PIECP Final Guideline

PIECP Final Guideline

[Federal Register: April 7, 1999 (Volume 64, Number 66)] [Notices] [Page 17000-
17014] From the Federal Register Online via GPO Access
www.gpoaccess.gov/fr/index.html [DOCID:fr07ap99-112]
[[Page 17000]]
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DEPARTMENT OF JUSTICE
Office of Justice Programs [OJP(BJA)-1213] RIN 1121-AA36
Prison Industry Enhancement Certification Program Guideline
AGENCY: Office of Justice Programs, Bureau of Justice Assistance (BJA), Justice.
ACTION: Issuance of final guideline.
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SUMMARY:
The Office of Justice Programs, Bureau of Justice Assistance (BJA), is issuing this
final revision to its Prison Industry Enhancement Certification Program (PIECP)
Guideline proposed for public comment on July 7, 1998, 63 FR 36710-36719. Under
Title 18 U.S.C. 1761(c), BJA PIECP certification excepts participating agencies from
certain Federal restraints placed on the marketability of prison-made goods by
permitting the transport of such goods in interstate commerce and the sale of such
goods to the Federal government. This Guideline addresses statutory amendments
and reflects administrative experience gained by BJA since the last final PIECP
Guideline published on March 29,1985 (50 FR 12661-64). The publication of this
Final Guideline is considered to be a Federal action that will not significantly affect
the quality of the human environment. Therefore, preparation of an environmental
impact statement is not necessary.
EFFECTIVE DATE: This Guideline is effective April 7, 1999; existing participants will have
until April 7, 2000 to achieve compliance with all of the new requirements set forth in
this Guideline except for those relating to the National Environmental Policy Act
(NEPA). The new requirements implementing NEPA are effective immediately.
FOR FURTHER INFORMATION CONTACT: Jeffrey R. Hall, Law Enforcement Program Manager, Bureau of
Justice Assistance, 810 Seventh Street, NW, Washington, DC 20531. Telephone:
(202) 616-3255.
SUPPLEMENTARY INFORMATION:
Scope of Program AnnouncementI. 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 NonCompliance 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 AshurstSumners 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
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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 HawesCooper 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 prisonermade 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 AshurstSumners 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
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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, noncompliance 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 (NCIA), prison industry and other professionals conduct regular, on-site
reviews of all PIECP projects. BJA responds to matters involving possible noncompliance 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
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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-forprofit 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 nonresponsive 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 noninmate 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 noncompliance, 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 National 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
<bullet> 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. <bullet> 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. <bullet> Through PIECP participation conditions, to prevent
unfair competition between prisoner-made goods and private sector goods. <bullet>
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 prisonermade 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):
<bullet> Parts for the repair of farm machinery; or <bullet> 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 <bullet> 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:
<bullet> Has a tangible item been produced, manufactured or mined? <bullet> Has
a tangible item been formed or transformed? <bullet> 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 postproduction, interstate transportation of prisoner- made goods?
<bullet> 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? <bullet> 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 lowcost, 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 noncompliance 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 noncompliance. 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