nization, policy, or agency operations and that such amendments will be submitted to the Social and Rehabilitation Service before it is put into effect, or within a reasonable time thereafter.

(d) Separate part relating to rehabilitation of the blind. If, as hereinafter provided for, a State agency for the blind administers or supervises the administration of that part of the State plan relating to the rehabilitation of the blind, such part of the State plan shall meet all requirements as to submission, amendment, and content prescribed by the act and this part, as though it were a separate State plan.

§ 401.3

Approval of State plans and amendments.

Both the original plan and all amendments thereto shall be submitted to the Regional Commissioner.

(a) New or substantially revised plans. New or substantially revised plans are approved by the Administrator.

(b) Plan amendments. An amendment to a plan is approved by the Regional Commissioner. If an amendment is approved, the Regional Commissioner incorporates it into the approved State plan and advises the State. If the Regional Commissioner considers an amendment not to be approvable and is unable to secure necessary changes by the State, he submits the amendment to the central office of the Social and Rehabilitation Service for appropriate action.

§ 401.4

Withholding of funds.

(a) When withheld. When after reasonable notice and opportunity for hearing to the State agency it is found that (1) the plan has been so changed that it no longer complies with the requirements of section 5(a) of the act, or (2) in the administration of the plan there is a failure to comply substantially with any such provisions, further payments under section 2 or 3 may be withheld or limited as provided by section 5(c) of the act. The State agency is notified of the action taken.

(b) Judicial review. The decision to withhold payments described in paragraph (a) of this section may be appealed to the U.S. district court for the district in which the capital of the State is located. The court will review the action on the record in accordance with the provisions of the Administrative Procedure Act.

(c) Informal discussions. Hearings described in paragraph (a) of this section are generally not called until after reasonable effort has been made by the Social and Rehabilitation Service to resolve the questions involved by conference and discussion with State officials. Formal notification of the date and place of a hearing does not foreclose further negotiations with State officials.

§ 401.5

State agency for administration. (a) Designation of sole State agency. The State plan shall designate a sole State agency to administer the State plan for vocational rehabilitation services in the State or to supervise its administration in a political subdivision of the State by a sole local agency of such political subdivision. This agency shall be one of the agencies specified in paragraph (b) of this section, except that the State agency for the blind, as specified in paragraph (c) of this section, may be designated as the sole State agency with respect to that part of the program relating to the vocational rehabilitation of the blind.

(b) Designated State agency. The designated State agency, except for a designated State agency for the blind as specified in paragraph (c) of this section, shall be:

(1) A State agency primarily concerned with vocational rehabilitation, or vocational and other rehabilitation, of disabled individuals; such agency must be an independent State commission, board, or other agency whose major function is vocational rehabilitation, or vocational and other rehabilitation, of disabled individuals, with authority, subject to the supervision which derives from the office of the Governor, to define the scope of the program within the provisions of State and Federal law, and to direct its administration without external administrative controls;

(2) The State agency administering or supervising the administration of education or vocational education in the State; or

(3) A State agency which includes at least two other major organizational units each of which administers one or more of the State's major programs of public education, public health, public welfare, or labor.

(c) Designated State agency for the blind. Where the State commission for the blind, or other agency which provides assistance or services to the adult

blind, is authorized under State law to administer or supervise the administration of vocational rehabilitation services to the blind, such commission or agency may be designated as the sole State agency to administer the part of the plan under which vocational rehabilitation services are provided for the blind or to supervise the administration of such part in a political subdivision of the State by a sole local agency of such political subdivision.

(d) Authority. The State plan shall set forth the authority under State law for the administration or supervision of the administration of the program by the State agency, and the legal basis for administration by local rehabilitation agencies, if applicable. In this connection, copies of all laws and interpretations thereof by appropriate State officials, directly pertinent to the administration or supervision of the vocational rehabilitation program, shall be submitted as a part of the plan.

(e) Responsibility for administration. The State plan shall provide that all decisions affecting eligibility for vocational rehabilitation services, including the acceptability for extended evaluation and the nature and scope of vocational rehabilitation services to be provided, will be made by the State agency through its organizational unit, or by a local rehabilitation agency under its supervision, and that this responsibility will not be delegated to any other agency or individual.

§ 401.6 Organization for administration.

(a) Organization. The State plan shall describe the organizational structure of the State agency, including descriptions of organizational units, the functions assigned to each, and the relationships among units in the vocational rehabilitation program. Such descriptions shall be accompanied by organizational charts reflecting (1) the relationship of the State agency to the Governor and his office and to other agencies administering major programs of public education, public health, public welfare, or labor of parallel stature within the State government, and (2) the internal structure of the State agency. The organizational structure shall provide for all the vocational rehabilitation functions for which the State agency is responsible, for clear lines of administrative and supervisory authority, and shall be suited to the size

of the vocational rehabilitation program and the geographic areas in which the program must operate. The State plan shall also describe methods of administration which will provide for the coordination and integration of activities, adequate controls over operations, channels for the development and interpretation of policies and standards, and effective supervision of staff under the Vocational rehabilitation program. The organizational structure and the methods of administration shall facilitate program operations, and shall ensure the provision of all necessary vocational rehabilitation services available under the State plan to rehabilitation clients, including services necessary to determine rehabilitation potential.

(b) Organizational unit. Where the designated State agency is of the type specified in § 401.5(b) (2) or (3), or § 401.5(c), the State plan shall provide that the agency (or each agency, where two such agencies are designated) shall include a vocational rehabilitation organizational unit which: (1) Is primarily concerned with vocational rehabilitation, or vocational and other rehabilitation, of disabled individuals, and is responsible for the administration of such State agency's vocational rehabilitation program, which must include the determination of eligibility for and the provision of services under the State plan; (2) has a full-time administrator in accordance with § 401.7; and (3) has a staff employed on such rehabilitation work of such organizational unit all or substantially all of whom are employed full time on such work.

(c) Location of organizational unit. (1) The State plan shall provide that the organizational unit, specified in paragraph (b) of this section, shall be located at an organizational level and shall have an organizational status within the State agency comparable to that of other major organizational units of such agency or, in the case of an agency described in § 401.5(b) (2), the unit shall be so located and have such status, or the administrator of such unit shall be the executive officer of such State agency. In evaluating the comparability of the organizational level and the organizational status of the unit, the Administrator will give consideration to such factors as the directness of the reporting line from the administrator of the organizational unit for vocational rehabilitation to the chief officer of the

designated State agency; the title, status and grade of the administrator of the organizational unit for vocational rehabilitation as compared with those of the heads of other organizational units of the State agency; the extent to which the administrator of the organizational unit for vocational rehabilitation can determine the scope and policies of the vocational rehabilitation program; and the kind and degree of authority delegated to the administrator of the organizational unit for the administration of the vocational rehabilitation program. (2) In the case of a State which has not designated a separate State agency for the blind as provided for in § 401.5, such State may, if it so desires, assign responsibility for the part of the plan under which vocational rehabilitation services are provided for the blind to one organizational unit of the State agency and assign responsibility for the rest of the plan to another organizational unit of such agency, with the provision of paragraphs (b) and (c) (1) of this section applying separately to each of such units.

§ 401.7 State administrator.

The State plan shall provide that there shall be a State administrator or other named official who shall direct the State agency specified in § 401.5(b) (1) or the organizational unit specified in § 401.6 (b), and who shall be required to devote his full time and efforts to the vocational rehabilitation program, or the vocational and other rehabilitation of disabled individuals, with the following exception: Upon the request of a State agency, the Administrator may approve arrangements whereby the State administrator is also responsible for the direction of other programs primarily concerned with handicapped persons, if he finds in view of all the circumstances in the particular case that such arrangements will not impair the effective administration of the State plan. § 401.8 Local administration.

The State plan may provide for administration of the plan through a sole local rehabilitation agency of a political subdivision of the State, under the supervision of the State agency and in compliance with statewide standards established by the State agency (except to the extent that there is a waiver of statewideness, § 401.10). If the plan provides for local administration, the local

rehabilitation agency shall be responsible for the administration of all aspects of the program within the political subdivision which it serves: Provided, however, that a separate local rehabilitation agency serving the blind may administer that part of the plan relating to the rehabilitation of the blind, under the supervision of the State agency for the blind. If the State plan provides for the administration of the program by local rehabilitation agencies, the State plan shall set forth the standards governing their organization and methods of administration and shall describe the nature and extent of the supervision exercised by the State agency in order to assure observance in the application of State standards and the effective achievement of the objectives of the State plan throughout the State except to the extent that the requirement for statewideness is waived in accordance with § 401.10.

§ 401.9 Shared funding and administration of joint projects.

If the State plan so provides, the State agency may request the Administrator to authorize the State agency to share funding and administrative responsibility for an identifiable joint project with another agency or agencies of the State in order to provide services to handicapped individuals. The Administrator will approve a request for a joint project which it has been determined will more effectively accomplish the purposes of the act. Upon approval of a request, the Administrator may waive the sole State agency provision of § 401.5(a) (except in cases of cooperative programs utilizing third-party funds for vocational rehabilitation services under § 401.11) and the provision of § 401.2(a) that the State plan be in effect in all political subdivisions of the State. The State plan shall further provide that each joint project shall be based on a written agreement which: (a) Describes the nature and scope of the joint project, the services to be provided to handicapped individuals, and the respective roles of each participating agency both in the provision of services and in the administration of such services, and in the share of the costs to be assumed by each; (b) specifies the initial term of the project and plans for anticipated continuation; (c) provides a budget showing for each fiscal year the financial participation by the State agency and each

participating agency; (d) provides written assurance that funds will be legally available for purposes of the joint project; (e) provides that the State agency shall annually evaluate the effectiveness of each project with special attention to its vocational rehabilitation objectives; and (f) assures that the State agency and each participating agency will furnish such information and reports as the Administrator may from time to time require to determine whether the activities are achieving the purposes of the project and warrant continuation. § 401.10 Waiver of Statewideness.

If the State agency desires to carry out activities in one or more political subdivisions through local financing to promote the vocational rehabilitation of substantially larger numbers of handicapped individuals or the vocational rehabilitation of individuals with particular types of disabilities, the State plan shall (a) describe the types of activities which will be carried out for these purposes; (b) provide that the State agency will obtain a full written description of any such activity to be carried out in a particular political subdivision and will obtain written assurance from the political subdivision that the non-Federal share of funds is available to the State agency; (c) provide that the State agency will require that its approval be given to each individual proposal before the proposal is put into effect in a political subdivision; (d) provide that the State agency will furnish such information and reports as the Administrator may from time to time require to ascertain whether the activities are within the purposes of this section; (e) provide that the State agency will have sole responsibility for administration (or supervision if the vocational rehabilitation program is administered by local rehabilitation agencies) of the program in the particular local political subdivision in accordance with § 401.5, except to the extent that the sole State agency provision has been waived with respect to a joint project (§ 401.9); and (f) provide that all requirements of the State plan shall apply to such activities, except the requirement that the program shall be in effect in all political subdivisions of the State, and except that the provision of § 401.82 may be applicable for Federal financial participation in expenditures for carrying out such activities.

§ 401.11

Cooperative programs utilizing third-party funds for vocational rehabilitation services.

(a) The State plan shall provide that when the State's share of the cost of a cooperative program is made available in whole or in part by a State or local public agency other than the State vocational rehabilitation agency, such cooperative program shall be based on a written agreement which (1) describes the activities to be undertaken; (2) provides for an annual budget; (3) provides that expenditures for vocational rehabilitation services and administration for which Federal financial participation is claimed will be under the control and at the discretion of the State agency; (4) provides that only individuals in need of evaluation to determine eligibility or handicapped individuals who have either been certified as eligible pursuant to § 401.30 (b) or have been determined to be in need of extended evaluation to determine eligibility shall be served by the cooperative program; (5) provides for periodic evaluation of the cooperative program; and (6) provides that the State agency and the cooperating agency will furnish such other information and reports as the Administrator may require.

(b) The State plan shall assure that services provided in such a cooperative program are vocational rehabilitation services (1) which are not services to which the handicapped individual would be entitled if he were not an applicant or client of the State agency and (2) which represent new services or new patterns of services of the cooperating agency.

(a) The State plan shall set forth the State agency's standards of personnel administration applicable to its own employees and those of local rehabilitation agencies operating under its supervision. The State plan shall specify that rates of compensation and minimum qualifications will be established for each class of position which are commensurate with the duties and responsibilities of that class; and shall set forth the policies of the State agency with respect to the selection, appointment, promotion, career development, and tenure of qualified personnel, including its policies against discrimination on the basis of sex, race, creed, color, or national origin.

(b) The State plan shall provide for the maintenance of such written personnel policies, records, and other information as are necessary to permit an evaluation of the operations of the system of personnel administration in relation to the standards of the State agency.

(c) Where personnel administration is conducted under a State merit system approved by the Department of Health, Education, and Welfare (or a constituent unit thereof) as meeting the "Standards for a Merit System of Personnel Administration," Part 70 of this title, the State plan may make reference to such fact, and the information required above with respect to "Standards of personnel administration" need not be submitted, except that the responsibility for the appointment of personnel shall be described.

(d) The Administrator shall exercise no authority with respect to the selection, method of selection, tenure of office, or compensation of any individual employed in accordance with the provisions of the approved State plan.

§ 401.13 Medical consultation.

The State plan shall provide for and describe the arrangements made to secure adequate medical consultation and to assure the availability of medical consultative services of high quality on all medical aspects of the vocational rehabilitation program, as needed in all State, district, or local offices of the agency.

§ 401.14 State agency facility staff.

The State plan shall provide for adequate staff to carry out the functions of the State agency pertaining to rehabilitation facilities in such areas as: (a) The setting of standards for rehabilitation facilities utilized in providing services to handicapped individuals under the State plan and, where appropriate, to disadvantaged individuals under the State evaluation and work adjustment plan under Part 402 of this chapter; (b) the effective utilization of existing rehabilitation facilities in the rehabilitation process; (c) the establishment and construction of rehabilitation facilities under §§ 401.58 and 401.59; (d) the coordination between the State agency and the State agency or agencies administering the programs pursuant to any other act concerned with the development, establishment, or construction of

rehabilitation facilities, in order to prevent duplication of the rehabilitation facility effort and impairment of the State vocational rehabilitation program; (e) the functions of the State agency in the administration of grants and services for rehabilitation facilities under this part and under Part 404 of this chapter; (f) the updating and maintenance of the State rehabilitation facilities plan; and (g) other activities under the State plan involving rehabilitation facilities.

§ 401.15 State agency program planning staff.

(a) The State plan shall provide for adequate staff with appropriate qualifications to carry out continuing statewide studies of the needs of handicapped individuals within the State and the means by which these needs may be most effectively met. Such staff shall be responsible for studies, which may include but are not limited to: (1) A continuing identification of those disabled persons who need and can benefit from vocational rehabilitation services; (2) the review, updating, and implementation of statewide planning studies for vocational rehabilitation services and of related planning studies within the State; (3) an evaluation of the adequacy of existing rehabilitation program resources and the identification of those resources necessary for meeting future rehabilitation needs; (4) planning studies and activities necessary for the development and improvement of the State vocational rehabilitation program; and (5) such other studies as are necessary to ensure the orderly development of rehabilitation services and resources. Planning studies for rehabilitation services shall be coordinated, to the maximum extent possible, with related planning activities being conducted on a statewide, regional or other basis under the act or other authority. In States in which there is a separate agency for the blind, coordinated or joint planning studies shall be conducted.

(b) Advisory committees, representing labor, management, medical and health related organizations and institutions, the disabled, public and voluntary agencies and civic groups, shall be utilized by the State agency program planning staff, insofar as practicable, in the conduct of statewide planning studies, and no less than one-third of the