[Federal Register Volume 64, Number 66 (Wednesday, April 7, 1999)]
[Notices]
[Pages 17000-17014]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 99-8575]
[[Page 17000]]
-----------------------------------------------------------------------
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.
-----------------------------------------------------------------------
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
