Comment on notice of proposed rulemaking: National Apprenticeship System Enhancements

Brent Parton
Principal Deputy Assistant Secretary for Employment and Training
U.S. Department of Labor
200 Constitution Ave. NW, Room N-5641
Washington, D.C. 20210

Docket No. ETA-2023-0004, RIN 1205–Ac13

Dear Mr. Parton:

On behalf of the Competitive Enterprise Institute, I am pleased to submit to the Department of Labor (Department) the following comments regarding its proposed rulemaking entitled National Apprenticeship System Enhancements, 89 Fed. Reg. 3118 (proposed Jan. 17, 2024) (to be codified at 29 C.F.R. pts. 29 & 30). The Competitive Enterprise Institute is a non-profit research and advocacy organization that focuses on regulatory policy.

1. The Proposal Suppresses the Potential for Apprenticeship

With good reason, the Department sees an “expanded potential for apprenticeship.” Id. at 3124. It explains in the preamble to the proposal that the potential for registered apprenticeship has expanded because of increased funding and because “the scope of business sectors, industries, and occupations that have benefitted and would benefit from registered apprenticeship has expanded, including both the emergence of entirely new industries and occupations (within the IT and education sectors, for example), as well as evolutions within existing industries and occupations.” Id. Similarly, the preamble to an earlier rule adopted by the Department’s Office of Apprenticeship (OA) noted that apprentices constitute only 0.2% of the workforce and yet a Harvard Business School study identified fifty occupations that were ripe for apprenticeship expansion. Apprenticeship Programs, Labor Standards for Registration, 85 Fed. Reg. 14,294, 14,294 (Mar. 11, 2020). The secretary of labor established a Task Force on Apprenticeship Expansion to consider this problem. It issued a report that “explained that many employers choose to establish apprenticeship programs outside of the registered apprenticeship program, in part because of the paperwork and process involved in registering a program. In addition, the report noted that there is insufficient flexibility in program requirements within the registered apprenticeship program to meet the varying needs of different industries.” Id. at 14,295.            

However, the Department now proposes to overcome the barriers to expansion of registered apprenticeship by increasing required paperwork and decreasing flexibility. The increase in paperwork includes mandatory (and detailed) reporting requirements imposed upon program sponsors and any participating employer, § 29.18, as well as burdensome requirements for applications for suitability determinations, § 29.7(c), and for applications for program registration. §§ 29.10, 29.24(d)(2). The requirements for applications for program registration, among many other things, compel applicants to produce “[i]nformation showing that the prospective program sponsor possesses and can maintain the financial capacity and other resources necessary to operate the proposed program.” § 29.10(a)(5). One commentator asked, “what businesses will be eager to show their accounts to the Labor Department for the uncertain benefit of registering a program?” Robert I. Lerman, What to Like—and What Not to Like—about the New Federal Apprenticeship Rules, The Hill (Feb. 11, 2024), https://thehill.com/opinion/finance/4461603-why-the-new-apprenticeships-rules-could-be-bad-for-business/

The Paperwork Reduction Act requires agencies to solicit comment on each proposed collection of information to “evaluate whether the proposed collection of information is necessary for the proper performance of the functions of the agency, including whether the information shall have practical utility.” 44 U.S.C. § 3506(c)(2)(A)(i). Undoubtedly the OA decided that the additional information sought by the preceding proposed sections might have some practical utility, but the information is not “necessary for the proper performance of the functions of the agency.”

Indeed, the proposed paperwork and collection of information would be detrimental to the proper performance of the functions of the OA. The cost of compliance with paperwork requirements will deter participation. Prof. Cass Sunstein, former administrator of OIRA, discussed this repercussion in a recent law review article:

Even if the benefits are high, the relevant costs might prove overwhelming. These costs can take qualitatively different forms. They might involve acquisition of information, which might be difficult and costly. They might involve time, which people might not have. They might be psychological, in the sense that they involve frustration, stigma, and humiliation. For any of those reasons, it might be very difficult to navigate or overcome the sludge. In some cases, doing the relevant paperwork might be literally impossible; it simply may not be feasible for people to fill out the forms. By themselves, these points help explain low take-up rates for many federal and state programs. . . .

Cass R. Sunstein, Sludge and Ordeals, 68 Duke L.J. 1843, 1853 (2019).             In addition, the proposed rules are inflexible on matters best left to employers to consider and to reconsider as circumstances change, such as the suitability of an apprentice program. Proposed section 29.7(a) provides that only the administrator of the OA may make that determination. The rest of the section sets forth a baroque procedure for the administrator to do so. An occupation will not be approved as suitable for apprenticeship training if the administrator determines that the application is incomplete or that “[a]ny of the requirements set forth at paragraphs (b)(1) through (b)(4) are not met.” § 29.7(e)(2). Paragraph (b)(4) insists upon “the completion of at least 2,000 hours of on-the-job training and not less than a minimum average of 144 hours of off-the-job related instruction for every 2,000 hours of on-the-job training in order to obtain proficiency in the occupation.”

Proposed section 29.12(c)(2) requires registered apprenticeship program sponsors to ensure that providers of related instruction have been trained in “adaptable learning styles.” The necessity of training in adaptable learning styles is as elusive as where one would send providers of related instruction to obtain training in adaptable learning styles.

Overlaid upon the inflexibility of the proposal is its complexity. Proposed subpart B of part 29 creates a separate system for career and technical education (CTE) apprenticeship with its own standards and its own rules for state apprenticeship agencies, registration, deregistration, and reinstatement. Altogether the proposed rules establish four different sets of standards for apprenticeships: standards for apprenticeship, § 29.8, national program standards for apprenticeships, § 29.14, national guidelines for apprenticeship standards, § 29.15, and standards for CTE apprenticeship, § 29.24(c).

The Department has proposed in abundant detail and quantity the very things that deter the expansion of registered apprenticeship—paperwork and inflexibility. 

2. The Proposal Pursues Unauthorized Objectives

The National Apprenticeship Act of 1937 concisely states the mission and authority of the Department with regard to apprentices:

The Secretary of Labor is authorized and directed to formulate and promote the furtherance of labor standards necessary to safeguard the welfare of apprentices, to extend the application of such standards by encouraging the inclusion thereof in contracts of apprenticeship, to bring together employers and labor for the formulation of programs of apprenticeship, to cooperate with State agencies engaged in the formulation and promotion of standards of apprenticeship, and to cooperate with the Secretary of Education in accordance with section 17 of title 20.

29 U.S.C. §50. Much of the proposal is given over to two objectives that the National Apprenticeship Act does not authorize: the promotion of diversity, equity, inclusion, and accessibility and the imposition of demands on state agencies.

a. Promotion of Diversity, Equity, Inclusion, and Accessibility

The first section in the proposal, § 29.1 “Purpose and Scope,” states a purpose not found in 29 U.S.C. §50, i.e., “ensuring equitable apprenticeship opportunities for underserved communities.” The preamble identifies DEIA as a crucial goal.  89 Fed. Reg. at 3212. DEIA is a variation of the familiar acronym for diversity, equity, and inclusion with the redundant addition of accessibility. Id. at 3118. One of the proposed functions of the OA is to “[p]romote diversity, equity, inclusion, and accessibility in apprenticeship, including for those from underserved communities, and, consistent with part 30 of this title, enforce equal opportunity standards for apprentices and applicants.” § 29.3(f).

These terms are ill-defined. Neither diversity, equity, inclusion, nor accessibility is defined. Whatever equity means it does not mean equality. In re: Blue Cross Blue Shield Antitrust Litigation, 85 F.4th 1070, 1093 (11th Cir. 2023) (“[T]he text of the amended rule requires equity, not equality, and treating class members equitably does not necessarily mean treating them all equally.”) “Underserved communities” is defined to mean “persons” rather than communities, and those persons include women, “persons adhering to particular religious beliefs,” veterans, and military spouses. § 29.2.

The proposed rules do not disclose how the OA is to promote DEIA or to “advocate . . .  the benefits of apprenticeship as a DEIA strategy.” 89 Fed. Reg. at 3139. The proposed rules require submission of data on race and other demographic characteristics but do not explain how that data will be used. The Department asserts obliquely that the data will “drive improvements toward greater equity in the National Apprenticeship System,” id. at 3212, and “help States assess program quality and support equity strategies to increase registered apprenticeship program access, participation, and improve outcomes for underserved communities.” Id. at 3223. On the basis of such vague aspirations, one cannot “evaluate whether the proposed collection of information is necessary for the proper performance of the functions of the agency, including whether the information shall have practical utility.” 44 U.S.C. § 3506(c)(2)(A)(i). Since that evaluation is impossible, the notice of proposed rulemaking does not comply with the Paperwork Reduction Act.  

The preamble says the proposal will require apprenticeship and pre-apprenticeship programs to have “an equitable, intentional, and achievable strategy for advancing the program’s recruitment, hiring, and retention of individuals from underserved communities.” 89 Fed. Reg. at 3127, 3136. The preamble does not explain what an equitable and intentional strategy is or how it differs from an equitable but unintentional strategy.

The implementation of equitable strategies will largely be done by the states and by sponsors subject to OA’s approval outside of public view and outside of any notice and comment procedure. See, e.g., §§ 29.10(a)(4), 29.24(d)(1)(v)(A). This is dangerous. Diversity efforts can lead to discrimination in the workplace and serve as a convenient rationale for discrimination. That remains the case even if diversity efforts are designed to favor underserved groups rather than to disfavor others because favoring one race necessarily means disfavoring another. Price v. Valvoline, L.L.C., 88 F.4th 1062, 1068 (5th Cir. 2023) (Ho, J., concurring) (citing Students for Fair Admissions, Inc. v. President & Fellows of Harvard Coll., 600 U.S. 181, 258 (2023) (Thomas, J., concurring) (quoting Grutter v. Bollinger, 539 U.S. 306, 393 (2003) (Kennedy, J., dissenting)); Parents Involved in Cmty. Schs. v. Seattle Sch. Dist. No. 1, 551 U.S. 701, 732, (2007) (plurality opinion of Roberts, C.J.); Rollerson v. Brazos River Harbor Navigation Dist., 6 F.4th 633, 647–50 (5th Cir. 2021) (Ho, J., concurring in part and concurring in the judgment); Preston v. Wis. Health Fund, 397 F.3d 539, 542 (7th Cir. 2005); Bless v. Cook Cnty. Sheriff’s Office, 9 F.4th 565, 574 (7th Cir. 2021)). The tendency for diversity efforts to lead to discrimination leads to an unresolved tension in the proposal. The proposal leaves intact an EEO requirement of part 30 “that selection procedure(s) must be facially neutral in terms of race, color, religion, national origin, sex, sexual orientation, age (40 or older), genetic information, and disability.” 29 C.F.R. § 30.10. The Department claims that “the EEO requirements and intentional DEIA focus of the part 30 regulations are important aspects of its goal to improve inclusivity and equity in the National Apprenticeship System.” 89 Fed. Reg. at 3270. There appears to be a significant risk that these are empty representations and the DEIA focus will advance procedures that are not facially neutral.

b. Imposition of Demands on State Agencies

The proposal pursues another objective that also is not authorized by the National Apprenticeship Act of 1937. The act authorizes the secretary of labor “to cooperate with State agencies engaged in the formulation and promotion of standards of apprenticeship.”

With regard to state agencies, the proposal envisions less cooperating and more commanding. Under the proposal, after being recognized by the Department, state apprenticeship agencies register and oversee apprenticeship programs and agreements for federal purposes. §§ 29.2, 29.26. The proposed rules mandate the structure and functions of state apprenticeship agencies. They even specify what state laws must provide with regard to state apprenticeship agencies. § 29.27(b)(1). The Department acknowledges that its proposal “may require a significant amount of State legislative session scheduling.” 89 Fed. Reg. at 3224. In five places the proposed rules use the expression “the State must.” §§ 29.27(b)(2)(iii), 29.27(b)(4), 29.27(b)(h), 29.29(c), 29.29(c)(1). That is an inappropriate way for the OA to address the sovereign states. The existing rules provide that “the State must” do something only twice. 29 C.F.R. §§ 29.13(b), 29.14(h).

As an example, one of the proposed sections using the inappropriate expression “the State must” sets forth requirements for one of the narratives a state apprenticeship agency must submit in order to be recognized: “The State must provide a narrative of the strategic alignment of workforce development activities in the State with the [state apprenticeship agency].” § 29.27(b)(2)(iii). That narrative has to describe a lot of leveraging. It must describe “leveraging of State planning and registered apprenticeship programs under WIOA,” § 29.27(b)(2)(iii)(A), efforts to “increase the leveraging of registered apprenticeship programs on the State list of eligible providers of training services,” § 29.27(b)(2)(iii)(B), and efforts to “leverage apprenticeship related data with education system and workforce development system data.” § 29.27(b)(2)(iii)(G).

The proposal compels state apprentice agencies to do more than just leverage various things. The proposal would convert voluntary recommendations for reporting by state apprenticeship agencies to the OA into compulsory reporting requirements. 89 Fed. Reg. at 3223. State apprenticeship agencies must also establish state apprenticeship councils. § 29.26(c). The proposed rules dictate the membership of state apprenticeship councils, permitting only one third of a state apprenticeship council to represent employers, § 29.26(c)(1), even though the success of an apprenticeship program depends upon employers hiring apprentices from the program. The preamble asserts that this rule would “provide more granular information about the backgrounds of such individuals that would be useful for aligning State Apprenticeship Council membership with the Department’s goals for expansion of the National Apprenticeship System and alignment with other workforce development entities and LEAs.” 89 Fed. Reg. at 3217. This is a step in the wrong direction. The Department’s instructions to the states should not be granular at all, particularly with regard to “strictly advisory bodies” (id.) such as state apprenticeship councils.

Such requirements are improper and unauthorized. A fundamental reason the Department should not be issuing commands to the states, especially granular ones, is the constitutional design. “[T]he Framers explicitly chose a Constitution that confers upon Congress the power to regulate individuals, not States. . . . The allocation of power contained in the Commerce Clause, for example, authorizes Congress to regulate interstate commerce directly; it does not authorize Congress to regulate state governments’ regulation of interstate commerce.” New York v. United States, 505 U.S. 144, 166 (1992).

While Congress can offer states the choice of regulating an activity according to federal standards or having state law preempted, id. at 167, that is not what Congress did here. Respecting the constitutional design, Congress authorized the Department to cooperate with state agencies. The proposal establishes a very different system. Under that system, the Department recognizes state apprenticeship agencies in order for them to register and oversee apprenticeship programs and agreements for federal purposes and then subjects state apprenticeship agencies to numerous requirements. The National Apprenticeship Act’s grant of authority “to cooperate with State agencies engaged in the formulation and promotion of standards of apprenticeship” does not authorize that system.

The act’s grant of authority to “formulate and promote the furtherance of labor standards necessary to safeguard the welfare of apprentices, to extend the application of such standards by encouraging the inclusion thereof in contracts of apprenticeship” does not authorize that system either. The system exceeds this authority to encourage the inclusion of standards in contracts of apprenticeship. It compels the inclusion of standards in state laws and regulations. 

The extent of the proposal’s unauthorized intrusion into state decision making is costly and harmful. It prevents states from trying different approaches and comparing the results. It removes citizens’ control over the actions of their own states. It compels states to spend money and time revising statutes and completing forms that could be more wisely spent in other ways.

The sunk costs of producing 27 pages of proposed regulations, many of which are unauthorized, and 152 pages of preamble to those proposed regulations are not a reason to impose them on the public. For the benefit of all concerned, the Department should spare the public from this labyrinth. It should take no further action on this proposed rulemaking.

Cordially yours,
David S. McFadden
Attorney, Competitive Enterprise Institute
[email protected]  

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