Prison Industry Enhancement Certification Program Guideline

DEPARTMENT OF JUSTICE

Office of Justice Programs

[OJP(BJA)-1213]

RIN 1121-AA36

Prison Industry Enhancement Certification Program Guideline

AGENCY: Office of Justice Programs, Bureau of Justice Assistance (BJA),

Justice.

ACTION: Issuance of final guideline.

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SUMMARY: The Office of Justice Programs, Bureau of Justice Assistance

(BJA), is issuing this final revision to its Prison Industry

Enhancement Certification Program (PIECP) Guideline proposed for public

comment on July 7, 1998, 63 FR 36710-36719. Under Title 18 U.S.C.

1761(c), BJA PIECP certification excepts participating agencies from

certain Federal restraints placed on the marketability of prison-made

goods by permitting the transport of such goods in interstate commerce

and the sale of such goods to the Federal government. This Guideline

addresses statutory amendments and reflects administrative experience

gained by BJA since the last final PIECP Guideline published on March

29,1985 (50 FR 12661-64).

The publication of this Final Guideline is considered to be a

Federal action that will not significantly affect the quality of the

human environment. Therefore, preparation of an environmental impact

statement is not necessary.

EFFECTIVE DATE: This Guideline is effective April 7, 1999; existing

participants will have until April 7, 2000 to achieve compliance with

all of the new requirements set forth in this Guideline except for

those relating to the National Environmental Policy Act (NEPA). The new

requirements implementing NEPA are effective immediately.

FOR FURTHER INFORMATION CONTACT: Jeffrey R. Hall, Law Enforcement

Program Manager, Bureau of Justice Assistance, 810 Seventh Street, NW,

Washington, DC 20531. Telephone: (202) 616-3255.

SUPPLEMENTARY INFORMATION:

Scope of Program Announcement

I. Introduction: Program Purposes and Objectives

II. Background of the Prison Industry Enhancement Certification

Program (PIECP)

a. The Legislative History

1. Unregulated Prison Labor

2. Prisoner Idleness and Prisoners' Need for Job Skills Training

b. The PIECP Program

1. Current State of the Program

2. Future Challenges

c. Discussion of Comments

c. 1-11 (see Nos. pp 821-847)

III. Program Guidance

a. PIECP Purposes

b. Definitions

c. BJA's Initial Considerations for Determining Propriety of

Work Pilot Project Certification

1. BJA's Exercise of Discretionary Authority To Define and

Certify 50 Work Pilot Projects

2. Threshold Inquiry for Determining Applicability of PIECP

Exception Status

d. Mandatory Program Criteria for PIECP Participation

1. Eligibility

2. Inmate Wages

3. Non-Inmate Worker Displacement

4. Benefits

5. Deductions

6. Voluntary PIECP Inmate Worker Participation

7. Consultation With Organized Labor

8. Consultation With Local Private Industry

9. Compliance With the National Environmental Policy Act (NEPA)

IV. PIECP Administration

a. Certificate Holders

1. Project Structure

2. Application Content

3. BJA Review

4. Standard or Provisional Certification

5. Certificate Holder Designation Authority

6. Certificate Holder Monitoring Responsibilities

b. Cost Accounting Centers' PIECP Exception Status

c. Compliance Reviews

1. Performance Reports

2. On-Site Monitoring Reviews

d. BJA's PIECP Administration

e. Exception Status Suspension/Termination

1. Notice of Possible Compliance Violation

2. Voluntary Compliance Agreements

3. Failure To Achieve Compliance and Effect of Non-Compliance

4. PIECP Exception Status Suspension and Termination

I. Introduction: Program Purposes and Objectives

The Prison Industry Enhancement Certification Program (PIECP),

codified at 18 U.S.C. 1761(c), was first authorized by the Justice

System Improvement Act of 1979, Pub. L. No. 96-157, 93 Stat. 1215. The

PIECP was expanded from 7 to 20 pilot projects under the Justice

Assistance Act of 1984, Pub. L. 98-473 Sec. 609k(a)(1), 98 Stat. 2077,

2102. In 1990, The Crime Control Act of 1990, Public Law 101-647

Sec. 2906, 104 Stat. 4789,4914, raised to 50 the number of PIECP

projects that may be excepted by the Bureau of Justice Assistance (BJA)

from certain Federal restrictions on the marketability of prisoner-made

goods, including the Ashurst-Sumners Act (18 U.S.C. 1761(a)) and the

Walsh-Healey Act (41 U.S.C. 35).

Since its inception in 1979, the PIECP program has certified 38

work pilot projects throughout the country. Prison administrators find

PIECP participation an effective way to address idleness among ever-

increasing prison populations and as a cost-efficient method for

providing inmates with marketable job skills. Taxpayers benefit because

PIECP wage deductions result in reductions in incarceration costs.

Inmate wages benefit society, generally, in that deducted amounts are

authorized to address victim compensation, inmate family support needs

and taxes. Lastly, PIECP industries obtain broad market access for

their products because they are excepted from the Ashurst-Sumners Act

prohibition against the interstate transport of prisoner-made goods and

from the Walsh-Healey Act prohibition against certain contract sales of

prisoner-made goods to the Federal government.

BJA first issued a Final Guideline to implement this program on

March 29, 1985, 50 FR 12661-64. After providing an opportunity for

public comment on the revised Guideline on July 7, 1998 (63 FR 36710-

19), the agency now publishes this Final Guideline to offer updated

program clarification. In so doing, the legislative underpinnings of

relevant laws are examined and the scope of their applicability is

defined. Compliance expectations are explained as program guidance.

Refined administrative practices reflect experience gained by BJA over

the past 14 years. The background history, guidance definitions and

administrative requirements described in this Guideline are specific

only to the PIECP and have no bearing on or relationship to the

development, goals or administrative practices of any other prison

industry program.

II. Background of the Prison Industry Enhancement Certification

Program (PIECP)

a. Legislative History

1. Unregulated Prison Labor

The 19th Century evolution of industrial capitalism and private

sector use of prisoner labor spawned a number of conditions that

adversely affected several major segments of society. By the turn of

the 20th Century, these segments joined in an organized appeal to

Congress and state legislatures nationwide. They collectively asserted

that the production and distribution of unregulated prisoner-made goods

in interstate commerce needed to be

[[Page 17001]]

eliminated or, at a minimum, controlled.

Human rights activists turned the public's attention to poor prison

work conditions and inmate exploitation. Organized labor argued that

the demand for prisoner-made products, anywhere, necessarily displaced

a possible demand for the product of free labor. Free enterprise

manufacturers at the time were disturbed because manufacturers of

prisoner-made goods did not bear the burden of overhead costs borne by

private industry competitors. Prisoner-made goods were sold at below

market prices. The viability of private industry competition was

thereby undercut. In December 1924, Secretary of Commerce Herbert

Hoover held a conference on the subject of the ``ruinous and unfair

competition between prison-made products and free industry and labor.''

70 Cong. Rec. S656 (1928).

Then-Secretary Hoover authorized an advisory committee to study the

problem. This committee issued a report to Congress in 1928 wherein

Chairman of the Advisory Committee on Prison Industries, Arthur

Davenport, submitted the following conclusions:

(1) Certain major factors in the normal cost of production which must

be met by all manufacturers are entirely absent in the case of prison

industries. If anything approaching normal efficiencies of operation

can be attained with the use of prison facilities and labor, the total

costs of production are . . . below those of the manufacturer who must

meet large overhead expenses as well as employ free labor.

(2) It is the universal belief that prisoners should be usefully

occupied whether as a part of their punishment or as a means of

rehabilitation by teaching them the habits of industry. To this end

nearly every State . . . provid[es] productive work for their prisoners

. . .

(3) The volume of goods produced by prison labor is already very

large in some lines, but as more prisoners are put to work, and the

industries become more efficient, the output of our prisons will be

greatly increased.

(4) The effect of placing on the open market a volume of goods

which have been produced below normal costs, is to lower prices and

disorganize the market * * * The increase in prison production which is

predicted will exaggerate this evil and make it difficult if not

impossible for manufacturers employing free labor to exist in trade

where the prison output becomes heavy.

(5) The solution of this problem, if prison production is to

continue * * * would seem to be the elimination, in one way or another,

of the direct price competition of the prison products with so called

``free products''* * *. 70 Cong. Rec. S656 (1928).

In closing, Chairman Davenport urged that solutions be found,

``[o]therwise either prison industries must cease and prisoners kept in

idleness or the manufacture of products competing with prison output

will become impossible. Either of these developments would be

disastrous * * *.'' See S. Rep. No. 344, 70th Cong., 1st Sess., re-

printed, Cong. Rec. S656 (Dec. 15, 1928), ``Statement of Prison Labor

Problems as Shown by Report of Senate Committee.''

Even if a state prohibited its own correctional institutions from

producing and marketing prisoner-made goods, that same state had no

jurisdiction to control such goods produced in other states,

transported in interstate commerce and sold within its boundaries. As

an initial solution to this problem, Congress enacted the Hawes-Cooper

Act in 1929, Pub. L. 70-669, 45 Stat. 1084, recodified by Pub. L. 95-

473, 92 Stat. 1449 (1978) [formerly codified at 49 U.S.C. 11507,

omitted in the revision of Title 49 by Pub. L. 104-88, Title I

Sec. 102(a), 109 Stat. 804 (effective January 1, 1996); See S. Rep. No.

104-176]. This law divested prisoner-made products of their interstate

character upon their arrival in the state of their destination and

permitted the laws of that state to become operative with respect to

the sale and distribution of such products. It was described, at the

time of enactment, as an enabling act because it did not prohibit the

transportation of prisoner-made goods or force the enactment of state

legislation.

In 1935, Congress enacted the Ashurst-Sumners Act, Pub. L. 74-215,

49 Stat. 494 (1935), which authorized Federal criminal prosecutions of

violations of state laws enacted pursuant to the Hawes-Cooper Act.

Subsequent amendments to this law, including Pub. L. 76-851, 54 Stat.

1134 (1940), strengthened Federal enforcement authority by making any

transport of prisoner-made goods in interstate commerce a Federal

criminal offense. As amended, 18 U.S.C. 1761(a) now provides:

Whoever knowingly transports in interstate commerce or from any

foreign country into the United States any goods, wares, or

merchandise manufactured, produced, or mined, wholly or in part by

convicts or prisoners, except convicts or prisoners on parole,

supervised release, or probation, or in any penal or reformatory

institution, shall be fined under this title or imprisoned not more

than two years, or both [herein referred to as the Ashurst-Sumners

Act].

Certain prisoner-made products were excepted, by statute, from the

Ashurst-Sumners Act prohibition, including ``agricultural commodities

or parts for the repair of farm machinery'' as well as ``commodities

manufactured in a Federal, District of Columbia or State institution

for use by the Federal Government, or by the District of Columbia, or

by any State or Political subdivision of a State or not-for-profit

organizations.'' Title 18 U.S.C. 1761(b).

The Walsh-Healey Act, 49 Stat. 2036 (1936), as amended in 1979 by

Pub. L. No. 90-351, Sec. 827(b) and codified at 41 U.S.C. 35, also

controls the production of prisoner-made goods. This statute prohibits

the use of prisoner labor to fulfill general government contracts which

exceed $10,000. BJA certification pursuant to Sec. 1761(c) excepts

prisoner-made goods produced at PIECP work pilot projects from the

Walsh-Healey Act contracting restrictions, as well as the Ashurst-

Sumners Act interstate transportation restrictions.

2. Prisoner Idleness and Prisoners' Need for Job Skills Training

The PIECP exception to the Ashurst-Sumners and the Walsh-Healey Act

restrictions was introduced into the Senate in 1979 after the 1978

Pontiac, Illinois prison riot. In the wake of that uprising, Senator

Charles Percy (R-Ill.) stated:

[L]ast summer in Pontiac, Illinois, our worst fears about the

conditions in the Nation's prisons erupted into a nightmarish

reality. The Pontiac prison riot of 1978 ended with three guards

dead, three others seriously wounded, and $4 million in property

damage * * *.

The shopping list of problems and deficiencies in our prison

system is long and well known. Overcrowding, old and obsolete

facilities, lack of training or educational programs, crime within

prison walls, frustration on the part of guards and inmates are all

a part of the dreary picture * * *. Recidivism is now a substantial

element in our overall crime rate, and prisons are often accurately

characterized as a ``school for crime,'' rather than a deterrent to

crime * * *. 125 Cong. Rec. S11834 (1979).

These concerns caused Congress to take measures to encourage prison

industries, provided that they not engage in unfair competition with

private sector business and labor. Senator Percy's bill, now referred

to as the Prison Industries Enhancement Act, Section 827 of the Justice

System Improvement Act of 1979, Pub. L. 96-157, Sec. 827(a), 93 Stat.

1215, was enacted on December 27, 1979. As amended, it now offers 50

certified projects an opportunity to participate in the

[[Page 17002]]

interstate market, provided certain safeguards to free-world labor and

industry, and to prisoner-workers themselves, are met. See The Crime

Control Act of 1990, Pub. L. 101-647, Sec. 2906, 104 Stat. at 4914.

In describing the purpose of his introduced legislation, Senator

Percy explained (125 Cong. Rec. S11834 (1979)):

My amendment would do two basic things: First, it would

authorize the [BJA] to encourage development of pilot demonstration

projects for prison industry at the State level, involving private

sector industry * * *. Under this approach, prison programs benefit

from the private business, develop access to new markets, and

attract needed capital. The goal of these pilot projects would be to

create as realistic a working environment as possible within the

prison walls, while enabling an inmate to become more self-

sufficient to the benefit of himself, the prison system, and the

taxpayer.

Secondly, my amendment creates a partial exemption to two

Federal laws which severely restrict the ability of State prison

industries to market their goods * * *. When these laws were enacted

decades ago, they represented significant reforms against

exploitation of prison labor. Over the years, however, they have

developed into heavy-handed roadblocks to growth among * * * prison

industry programs * * *.

My amendment would provide limited exemptions to these

restrictions where inmates have been paid a wage comparable to that

paid for similar work in the private sector in the locality * * *.

The statutory exception that was enacted to establish PIECP is

codified at 18 U.S.C. 1761(c):

* * * [the Federal marketability prohibitions] shall also not

apply to goods, wares, or merchandise manufactured, produced, or

mined by convicts or prisoners who--

(1) Are participating in one of not more than 50 non-Federal

prison work pilot projects designated by the Director of the Bureau

of Justice Assistance; * * *

To become eligible for Bureau of Justice Assistance (BJA)

certification, an applicant department of corrections must comply with

specified statutory requirements. It must pay participating prisoners

``wages not less than that paid for work of a similar nature in the

locality in which the work was performed'' and cannot take more than 80

percent in deductions from gross wages for specified purposes including

taxes, reasonable charges for room and board, family support and

victims' compensation. 18 U.S.C. 1761(c)(2).

Certain other conditions of employment must also be met. An

eligible applicant cannot deprive participating offenders, solely

because of their status as offenders, of the right to participate in

benefits made available by the Federal or state government to other

individuals on the basis of their employment, such as workmen's

compensation. Title 18 U.S.C. 1761(c)(3). PIECP inmates must also

participate on a voluntary basis and must have agreed to the specific

deductions made from gross wages pursuant to 18 U.S.C. 1761(c)(2), and

all other financial arrangements resulting from participation in such

employment. Title 18 U.S.C. 1761(c)(4).

The note following 18 U.S.C. 1761, although not codified, is public

law and adds two additional PIECP requirements on certified prison

industries. The note requires participating prison industries to

consult with local union organizations prior to initiating any project

qualifying for a 1761(c) exemption. Also, the qualifying applicant must

ensure that paid PIECP inmate employment will not result in the

``displacement of employed workers, or be applied in skills, crafts, or

trades in which there is a surplus of available gainful labor in the

locality, or impair existing contracts for services.'' The Justice

System Improvement Act of 1979 added these provisions which became

Sec. 827(c) of the Omnibus Crime Control and Safe Streets Act of 1968.

See Pub. L. 96-157, 93 Stat. 1215, reprinted in 1979 U.S.C.C.A.N. 2471.

In 1984, Sec. 827(c) was redesignated Sec. 819 of the Omnibus Crime

Control and Safe Streets Act of 1968, as amended. See Pub. L. 98-473,

98 Stat. 2093.

If all eligibility requirements are met and an applicant acquires

BJA certification, the agency is thereafter authorized to operate

irrespective of Federal prohibitions on the marketing of state

prisoner-made goods. Conversely, non-compliance with these statutory

eligibility requirements could expose an industry to criminal

prosecution under the Ashurst-Sumners Act. Title 18 U.S.C. 1761(a).

b. The PIECP Program

1. Current State of the Program

Currently, 38 departments of correction or umbrella authorities are

PIECP Certificate Holders. Under the Justice System Improvement Act of

1979, Arizona, California, Idaho, Kansas, Minnesota, Nevada and Utah

were certified. In 1984, under the Justice Assistance Act of 1984, 13

prisons work pilot projects were certified in: Alaska, Belnap County

(NH), Connecticut, Iowa, Maine, Missouri, Nebraska, New Mexico,

Oklahoma, Oregon, South Carolina, Strafford County (NH) and Washington

State. Under the Crime Control Act of 1990, the following additional

departments of correction were certified: Colorado, Delaware, Florida,

Hawaii, Indiana, Louisiana, Maryland, Montana, North Carolina, Ohio,

Red River County (TX), South Dakota, Tennessee, Texas, the Texas Youth

Commission, Vermont, Virginia, Washington State Jail Industries Board

and Wisconsin.

About 145 private sector businesses now work in partnership with

PIECP certified projects to employ about 2,800 inmates. Either the

department of corrections or the private sector enterprise retains

project authority to direct and control inmate labor, depending on the

management model used. Project implementation has resulted in the

production of myriad products including such items as furniture, sheet

metal, video equipment, clothing, food products, office products,

mattresses, draperies, crutches and road signs. In addition, although

service industries were not a threat to the private sector in 1935 and

thus, were not included within the scope of the Ashurst-Sumners

prohibition, a number of service industries have elected to comply with

the PIECP requirements.

Between January 1979 and September 1998, PIECP projects generated

approximately $113.7 million in gross inmate wages. Nearly half of this

amount was diverted to non-inmate recipients: $8.9 million was deducted

for victims of crime, $25.7 million was deducted for room and board

payments, $5.8 million was deducted for family support and about $13.7

million was withheld in local, State and Federal taxes.

BJA monitors the performance of PIECP work pilot projects to ensure

that they operate in full compliance with all legislative and

administrative program requirements. Under a grant to the Correctional

Industries Association (CIA), prison industry and other professionals

conduct regular, on-site reviews of all PIECP projects. BJA responds to

matters involving possible non-compliance by taking appropriate

remedial action such as providing technical assistance or proposing a

corrective action plan.

2. Future Challenges

PIECP is used nationwide as a cost-efficient way to provide inmates

with work experience and training in marketable job skills, as well as

to reduce idleness among growing prison populations.

Over time, the limit on the authorized number of pilot projects has

been raised to meet the demands of interested applicants. When Congress

last increased the project ceiling to 50, the House took into

consideration a waiting

[[Page 17003]]

list of states and counties that had wanted to participate and noted

that ``the demand for certification by state and local governments

indicates a need for this amendment which will enable the program to

expand and other jurisdictions to apply.'' H.R. (I), 101st Cong. 202

(1990).

BJA administers PIECP with the objective of making participation

available to as many qualified applicants as possible, within limits

imposed by the statutory ceiling. This Guideline provides projects with

clarity as to Federal participation requirements, as well as

programmatic flexibility to allow for PIECP Project growth in ways that

respond to local needs. The Federal requirements are intended to ensure

that the interests of local business and organized labor are protected.

In this way, BJA's administrative practices address concerns reflected

in the legislative history pre-dating the onset of Federal regulation

of prisoner-made goods.

Finally, this revised Guideline addresses novel issues presented by

new PIECP participants, the private sector prisons. These entities are

unique in that they render an essential service traditionally

undertaken by public agencies and they do so for profit. Thus, BJA has

altered some PIECP program requirements to insure program

implementation remains consistent with Congressional intent. Congress

enacted PIECP to introduce public departments of correction to private

sector profit-making enterprises. Therefore, private prisons are

invited to participate in PIECP only as Cost Accounting Centers (CACs)

designated under the authority of departments of correction.

c. Discussion of Comments

BJA published a proposed Guideline in the Federal Register on July

7, 1998 for public comment. Written comments from public and private

organizations were received. All comments have been considered by the

BJA in this publication. This Guideline is final. The following is a

summary of substantive comments and BJA's response.

1. Background on PIECP

Comment: BJA should retain the legislative history and background

section. It is informative and useful.

BJA should explain that the background section does not accurately

describe present day political, social or economic concerns regarding

the implementation of prison industry programs.

Response: BJA provides the background and legislative history

section to illustrate social, political and economic concerns that were

predominant prior to 1940, before the Federal government first began

regulating, as a criminal matter, the interstate transport of prisoner-

made goods, as well as such concerns as they existed prior to the 1979

enactment of the PIECP exception to 18 U.S.C. 1761(a). BJA provides

this background to inform PIECP Cost Accounting Centers about Congress'

intent when developing the program's statutory requirements and

exception authority.

Accordingly, no substantive change was made in the background

section of the Guideline.

2. Program Purposes

Comment: BJA should modify its program purposes to add, as a

purpose, introducing government to private sector profit-making

enterprises. More specifically, BJA should endorse private sector

prison options as a specific way to introduce state and local

government agencies to private sector profit-making enterprises.

Response: Consistent with the legislative history of the PIECP, BJA

exercises its administrative authority only to endorse PIECP as a cost-

efficient means to address inmate idleness and to provide inmates with

work experience and training in marketable job skills. Whether private

sector partnerships or private prison contracts are suitable prison

industry options for any given jurisdiction, is a state and or local

matter for determination. State and local interests are uniquely poised

to identify appropriate private sector profit-making enterprises, if

any, to partner with prison industries. Thus, as a Federal agency, BJA

is not prepared to adopt such a program purpose.

Accordingly, no change was made in the program purposes provision

of the Guideline.

3. Definitions

Comment: BJA should modify the definitions so that references to

departments of corrections include public or not-for-profit agencies

sanctioned under state law to administer the Prison Industry

Enhancement Certification Program.

BJA should add a definition of ``chief state correctional

officer,'' as the term is used in reference to the room and board

deduction, so that it encompasses umbrella authorities where such

models have been certified by BJA as prison work pilot projects.

With respect to the minimum wage definition, BJA should state that

this PIECP program wage threshold is in no way intended, in and of

itself, to ascribe to inmate workers ``employee'' status for purposes

of other state and Federal laws.

BJA should re-define the locality definition. The proposed

definition, which defers to state agencies for the making of such

determinations, is too vague and subjective.

Response: BJA concurs with a number of recommendations to enhance

the clarity of terms used in the Guideline. A definition for the term

``departments of correction'' is incorporated to clarify that state and

local government agencies, and the instrumentalities thereof, including

not-for-profit entities sanctioned under state law to administer PIECP,

are eligible as potential PIECP Certificate Holders. A definition of

the term ``chief state correctional officer'' is added to enhance

guidance with respect to model specific implementation of the room and

board deduction. Also, the scope of the minimum wage definition is more

specifically defined in relation to PIECP purposes and the operation of

other laws.

The locality definition has implications both with respect to the

inmate wage requirement and the prohibition against private sector

employee displacement. BJA directs all Cost Accounting Centers to

obtain non-displacement projections and prevailing wage determinations

from their appropriate state agencies and, in so doing, extends to the

states an opportunity to locally influence implementation of the

Federally authorized PIECP Project. BJA expects that by extending this

opportunity, the states will exercise their authority so as to protect

the interests of local labor groups and private sector competition.

This approach was adopted to vest state agencies with authority and

flexibility to respond to uniquely local economic trends and

conditions. Accordingly, no change to the locality definition was made.

4. Eligibility

Comment: BJA should allow private prisons to independently qualify

as Certificate Holders. Alternatively, restrictions affecting the

designation of private prison industries, as Cost Accounting Centers

(CAC), should be eased.

Umbrella authorities should not be allowed to qualify as eligible

Certificate Holders. The certification of umbrella authorities

circumvents the 50 project limit imposed on the program by Congress.

Response: Title 18 U.S.C. 1761(c)(1) authorizes BJA to exercise

broad discretion in certifying PIECP prison work pilot projects. Two

significant

[[Page 17004]]

considerations, however, weigh in favor of limiting Certificate Holder

eligibility only to departments of correction and not private prisons.

First, the legislative history of the PIECP reflects Congress' desire

to craft an inmate work vehicle to advance state and local government

interests, and specifically their need to gainfully occupy growing

prison populations in marketable job skills. Second, as PIECP

implementation could impact state and local private sector interests,

BJA believes that the protection of those interests would be best

served by reserving certification for those agencies which, by their

very nature, are accountable to the public.

BJA will not authorize any PIECP certified project to designate

CACs outside of its jurisdictional boundaries because the Bureau defers

to individual state legislatures for determinations as to whether PIECP

should be authorized within their jurisdictions. If a state legislature

decides not to authorize PIECP implementation in public facilities,

private facilities ought not be authorized to implement PIECP, in that

same state, through a designation authorized by a Certificate Holder

located in another state. BJA, however, incorporates amendments to the

Final Guideline to allow any given state Certificate Holder to

designate CACs within private prisons operating within that same state,

even in the absence of a contract for incarceration services between

that state and the private prison seeking to participate in PIECP. The

BJA form used to accomplish the designation of a CAC within a private

prison must reflect express approval of the designation by the Chief

State Correctional Officer for the state in which the private prison

CAC is located. See Section IV.(a)(5), infra.

CACs designated within private prisons must also retain on-file

documentation reflecting approval of PIECP inmate worker participation

by the state and local jurisdictions in which the PIECP inmate workers

were convicted. In order to issue such approvals, the remanding state

and local jurisdictions must also hold PIECP certificates. This

requirement insures continuity of the necessary PIECP project

authorization vis-a-vis the PIECP inmate workers, and is responsive to

the statutory project ceiling number.

If inmate workers could not participate in PIECP within the

boundaries of the state and local jurisdictions in which they were

convicted, they should not be allowed to participate in PIECP in

another state or local jurisdiction through an agreement for private

prison incarceration services. Alternatively stated, state and local

jurisdictions cannot be allowed to participate in PIECP indirectly

through a contract with a private prison that has a PIECP-designated

CAC, if they choose not to participate in PIECP directly, i.e., had

they incarcerated their inmates within their own state and local

jurisdictional boundaries.

Title 18 U.S.C. 1761(c) offers BJA broad discretion with respect to

defining a prison work pilot project for PIECP eligibility purposes.

Umbrella authorities may represent a mix of agency members such as

state and local departments of correction, and youth authorities. Any

of these agency members may, through their respective umbrella

authorities, designate CACs within themselves or private prisons

located in their jurisdictional areas. In order to qualify for PIECP

certification, umbrella authorities must be able to assure BJA that a

central administration of the CACs can be accomplished to insure

project-wide compliance with the guideline and the statute as well as

responsible exercises of designation/undesignation authority. Since the

inception of PIECP in 1980, BJA has certified several umbrella

authorities. During that same period of time, Congress was advised of

such projects and consistently increased the project ceiling. BJA

interprets such action as tacit approval of BJA's certification of

umbrella authority models.

Accordingly, changes are made in the eligibility provisions to ease

restrictions on Certificate Holder designation of CACs within private

prisons located within the Certificate Holder's jurisdiction. Private

prisons are ineligible as independent PIECP Certificate Holders.

5. Inmate Wages

Comment: Authors of two comments claim that PIECP wage rates do not

equal labor costs: BJA should allow Cost Accounting Centers (CACs) to

make adjustments in prevailing wage rates to address the hidden,

unusual costs of doing business in a prison environment such as the

cost of transportation to rural areas, reduced production levels due to

rapid turnover, and added expenses of worker training and start-up.

Because these cost variables are significant and inherent in doing

business within prisons, the PIECP wage requirement is not necessary to

``level the playing field'' with private sector competition.

From the perspective of one organized labor group, the proposed

Guideline is an improvement over the 1985 PIECP guideline. BJA,

however, is urged not only to encourage, but to require CACs to

implement salary wage plans based on worker competency and seniority.

Regarding the wage self-determination option, in the proposed

guideline, the following diverse comments were received: this option is

an improvement in that it allows for CAC implementation in instances

where state agencies are non-responsive to requests for prevailing wage

determinations; this option imposes too great of an administrative

burden on CACs; this option provides participants with an opportunity

to avoid obtaining state agency wage determinations.

In instances where a private sector partner has both a non-inmate

operation and a PIECP CAC in the same locality, the partner should be

permitted to bypass a state agency's wage determination and use

relevant non-inmate wage scales with respect to PIECP inmate workers

performing the same job function.

BJA should clarify the meaning of the term of ``notable tasks,'' as

it is used in the Guideline with respect to identifying which inmate

workers should be paid a PIECP wage.

Response: Title 18 U.S.C. 1761(c)(1) expressly states that PIECP

wages must be paid at a rate which ``is not less than that paid for

work of a similar nature in the locality in which the work is

performed.'' PIECP wage determinations must be based only on comparable

non-inmate worker wages for performing work of a similar nature. Gross

wages earned by PIECP inmate workers may be reduced only through an

application of the four authorized wage deductions specified in 18

U.S.C. 1761(c)(2). Thus, the plain language of the PIECP exception

statute provides BJA with no authority to allow wage deductions in

addition to those set forth in 18 U.S.C. 1761(c)(2) and for the purpose

of addressing the unusual costs of doing business in a prison

environment, however meritorious such proposed adjustments might be.

The language of 18 U.S.C. 1761(c)(3) requires PIECP projects to pay

wages based only on private sector wage amounts for performing similar

work and it does not, as a matter of law, require the implementation of

salary plans. BJA added this policy-based encouragement to advance

program objectives.

The self-determination option, as reflected in the proposed

guideline, was presented to address a recurring challenge confronting

many PIECP Cost Accounting Centers (CACs). On occasion and through no

fault of their own, CACs are unable to obtain timely, state agency

responses to requests for wage determinations. The self-

[[Page 17005]]

determination option, which is available only when state non-

responsiveness occurs, assists CACs to achieve compliance without

relying on a determination by a third party. The method presented

requires only the minimum amount of data collection and analysis

necessary to yield a defensible, rationally-based wage determination.

Availability of the self-determination option prevents CACs from paying

a Federal minimum wage--the lowest possible PIECP wage, indefinitely,

when payment of such a wage rate is unwarranted and the state remains

non-responsive to wage determinations requests.

To ease the impact of PIECP implementation on any given locality's

ecomony and labor force, BJA reserves two opportunities for states to

affect the implementation of the Federal PIECP program within state

boundaries. The requirement that proposed CACs must obtain wage rates

from the relevant state agencies, is one of those opportunities. BJA

reserves this opportunity for state participation in the program,

without exception, to insure CACs respond to relevant, locally-based

input from an objective source.

BJA introduces the Guideline concept of ``notable tasks'' as a way

to assist CACs in identifying inmate workers to whom a PIECP prevailing

wage should be paid. Questions arise as to whether inmates performing

support functions, such as janitorial and maintenance services,

necessary to CAC operations must be paid a PIECP wage. A more specific

definition, in this regard, is not possible without compromising

flexibility in the application. The Guideline offers specific

administrative direction by identifying relevant considerations for

determining whether a given task is ``notable.''

Accordingly, no change was made in the wage payment provisions of

the Guideline.

6. Non-Inmate Worker Displacement

Comment: One representative from organized labor claimed that

prisoner labor should never be allowed to compete with free-world labor

because it undermines the private sector labor force and inmate

rehabilitation. Another representative of organized labor generally

endorsed the Guideline and the revised non-inmate worker displacement

requirement, stating that it is an improvement over that which was

issued in 1985.

The presumption of non-compliance, applicable when a private sector

partner employs non-inmate and inmate workers in the same locality, is

too vague and too restrictive on private sector partners.

The general language of this requirement makes it difficult to

measure displacement in instances where other non-employee, non-inmate

workers perform similar jobs or skills in the same locality. Any PIECP

operation is likely to affect the private sector marketplace and,

consequently, private sector jobs. The requirement ought not be

construed in such a way so as to prohibit PIECP companies from engaging

in normal business operations such as bidding for contracts on the open

market after they have been designated as participating in a PIECP

project. Also, BJA should not impede or discourage successful PIECP

operations, already designated, from continuing operations even when

there is a subsequent general downturn in the economy and, arguably, de

facto displacement of non-inmate workers performing similar work in the

locality.

This requirement is too restrictive in that it prohibits PIECP

partners from outsourcing entry level jobs and redirecting their

current private sector workforce toward higher skill level jobs.

The Guideline encourages potential Cost Accounting Centers to

develop new jobs in a locality; this should not be implemented so as to

adversely affect a CAC which decides not to follow the encouragement.

Response: Congress directs BJA to implement the PIECP program, a

prison industry program that places prison made goods in competition

with the private sector. BJA has no discretion to exercise in

determining whether or not to implement this program.

One BJA purpose in revising the Guideline is to improve the

program's responsiveness to organized labor's concerns. The agency is

pleased that a segment of the labor community views its interests as

better served through the re-issuance of the PIECP Guideline.

BJA acknowledges that implementing the non-inmate worker

displacement prohibition may appear to work at cross purposes with

encouraging the commercial success of PIECP Cost Accounting Centers

(CACs). The agency must respond to a broad statutory mandate to insure

that PIECP does not impair or displace private sector workers and is

not applied in skills in which there is a surplus of available gainful

labor. However, BJA cannot accomplish PIECP implementation if CAC's are

prevented from attaining commercial success by engaging in typical

competitive market practices. To address this concern, the guidance

language is modified to reflect BJA's expectation that PIECP CACs will

engage in typical business operations, such as bidding for contracts on

the open market after project initiation.

While compliance is a continuing CAC responsibility, a violation of

the non-displacement requirement is more likely to occur and is more

discernable just prior to and immediately following CAC implementation

than thereafter. For this reason, BJA will scrutinize CAC compliance

with this provision just prior to and within one year following CAC

implementation.

The agency devised a presumption of displacement which may be

applicable in instances where a private sector partner retains non-

inmate workers in the same locality. This presumption is modified in

this Final Guideline to provide partners with a degree of flexibility

to reallocate resources to their optimum use. Specifically, the

presumption may be overcome if the private sector partner can

demonstrate that non-inmate workers have been retained by the private

sector partner in jobs at pay rates equal to or greater than that

received in the previous position, that non-inmate employees have been

provided an adequate opportunity for effective training in any new job

skills and that the subject non-inmate employees are being retained by

the private sector partner under reasonably similar or improved

employment conditions.

BJA policy encouragement regarding the creation of new PIECP jobs

is not a mandate. CACs which do not bring new jobs to their localities

will not be penalized. For obvious reasons, however, CACs generating

new jobs are easier for BJA to evaluate and are less likely to be the

subject of local criticism.

Accordingly, changes are made in the non-inmate worker displacement

provision to clarify the scope of the prohibition and to not unduly

impede business decisions that lend themselves to effective commercial

management and success of PIECP Cost Accounting Centers.

7. Benefits Requirement

Comment: A resolution of inconsistent Social Security requirements

imposed on PIECP models should be accomplished at the Federal level

between BJA, the Social Security Administration and the Internal

Revenue Service. The disparate treatment of customer and employer

models is arbitrary. Both models should be treated the same way for

purposes of requiring projects to provide inmates with Social Security

coverage.

BJA should clarify its position with respect to imposing the

Federal

[[Page 17006]]

Unemployment Tax Act on PIECP models as a benefits requirement.

Response: The benefits requirement, as outlined in the proposed

Guideline, elicited the greatest number of comments. Several Federal

laws apply to wages earned by inmates in penal institutions. BJA,

therefore, sought a Guideline review from both the Social Security

Administration (SSA) and the Internal Revenue Service (IRS) to

ascertain whether the PIECP benefits requirement, as proposed, was

consistent with comparable laws administered by those Federal agencies.

Both the IRS and the SSA concluded that BJA's benefits requirement

is consistent with comparable laws set forth in the Social Security

Act, 42 U.S.C. 410(a)(7) and 418(c)(6)(B), and the Internal Revenue

Code. Services performed in an institution by an inmate in the employ

of a State, a political subdivision, or a wholly-owned instrumentality

are excepted from Social Security employment by 26 U.S.C. 3121(b)(7).

Section 3121(u)(2)(B)(ii)(II) also provides that such services are not

subject to the Medicare tax.

In contrast to those inmate services performed in the employ of a

state or governmental entity, there is no IRS or SSA exception for

services of inmates performing services in the employ of a non-

governmental entity (for example, a private corporation operating a

prison or a private corporation operating under the PIECP employer

model). PIECP Employer models must generally provide inmates with

Social Security coverage.

BJA retains the customer and employer models to implement the PIECP

benefits provision, 18 U.S.C. 1761(c)(3), in a manner consistent with

other Federal laws addressing inmate wages. Specifically, the models

are necessary in order to accord states and other governmental entities

the Social Security employment or coverage exception status, as

recognized by the IRS and the SSA. BJA will monitor and evaluate Cost

Accounting Centers (CACs) in accordance with the guidance set forth in

this Guideline, but will defer to the expertise of both the IRS and SSA

should either of those agencies reach another conclusion with respect

to the appropriate benefits treatment of inmate wages earned at any

given CAC.

In the case of services performed by PIECP inmates, regardless of

whether services are being performed under the customer or employer

model, Federal Unemployment Tax Act taxes do not apply to such

services. See Section 26 U.S.C. 3306(c)(21) which excepts from

employment ``service performed by a person committed to a penal

institution.''

Accordingly, no changes are made in the benefits requirement of the

Guideline.

8. Deductions

Comment: BJA ought to expressly authorize the use of room and board

deduction funds for the purpose of lowering costs otherwise incurred to

maintain and operate a PIECP program.

The term ``Chief State Correction Officer'' should be amended to

also include ``responsible umbrella authorities.''

Private prisons managing PIECP Cost Accounting Centers (CACs)

should be required to demonstrate that any benefit derived through the

taking of room and board deductions is passed on to states which

provide public funds to cover such costs.

The authorized deduction for victims compensation ought to be made

available to address a PIECP inmate's legal obligations to pay victim

restitution.

Response: Consistent with the statutory mandate addressing the room

and board deduction, BJA defers to state determinations--as reflected

in regulations issued by Chief State Correctional Officers--with

respect to determining the amounts of such deductions as well as

identifying the specific needs to which such deducted amounts may be

directed. BJA has authority to review room and board deductions to

insure the amounts deducted are reasonable and are used to defray the

costs of inmate incarceration. Specific amount determinations and

budget line item uses are issues more appropriately determined at the

state and local level.

In instances where the Certificate Holder is an umbrella authority,

possibly composed of diverse state as well as local agencies, the

umbrella authority may itself issue policy on this matter to guide its

multijurisdictional membership. A definition of ``Chief State

Correctional Officer'' is added to accommodate the administration of

this deduction by such models.

The room and board deduction was authorized by Congress to lower

incarceration costs otherwise borne by the public. Since private prison

PIECP inmates' room and board expenses might otherwise be addressed in

contracts for incarceration services between private prisons and public

agencies, BJA requires private prison CACs to obtain written approval

from their respective public agency clients before taking the room and

board deduction. In devising this requirement, BJA insures notice of

this possible revenue source is received by appropriate public agencies

without unduly burdening contractual relations to which it is not a

party.

BJA broadens its interpretation of the victims compensation

authorized deduction to also include deductions deposited in funds

established by law to facilitate victim restitution. Compensation and

restitution serve substantially the same purpose in providing victims

with financial redress for expenses incurred as a result of crime.

Although the statutory PIECP authorization, 18 U.S.C. 1761(c), does

not require CACs to make tax deductions, the Internal Revenue Code

requires federal income tax withholding if payments of wages are made

to employees. BJA encourages all CACs to take whatever deductions,

which may be necessary to comply with all Federal laws, including the

Internal Revenue Code. As with the PIECP benefits provision, BJA defers

to the IRS as the final authority with respect to making CAC tax

withholding determinations.

Accordingly, changes are made in the deductions provision to

clarify that the victims deduction may, in some instances, be used to

address a PIECP worker's restitution obligations. Guidance regarding

room and board deduction is simplified because of the inclusion of a

definition for the term ``Chief State Correctional Officer.''

Clarification is also provided with respect to tax deductions which may

be necessary to facilitate CAC compliance with the Internal Revenue

Code.

9. Voluntary Inmate Participation

Comment: BJA should accept inmate signatures on deduction notices

as evidence of voluntary inmate participation. BJA should not require

the execution of new inmate voluntary participation agreements each

time the deductions affecting inmate wages are changed.

Response: The 18 U.S.C. 1761(c) expressly requires not only

voluntary inmate employment, but also inmate agreement, in advance, of

all deductions and financial arrangements affecting gross wages. While

an inmate's signature on a notice form may signify receipt of notice,

it does not necessarily reflect inmate agreement. Thus, the proposal is

inadequate to insure compliance with the statutory requirement.

Accordingly, no change is made to the voluntary participation

provision.

[[Page 17007]]

10. Consultation With Local Labor and Business

Comment: The consulation requirements reflected in the guideline

exceed BJA's statutory authority. The requirements are overly

burdensome and should not be implemented so as to compromise the

competitive capablity of the Cost Accounting Centers (CACs).

BJA should accept as compliance with the labor consultation

requirement, the presence of an organized labor representative on the

board of an umbrella authority PIECP project.

With respect to consulation with organized labor, BJA should

routinely require CAC consultation with both state and local union

representatives. CACs should also be required to maintain documentation

of such consultation, on file.

Response: BJA's labor consultation requirement is consistent with

the mandate reflected in the statutory note to 18 U.S.C. 1761(c). The

provision requiring notice to local business, is consistent with a

provision reflected in the 1985 guideline as well as the legislative

history of the program exception. In this revised Guideline, BJA

provides specific guidance on the minimum amount of information

necessary to insure provision of adequate consultation; it includes

general information on the scope and nature of the proposed Cost

Accounting Center, the proposed initiation date as well as notice of

the requirement and an invitation to comment. Implementation of the

consultation requirements is not intended to compromise the market

competitiveness of a CAC, but to advise local economic interests which

may be impacted by the project.

Labor consultation cannot automatically be achieved through labor

participation on the board of a PIECP project. Such representation does

not necessarily insure notice of the proposed CAC activities to the

relevant local union representative in the locality to be affected.

While BJA issues this guidance to insure provision of consultation

to a labor organization (i.e., notice to a state labor organization, in

the event a local organization cannot be identified or does not exist),

BJA has no statutory authority to require notice to both state and

local labor organizations on a routine basis.

Accordingly, no change is made to the consultation provisions.

11. Compliance With the National Environmental Policy Act (NEPA)

BJA should allow PIECP projects to defer to state environmental

requirements and not impose a new national requirement.

BJA should provide Cost Accounting Centers (CACs) with technical

assistance to facilitate compliance with this program requirement.

Response: BJA has no authority to allow CAC applicants to defer to

state environmental requirements as a substitute for implementing the

provisions of the National Environmental Policy Act (NEPA), 42 U.S.C.

4321-4347 (NEPA). BJA decisions on proposed PIECP certifications and

designations consitute ``Federal actions'' as defined by 40 C.F.R.

1508.18 of the Council on Environmental Quality's (CEQ) regulations for

implementing NEPA. As such, BJA has a federal obligation to insure that

prior to decisions being made on requested certifications and

designations, BJA implements the appropriate provisions of the CEQ

regulations. These Federal implementation responsibilities, which can

be shared with but cannot be delegated to Federal program applicants,

have existed since the enactment of NEPA.

The technical assistance needs of CACs will be addressed through

BJA, itself, as well as its contractor, the Correctional Industries

Association.

Accordingly, no change was made to the proposed PIECP provision

implementing the NEPA.

As a result of public review and comment, the final ``Prison

Industry Enhancement Certification Program'' Guideline is revised to

read as follows:

III. Program Guidance

a. PIECP Purposes

To provide a cost-efficient means to address inmate

idleness and to provide inmates with work experience and training in

marketable job skills. BJA encourages private sector PIECP partners to

consider post-incarceration employment to PIECP inmate workers.

Through inmate wage deductions, to increase advantages to

the public by providing departments of correction with a means for

collecting taxes and partially recovering inmate room and board costs,

by providing crime victims with a greater opportunity to obtain

compensation, as well as by promoting inmate family support.

Through PIECP participation conditions, to prevent unfair

competition between prisoner-made goods and private sector goods.

To prevent the exploitation of prisoner labor.

b. Definitions

Benefits refers to inmate benefit coverage required by 18 U.S.C.

1761(c)(3). PIECP projects must provide inmate workers appropriate

benefits comparable to those made available by the Federal or state

government to private sector employees. The scope of appropriate

benefits coverage is impacted by whether the Cost Accounting Center is

structured as an employer or customer model and whether the inmate

labor work force is controlled by a public agency or the private

sector.

BJA refers to the Bureau of Justice Assistance within the Office of

Justice Programs, U.S. Department of Justice.

Certificate Holder refers to a department of corrections, or an

alternate umbrella authority, which is approved by BJA for PIECP

Project certification. Certificate Holders assume monitoring and

designation responsibilities with respect to their designated Cost

Accounting Centers. All PIECP prisoner-made goods are produced within

Cost Accounting Centers that a Certificate Holder designates within

itself, private prisons located in the same state or jurisdiction or,

in the case or an umbrella authority, within its membership agencies.

Certification refers to an exercise of BJA's discretionary

authority to designate a Prison Work Pilot Project pursuant to Title 18

U.S.C. 1761(c). BJA may issue either standard or provisional

certifications to applicant projects. BJA certified projects are

excepted from certain Federal marketability restraints on the transport

of prisoner-made goods in interstate commerce, as provided in 18 U.S.C.

1761(a), and sales to the Federal government in excess of $10,000, 41

U.S.C. 35.

Chief State Correctional Officer refers either to the highest

correctional officer for the jurisdiction in which the certified work

pilot project is located or, with respect to umbrella authorities that

control PIECP CACs within a mix of state and local jurisdictions, the

authorities themselves.

Cost Accounting Center (CAC) refers to a distinct PIECP goods

production unit of the industries system that is managed as a separate

accounting entity under the authority of a Certificate Holder. All

PIECP production activities are conducted within the context of a

designated CAC which, generally, is structured either as a customer or

employer model for purposes of determining PIECP inmate benefits. All

CACs must operate in compliance with the provisions set forth in 18

U.S.C. Sec. 1761(c) and this Guideline.

[[Page 17008]]

Customer Model is a form of a PIECP Cost Accounting Center

management structure. In this model, the private sector is engaged in a

CAC enterprise only to the extent that it purchases all or a

significant portion of the output of a prison-based business owned and

operated by a governmental entity, political subdivision or an

instrumentality thereof. A customer model private sector partner

assumes no major role in industry operations, does not direct

production and has no control over inmate labor. These functions are

performed, rather, by a department of corrections.

Deductions. CACs may elect to take deductions from a PIECP inmate

worker's wages for certain authorized items. Deductions from PIECP

inmate gross wages, if taken, may be made only for those items

specified in 18 U.S.C. 1761(c)(2), including: payment of taxes,

reasonable charges for room and board, allocations for family support

and contributions to any funds established by law to compensate victims

of crime (no less than 5 percent and no more than 20 percent). In no

event may a PIECP inmate worker's total deductions exceed 80 percent of

gross wages and each and every PIECP inmate worker must agree, in

advance, to all deductions from gross wages.

Department of Corrections refers to state or local governmental

entity or a political subdivision or instrumentality thereof, including

not-for-profit entities, that are legally sanctioned by state

legislatures to administer prison industries.

Designation is an exercise of a Certificate Holder's discretionary

authority to bring a CAC within its certified PIECP Project. This

exercise of authority results in an extension of PIECP exception status

and an imposition of compliance requirements on an identified CAC

operating within the certified PIECP Project.

Employer Model is a form of a PIECP management structure. In this

model, the private sector owns and operates the CAC by controlling the

hiring, firing, training, supervision, and payment of the inmate work

force. The department of corrections assumes no major role in industry

operations, does not direct production, and exercises minimum control

over inmate labor performance. These functions are performed, rather,

by the private sector.

Goods include tangible items, wares, and merchandise.

Locality means the geographic area impacted by the presence of a

PIECP CAC operation. For PIECP CACs, it is relevant with regard to:

determining inmate wages, providing consultation to appropriate labor

and private sector organizations, and determining whether a PIECP CAC

operation will displace the private sector labor force. All locality

determinations must be documented as part of a Notice of Designation.

As used in the calculation of CAC wage rates, locality is usually a

matter for definition by the appropriate state agency which normally

determines wage rates (i.e., the State Department of Economic

Security).

Minimum wage refers to the Federal minimum wage which is the lowest

possible wage that can be paid to private sector employees under the

Fair Labor Standards Act, 29 U.S.C. 206. Any special wage program,

excepted by law from the minimum wage requirement in the private

sector, may be used by a PIECP CAC as long as the CAC meets the same

program participation conditions as private sector participants. The

requisite payment of at least a minimum wage, by a CAC, is in no way

intended by BJA to imply that PIECP inmate workers are employees for

purposes of the PIECP statute or any other Federal law.

Monitoring refers to the process of examining Prison Work Pilot

Project activities to ensure continuing compliance with 18 U.S.C.

1761(c) and this Guideline. It includes, at a minimum, BJA's receipt

and analysis of performance reports and on-site CAC monitoring visits

by BJA, BJA contractors and Certificate Holders.

NEPA means the National Environmental Policy Act, Pub. L. 91-190,

83 Stat. 852 (1970) (codified as amended at 42 U.S.C. 4321-4347;

implemented under 40 C.F.R. pt. 1500).

Participation means engaging in the activities and operations of an

18 U.S.C. 1761(c) excepted PIECP Project.

PIECP means the Prison Industry Enhancement Certification Program

as authorized by 18 U.S.C. 1761(c).

PIECP Exception Status. Any PIECP Project which produces prisoner-

made goods pursuant to 18 U.S.C. 1761(c) is excepted from certain

Federal restraints imposed on the marketability of prisoner-made goods,

including 18 U.S.C. 1761(a) and 41 U.S.C. 35.

PIECP Inmate Worker is a convict or prisoner who performs notable

tasks necessary to produce or transport goods in interstate commerce

and for a Prison Work Pilot Project certified under 18 U.S.C. 1761(c).

The PIECP Inmate Worker benefits from PIECP by receiving training and

work experience.

Prevailing wage is a wage rate which is not less than that paid for

work of a similar nature in the locality in which the work is to be

performed, 18 U.S.C. 1761(c)(2).

Prison Industry means an organized utilization of inmate labor to

produce goods or render services.

Prison Work Pilot Project (PIECP Project) refers to one of 50 non-

Federal prison work pilot projects which may be designated by the

Director of BJA under 18 U.S.C. 1761(c). This term encompasses the

operations of the Certificate Holder's designated Cost Accounting

Centers (CACs). Any Prison Work Pilot Project may consist of one or

more CACs.

Prisoner includes prison and jail inmates, convicts and

incarcerated juvenile offenders, and does not include prisoners on

parole, probation, or supervised release. Title 18 U.S.C. 1761(a) does

not regulate the transport of goods produced by prisoners on parole,

supervised release, or probation.

Prisoner-made goods include all goods, wares, and merchandise

manufactured, produced, or mined, wholly or in part, by convicts or

prisoners (except convicts or prisoners on parole or probation).

Production is the forming anew or transforming of marketable goods.

The term includes mining and manufacture and excludes services.

Provisional Certification is issued by BJA in instances where an

applicant has not yet come into full compliance with all PIECP

requirements, but such compliance appears imminent. It entitles the

holder to PIECP exception status for an identified period of time, may

be made contingent upon the occurrence of identified conditions, and

may or may not be renewed by BJA.

Statutory Exception Status refers to a prison industry which meets

the statutory requirements set forth in 18 U.S.C. 1761(b), and is

thereby entitled to an exception from the prohibition set forth in 18

U.S.C. 1761(a).

Supervised Release. 18 U.S.C. 1761(a) states that the Ashurst-

Sumners Act prohibition does not apply to ``convicts on parole,

supervised release, or probation.'' The reference to ``supervised

release'' was added to 1761(a) in 1984, Pub. L. 98-473, 223, and is

responsive to changes made at that same time in state and Federal

Sentencing Guidelines. Policy statements issued by the U.S. Sentencing

Commission explain that supervised release is a ``new form of post-

imprisonment supervision created by the Sentencing Reform Act.'' See

Federal Sentencing Guidelines, 18 U.S.C.A. ch. 7, pt. A (1997).

Umbrella Authority refers to a type of Certificate Holder which is

authorized by law to administer a PIECP Project and which consists of

state and/or local departments of correction located

[[Page 17009]]

within the same state. A certified umbrella authority may designate

CACs within its membership agencies, as well as within members' private

prisons, and assumes responsibility for monitoring CAC compliance.

c. BJA's Initial Considerations for Determining Propriety of Work Pilot

Project Certification

1. BJA's Exercise of Discretionary Authority To Define and Certify 50

Work Pilot Projects

(A) BJA may exercise discretionary authority to designate up to 50 non-

Federal work pilot projects, 18 U.S.C. 1761(c).

(B) BJA may define PIECP eligibility qualifications and, in accordance

with its own definitions, may exercise agency discretion to extend or

withdraw certification privileges, as it deems appropriate.

2. Threshold Inquiry for Determining Applicability of PIECP Exception

Status

Appropriate PIECP participants include prison industries whose

activities would likely violate the 18 U.S.C. 1761(a) prohibition and

would likely not fit within an 18 U.S.C. 1761(b) exception. BJA has

devised an administrative approach for identifying such industries.

This approach incorporates relevant sections 1761 (a) and (b)

considerations, including whether a given prisoner-made item qualifies

as an excepted agricultural product, whether a given prison industry

activity qualifies as an unregulated service, and whether a product

distribution activity qualifies as an intrastate distribution of goods.

These considerations are reflected in the following threshold inquiry,

which BJA will use to determine whether a prison industry should be

encouraged to apply for PIECP exception status:

(A) Is a statutory exception applicable under 18 U.S.C. 1761(b)? The

following prisoner-made items are excepted from the prohibition set

forth in section 1761(a):

Parts for the repair of farm machinery; or

Commodities manufactured in a Federal, District of

Columbia, or state institution for use by the Federal Government, or by

the District of Columbia or by any state or political subdivision of a

state or not-for-profit organizations. This exception is intended to

inure to the benefit of the public; or

Agricultural commodities grown or cultivated on a farm

which retain continuing substantial identity through processing stages,

if any. In making the determination as to whether a processing stage

changes a product from an agricultural commodity to a manufactured

commodity, a relevant consideration is whether the processing is

incidental or ancillary to agricultural commodity growth and or

cultivation. If the processing is incidental or ancillary in nature and

is commonly undertaken by agricultural enterprises, then it would

likely fall within the scope of the statutory exception.

(B) Could the contemplated activity trigger 18 U.S.C. 1761(a) by

resulting in a production of goods by inmates in any penal or

reformatory institution? The production of goods, which is regulated by

18 U.S.C. 1761(a), must be distinguished from inmate services which are

not regulated by the criminal prohibition. The following factors are

relevant in determining whether a given activity results in the

production of prison-made goods:

Has a tangible item been produced, manufactured or mined?

Has a tangible item been formed or transformed?

Has the activity resulted in the creation of property or

in a new, marketable item?

(C) Could the contemplated activity trigger 18 U.S.C. 1761(a) by

resulting in a post-production, interstate transportation of prisoner-

made goods?

Will there be transportation of prisoner-made goods into

the flow of interstate commerce, i.e., across state lines or from a

foreign country into the United States?

Is there a commercial economic enterprise present?

BJA will use this preliminary threshold inquiry to instill greater

consistency in PIECP eligibility decision-making. If a prison industry

activity falls within the scope of the Sec. 1761(b) statutory

exception, the involved industry need not seek Sec. 1761(c) exception

status to avoid Sec. 1761(a) criminal sanctions. Additionally, if a

prison industry activity would not result in the production of goods,

interstate transport of prisoner-made goods, or does not in any other

way trigger Sec. 1761(a), the involved industry need not seek

compliance with the requirements set forth in Sec. 1761(c) or this

Guideline.

This threshold inquiry was devised only for 18 U.S.C. 1761(c)

programmatic purposes and does not reflect the Department of Justice's

18 U.S.C. 1761(a) prosecution guidelines. Thus, reliance on this

Guideline, or any BJA determination based thereon, is not a complete

defense to any civil or criminal action, but would depend on other

factors as well.

d. Mandatory Program Criteria for PIECP Participation

1. Eligibility

All departments of correction and juvenile justice agencies

authorized by law to administer prison industry programs are eligible

to apply for PIECP certification; such governmental agencies are also

eligible members of umbrella authorities, authorized by law to

administer prison industry programs, that are seeking certification.

PIECP Certificate Holders may designate CACs within themselves, as well

as within private prisons located in the same state. A private prison

industry may participate in PIECP only as designated CAC of the

certified PIECP Project in its respective state and upon the approval

of the Chief State Correctional Officer of that same state. CACs

designated within private prisons must also retain on-file

documentation reflecting approval of PIECP inmate worker participation

by the state and local jurisdictions in which the PIECP inmate workers

were convicted. In order to issue such approvals, the remanding state

and local jurisdictions must also hold PIECP certificates. Non-

compliance by any one designated CAC may result in PIECP exception

status suspension and/or termination as to that CAC, and if warranted,

its respective Certificate Holder. Also, within a reasonable period of

time after certification, each Certificate Holder must have at least

one CAC producing goods and operating under its authority or risk

losing certification.

2. Inmate Wages

PIECP inmate workers must receive wages at a rate which is not less

than that paid for work of a similar nature in the locality in which

the work is to be performed. This requirement benefits society by

allowing for the development of prison industries while protecting the

private sector labor force and business from unfair competition that

could otherwise stem from the flow of low-cost, prisoner-made goods

into the marketplace. PIECP participants must, therefore, implement the

prevailing wage requirements under like conditions experienced by

private sector competition. Toward this end, the following requirements

are applicable:

(A) Section 1761(c) requires that the PIECP wage amount be set

exclusively in relation to the amount of pay received by similarly

[[Page 17010]]

situated non-inmate workers. In deriving the appropriate PIECP wage, 18

U.S.C. 1761(c)(2) does not allow other cost variables to be taken into

consideration, such as unique expenses incurred as a result of

undertaking production within the prison environment.

(B) Prevailing wage verification must be obtained by the appropriate

state agency which determines wage rates (usually the Department of

Economic Security).

(C) When making PIECP prevailing wage verifications and annual re-

verifications, the responsible state agency should recommend the

utilization of a non-inmate wage scale which will not result in the

displacement of non-inmate workers performing similar work in the

relevant locality.

(D) The PIECP prevailing wage must be received by those inmate workers

performing notable tasks necessary to produce and/or transport goods in

interstate commerce. If a similarly situated, private sector company is

paying wages to obtain services that are necessary to production, e.g.

refuse pickup, then the PIECP CAC must also pay such wages to the

inmate provider of like services. In determining which tasks are

covered, the following considerations are relevant: the amount of

inmate time involved, effort and skill necessary to accomplish the

task, the regularity of task performance, and whether the task would

have been performed by the inmate absent PIECP production.

(E) The prevailing wage must be verified prior to the initiation of

PIECP participation. Annually, thereafter, the PIECP participant must

re-verify the adopted wage to ensure that it continues to be comparable

to wages paid for work of a similar nature in the locality in which the

project is located.

(F) If no such verification can be obtained from the State Department

of Economic Security, or other similar department, the PIECP

participant is responsible for establishing a reasonable prevailing

wage. In such instances, the participant should retain on file, for

BJA's review:

(1) relevant wage data from a sufficient number of competitors in

the locality;

(2) data analyses for determining a reasonable prevailing wage

result; and

(3) if possible, a written assessment of the reasonableness of the

resulting prevailing wage determination by an appropriate state agency

which normally determines wage rates.

(G) The PIECP prevailing wage can not be set below the Federal minimum

wage, as defined in the Fair Labor Standards Act (FLSA), 29 U.S.C. 201

et seq. Payment of the Federal minimum wage, however, does not

automatically achieve compliance with the prevailing wage requirement

unless the prevailing wage for the comparable private sector industries

is, in fact, the Federal minimum wage.

(H) Overtime, at one and a half times the rate of regular or prevailing

wage, must be paid for prisoner hours worked in excess of 40 hours per

week. See 29 U.S.C. 207(a) (a payment standard imposed on private

sector competition).

(I) If a CAC pays a wage based on piece work, the project must apply a

calculation to convert regular wages paid into a comparable hourly

wage. The calculation should be used as a routine check to ensure that

inmate workers, paid according to piece rate work, do not receive less

than the Federal minimum wage. In instances where the CAC is paying

Federal minimum wage and such a wage is less than the industry standard

for the prevailing wage, the CAC must be able to identify inmate worker

performance variances as justification for the wage rate.

(J) BJA strongly encourages the use of wage plans that take into

consideration a PIECP worker's experience, seniority, and performance.

3. Non-Inmate Worker Displacement.

PIECP CAC operations must not result in displacement of employed

workers; be applied in skills, crafts, or trades in which there is a

surplus of available gainful labor in the locality; or significantly

impair existing contracts. The term ``displacement,'' as used in this

provision, includes all such prohibited activities, as well as the

inappropriate transfer of private sector job functions to PIECP

inmates. This prohibition is intended to protect the private sector

partner's non-inmate employees, as well as all other non-inmate workers

who perform work of a similar nature in the same locality in which the

CAC is located. This prohibition is not, however, intended to prohibit

PIECP CACs from engaging in typical business operations, such as

competing for business or bidding on contracts on the open market after

their designation as Cost Accounting Centers.

(A) Regarding the possibility of displacement among non-inmate

employees of private sector partners in the same locality as the CAC:

(1) BJA will presume non-compliance where there is a non-inmate

worker's job function replacement by a PIECP inmate worker or where a

non-inmate worker's job function is eliminated or adversely impacted,

to a significant degree, and there is a concomitant assumption of a

similar job function by a PIECP inmate worker. This presumption may be

overcome if it can be demonstrated that the non-inmate workers have

been retained by the private sector partner in jobs at pay rates equal

to or greater than that received in previous positions, that non-inmate

employees have been provided an adequate opportunity for effective

training in any new job skills and that the subject non-inmate

employees are being retained by the private sector partner under

reasonably similar or improved employment conditions. When making this

compliance evaluation, BJA will not consider the private sector

partner's intent or economic viability.

(2) Prior to CAC initiation, the CAC applicant must provide BJA

with written documentation reflecting the private sector partner's

agreement not to displace its non-inmate employees with PIECP inmate

labor in violation of the 18 U.S.C. 1761(c) statutory note.

(B) Prior to project initiation, all CAC applicants must show

through written verification by the State Department of Economic

Security (or other appropriate state agency) that the PIECP project

will not result in displacement of non-inmate workers performing the

same work, regardless of wage rate. In cases where an appropriate state

agency cannot provide this service, the applicant CAC should propose to

and confer with BJA as to alternative measures to address this

requirement.

(C) While compliance is a continuing CAC obligation, BJA will

scrutinize CAC compliance with the non-displacement requirement just

prior to and within one year after the initiation date of CAC

operations.

(D) In instances where BJA finds that CAC implementation results in

private sector worker displacement, the CAC must either cease its

operations or comply with a BJA-approved corrective action plan, if BJA

proposes such a plan under Section IV. f. of this Guideline, infra.

[[Page 17011]]

(E) BJA strongly recommends that CAC job development be oriented toward

the creation of new jobs within the locality.

4. Benefits.

PIECP projects must provide inmate workers appropriate benefits

comparable to those made available by the Federal or State Government

to private sector employees, including workers' compensation and, under

certain circumstances, Social Security.

(A) By statute, in some states, inmates are not eligible to participate

in workers' compensation programs. Provision of comparable workers'

compensation benefits is acceptable as long as the CAC can demonstrate

comparability of such benefits with those secured by the Federal or

state Government for private sector employees.

(B) The PIECP CAC management model impacts whether the CAC must provide

Social Security benefits to PIECP inmate workers. Where the employer

model is utilized and the private sector directs and controls the PIECP

inmate worker, the PIECP participant must provide PIECP inmate workers

with Social Security benefits. Where a customer model is utilized and a

governmental, or instrumentality thereof, directs or controls the PIECP

inmate worker, BJA recognizes the applicability of other provisions of

Federal law which may operate to preclude the provision of PIECP

inmates with certain benefits, including Social Security.

5. Deductions.

Participating CACs are not required under 18 U.S.C. 1761(c) to take

deductions from PIECP inmate wages. Deductions, however, may be

required under other Federal statutes, such as the Internal Revenue

Code. If a CAC elects to take deductions from a PIECP inmates' gross

wages, such deductions can be taken only under the following

conditions:

(A) Deductions from gross wages, if made, may be withheld only for the

following authorized purposes:

(1) taxes (Federal, state, local);

(2) in the case of a state prisoner, reasonable charges for room

and board as determined by regulations issued by the Chief State

Correctional Officer;

(3) allocations for support of family pursuant to state statute,

court order, or agreement by the offender; and

(4) contributions of not more than 20 percent, but not less than 5

percent of gross wages to any fund established by law to compensate the

victims of crime.

Such deductions, in aggregate, cannot exceed 80 percent of gross

wages.

(B) PIECP inmate workers must be paid, credited with, or otherwise

benefit legally from, the 20 percent gross remainder. In this regard,

the CAC may direct the 20 percent gross remainder to a PIECP inmate

worker's expense accounts, savings accounts, or toward the settling of

the worker's legal obligations, including the payment of fines and

restitution.

(C) Each Certificate Holder, through its respective Chief State

Correctional Officer, retains flexibility in determining appropriate

room and board charges that may be deducted from PIECP inmate workers'

gross wages. Except as to CACs within private prisons, the applicable

regulations for determining this deduction are those issued by the

Chief State Correctional Officer of the state in which the PIECP inmate

is incarcerated.

(D) The legislative history of 18 U.S.C. 1761(c) reflects a

Congressional intent to permit the use of the room and board deduction

to lower costs otherwise incurred by the public for inmate

incarceration. Thus, prior to making room and board deductions, private

prison CACs must obtain written approval of any such proposed

deductions from the Chief State Correctional Officers for those states

from which the PIECP inmate workers were remanded.

(E) A PIECP inmate's gross wages may be subjected to a deduction for

the purpose compensating crime victims if the deducted amount is

deposited into a fund established by law for the purpose of providing

crime victim compensation. State crime victim compensation funds

typically qualify as authorized recipients of such deducted amounts.

The victims compensation deduction may also be used to address

victim restitution as long as the deducted amounts are deposited into a

fund established by law to address such victim interests. Amounts

deducted by private prison CACs should be deposited in those crime

victim compensation or restitution funds in states from which the PIECP

inmates were remanded.

6. Voluntary PIECP Inmate Worker Participation

The Inmate Worker must indicate, in writing, that he or she:

(A) agrees voluntarily to participate in the PIECP project, and

(B) agrees voluntarily, and in advance, to specific deductions made

from gross wages, as well as all other financial arrangements made as

to earned PIECP wages.

7. Consultation With Organized Labor

PIECP CACs must:

(A) consult with representatives of local union central bodies or

similar labor union organizations prior to the initiation of any

certified or designated CAC project. CACs should consult with as many

of such organizations as may have an interest in the trade or skill to

be performed by the PIECP inmates. If there are no local union bodies

or labor organizations, consultation must be made with the state union

bodies or similar state-wide labor organizations.

(B) provide adequate information about the contemplated PIECP

participation such as, at a minimum, an identification of the scope of

the intended CAC and projected initiation date, as well as an

explanation of the fact that statutory consultation is required and

comments are invited. CACs should retain documentation reflecting

provision of adequate consultation.

8. Consultation With Local Private Industry

PIECP CACs must:

(A) consult with representatives of local business that may be

economically impacted by CAC production prior to beginning operations,

and

(B) provide adequate information about the contemplated PIECP

participation such as, at a minimum, an identification of the scope of

the intended CAC and projected initiation date as well as an

explanation of the fact that consultation is required and comments are

invited. CACs should retain documentation reflecting provision of

adequate consultation.

9. Compliance With the National Environmental Policy Act (NEPA)

The review and approval of PIECP certification applications as well

as the designation of PIECP CACs must comply with NEPA and other

related Federal environmental review requirements. See NEPA, 42 U.S.C.

[[Page 17012]]

4321-4347 and 40 CFR pt. 1500. See also 28 CFR pt. 61 (Department of

Justice procedures for implementing NEPA); 28 CFR pt. 61 App. D

(procedures specific to Federal actions undertaken by the Office of

Justice Programs).

(A) A BJA PIECP certification, or a CAC designation under an issued

certification, constitutes a ``Federal action,'' as defined by 40 CFR

1508.18 of the Council on Environmental Quality's (CEQ) regulations for

implementing NEPA. Consistent with CEQ regulations, PIECP applicants

and CACs are required to submit for BJA review environmental data and

information regarding their proposed activities and, if necessary,

environmental assessments. Applicants and CACs must also assist BJA in

the preparation of any required environmental impact statements.

(B) Title 28 CFR Part 61 App. D provides NEPA compliance guidance to

PIECP applicants and CACs, including the following:

(1) Actions entailing minor renovation projects or remodeling do

not normally require an environment impact statement or an

environmental assessment, unless, for example the actions would be

located in or potentially affect a floodplain; a wetland; a listed

species or critical habitat for an endangered species; or a property

that is listed on or may be eligible for listing on the National

Register of Historic Places.

(2) Actions that normally require an environmental assessment, but

not necessarily an environmental impact statement, include: renovations

and expansions that change the basic prior use of a facility or

substantially change its size; change in use of an existing facility

that results in the increased production of liquid, gaseous, or solid

wastes; new construction; research and technology whose anticipated and

future application could be expected to have an effect on the

environment; and new operations involving the use of hazardous, toxic,

radioactive, or odorous materials. Assessments of such activities which

result in BJA ``findings of significant impact'' will necessitate the

preparation of environmental impact statements in compliance with NEPA

and its implementing regulations.

(3) Additionally, no certification will be approved nor can any

designation be provided or maintained if the application or designation

includes a facility in non-compliance with any Federal, state, or local

environmental law or regulation.

IV. PIECP Administration

a. Certificate Holders

BJA may exercise its discretionary authority to certify up to 50

Non-Federal PIECP Projects. Eligible applicants may seek certification

by submitting an application to BJA in accordance with the requirements

set forth in BJA's PIECP Certification Application, which will be

provided upon request, and subpart IV.a.2, infra. BJA's review of

submitted applications will be conducted as outlined in subparts IV.a.3

and a.4, infra. Once a certificate is issued, the holder assumes the

authority and responsibilities set forth in subparts IV.a.5 and a.6,

infra.

1. Project Structure

All departments of correction, authorized by law to administer

prison industry programs, are eligible to apply for BJA certification.

Certified applicants may designate one or a number of Cost Accounting

Centers (CACs) under their authority. Certificate Holders may also

under certain conditions designate CACs within private prisons located

in their respective states or jurisdictions. BJA will consider

alternative program structures suggested by certification applicants,

including, but not limited to, applicant umbrella authorities, as

described in subpart III. d.1, supra.

2. Application Content

All applications for PIECP Project Certification shall include the

following:

(A) Assurances of Authority. The Certificate Holder must provide

written assurance to BJA that it has in place appropriate statutory and

administrative authority to meet all mandatory program criteria and, in

particular, to monitor CAC compliance throughout the proposed PIECP

Project.

(B) Documentation to Show Compliance With Mandatory Program Criteria.

The applicant must submit all documentation necessary to show CAC

compliance with the nine mandatory program criteria outlined in Section

III. d., supra.

(C) Project Description. The applicant must describe key project

elements, including the process to be used to designate and monitor

compliance of CACs with 18 U.S.C. 1761(c) and this Guideline.

3. BJA Review

PIECP applications will be reviewed by BJA on a first-come, first-

served basis. Awards of certification are discretionary exercises of

authority by BJA under 18 U.S.C. 1761(c). No certification will be

awarded, however, unless there is a determination that the applicant

has met the mandatory participation criteria outlined in this

Guideline. Applicants will be notified in writing of BJA's award or

denial of certification. The hearing and appeal procedures set forth in

28 C.F.R. Part 18 do not apply to denied PIECP applicants. Certified

applicants will be informed of the effective date of BJA's

certification.

4. Standard or Provisional Certification

A standard certification may be issued by BJA to an approved

Certificate Holder applicant when all mandatory program criteria have

been met. When one or more mandatory program criteria have not been

met, but when steps have been taken to ensure that those criteria will

be met within a reasonable period of time, then a provisional

certification may be issued by BJA in instances where the withholding

of certification would significantly impair the applicant's ability to

further develop its project. The terms of the provisional certification

will be made specific to the nature of the unmet mandatory criteria and

may be made contingent upon the occurrence of identified conditions.

Provisional certifications may be issued for no longer than one year

from the date of issuance and may be subject to renewal, at BJA's

discretion.

5. Certificate Holder Designation Authority

(A) The Certificate Holder may exercise CAC designation authority with

respect to department of correction prison industries operating under

its jurisdiction, including in private prisons which are located in its

respective state or jurisdiction. CACs designated within private

prisons must also retain on-file documentation reflecting approval of

PIECP inmate worker participation by the state and local jurisdictions

in which PIECP inmate workers were convicted. In order to issue such

approvals, the remanding state and local jurisdictions must also hold

PIECP certificates.

To exercise this authority, a Certificate Holder must first determine

that a proposed CAC has complied with the requirements set forth in

this Guideline and in 18 U.S.C. 1761(c).

[[Page 17013]]

Whenever the Certificate Holder elects to exercise this authority after

certification application approval, it must submit a Notice of

Designation Form to BJA that provides the following information and

documentation:

(1) Cost Accounting Center Name and Location;

(2) Proposed number of workers;

(3) Item(s) to be produced;

(4) Proposed consumer market (including anticipated geographic

distribution);

(5) Description of private sector involvement, including models

that will be used in working with private enterprise;

(6) Locality determination, and supporting justification;

(7) Description of inmate compensation plans;

(8) Documentation of prevailing wage verification;

(9) Identification of deductions and percentage of each to be taken

from PIECP inmates' gross wages;

(10) Documentation of private sector partner's agreement not to

displace its non-inmate employees in the same locality with PIECP

inmate labor, if applicable;

(11) Documentation of non-displacement verification; and

(12) As to any CACs within private prisons, written approval from

remanding jurisdiction of any proposed room and board deduction, in

compliance with Section III.d.5.(E)of this Guideline, supra;

(13) As to any CACs within private prisons, written approval of the

designation by the Chief State Correctional Officer for the

jurisdiction in which the CAC is located; and

(14) Documentation of the environmental impacts of the CAC's

existing and proposed activities.

(B) The Certificate Holder may, in its own discretion, undesignate any

previously designated CAC. In such instances, the Certificate Holder

must submit to BJA an Undesignation Form providing the following

information:

(1) Cost Accounting Center Name and Location;

(2) Reasons for Undesignation; and

(3) Effective Date of Undesignation.

(C) BJA may, at any time deemed necessary to resolve compliance

concerns and upon the issuance of written notice, suspend a Certificate

Holder's authority to designate additional Cost Accounting Centers.

6. Certificate Holder Monitoring Responsibilities

As to all designated CACs, the Certificate Holder must assume the

following monitoring responsibilities:

(A) Undertake all reporting and evaluation activities deemed necessary

to ensure continuing designated CAC compliance; and

(B) Respond to all BJA requests for information and cooperation aimed

at ensuring Project compliance.

b. Cost Accounting Centers' PIECP Exception Status

A CAC is entitled to operate under PIECP exception status.

1. To retain this status, the CAC must comply with all PIECP

participation obligations to its Certificate Holder and to BJA,

including:

(A) Maintaining continuous compliance with the requirements set

forth in 18 U.S.C. 1761(c) and in III.d), supra, of this Guideline; and

(B) Responding to all monitoring requests for information and

cooperation aimed at maintaining continued compliance with this

Guideline.

2. The CAC must promptly report to the Certificate Holder any

contemplated change in operations which may affect its ability to

maintain statutory and Guideline compliance.

c. Compliance Reviews

1. Performance Reports

Within 30 days following the close of each calendar quarter, each

CAC must submit a quarterly performance report to its Certificate

Holder in a form prescribed by BJA. The performance report describes

activities undertaken during the prescribed period. A consolidated

report of all CAC activity must be submitted to BJA by the Certificate

Holder within 45 days following the close of each calendar quarter.

2. On-Site Monitoring Reviews

BJA and BJA technical assistance contractors are authorized to

perform desk and on-site reviews of all PIECP participants, including

all CACs, as deemed necessary. On-site reviewers may request access to

any and all documentation necessary to assist in determining compliance

with the requirements of this Guideline and 18 U.S.C. 1761. Monitored

participants will be advised in writing of the results of any such

reviews. Immediate corrective action must be taken to address

determinations of non-compliance and/or to respond to issues that raise

compliance related-concerns for BJA.

d. BJA's PIECP Administration

BJA's PIECP responsibilities include the following:

1. Review and approval of Certificate Holder PIECP applications;

2. Monitoring to determine compliance status of operations within all

CACs;

3. PIECP exception status termination or suspension for cause related

to substantial non-compliance;

4. Liaison with other Federal agencies that may affect PIECP

operations;

5. Provision of compliance-related technical assistance; and

6. Any and all other functions necessary to administer the program in

compliance with 18 U.S.C. 1761(c).

e. PIECP Exception Status Suspension/Termination

1. Notice of Possible Compliance Violation

Alleged facts indicative of non-compliance shall be communicated in

writing by BJA to the involved Certificate Holder and the involved

designated CAC. These parties must respond to the allegations, in

writing, within 15 days after receipt of the notice of non-compliance

determination. Immediate corrective action must be taken to address

determinations of non-compliance.

2. Voluntary Compliance Agreements

If BJA determines that noncompliant practices persist, BJA may, in

its discretion, propose a voluntary compliance agreement to the

involved Certificate Holder.

3. Failure To Achieve Compliance and Effect of Non-Compliance

If a voluntary compliance agreement is not presented by BJA or is

not accepted or adequately implemented by the Certificate Holder within

30 days after receipt of such an agreement, BJA may suspend the

Certificate Holder's certification and/or CAC exception status.

4. PIECP Exception Status Suspension and Termination

A certification may be terminated by BJA if it has been inactive

(no production within a designated CAC) or suspended for six

consecutive months. A certification and/or designation may be

suspended, and six months thereafter, terminated upon: (1) issuance of

a notice of a determination that the Certificate Holder and/or

designated CAC is not acting in compliance with

[[Page 17014]]

the requirements of 18 U.S.C. 1761, this Guideline or the conditions

set forth in its certificate; or (2) in the discretion of the Director

of BJA and upon a re-definition of a PIECP Project authorized under 18

U.S.C. 1761(c). Termination or suspension of the exception status of

one designated CAC will not automatically impact the PIECP exception

status of other CACs under the same certification unless the PIECP

Project certification is suspended or terminated. The hearing and

appeal procedures set forth in 28 C.F.R. Part 18 do not apply to PIECP

applicants or participants who have had PIECP exception status

suspended or terminated under this provision.

Dated: March 31, 1999.

Nancy Gist,

Director, Bureau of Justice Assistance.

[FR Doc. 99-8575 Filed 4-6-99; 8:45 am]

BILLING CODE 4410-18-P