[Federal Register Volume 79, Number 33 (Wednesday, February 19, 2014)]
[Rules and Regulations]
[Pages 9404-9412]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2014-03496]
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DEPARTMENT OF LABOR
Employment and Training Administration
20 CFR Part 619
RIN 1205-AB64
Federal-State Unemployment Insurance (UI) Program; Data Exchange
Standardization as Required by Section 2104 of the Middle Class Tax
Relief and Job Creation Act of 2012
AGENCY: Employment and Training Administration, Labor.
ACTION: Final rule.
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SUMMARY: The Department of Labor's (Department's) Employment and
Training Administration (ETA) issues this final rule to designate in
regulation data exchange standards, developed in consultation with an
interagency work group established by the Office of Management and
Budget (OMB), for Unemployment Insurance (UI) administration, as
required by amendments to Title IX of the Social Security Act (SSA)
made by the Middle Class Tax Relief and Job Creation Act of 2012 (the
Act). These regulations establish data exchange standards for three
categories of information: real-time applications on the Interstate
Connection Network (ICON); the State Information Data Exchange System
(SIDES); and implementation of the standards identified for ICON and
SIDES in major Information Technology (IT) modernization projects to
upgrade UI Benefits and Tax systems by State Workforce Agencies (SWAs)
using Federal funds.
DATES: Effective date: The rule will take effect on March 21, 2014. The
Office of Management and Budget has pre-approved the information
collection requirements contained in this rule under the Paperwork
Reduction Act and has assigned them control number 1205-0510.
FOR FURTHER INFORMATION CONTACT: Gay M. Gilbert, Administrator, Office
of Unemployment Insurance, U.S. Department of Labor, 200 Constitution
Avenue NW., Room S-4524, Washington, DC 20210; telephone (202) 693-3029
(this is not a toll-free number).
Individuals with hearing or speech impairments may access the
telephone number above via TTY by calling the toll-free Federal
Information Relay Service at 1-800-877-8339.
SUPPLEMENTARY INFORMATION:
The preamble to this final rule is organized as follows:
I. Background--provides a brief description of the development of
the rule.
II. Summary of the Comments--provides an overview of the comments
received.
III. Section-by-Section Review--summarizes and discusses the
regulations.
IV. Administrative Information--sets forth the applicable regulatory
requirements.
I. Background
On February 22, 2012, the President signed the Middle Class Tax
Relief and Job Creation Act. Section 2104 of the Act amends Title IX,
SSA (42 U.S.C. 1101 et seq.) by adding a new section 911, which
requires the Department to issue rules, developed in consultation with
an interagency workgroup established by the OMB, that establish data
exchange standards for certain functions related to administration of
the UI \1\ program. Before enactment of this requirement for data
exchange standardization, the Department had been a proponent of and
strong advocate for the use of open source technologies and data
exchange standards in the development of IT systems supporting critical
UI functions (such as ICON and SIDES), and of SWAs' overall UI IT
modernization efforts. Section 911, SSA, contains two major
subsections, (a) and (b), each of which requires data exchange
standards; these requirements are discussed in detail below.
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\1\ The Department's Office of Unemployment Insurance uses the
term Unemployment Compensation (UC) when referring to UC benefits
paid or UC laws, and the term Unemployment Insurance (UI) to refer
to the UI program, administration, and operations.
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Section 911(a)(1), SSA, requires that the Secretary of Labor
``shall, by rule, designate a data exchange standard for any category
of information required under title III [42 U.S.C. 501 et seq.], title
XII [42 U.S.C. 1401 et seq.], or this title [IX] [42 U.S.C. 1101 et
seq.].'' 42 U.S.C. 1111(a)(1) (Emphasis added.) The Department
explained in the Notice of Proposed Rulemaking (NPRM), published in 78
FR 12655, Feb. 25, 2013, that this statutory language allows the
Department to identify any category of information under the specified
titles, by rule, for which to establish a data exchange standard.
Section 911(b)(1), SSA, requires that the Secretary of Labor ``shall,
by rule, designate data exchange standards to govern the reporting
required under [the same specified titles].'' (Emphasis added.) 42
U.S.C. 1111(b)(1). This rule establishes data exchange standards for
information required under section 303(a)(1), SSA, that meet the
requirements of both sections 911(a)(1) and 911(b)(1), SSA.
Section 303(a)(1), SSA, commonly known as the ``methods of
administration'' requirement, provides that State law, as a condition
of the State receiving Unemployment Compensation (UC) administrative
grants, must include ``such methods of administration . . . as are
found by the Secretary of Labor to be reasonably calculated to insure
full payment of unemployment compensation when due.'' The Department
chose to establish data exchange standards for information required
under section 303(a)(1), SSA, because this section is the foundational
statutory authority for the Department's guidance to States on the
administration of the UI program, including guidance on program
operations and reporting requirements.
In the NPRM, the Department indicated that it did not propose
establishing data exchange standards for categories of information
under Titles IX and XII, SSA, because they provided fewer opportunities
for establishment of data exchange standards that would benefit the UI
system broadly, given that their focus is primarily on Unemployment
Trust Fund (UTF) management issues. Title IX establishes the account
structure for the UTF, and Title XII establishes the processes for
States to obtain advances if their States' accounts in the UTF are
depleted. As discussed in more detail in the Comment Section below in
response to the comment received on the NPRM, the Department will
continue to review all UI reporting and determine the application of
appropriate data exchange standards, where feasible. In this rule, the
Department addresses the data exchange systems that are most
immediately well-positioned to facilitate implementation of the data
exchange standard.
To meet the requirements of section 911, SSA, the Department is
designating in this final rule that eXtensible Markup
[[Page 9405]]
Language (XML) \2\ be the data exchange standard for two systems that
support the reporting of data and information for two core UI
administrative functions: (1) employer reporting of information
requested by SWAs to support eligibility determinations (SIDES); and
(2) the reporting and exchange of wage information among the States
that also supports determination of eligibility for benefits (ICON).
XML is a markup language that defines a set of rules for encoding
documents in a format designed to structure, store and transport data.
XML data are stored in plain text format that is both human-readable
and machine-readable. Use of XML also provides for a software- and
hardware-independent method of exchanging data over incompatible
applications or systems over the Internet.
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\2\ XML is a nonproprietary, searchable, computer-readable
format, and has the capacity to be upgraded continually, as
necessary. Interoperability helps information technology systems
more readily interface to carry out shared functions and manage
communications.
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Section 911(a)(2), SSA, requires that the data exchange standard
implemented in this rulemaking ``to the extent practicable, be
nonproprietary and interoperable.'' Section 911(b)(2), SSA, also
requires that the data exchange standards implemented in this
rulemaking ``to the extent practicable incorporate a widely accepted,
nonproprietary, searchable, computer-readable format,'' and ``be
capable of being continually upgraded as necessary.'' Section
911(b)(3), SSA, specifically requires that this rule, ``to the extent
practicable, incorporate existing nonproprietary standards, such as the
eXtensible Markup Language.'' The data exchange standards established
in these regulations mandate the use of XML to meet the requirements of
sections 911(a) and (b), SSA.
XML \3\ provides an interoperable standard framework using common
computer languages and standard formats and protocols to manage certain
functions or communications. Gaining interoperability among the
Department and 53 States and territories with different IT
infrastructure and different program parameters (State UI programs have
differing eligibility requirements and processes for supporting those
requirements) is challenging. Therefore, the Department focused these
regulations on core functions and reporting requirements that are truly
common among the States.
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\3\ The use of the term ``XML'' means XML and any XML-based
markup language(s) that defines a set of rules for encoding
documents and/or data in a format that is both human-readable and
machine-readable. The term ``XML'' encapsulates the provisions
specified in newly added section 911, SSA.
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Finally, section 911(a)(3)(A), SSA, requires that for data exchange
reporting standards, the rule, to the extent practicable, incorporate
interoperable standards developed and maintained by an international
voluntary consensus standards body. The XML standard herein designated
meets this requirement as it is recognized by the World Wide Web
Consortium, an international voluntary consensus standards body. The
rule also meets the requirement of incorporating standards developed
and maintained by intergovernmental partnerships like the National
Informational Exchange Model (NIEM) referenced in section 911(a)(3)(B),
SSA. XML is a data exchange standard recognized by NIEM. The standard
to be considered under Section 911(a)(3)(C), SSA, requires
incorporation, to the extent practicable, of ``interoperable standards
developed and maintained by Federal entities with authority over
contracting and financial assistance, such as the Federal Acquisition
Regulations Council.'' This requirement applies to contracting and
procurement processes and is not applicable to UI processes.
In accordance with these provisions, this final rule implements the
following data exchange standards:
Under section 911(a), SSA, the Department designates XML
as the data exchange standard for the real-time applications \4\ of
ICON;
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\4\ ICON applications are available in real-time and batch mode.
States vary in the use of real-time applications versus the batch
mode. The batch mode allows for processing of multiple requests at a
scheduled time instead of immediate ``real-time'' processing.
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Under section 911(a), SSA, the Department designates XML
as the standard for the SIDES data exchange modules;
Under section 911(b), SSA, the Department designates XML
as the data exchange standard to govern reporting of information shared
through SIDES; and
Under section 911(a), SSA, the Department designates XML
as the data exchange standard for real-time applications of ICON and
SIDES data exchange modules in association with major IT modernization
projects using Federal funds.
By publishing this final rule, the Department does not foreclose
the possibility of later establishing additional data exchange
standards by regulation, as technological and other advances make it
feasible and appropriate. The Department will explore on an ongoing
basis other functions where data exchange standards would be valuable
to the UI program and as it relates to shared data exchange with other
Federal agencies.
ICON
ICON is used to implement sections 3304(a)(9)(A) and (B) of the
Federal Unemployment Tax Act (FUTA), providing for interstate and
combined-wage claims.\5\ ICON enables States to request, submit, and
receive much of the information necessary to establish claims (as
identified below) and determine eligibility. The requirement to pay UC
``when due'' under section 303(a)(1), SSA, includes the timeliness of
these payments. Interstate and combined wage claims are more complex to
administer since they require communication and transmission of
information between States or between a State and a Federal agency. To
ensure that these claims are paid ``when due,'' the Department supports
development and maintenance of ICON. ICON is a secure multi-purpose
telecommunications network that supports the transfer of data among the
SWAs needed for critical program functions, including:
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\5\ Section 3304(a)(9)(A), (FUTA) requires, as a condition of
the Secretary's certification of a State law under FUTA, that
``compensation shall not be denied or reduced to an individual
solely because he files a claim in another State . . . or because he
resides in another State . . . at the time he files a claim for
unemployment compensation.'' Section 3304(a)(9)(B), FUTA, also
requires as a condition of the Secretary's certification that ``the
State shall participate in any arrangements for the payment of
compensation on the basis of combining an individual's wages and
employment covered under the State law with his wages and employment
covered under the State unemployment compensation law of other
States. . . . ''
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Interstate Benefits/Combined-Wage Claims;
Unemployment Compensation for Federal Civilian Employees
and Unemployment Compensation for Ex-Servicemembers programs;
The Wage Record Interchange System, which allows SWAs to
obtain wage data for program performance purposes of individuals who
have participated in workforce investment programs in SWAs;
The UI Inquiry data exchange with the Social Security
Administration (Social Security) that enables SWAs to validate Social
Security Numbers (SSNs) with Social Security; and
The Health Coverage Tax Credit that enables a SWA to
transmit information to the Internal Revenue Service about individuals
eligible for help paying for their health insurance coverage.
[[Page 9406]]
The Department establishes in this final rule that XML be used as
the data exchange standard under section 911(a), SSA, for a subset of
these functions due to both State and ICON capacity to adopt standards
for some of these functions at this time. In relation to these chosen
functions, ICON currently supports the following applications in real-
time allowing for States to use XML standards for these functions.
These are applications currently used by some SWAs to support the
processing of all UC claims:
Interstate Wages and Benefits Inquiries/Responses, which
supports online transmission of interstate wages and benefits inquiries
and responses between SWAs;
Withdrawn/Invalid Claims, which allows for the posting and
viewing of withdrawn or invalid claim information for SWAs; and
State Identification Inquiry, which allows SWAs to inquire
about wages reported to other SWAs by SSN.
Currently, seven SWAs are involved in modernizing some of their
ICON applications and it is not practical to require all States to
comply with this standard immediately. In this final rule, the
Department requires that all SWAs using real-time ICON applications
comply with the XML data exchange standard no later than September 30,
2018. A SWA may request an extension of the September 2018 deadline if
it demonstrates that resources are not available to meet this
requirement. These requests must be submitted in writing to the
Administrator of the Office of Unemployment Insurance no later than 6
months before the deadline; requests will be reviewed and decided
within 30 days.
SIDES
SIDES is necessary to effectuate the Standard for Claim
Determinations--Separation Information, codified in regulation at 20
CFR Part 625 Appendix B. This standard is based significantly on the
``methods of administration'' requirement in section 303(a)(1), SSA,
and includes a requirement that a State promptly obtain information
from the worker, employer, or other source that is sufficient to
reasonably insure payment of UC when due. For this reason, the
Department supports development and maintenance of SIDES, which enables
States to exchange information with employers electronically, thereby
markedly improving the timeliness and accuracy of the employer-provided
information about the reasons individuals separated from employment.
SIDES is an automated information exchange and reporting system to
standardize SWAs' delivery of information to employers and collection
of information by SWAs from employers and third-party administrators
(TPAs). In FY 2010, the first format of SIDES for exchange of employee
separation information was implemented. This exchange of information
with employers or their TPAs on the circumstances underlying individual
UC claimants' job separations will reduce UC payments to ineligible
claimants, yield administrative cost savings to both employers and
taxpayers, and promote more timely benefit determinations. Currently,
36 SWAs and three TPAs are participating in the SIDES effort. In FY
2011, the SIDES earnings verification module was implemented. The
addition of the earnings verification exchange allows SWAs and
employers to more quickly and accurately verify when UC claimants
return to work, thus reducing the leading cause of UC overpayments:
claimants' receipt of UC while employed. In FY 2013, the SIDES module
providing information on monetary and potential charges to the
employer's account was implemented. This module allows SWAs to inform
employers more quickly of potential charges to their accounts so that
employers can appeal these charges expeditiously. If an employer
appeals the charges, additional fact-finding of the claim can be
conducted before additional benefits are paid to claimant thus
preventing improper payments.
SIDES is managed by the National Association of State Workforce
Agencies (NASWA \6\) which contracts with a vendor for its maintenance,
support, and operations. The Department has provided specific funding
to State consortia and SWAs for development, maintenance, and operation
of SIDES. State consortia are groups of States collaborating to jointly
establish a project team to oversee the design, development and
implementation of an IT solution that will be shared across the States.
The Department recently funded a consortium of States to oversee the
development of new SIDES data exchange modules to allow SWAs to notify
employers and TPAs of benefits charges to their accounts and of non-
monetary determinations. SWAs, participating in the SIDES consortia,
identify and help prioritize new SIDES modules to be developed and
direct these funds to NASWA for the development of these modules. All
SWAs using SIDES modules provide administrative funding to NASWA for
the continued operations of SIDES.
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\6\ A definition for NASWA was included in the NPRM as part of
the proposed rule. Since this term is not included in this
regulation, the proposed definition has been deleted in this final
rule. This deletion of the definition of NASWA is the only change
made to the final rule when compared to the proposed rule in the
NPRM.
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The Department continues to facilitate the expansion and
enhancement of the functionality and use of SIDES as a vital tool for
SWAs for the prevention and detection of improper payments, and has
provided supplemental funding to a State consortium for the development
of additional data exchange modules. These modules include:
UC Benefit Charge Notices. This enhancement will make it
possible for SWAs to provide employers notice of actual (as opposed to
potential as discussed above) benefit charges to their accounts
electronically rather than by paper and mail. This permits a quicker
delivery and review by the employer and the ability to reply
electronically if the charges are questionable. This expedited
information exchange can detect potential improper payments earlier,
particularly those related to identity theft and employees that return
to work and continue to collect benefits.
Non-Monetary Determinations Exchange. This enhancement
will notify employers electronically, rather than on paper, of SWA
decisions on the eligibility of their former employees when issues
arise about whether the employees quit or were terminated for cause.
This will improve the timeliness of employer appeals and allow for
quicker appeal decisions, halting improper payments faster if the
employer prevails in the appeal.
Additionally, several other data exchange modules are under
consideration for the expansion of SIDES including one for the exchange
of Appeals Decisions. The XML standard will apply to these additional
data exchange modules as well.
The final rule designates a data exchange standard under section
911(a), SSA, to apply to the SIDES data exchange modules and designates
a standard under section 911(b), SSA, to govern reporting of
information through SIDES data exchange modules.
Major IT Modernization of UI Benefits and Tax Systems
For the purpose of this regulation, a major IT Modernization of UI
Benefits and Tax systems includes conversion, re-engineering,
rewriting, or transferring of an existing system to a modernized
framework such as transferring a process from mainframe operations to
web-based operations, converting to modern computer programming
languages, or upgrading software
[[Page 9407]]
libraries, protocols, or hardware platform and infrastructure. As the
Department provides funding to States to modernize their IT systems,
the opportunity exists to use new data exchange standards that improve
operations of the UI system as a whole and may further enable improved
data exchanges with other States and Federal agencies.
The Department facilitates SWAs' efforts to modernize IT systems
supporting their UI programs by providing funding for administration
and operations, and appropriate technical assistance. While the
Federal-State structure of the UI program places primary responsibility
for its administration on the States, the Department provides periodic
supplemental funding opportunities for IT modernization activities. In
addition, Congress periodically provides special distributions of
administrative UI funding to States.
Federal funds for UI modernization efforts come primarily from
three sources: (1) supplemental budget funds that are designated by the
Department for State IT modernization efforts, (2) State UI
administration funding, and (3) special distributions. State
administration funding primarily consists of State UI operations funds
(an administrative grant awarded by the Department at the beginning of
each fiscal year). Recent special distributions to States, under
section 903, SSA, include those provided under the Job Creation and
Worker Assistance Act of 2002 funds (distributed under the Reed Act, a
mechanism by which the Federal government transfers surplus UI funds to
States) and American Recovery and Reinvestment Act funds (an economic
stimulus package enacted in February 2009). Also, since 2009, the
Department has provided supplemental funding to State consortia to
develop jointly functional requirements and development of modernized
UI IT Benefits and/or Tax systems. One of the requirements was that the
technology tools developed use open source components to the extent
feasible, be transferable, and be capable of being shared by multiple
SWAs. The goal is for multiple SWAs to share common systems/tools that
accommodate each SWA's specific needs. Each of the consortia has its
State leadership engaged in the process and soliciting vendors to
assist with the system design and development efforts.
This final rule requires that SWAs, when using Federal funds to
modernize their UI systems, use XML as a data exchange standard when
developing the functionality to interface with ICON, to implement SIDES
and the reporting of information through SIDES. This requirement will
potentially further accelerate State adoption of this standard for both
functions. The Department strongly encourages SWAs, to the extent
feasible, to begin conforming to the XML standard for any major UI IT
modernization projects already underway.
Effective Date
Section 2104(b)(1) of the Act requires that a final rule to be
issued ``after public comment, within 24 months after such date of
enactment.'' Section 2104(b)(2) of the Act requires that a proposed
rule under section 911(b), SSA, will ``become effective with respect to
reports required in the first reporting period, after the effective
date of the final rule referred to in paragraph (1) of this
subsection.''
Accordingly, this final rule requires that the data exchange
standard for SIDES, under both sections 911(a) and (b), SSA, become
effective 30 days after publication of this final rule. States
implementing new data exchange modules after that date will use XML as
the data exchange standard.
Additionally, this final rule establishes September 30, 2018, as
the date by which SWAs must comply with the data exchange standard for
ICON, in accordance with section 911(a), SSA. This will allow States to
begin implementing the standard as soon as practicable, while still
providing enough advance time to account for the current technology
capacity of States and the fact that many States will need to make
substantial changes to their technology systems to implement XML for
their ICON exchanges.
Finally, the effective date of designation of XML as the data
exchange standard for SIDES data exchange modules and for the real-time
ICON applications, in accordance section 911(a), SSA, is 30 days after
publication of this final rule.
II. Summary of the Comments
The Department received only one comment in response to the NPRM,
which was from the Chairman and six Members of the Subcommittee on
Human Resources, U.S. House of Representatives, Committee on Ways and
Means. This comment generally supported the rulemaking; however, it
also detailed two particular concerns about the NPRM. First, the
comment encouraged the Department to continue to review program data
beyond the specific data exchanges identified in this rule for
standardization including data exchanges under Titles IX and XII.
Second, the comment specifically indicated that the Department should
explore the standardization of weekly UI claims data. Finally, the
comment recognized the Department's commitment to working with other
Federal agencies to identify standards that could improve interagency
data exchanges. The Department addresses these concerns in the
following paragraphs.
First, the commenters state that ``as authors of this provision
[the Act], we intended `any' to cover all categories of information.''
In other words, the commenters asserted the Department should interpret
data exchange standardization to cover all categories of information.
The comment states ``we recognize that the effort to move a
standardized system will require upfront investment of time and
effort.'' The comment also noted that ``[t]his is an iterative process
and we look forward to working together to achieve success.''
The Department appreciates that the commenters recognize that
extending data exchange standardization to all types of reporting and
information data exchanges is an enormous effort that takes time; it is
an iterative and evolutionary process. The Department recognizes that
the statutory language regarding ``any'' category of information could
be interpreted as the commenters assert. The language is ambiguous and
therefore the Department interpreted it in a manner to make the
implementation of the statute feasible. The Department will continue to
review all UI reporting and determine the application of appropriate
data exchange standards, where feasible. In the UI program, this
process must be accompanied by considerable consultation and
partnership from the States. As we noted in the NPRM, 78 FR 12656, Feb.
25, 2013, States vary widely in their IT infrastructure, with many
States continuing to operate antiquated and inflexible systems. In
addition, the IT infrastructure in States has been significantly
challenged over the past several years due to the complexity of new
Federal UI programs such as the Emergency Unemployment Compensation
program, and more recently as a result of sequestration. The fact of
this varying State IT capacity requires consideration of priorities,
funding availability, and timing constraints when it comes to data
exchange standardization.
The Department addresses, in this rule the data exchanges that are
most immediately well-positioned to facilitate implementation of new
data exchange standardization. For example, the ICON network has
completed the
[[Page 9408]]
implementation of the XML data exchange for the ``real time''
applications that are used by SWAs. The Department wants to encourage
SWAs to transition to the XML data exchange standards for these ``real
time'' applications and these regulations provide such an opportunity.
In addition, the SIDES data exchange tool is a recent development and
SWAs are in the process of adopting this tool to facilitate the
exchange of information between SWAs and employers and third party
administrators. Although the designation of a XML standard has started
with these specific data exchanges, the Department will continue to
review other data exchanges, and reporting requirements for designation
of data exchange standards, where feasible. In a May 10, 2013, meeting
between the Department and staff members of the House Subcommittee on
Human Resources, the committee staff indicated that they were not
requesting any specific change to the rule based on this explanation.
They asked, and the Department agreed, that it would continue to keep
the Committee informed of new opportunities to develop data exchange
standards between SWAs and the Department and also between the
Department and other Federal agencies.
The comment also noted that the exchanges that deal with the issue
of Unemployment Trust Fund reporting under Titles IX and XII could also
benefit from data exchange standardization. Most of the data systems on
Unemployment Trust Fund reporting are operated by the U.S. Department
of Treasury (Treasury). The Department will work with Treasury to
explore opportunities for standardizing these data exchanges and
reporting under Titles IX and XII.
While developing this rule for data exchange standards, the
Department determined that it is neither feasible nor practicable to
immediately set standards for all reports under the three titles listed
in Section 911(b), SSA. In the NPRM, the Department indicated that
imposing data exchange standards for certain reporting for the UI
program would be counter-productive and would interfere with the
Department's ability to use and analyze the data. For example, State UI
agencies currently send data, such as weekly UI claims data, to the
Department in a format that enables the Department to store the data in
a relational database for purposes of analysis and performance
management. The Department noted that if the data were instead required
to be received in XML format, pre-processing of the data would be
required to store this information within a relational database, thus
adding a layer of complexity for the analytical software. That approach
would result in unnecessary inefficiency and there would be no benefit
to any user of the data.
The comment further stated that while the commenters agreed with
the Department's effort to ``avoid unnecessary inefficiencies,'' they
do not agree with the Department's ``assertion that there would be no
long term benefit gained from including weekly UI claims data in the
data exchange standardization effort.''
The Department acknowledges that presenting the data with
consistent identification codes and formatting is desirable. The
Department plans to conduct a feasibility study on consolidating the
State UI reporting infrastructure within the Department's National
Office. This process will provide opportunities for updating the format
and standards by which these reports are presented to users of the
data. With this pending consolidation project, the Department will
continue to explore how best to present the data to facilitate greater
usability, transferability and transparency. As an interim measure, the
Department, where feasible, intends to prioritize the translation and
publication of data, including weekly claims data, in an XML format to
enable users to better understand the data elements and definitions.
These are actions that the Department can take without any further rule
making because it does not need involvement by external entities.
Finally, the comment supported the Department's commitment to
interagency coordination ``to identify standards that could be applied
to improve interagency data exchanges and issue additional
regulations.''
The comment also stated that ``[the Subcommittee] look[s] forward
to working together to achieve success'' in this respect. The
Department appreciates the interest shown by the Committee and intends
to continue to work closely with all stakeholders, including the
Committee and all Members of Congress, as well as the States, OMB, and
other Federal agencies in pursuing opportunities for data exchange
standardization. The Department agrees with the Committee on the
potential benefits for data exchange standardization.
The Department also notes that if the goal for the UI program and
other Federal programs is to advance data exchange standardization as
quickly as feasible, it is critical that agencies have flexibility to
determine the data exchanges that will produce the best results and the
timing for implementation based on issues such as capacity and cost. In
addition, the Department also notes that requiring agencies to
implement data exchange standards through regulations is extremely
cumbersome and may actually inhibit agencies' agility to respond to
advances in technology concerning standardization. The Department is
willing to work with the Committee to identify alternatives to
accelerate data exchange standardization in other areas.
Based on the conversation with Committee staff on May 10, 2013, the
Department is making no changes to the regulation as a result of this
comment.
III. Section-by-Section Review
Definitions (Sec. 619.1)
This section establishes definitions of terms used in this rule.
Most are self-explanatory; however, of particular note is paragraph
(c), which defines XML, the standard designated in this rule to use for
data exchange. XML data are stored in plain text format that is both
human-readable and machine-readable and provides for a software- and
hardware-independent method of exchanging data over incompatible
applications or systems over the internet. This definition includes any
future upgrades, iterations, or releases of XML-based language. A
definition for the NASWA was included in the NPRM as part of the
proposed rule. Since this term is not included in this regulation, the
proposed definition has been deleted in this final rule. This deletion
of the definition of NASWA is the only change made to the final rule
when compared to the proposed rule in the NPRM.
Data Exchange Standardization for ICON (Sec. 619.2)
Paragraph (a) designates XML as the data exchange standard for the
real-time ICON applications. These applications are: Interstate Wages
and Benefits Inquiries/Responses; Withdrawn/Invalid Claims; and State
Identification Inquiry. These applications, used by States, are
currently supported by ICON in real-time using two data exchange
formats--Extended Binary Coded Decimal Interchange Code (EBCDIC) and
Web Services Description Language (WSDL), which is a XML-based
language. As stated previously, the Department has selected this sub-
set of the applications supported on ICON for applying a data exchange
standard because they represent the applications which both ICON and
States currently
[[Page 9409]]
have capacity to implement. The Department will continue to consider
ways to apply data exchange standards to the other ICON functions, but
the technology solutions are currently not available. It may be over
five years before these new technology solutions can be effectively
applied in the ICON environment.
Paragraph (b) requires that all SWAs using real-time ICON
applications conform to the XML data exchange standard no later than
September 30, 2018. The rule provides that a SWA may request an
extension of this deadline if it demonstrates that resources are not
available to meet the requirements. The request must be submitted to
the Administrator of the Office of Unemployment Insurance no later than
6 months before the deadline, and the request will be approved or
denied within 30 days.
ICON is funded by a cooperative agreement between the Department
and the State of Maryland. The Maryland Department of Labor, Licensing
and Regulation acts as the Department's agent to contract with a vendor
for the maintenance, support, and operation of ICON. Beginning in FY
2007, the Department facilitated and later provided funding for the
conversion of data exchange formats from EBCDIC to WSDL. EBCDIC is a
format specifically used for mainframes and is not an interoperable
standard. However, the migration of SWAs from EBCDIC to WSDL is still
in its infancy requiring ICON to support a dual environment (Web
Services and Mainframe).
A few SWAs currently are in the process of implementing some of the
modernized, XML-based real-time applications in conjunction with their
efforts to modernize their IT systems or replace outdated systems. The
goal of this paragraph is to accelerate State adoption of XML-based
real time applications in order to eventually eliminate the need for
ICON to manage mainframe applications in addition to the XML-based
applications.
The Department will continue to support SWAs' transition to
modernized XML-based real-time ICON applications and expects that the
data exchange standard in this regulation will accelerate SWAs'
adoption of the XML exchange standard. The development of a single
environment will result in improved efficiencies and cost savings and
allow the Department to more effectively manage the development of
future data exchanges and maintenance of resources.
Data Exchange Standardization for SIDES (Sec. 619.3)
Paragraph (a) designates XML as the data exchange standard for
SIDES. Paragraph (b) requires that this standard apply to any
Federally-funded SIDES consortium, and any future agents of the
Department providing vendor services for the development, maintenance,
support and operations of the SIDES. Paragraph (c) designates XML as
the data exchange standard to govern the reporting of information
through the SIDES data exchange modules. Paragraph (d) denotes when the
standard set in paragraph (c) becomes effective.
SIDES uses Web services and the XML data format for the information
exchange between the SWAs and employers. The Department is requiring
that all SIDES exchanges (current and future), which are developed in
whole or part with Department funds, continue to conform to the XML
data exchange standard. Additionally, as States, employers, and TPAs
chose to implement SIDES or new data exchange modules of SIDES, they
must conform to this data exchange standard by application design.
SIDES offers two options for implementation for SWAs and employers:
SIDES web services, and SIDES E-Response. Both systems are designed to
meet the unique needs of businesses, large and small. For employers
with a limited number of UC claims, the SIDES E-Response Web site
provides an easy and efficient way to respond to information requests
from SWAs. For employers and TPAs that handle a large volume of UC
claims information requests, SIDES web services provides an automated,
computer-to-computer interface between employers' and TPAs' IT systems
and SWA networks.
Data Exchange Standardization for the UI Benefits and Tax Systems
(Sec. 619.4)
Paragraph (a) designates XML as the data exchange standard for the
real-time ICON applications and SIDES data exchange modules associated
with major IT modernization projects to upgrade UI Benefits and Tax
Systems by SWAs using Federal funds. This standard will improve the
interoperability of State, Federal, and employer systems that collect
and exchange information for UI administrative purposes. Linking data
between these systems at the State level will allow for better service
delivery and faster eligibility determinations, and should facilitate
program integrity efforts.
Paragraph (b) requires that, beginning on the effective date of
this regulation, major IT modernization efforts funded by the
Department must conform to the XML data exchange standard for the
implementation of the real-time ICON applications and the SIDES
exchange modules.
IV. Administrative Information
Executive Orders 12866 and 13563: Regulatory Planning and Review
Executive Orders 12866 and 13563 direct agencies to assess all
costs and benefits of available regulatory alternatives and, if
regulation is necessary, to select regulatory approaches that maximize
net benefits (including potential economic, environmental, public
health and safety effects, distributive impacts, and equity). Executive
Order 13563 emphasizes the importance of quantifying both costs and
benefits, of reducing costs, of harmonizing rules, and of promoting
flexibility. This rule has been designated a ``significant regulatory
action'' because, although not economically significant under section
3(f) of Executive Order 12866, it raises novel issues of law and
policy. The key policy being implemented in this rule is the
designation of XML as the data exchange standard for three categories
of information: real-time applications on ICON; SIDES; and
implementation of the XML standard identified for ICON and SIDES in
major IT modernization projects to upgrade UI Benefits and Tax systems
by SWAs using Federal funds. Therefore, the Department has submitted
this final rule to OMB for review.
Paperwork Reduction Act
The purposes of the Paperwork Reduction Act of 1995 (PRA), 44
U.S.C. 3501 et seq., include minimizing the paperwork burden on
affected entities. The PRA requires certain actions before an agency
can adopt or revise a collection of information, including publishing a
summary of the collection of information and a brief description of the
need for and proposed use of the information. A Federal agency may not
conduct or sponsor a collection of information, unless it is approved
by OMB under the PRA, and displays a currently valid OMB control
number, and the public is not required to respond to a collection of
information unless it displays a currently valid OMB control number.
Also, notwithstanding any other provisions of law, no person shall be
subject to penalty for failing to comply with a collection of
information if the collection of information does not
[[Page 9410]]
display a currently valid OMB control number (44 U.S.C. 3512).
While this final rule imposes no new information collections,
Sec. Sec. 619.2-619.4 would impose formatting requirements for the
data exchanges of various UI applications that may impose a burden
under the PRA. The Department submitted an information collection
request (ICR) to the OMB to obtain PRA approval for the information
collection formatting requirements contained in the NPRM. On May 16,
2013, consistent with regulations 5 CFR 1320.11(c), the OMB issued a
Notice of Action assigning control number 1205-0510 to the ICR. The OMB
did not pre-approve the formatting requirements at that time; instead,
the Department was to resubmit the ICR for approval at the final rule
stage, after reviewing and responding to any public comments. The
substance of the public comment and the Departmental response appears
earlier in this preamble. The public comment did not address the PRA
burden estimates in the NPRM. Concurrent with publication of this final
rule, the Department is resubmitting the request to the OMB for PRA
approval. ETA will publish a Notice in the Federal Register to announce
any final OMB decision on that request.
The burden for the information collection provisions of this final
rule can be summarized as follows:
Agency: DOL-ETA.
Title of Collection: Federal-State Unemployment Insurance Program
Data Exchange Standardization.
OMB ICR Reference Number Control Number: 1205-0510.
Affected Public: State Governments.
Total Estimated Number of Respondents: 53.
Total Estimated Number of Responses: 53.
Total Estimated Annual Burden Hours: 6,360.
Total Estimated Annual Other Costs Burden: $1,057,329.
Executive Order 13132: Federalism
Section 6 of Executive Order 13132 requires Federal agencies to
consult with State entities when a regulation or policy may have a
substantial direct effect on the States or the relationship between the
National Government and the States, or the distribution of power and
responsibilities among the various levels of government, within the
meaning of the Executive Order.
Section 3(b) of the Executive Order further provides that Federal
agencies must implement regulations that have a substantial direct
effect only if statutory authority permits the regulation and it is of
national significance. This final rule is specifically required by the
Middle Class Tax Relief and Job Creation Act of 2012.
This rule does not have a substantial direct effect on the current
nature of the relationship between the National Government and the
States, or the distribution of power and responsibilities among the
various levels of Government, within the meaning of the Executive
Order. The Department is exercising its existing authority to interpret
Federal statutes with regard to States' administration of UI programs.
In the Federal-State UI system, States have a great deal of flexibility
to design their UC laws and operations as long as they comply with the
broad Federal requirements in FUTA and the SSA. This rule implements a
new statutory requirement for a uniform data exchange and reporting
standard and thus is no different from other UC regulations that
interpret Federal law as it applies to State requirements. It simply
sets a new standard for data exchanges of information used in the
administration of the UI program under Title III of the SSA. The
Department consulted with NASWA's Information Technology Support Center
and NASWA's UI Committee to discuss the impacts of this rule and
identify State application interfaces which will benefit by the
implementation of the XML data exchange standard. NASWA agreed with the
Department's approach to implement uniform data exchange standards in
areas already identified as valuable to the UI system and for
applications developed collaboratively with the States.
Unfunded Mandates Reform Act of 1995
This regulatory action has been reviewed in accordance with the
Unfunded Mandates Reform Act of 1995. Under the Act, a Federal agency
must determine whether a regulation proposes a Federal mandate that
would result in the increased expenditures by State, local, or tribal
governments, in the aggregate, or by the private sector, of $100
million or more in any single year. The Department has determined this
rule does not include any Federal mandate that may result in increased
expenditure by State, local, and Tribal governments in the aggregate of
more than $100 million, or increased expenditures by the private sector
of more than $100 million. Most if not all of the costs of implementing
this regulation will be covered by Federal funding.
Plain Language
The Department drafted this final rule in plain language.
Effect on Family Life
The Department certifies that this final rule has been assessed
under section 654 of the Treasury and General Government Appropriations
Act, enacted as part of the Omnibus Consolidated and Emergency
Supplemental Appropriations Act of 1999 (Pub. L. 105-277, 12 Stat.
2681) for its effect on family well-being. This provision will not
adversely affect the well-being of the nation's families. Therefore,
the Department certifies that this rule does not adversely impact
family well-being as discussed under section 654 of the Treasury and
General Government Appropriations Act of 1999.
Regulatory Flexibility Act/Small Business Regulatory Enforcement
Fairness Act
The Department has notified the Chief Counsel for Advocacy, Small
Business Administration, and made the certification according to the
Regulatory Flexibility Act (RFA) at 5 U.S.C. 605(b), that this final
rule will not have a significant economic impact on a substantial
number of small entities. Under the RFA, no regulatory flexibility
analysis is required where the rule ``will not . . . have a significant
economic impact on a substantial number of small entities.'' 5 U.S.C.
605(b). A small entity is defined as a small business, small not-for-
profit organization, or small governmental jurisdiction. 5 U.S.C.
601(3)-(5).
This final rule requires implementation of a data exchange standard
that would be used in SIDES and ICON. ICON is used only by States and
Federal entities, neither of which qualifies as a small entity under
the RFA. SIDES, however, is used by States and by employers, including
TPAs, in the private sector. However, because SIDES already uses an
XML-based interface, there is no incremental cost to current users.
Furthermore, while additional employers and TPAs may adopt SIDES in the
future, this rule does not require them to do so, nor does this rule
affect their costs if they did. Consequently, this rule will not have a
significant economic impact on a substantial number of small entities,
and a Regulatory Flexibility Analysis is not required under the RFA.
In addition, this rule does not require review by the Congress
under the Small Business Regulatory Enforcement Fairness Act of 1996
because it will not
[[Page 9411]]
result in (1) an annual effect on the economy of $100,000,000 or more;
(2) a major increase in costs or prices for consumers, individual
industries, Federal, State, or local government agencies, or geographic
regions; or (3) significant adverse effects on competition, employment,
investment, productivity, innovation, or on the ability of United
States-based enterprises to compete with foreign-based enterprises in
domestic and export markets.
As discussed above, the most significant effect of this final rule
will be to accelerate action (e.g., the adoption of the real-time XML-
based ICON applications) that the Department expects to occur even in
the absence of this rule. The noteworthy cost of the final rule is the
cost of this acceleration. That is, the rule would change the timing--
and therefore the present value--of nominal costs that would have been
incurred even in the absence of the rule. These costs will be borne by
the State and Federal governments, not by small entities.
List of Subjects in 20 CFR Part 619
Labor, Unemployment Compensation.
For the reasons stated in the preamble, the Department amends 20
CFR chapter V to add part 619 as set forth below:
PART 619--UNEMPLOYMENT COMPENSATION DATA EXCHANGE STANDARDIZATION
FOR IMPROVED INTEROPERABILITY
Sec.
619.1 Definitions.
619.2 Data exchange standardization for ICON.
619.3 Data exchange standardization for SIDES.
619.4 Data exchange standardization for the UI Benefits and Tax
Systems.
Authority: 42 U.S.C. 1111; Section 2104(b) of Pub. L. 112-96;
42 U.S.C. 1302(a).
Sec. 619.1 Definitions.
As used in this part--
Administrator of the Office of Unemployment Insurance means the
Department's Employment and Training Administration's chief
administrative officer directly responsible for the operation of the
Unemployment Insurance (UI) program and oversight of the Unemployment
Compensation (UC) program and UC laws.
Department means the United States Department of Labor.
eXtensible Markup Language or XML means a markup language that
defines a set of rules for encoding documents in a format designed to
structure, store and transport data between applications or systems
over the Internet. This term includes any future upgrades, iterations,
or releases of XML-based language.
Federal funds or Federally-funded means funds that include, but are
not limited to:
(1) Supplemental budget funds that are designated by the Department
for State IT modernization efforts;
(2) General State UI administration funding for State program
operations (an administrative grant issued by the Department at the
beginning of each fiscal year); and
(3) Special UI funding distributions.
Interstate Connection Network or ICON means a secure multi-purpose
telecommunications network that supports the transfer of data among the
SWAs.
Interstate Wages and Benefits Inquiries/Responses means the ICON
application which supports online transmission of interstate wages and
benefits inquiries and responses between SWAs.
Major IT Modernization Project means conversion, re-engineering,
rewriting, or transferring of an existing system to a modernized
framework such as transferring a process from mainframe operations to
Web-based operations, converting to modern computer programming
languages, or upgrading software libraries, protocols, or hardware
platform and infrastructure. These are projects to upgrade UI Benefits
and Tax Systems by SWAs using Federal funds.
State or States refers to, individually or collectively, the 50
States of the United States of America, the District of Columbia, the
Commonwealth of Puerto Rico, and the United States Virgin Islands.
State Identification Inquiry means the ICON application which
allows SWAs to inquire about wages reported to other SWAs by Social
Security Number.
State Information Data Exchange System or SIDES means an automated
response system used by SWAs to collect claim-related information from
employers and third-party administrators.
State unemployment compensation law or UC law means the law of a
State approved under Section 3304(a) of the Internal Revenue Code of
1986 (26 U.S.C. 3304(a)).
State Workforce Agency or SWA means the agency of the State charged
with the administration of the State's Unemployment Compensation (UC)
law.
Unemployment compensation or UC means cash benefits payable to
individuals with respect to their unemployment, as defined in 26 U.S.C.
3306(h).
Unemployment Insurance or UI means the Federal-State system and
operations administering and implementing UC law.
Withdrawn/Invalid Claims means the ICON application which allows
for the posting and viewing of withdrawn or invalid claim information
for SWAs.
Sec. 619.2 Data exchange standardization for ICON.
(a) XML is the data exchange standard for the real-time ICON
applications. These applications are: Interstate Wages and Benefits
Inquiries/Responses; Withdrawn/Invalid Claims; and State Identification
Inquiry.
(b) All SWAs using real-time ICON applications must comply with
this XML data exchange standard no later than September 30, 2018. A SWA
may request an extension of this deadline if it demonstrates that
resources are not available to meet this requirement. These requests
must be submitted in writing to the Administrator of the Office of
Unemployment Insurance no later than 6 months before the deadline;
requests will be approved or denied within 30 days.
Sec. 619.3 Data exchange standardization for SIDES.
(a) XML is the data exchange standard for SIDES.
(b) This standard applies to any Federally-funded SIDES consortium,
and any future agents of the Department providing vendor services for
the development, maintenance, support, and operations of the SIDES, and
for any State that adopts SIDES. A SIDES consortium involves a group of
two or more States jointly establishing a project team to oversee the
design, development, and implementation of a new SIDES data exchange
module. As States implement SIDES or new data exchange modules of
SIDES, they must conform to this data exchange standard by application
design.
(c) XML is designated as the data exchange standard to govern the
reporting of information through SIDES data exchange modules. The
regulation applies to current SIDES data exchange modules and any
future SIDES data exchange modules developed with Federal funds.
(d) The standard designated in paragraphs (a), (b), and (c) of this
section is effective March 21, 2014.
Sec. 619.4 Data exchange standardization for the UI Benefits and Tax
Systems.
(a) XML is the data exchange standard for the real time ICON
applications set out in Sec. 619.2 and for the SIDES exchanges set out
in Sec. 619.3 associated with major IT modernization projects, to
[[Page 9412]]
upgrade UI Benefits and Tax Systems by SWAs using Federal funds.
(b) The standard designated in paragraph (a) of this section is
effective March 21, 2014.
Eric M. Seleznow,
Acting Assistant Secretary, Employment and Training Administration.
[FR Doc. 2014-03496 Filed 2-18-14; 8:45 am]
BILLING CODE 4510-FN-P