public

commenters were concerned that insufficient emphasis was placed on the

requirement that policies governing the provision of services must be

designed to meet the rehabilitation needs of each individual served by

the State unit. In response, the Secretary proposes to amend the

regulations to specify that the policies required to be developed under

this section must ensure that the provision of services is based on the

individual's rehabilitation needs as identified in the IWRP. As in the

draft regulations, the proposed section would also prohibit State units

from arbitrarily limiting the nature or scope of vocational

rehabilitation services needed by any eligible individual to achieve an

employment outcome.

Some commenters on the draft regulations opposed the ability of

State units to establish preferences for in-State services on the basis

that those preferences are inconsistent with principles of individual

choice. In response, the Secretary proposes to amend the regulations to

permit individuals to choose out-of-State services over in-State

services. However, if an individual selects an out-of-State service at

a higher cost than an in-State service, if either service would meet

the individual's rehabilitation needs, the designated State unit would

be required to pay only an amount equal to the cost of the in-State

service.

The draft regulations would have required State units to provide

written authorization of services either before or at the same time as

the purchase of services, except in emergency situations when oral

authorization, followed by prompt written confirmation, was permitted.

In response to those commenters on the draft regulations who believed

that the State unit should have greater flexibility in developing

policies governing the authorization of services to individuals, the

Secretary proposes to simplify the regulations to require State units

to establish policies related to the timely authorization of services,

including conditions under which verbal authorization can be given.

Section 361.51--Written Standards for Facilities and Providers of

Services

This proposed section would incorporate Sec. 361.45 of the existing

regulations, would expand the requirement for standards to ensure

accessibility of facilities, and would require new standards regarding

qualified personnel and fraud, waste, and abuse, consistent with the

1992 Amendments.

In response to public comment on the draft regulations, the

Secretary interprets the accessibility of facilities requirement

broadly so as not to prevent any individual with a disability,

including the multi-chemically disabled, from receiving services at a

facility. In response to public comment, the Secretary also proposes to

amend the qualified personnel requirements in paragraph (b)(1) of this

section to reflect the personnel standards included in the State

agency's comprehensive system of personnel development under section

361.18(c).

Section 361.52--Opportunity To Make Informed Choices Regarding the

Selection of Services and Providers

This proposed new section would implement section 12(e)(1) of the

Act, which was added by the 1992 Amendments and requires the Secretary

to promulgate regulations establishing criteria pertaining to the

selection of vocational rehabilitation services and providers by an

individual with a disability.

In response to public comment on the draft regulations, the

Secretary proposes to amend this section of the regulations to clarify

that the concept of informed choice applies to all aspects of the

vocational rehabilitation process, including the selection of

vocational goals, intermediate objectives, VR services, and service

providers. This provision is closely related to the requirement in

proposed Sec. 361.46(a)(6) that the IWRP include a statement from the

individual describing the manner in which the individual exercised

informed choice in selecting among

[[Page 64492]]

alternative goals, objectives, services, providers, and methods used to

procure or provide services. The proposed regulations also would

require that the State unit consult with its State Rehabilitation

Advisory Council, if it has one, when developing its policies for

facilitating informed choice.

Several commenters opposed the requirement in the draft regulations

that State units develop indicators regarding the quality of service

providers on the basis that such a requirement is overly burdensome and

likely to lead to disputes, and potentially litigation, between State

units and providers of VR services. In response, the Secretary proposes

to amend the regulations to require State units to provide individuals,

or assist individuals in acquiring, information necessary to make an

informed choice about the specific services, including the providers of

those services, that are needed to achieve the individual's vocational

goal. Thus, it is expected that State units will provide, or facilitate

access to, information concerning cost and accessibility of services,

level of consumer satisfaction with services, qualifications of service

providers, and other information necessary to enable the individual to

make an informed choice among alternative services and providers.

It should also be noted that in response to public comment and in

the interest of reducing the burden on State units, the proposed

regulations would not require DSUs to provide a list of available

services and the potential providers of those services to each

individual. Lists of this type, as well as resource materials such as

consumer satisfaction surveys, are, however, included in the

regulations as examples of possible sources of information that may be

used by DSUs to satisfy the information requirements of this section.

Section 361.53--Availability of Comparable Services and Benefits

This proposed section revises Sec. 361.47(b) of the existing

regulations.

As provided for in the draft regulations, the availability of

comparable services and benefits is based on whether services and

benefits exist under another program for the individual and whether the

individual is eligible for those services or benefits. However, the use

of comparable services and benefits under the draft regulations was

dependent upon whether the comparable services and benefits were

``currently available'' to the individual. In response to public

commenters who expressed confusion as to the meaning of this phrase,

the Secretary proposes to delete the word ``currently'' from this

section and to amend the regulations to require DSUs to use comparable

services and benefits if available to the eligible individual within a

reasonable period of time that is appropriate for the achievement of

the intermediate rehabilitation objectives identified in the

individual's IWRP. What constitutes a reasonable period of time would

vary according to the services identified in each individual's IWRP. By

making this change, the Secretary emphasizes that the use of comparable

services and benefits should not unreasonably delay the individual in

meeting his or her rehabilitation objectives.

In the event comparable services and benefits exist but are not

available to the individual within a reasonable period of time, the

proposed regulations would require the State unit to provide VR

services during the interim period until they become available. In an

effort to respond to public comment and reduce the burden on DSUs, the

Secretary proposes to delete the requirement in the draft regulations

that State units obtain reimbursement for any overlap in benefits once

the comparable services and benefits become available.

In response to public comment on the draft regulations, the

Secretary also proposes to revise the regulations to clarify that a

determination as to the availability of comparable services and

benefits is not required in connection with the provision of those

services listed under paragraph (b) of this section. Although DSUs are

free to provide these services without pursuing the availability of

comparable services and benefits, the Secretary encourages State units

to use known comparable services and benefits whenever possible in

order to maximize the use of funds provided under this program.

In response to public comment on the draft regulations, the

Secretary also proposes to amend paragraph (b) of this section by

including taped texts and computer accessible formats (sometimes

referred to as E-text) among those services for which comparable

services and benefits do not need to be sought. This addition is

consistent with the Act's legislative history, specifically Conference

Report No. 102-973.

Section 361.54--Participation of Individuals in Cost of Services Based

on Financial Need

This proposed section is taken from Sec. 361.47(a) of the existing

regulations. It would clarify the requirements that a State unit must

meet if it chooses to consider the financial need of individuals to

determine the extent of their participation in the cost of vocational

rehabilitation services. The Secretary proposes to clarify the draft

regulations to require State units to ensure that its policies

governing financial need be applied uniformly to all individuals in

similar circumstances. The Secretary interprets this provision, which

is modeled after existing regulations, to require a State unit to apply

its financial needs test to each individual in need of a service

covered by the test without regard to the type of the individual's

disability. The proposed regulations would also clarify that this

uniform application requirement does not prohibit setting different

levels of need for different geographic regions in the State, but

requires uniform application of the standard to all individuals within

each geographic region or to all individuals within the State if the

State unit does not establish geographical differentials. Finally, the

proposed regulations would clarify that the level of an individual's

financial participation in the cost of VR services must be reasonable,

based on the individual's financial need and ability to pay, and must

not be so high as to effectively deny the individual a necessary

service.

Section 361.55--Review of Extended Employment in Community

Rehabilitation Programs or Other Employment Under Section 14(c) of the

Fair Labor Standards Act

This proposed section is taken, in part, from Sec. 361.58 of the

existing regulations. In addition to the review of extended employment

outcomes, the 1992 Amendments require the review of employment outcomes

in which the individual is compensated in accordance with section 14(c)

of the Fair Labor Standards Act to determine the individual's needs and

interests related to competitive employment. This section would also

incorporate the emphasis in the 1992 Amendments on employment and

training in integrated settings and would elaborate on the meaning of

the ``maximum effort'' required of State units in the existing

regulations to clarify that State units are required to provide

services to promote movement from extended employment to integrated

employment.

Section 361.56--Individuals Determined To Have Achieved an Employment

Outcome

This proposed section, which has been renamed to conform to the

changes discussed in the following paragraphs, is taken from

Sec. 361.43 of the existing regulations. It has been revised to make

the requirements in the current

[[Page 64493]]

regulations more outcome-oriented, rather than process-oriented, and to

incorporate the new statutory emphases on choice and integrated

settings.

In an effort to better reflect whether an individual has

successfully achieved an employment outcome, the draft regulations

would have extended the period for which an employment outcome must be

maintained from 60 to 180 days. Several commenters, however, opposed

the 180-day standard as unduly burdensome and inconsistent with

individual choice. Some commenters believed that the standard for

closing an individual's case should be based on the particular

circumstances of the individual's employment situation, while others

indicated that the determination as to whether the individual is

successfully employed should be made jointly by the individual, the

rehabilitation counselor or coordinator, and, in some cases, the

employer. In response to these comments and to the views expressed by

members of the focus group that discussed this issue, the Secretary

proposes to delete the draft requirement that an employment outcome

must be maintained for 180 days. In its place, the Secretary proposes a

standard under which the individual must maintain the employment

outcome for the duration of any probationary period that the employer

has established for its employees, or, if the employer does not have an

established probationary period, for a period of at least 90 days. In

addition, the individual and the rehabilitation counselor or

coordinator must agree that the employment outcome is satisfactory and

that the individual is performing well on the job. Like the draft

regulations, this section would also require the State unit to assure

that the employment outcome is in the most integrated setting possible

and is consistent with the individual's abilities, capabilities,

interests, and informed choice. Finally, in response to public comment,

the Secretary proposes to amend this section to require that the

provision of services under the individual's IWRP contribute to, rather

than result in, the achievement of the employment outcome.

The proposed standard, like that in the draft regulations, is

intended to strengthen the current minimum 60-day standard for

maintaining a job placement in an effort to better reflect whether an

individual has, in fact, successfully achieved an employment outcome.

The Secretary agrees with those commenters who suggested that

achievement of an employment outcome should be based, in part, on the

stability of the individual's employment. In addition, the proposed

changes from the current regulations are also intended to condition the

achievement of an employment outcome on the satisfaction of the

individual, the counselor, and the employer. The Secretary believes

that the best measure of an employer's satisfaction with an

individual's job performance is whether the individual has met the

employer's probationary period. For those individuals whose employers

have not established a customary probationary period, the Secretary

views the 90-day minimum as an adequate safeguard to ensure that the

individual is performing well and is likely to maintain the employment

outcome. Consistent with the Act's emphasis on informed choice, the

proposed regulations would also base the decision that an individual

has achieved an employment outcome on the individual's, as well as the

counselor's or coordinator's, satisfaction with the employment outcome.

The Secretary emphasizes that a satisfactory employment outcome, at a

minimum, must meet the provisions of this section, and the Secretary is

particularly interested in public comment concerning whether further

standards for defining ``satisfactory'' should be developed at the

Federal level.

The Secretary is continuing to consider issues concerning outcome

measures for the vocational rehabilitation program, including the

proposed time standard in these regulations for maintaining a job

placement in order to achieve an employment outcome (the duration of

the employer's probationary period or, in the absence of an employer

policy in this area, at least 90 days). The Secretary believes that the

high level of Federal funding for this program--over 78 percent--

warrants close attention to accountability measures to ensure that

employment outcomes are maintained over time. The Secretary is

particularly interested in receiving comments on whether the proposed

job retention standard is strong enough to achieve this result.

The Secretary is also interested in receiving comments about the

relationship between closure requirements for the vocational

rehabilitation program and other programs, including those under the

Job Training Partnership Act (13 weeks), the Social Security

beneficiary rehabilitation program (9 months of substantial gainful

activity), and other State manpower development and job training

programs. Finally, the Secretary is interested in comments on the

impact of the proposed new employment outcome standard and whether, in

comparison to the current standard, it would likely increase or

decrease the number of individuals with disabilities achieving long-

term employment outcomes.

Section 361.57--Review of Rehabilitation Counselor and Coordinator

Determinations

This proposed section is taken from Sec. 361.48 of the existing

regulations.

In accordance with the Department's principles for regulating, the

Secretary proposes to delete all non-statutory timelines from this

section of the draft regulations. In place of specific time limits, the

proposed regulations would require each DSU, in consultation with its

State Rehabilitation Advisory Council, if it has one, to develop

reasonable timelines for key stages of the appeal process to ensure

that appeals are handled promptly. Specifically, DSU's would be

required to develop timelines to ensure that hearings are held within a

reasonable time after an individual's request for review, that the

initial decision of the impartial hearing officer is rendered within a

reasonable time after the hearing is completed, and that the final

decision of the DSU director is rendered within a reasonable time after

notifying the individual of the director's intent to review the initial

decision. These changes are intended to provide DSU's with increased

flexibility to develop appropriate timelines, while protecting

individuals against unreasonable delays in the review process. Like the

current regulations, this proposed provision also would permit a DSU to

establish an informal process to resolve a request for review without

conducting a formal hearing, but would require the DSU to conduct a

hearing within the relevant State-developed timeline if informal

resolution is unsuccessful. The Secretary particularly requests public

comment on whether a specific overall time limit for completing the

entire formal review process (e.g., 125 days) should be required under

the regulations.

This section would incorporate the requirement in the 1992

Amendments that prohibits the State unit from instituting a suspension,

reduction, or termination of services pending a final State hearing

determination unless the agency has evidence that the services were

obtained through fraud, misrepresentation, collusion, or criminal

conduct on the part of the individual, or the individual so requests.

The Secretary interprets this provision to mean that services may be

suspended, reduced, or terminated

[[Page 64494]]

pending a final determination if there is ``substantial evidence'' of

that conduct.

This proposed section also incorporates the requirement in the 1992

Amendments that the director not overturn or modify the decision of an

impartial hearing officer unless the director concludes, based on clear

and convincing evidence, that the decision of the impartial hearing

officer is clearly erroneous because it is ``contrary to Federal or

State law, including policy.'' The Secretary interprets this statutory

language to include a decision that is contrary to the approved State

plan, the Act, or Federal or State vocational rehabilitation

regulations or policy.

It should be noted that the Secretary has changed the term

``calendar day'' from the draft regulations to ``day'' in the proposed

regulations in response to public commenters who inquired as to the

difference in meaning between the two terms. Procedural time limits in

this section and throughout the regulations are, therefore, measured in

terms of ``days,'' which the Secretary intends to mean ``calendar

days'' rather than ``working days.''

Finally, in response to public comment on the draft regulations,

the Secretary proposes to add to paragraph (f) of this section a

requirement that the DSU inform applicants and eligible individuals of

the manner in which it selects impartial hearing officers.

Section 361.60--Matching Requirements

This proposed new section would clarify the matching requirements

by consolidating all of the Federal and non-Federal share provisions.

Proposed paragraph (a) of this section contains the general Federal

share provision, which is in Sec. 361.86(a) of the existing regulations

and was revised by the 1992 Amendments to be 78.7 percent. Proposed

paragraph (a) of this section also contains the 50 percent Federal

share provision for construction projects, which is in Sec. 361.74(b)

of the existing regulations, and the 90 percent Federal share provision

for innovation and expansion grant activities, which is addressed in

Sec. 361.153 of the existing regulations.

In accordance with the Department's principles for regulating, the

Secretary proposes to simplify the requirements relating to the non-

Federal share in the draft regulations by removing from the regulations

a list of permissible sources of expenditures to meet the non-Federal

share and instead cross-referencing the applicability of the matching

or cost sharing requirements in 34 CFR 80.24 of EDGAR with certain

exceptions. The proposed regulations would specify that third party in-

kind contributions, which are a permissible source of matching funds

under EDGAR, may not be used as part of the non-Federal share under the

VR program. In addition, the proposed regulations would continue, but

clarify, existing regulatory requirements that prohibit earmarked

donations that benefit the donor from being used to meet the non-

Federal share. The Secretary wishes to emphasize that the changes

proposed with regard to meeting the non-Federal share would not

prohibit the use of any funding sources that are currently allowable.

Section 361.61--Limitation on Use of Funds for Construction

Expenditures

This proposed new section sets out in a separate section the

requirement in paragraph (d) of Sec. 361.85 of the existing regulations

that no more than 10 percent of a State's allotment may be used for

construction.

Section 361.62--Maintenance of Effort Requirements

This proposed section is taken from Sec. 361.86 of the existing

regulations. It incorporates provisions in the 1992 Amendments, which

changed the standard on which the maintenance of effort level is based

from the average of the three prior fiscal years to the second prior

fiscal year. It also folds into the same section a separate maintenance

of effort requirement relating to the construction of facilities that

is contained in both Sec. 361.52(e) and Sec. 361.85(d) of the existing

regulations. This proposed section clarifies the procedures the

Secretary follows for determining whether maintenance of effort

requirements have been met and for reducing the amount payable in the

case of a maintenance of effort deficit if there is a separate State

agency for vocational rehabilitation services for individuals who are

blind.

Section 361.63--Program Income

This proposed new section consolidates in one place all of the

provisions related to program income. Proposed paragraph (a) of this

section incorporates the definition of program income from EDGAR (34

CFR 80.25(b)). Proposed paragraph (b) of this section incorporates

existing subregulatory guidance regarding the sources of program

income. Proposed paragraph (c)(1) of this section incorporates the

general EDGAR requirement that program income must be used in the

program in which it is earned, but makes an exception for Social

Security reimbursements as provided in section 108 of the Act. Proposed

paragraph (c)(1) of this section would clarify that program income is

considered earned when it is received.

In response to public comment on the draft regulations, the

Secretary proposes to delete from proposed paragraph (c)(3)(ii) of this

section the requirement that the State notify the Secretary prior to

using the deduction method for accounting for program income. By

removing this condition, the Secretary emphasizes that the State is

free either to use program income to expand its vocational

rehabilitation program or to deduct it from its total allowable costs,

without seeking prior Federal approval.

Proposed paragraph (c)(4) of this section would clarify that

program income may not be used to meet the non-Federal share

requirement.

Section 361.64--Obligation of Federal Funds and Program Income

This proposed new section incorporates the amendment to section 19

of the Act, which clarifies that both Federal funds, including

reallotted funds, and program income from all sources may be carried

over for obligation from the year in which the funds are received until

the end of the following year.

In response to public comments on the draft regulations, the

Secretary proposes to amend paragraph (b) of this section to clarify

that the State unit may carry over any portion of unobligated Federal

funds that it has matched by obligating non-Federal funds during the

fiscal year for which the Federal funds were appropriated. This

clarification is consistent with section 19 of the Act, which allows

for carryover of Federal funds ``to the extent'' that recipients comply

with Federal share requirements.

Section 361.65--Allotment and Payment of Federal Funds for Vocational

Rehabilitation Services

This proposed section is taken from Secs. 361.85 and 361.87 of the

existing regulations.

Section 361.70--Purpose of the Strategic Plan

This proposed section implements new section 120 of the Act, which

makes grants under Part B of the Act, as well as innovation and

expansion grants under Part C of the Act, contingent on the preparation

and submission of a statewide strategic plan.

Section 361.71--Procedures for Developing the Strategic Plan

This proposed new section implements new section 122 of the Act,

which requires the State to hold public forums and meet with members of

the

[[Page 64495]]

State Rehabilitation Advisory Council and the Statewide Independent

Living Council prior to developing the strategic plan. The Secretary

interprets the public forum requirement in the statute to require the

same procedures for public input on the strategic plan that are

required for the development of the State plan under Sec. 361.20 of the

proposed regulations.

Section 361.72--Content of the Strategic Plan

This proposed new section incorporates the new requirements in

section 121 of the Act with no substantive changes.

Section 361.73--Use of Funds

This proposed new section incorporates the requirements in new

sections 101(a)(34)(B) and 123 of the Act. The Secretary interprets

101(a)(34)(B) to require that at least 1.5 percent of the funds

received under Part B of the Act be used for the activities identified

in section 123. The Secretary has clarified that all funds received

under Part C of the Act must be used for activities identified in a

State's strategic plan, which may include, but are not limited to, the

activities identified in section 123 of the Act.

Section 361.74--Allotment of Federal Funds

This proposed new section incorporates by reference the

requirements of new section 124 of the Act without substantive change.

Executive Order 12866

1. Assessment of Costs and Benefits

These proposed regulations have been reviewed in accordance with

Executive Order 12866. Under the terms of the order the Secretary has

assessed the potential costs and benefits of this regulatory action.

The potential costs associated with the proposed regulations are

those resulting from statutory requirements and those determined by the

Secretary to be necessary for administering this program effectively

and efficiently. Burdens specifically associated with information

collection requirements, if any, are identified and explained elsewhere

in this preamble under the heading Paperwork Reduction Act of 1995.

In assessing the potential costs and benefits--both quantitative

and qualitative--of these proposed regulations, the Secretary has

determined that the benefits of the proposed regulations justify the

costs. A further discussion of the potential costs and benefits of

these proposed regulations is contained in the summary at the end of

this section of the preamble.

The Secretary has also determined that this regulatory action does

not unduly interfere with State, local, and tribal governments in the

exercise of their governmental functions.

To assist the Department in complying with the specific

requirements of Executive Order 12866, the Secretary invites comment on

whether there may be further opportunities to reduce any potential

costs or increase potential benefits resulting from these proposed

regulations without impeding the effective and efficient administration

of the program.

Summary of potential benefits relative to potential costs of the

regulatory provisions discussed previously in this preamble:

The Secretary believes that the NPRM would substantially improve

The State VR Services Program and would yield substantial benefits in

terms of program management, efficiency, and effectiveness. The

Secretary also believes that the proposed regulations represent the

least burdensome way to implement the 1992 Amendments to Title I of the

Act and fulfill important policy objectives that the Secretary

considers essential to the success of the program. As stated previously

in this preamble, the NPRM has been revised consistent with the

Department's principles for regulating, which were developed during the

Administration's regulatory reinvention initiative, to further reduce

paperwork or process requirements and to enhance the flexibility of

DSUs to meet non-statutory requirements. Increased flexibility of DSUs

and other benefits resulting from the proposed regulations are

discussed in the following paragraphs of this section and throughout

the section-by-section summary of the preamble.

Improved Organization of Regulations

The NPRM would substantially reorganize and clarify the current

program regulations in order to make the regulations easier to

understand and more useful. In response to requests from members of the

vocational rehabilitation community, the proposed regulations also

would include definitions of a number of previously undefined terms,

including ``comparable services and benefits,'' ``maintenance,'' and

``post-employment services.''

Notes and Examples

The Secretary has provided additional clarifying information in the

proposed regulations through the use of notes and examples. Many

commenters to the draft regulations stated that they find this

information more accessible and more useful when it is included in the

regulations rather than issued separately by RSA as subregulatory

guidance. As stated previously throughout this preamble, the Secretary

emphasizes that the limited notes and examples in the proposed

regulations are purely illustrative and are not intended to restrict

State flexibility.

Reduction of Grantee Burden

Non-statutory paperwork requirements have been eliminated or

consolidated throughout the NPRM in an effort to reduce the regulatory

burden on States. For example, previously duplicative requirements

under Sec. 361.46 (Content of the IWRP) and Sec. 361.47 (Record of

services) have been consolidated to reduce the paperwork burden on

States and to ensure efficient administration of the program. A list of

other sections in which paperwork burden on grantees has been removed

or reduced in response to public comment on the draft regulations

precedes the section-by-section summary in this preamble. Also,

additional burden-reducing steps taken by the Secretary in accordance

with the Department's principles for regulating are explained

throughout the section-by-section summary in the preamble. For example,

the proposed deletion of the requirement that the State plan describe

the organizational structure of the State agency and its organizational

units is discussed under Sec. 361.13 (State agency for administration)

in the section-by-section summary. Those paperwork requirements that

would remain in the proposed regulations are considered essential to

the proper administration of the program.

Enhanced Protections for Individuals With Disabilities

The proposed regulations include provisions intended to ensure that

individuals with disabilities are not improperly denied necessary VR

services. In particular, Sec. 361.50 (Written policies governing the

provision of services) would require DSUs to ensure that the provision

of VR services for an eligible individual is based on the individual's

particular rehabilitation needs and would prevent DSUs from arbitrarily

limiting the nature or scope of vocational rehabilitation services

needed by any eligible individual to achieve an employment outcome. In

addition, Sec. 361.54 (Participation of individuals in cost of services

based on financial need) would require DSUs to

[[Page 64496]]

apply a State financial needs test to each individual in need of a

service covered by the test without regard to type of disability. This

section would also require DSUs to ensure that the level of an

individual's financial participation in the cost of VR services is

reasonable, based on the individual's ability to pay, and not so high

as to effectively deny the individual a necessary service.

Increased Flexibility of Grantees to Satisfy Statutory Requirements

A number of provisions in the proposed regulations have been

revised in an effort to enhance the flexibility of States in meeting

specific statutory requirements. For example, proposed Sec. 361.20

(State plan development) would allow States to determine what

constitutes appropriate and sufficient notice under the Act for

purposes of providing notice of public meetings on State plan

development. Although the proposed regulations would not impose any

specific minimum Federal requirements for what constitutes

``appropriate and sufficient notice,'' the section-by-section summary

of this proposed section identifies suggested ways a DSU might meet

these requirements. Similarly, Sec. 361.52 (Opportunity to make

informed choices regarding the selection of services and providers) of

the proposed regulations identifies possible methods a DSU may follow

or sources of information a DSU may maintain to ensure that each

eligible individual is afforded an opportunity, as required under the

Act, to make an informed choice in selecting vocational rehabilitation

services and providers. Finally, proposed Sec. 361.57 (Review of

rehabilitation counselor and coordinator determinations) would allow

States to establish their own timelines for key stages of the

statutorily-mandated fair hearing process.

Additional Benefits

The proposed regulations reflect the policy in the 1992 Amendments

of ensuring that individuals are provided necessary information through

appropriate modes of communication to enable them to participate in a

rehabilitation program or to influence DSU rehabilitation policy

development. For example, proposed Sec. 361.20(d) requires a DSU, in

developing its State plan, to provide, through appropriate modes of

communication, the notices of the public meetings, any materials

furnished prior to or during the public meetings, and the approved

State plan.

2. Clarity of the Regulations

Executive Order 12866 requires each agency to write regulations

that are easy to understand.

The Secretary invites comments on how to make these proposed

regulations easier to understand, including answers to questions such

as the following: (1) Are the requirements in the proposed regulations

clearly stated? (2) Do the regulations contain technical terms or other

wording that interferes with their clarity? (3) Does the format of the

regulations (grouping and order of sections, use of headings,

paragraphing, etc.) aid or reduce their clarity? Would the regulations

be easier to understand if they were divided into more (but shorter)

sections? (A ``section'' is preceded by the symbol ``Sec. '' and a

numbered heading; for example, Sec. 361.5 Applicable definitions.) (4)

Is the description of the regulations in the ``Supplementary

Information'' section of this preamble helpful in understanding the

regulations? How could this description be more helpful in making the

regulations easier to understand? (5) What else could the Department do

to make the regulations easier to understand?

A copy of any comments that concern how the Department could make

these proposed regulations easier to understand should be sent to

Stanley M. Cohen, Regulations Quality Officer, U.S. Department of

Education, 600 Independence Avenue, S.W. (Room 5100, FB-10B),

Washington, D.C. 20202-2241.

Regulatory Flexibility Act Certification

The Secretary certifies that these proposed regulations would not

have a significant economic impact on a substantial number of small

entities.

Because these proposed regulations would affect only States and

State agencies, the regulations would not have an impact on small

entities. States and State agencies are not defined as ``small

entities'' in the Regulatory Flexibility Act.

Paperwork Reduction Act of 1995

Sections 361.10, 361.13, 361.14, 361.15, 361.16, 361.17, 361.18,

361.19, 361.20, 361.21, 361.22, 361.26, 361.27, 361.29, 361.33, 361.34,

361.35, 361.37, 361.40, 361.46, 361.48, 361.49, 361.50, 361.51, 361.52,

361.54, 361.57, 361.71, and 361.72 contain information collection

requirements. As required by the Paperwork Reduction Act of 1995 (44

U.S.C. 3507(d)), the Department of Education has submitted a copy of

these sections to the Office of Management and Budget (OMB) for its

review.

Collection of Information: The State Vocational Rehabilitation Services

Program

States are eligible to apply for grants under these regulations.

The information to be collected includes State plan assurances and

descriptions to meet statutory requirements. The Department needs and

uses the information to review State plans to determine whether they

can be approved. Approval of a State plan is necessary to receive a

grant under this program.

All information is to be collected and reported once every three

years, with the exception of the following information, which is

required annually: advice provided by the State Rehabilitation Advisory

Council under Sec. 361.16; collection and analysis of data on qualified

personnel needs and personnel development under Sec. 361.18; analysis

of characteristics of individuals determined to be ineligible for

services and reasons for their ineligibility, evaluation of the

effectiveness of the State's vocational rehabilitation program, any

changes adopted in State policy or in the State plan as a result of

statewide studies and the annual program evaluation, and the methods

used to expand and improve vocational rehabilitation services to

individuals with the most severe disabilities under Sec. 361.29;

revisions to the supported employment plan under Sec. 361.34; a

description of the manner in which rehabilitation technology services

will be provided throughout the rehabilitation process, the personnel

training that will be provided to facilitate the provision of

rehabilitation technology services, and the manner in which personal

assistance services will be provided to individuals with disabilities

under Sec. 361.48. Annual reporting and recordkeeping burden for this

collection of information is estimated to average 221.2 hours per

response for 82 respondents, including the time for reviewing

instructions, searching existing data sources, gathering and

maintaining the data needed, and completing and reviewing the

collection of information. Thus, the total annual reporting and

recordkeeping burden for this collection is estimated to be 18,138.4

hours.

Organizations and individuals desiring to submit comments on the

information collection requirements should direct them to the Office of

Information and Regulatory Affairs, OMB, Room 10235, New Executive

Office Building, Washington, D.C. 20503; Attention: Laura Oliven.

[[Page 64497]]

The Department considers comments by the public on these proposed

collections of information in--

Evaluating whether the proposed collections of information

are necessary for the proper performance of the functions of the

Department, including whether the information will have practical

utility;

Evaluating the accuracy of the Department's estimate of

the burden of the proposed collections of information, including the

validity of the methodology and assumptions used;

Enhancing the quality, usefulness, and clarity of the

information to be collected; and

Minimizing the burden of the collection of information on

those who are to respond, including through the use of appropriate

automated, electronic, mechanical, or other technological collection

techniques or other forms of information technology; e.g., permitting

electronic submission of responses.

OMB is required to make a decision concerning the collections of

information contained in these proposed regulations between 30 and 60

days after publication of this document in the Federal Register.

Therefore, a comment to OMB is best assured of having its full effect

if OMB receives it within 30 days of publication. This does not affect

the deadline for the public to comment to the Department on the

proposed regulations.

Intergovernmental Review

This program is subject to the requirements of Executive Order

12372 and the regulations in 34 CFR part 79. The objective of the

Executive order is to foster an intergovernmental partnership and a

strengthened federalism by relying on processes developed by State and

local governments for coordination and review of proposed Federal

financial assistance.

In accordance with the order, this document is intended to provide

early notification of the Department's specific plans and actions for

this program.

Invitation to Comment: Interested persons are invited to submit

comments and recommendations regarding these proposed regulations.

All comments submitted in response to these proposed regulations

will be available for public inspection, during and after the comment

period, in Room 3214, 330 C Street SW., Washington, D.C., between the

hours of 8:30 a.m. and 4:00 p.m., Monday through Friday of each week

except Federal holidays.

Assessment of Educational Impact

The Secretary particularly requests comments on whether the

proposed regulations in this document would require transmission of

information that is being gathered by or is available from any other

agency or authority of the United States.

List of Subjects in 34 CFR Part 361

Reporting and recordkeeping requirements, State-administered grant

program--education, Vocational rehabilitation.

Dated: August 28, 1995.

Richard W. Riley,

Secretary of Education.

(Catalog of Federal Domestic Assistance Number 84.126--The State

Vocational Rehabilitation Services Program)

The Secretary proposes to amend Title 34 of the Code of Federal

Regulations by revising Part 361 to read as follows:

PART 361--THE STATE VOCATIONAL REHABILITATION SERVICES PROGRAM

Subpart A--General

Sec.

361.1 Purpose.

361.2 Eligibility for a grant.

361.3 Authorized activities.

361.4 Applicable regulations.

361.5 Applicable definitions.

Subpart B--State Plan for Vocational Rehabilitation Services

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

361.11 Withholding of funds.

State Plan Content: Administration

361.12 Methods of administration.

361.13 State agency for administration.

361.14 Substitute State agency.

361.15 Local administration.

361.16 Establishment of an independent commission or a State

Rehabilitation Advisory Council.

361.17 Requirements for a State Rehabilitation Advisory Council.

361.18 Comprehensive system of personnel development.

361.19 Affirmative action for individuals with disabilities.

361.20 State plan development.

361.21 Consultations regarding the administration of the State

plan.

361.22 Cooperation with agencies responsible for transitioning

students.

361.23 Cooperation with other public agencies.

361.24 Coordination with the Statewide Independent Living Council.

361.25 Statewideness.

361.26 Waiver of statewideness.

361.27 Shared funding and administration of joint programs.

361.28 Third-party cooperative arrangements involving funds from

other public agencies.

361.29 Statewide studies and evaluations.

361.30 Services to special groups of individuals with disabilities.

361.31 Utilization of community resources.

361.32 Utilization of profitmaking organizations for on-the-job

training in connection with selected projects.

361.33 Utilization of community rehabilitation programs.

361.34 Supported employment plan.

361.35 Strategic plan.

361.36 [Reserved].

361.37 Establishment and maintenance of information and referral

resources.

361.38 Protection, use, and release of personal information.

361.39 State-imposed requirements.

361.40 Reports.

State Plan Content: Provision and Scope

This text is long and has been trimmed here. Open the source document for the complete record.