Federal-State Unemployment Insurance (UI) Program; Data Exchange Standardization as Required by Section 2104 of the Middle Class Tax Relief and Job…

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

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.

FOOTNOTE 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. END FOOTNOTE

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 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.

FOOTNOTE 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. END FOOTNOTE

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.

FOOTNOTE 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. END FOOTNOTE

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;

--This is a summary of a Federal Register article originally published on the page number listed below--

Final rule.

CFR Part: "20 CFR Part 619"

RIN Number: "RIN 1205-AB64"

Citation: "79 FR 9404"

Federal Register Page Number: "9404"

"Rules and Regulations"