Wagner-Peyser Act Employment Service Staffing

DEPARTMENT OF LABOR Employment and Training Administration 20 CFR Part 652 [Docket ETA-2025-0005] RIN 1205-AC22 Wagner-Peyser Act Employment Service Staffing AGENCY: Employment and Training Administration, Labor. ACTION: Final rule. SUMMARY: The U.S. Department of Labor (DOL or the Department) is removing the requirement that States use State merit staff to provide Wagner-Peyser Employment Service (ES) services. This final rule allows States to use the staffing model that provides the required services with the most efficient and cost-effective model for their State. DATES: This final rule is effective on October 19, 2026. FOR FURTHER INFORMATION CONTACT: Kimberly Vitelli, Administrator, Office of Workforce Investment, Employment and Training Administration, U.S. Department of Labor, 200 Constitution Avenue NW, Room C-4526, Washington, DC 20210, Email: vitelli.kimberly@dol.gov. SUPPLEMENTARY INFORMATION: Table of Contents I. Acronyms and Abbreviations II. Background III. Discussion on Statutory Basis for Merit-Staffing Requirement IV. Notice of Proposed Rulemaking V. Discussion of Public Comments VI. Rulemaking Analyses and Notices A. Review Under Executive Orders 12866 (Regulatory Planning and Review), 13563 (Improving Regulation and Regulatory Review), and 14192 (Unleashing Prosperity Through Deregulation), and Subtitle E of the Small Business Regulatory Enforcement Fairness Act of 1996 (Congressional Review Act) 1. Statement of Need 2. Alternatives Considered 3. Economic Analysis B. Review Under the Regulatory Flexibility Act C. Paperwork Reduction Act of 1995 D. Review Under Executive Order 13132 (Federalism) E. Review Under the Unfunded Mandates Reform Act F. Executive Order 13175 (Indian Tribal Governments) G. Plain Language I. Acronyms and Abbreviations 2020 Final Rule  Wagner-Peyser Act Staffing Flexibility; Final Rule, 85 FR 592 (Jan. 6, 2020) 2023 Final Rule   Wagner-Peyser Act Staffing; Final Rule, 88 FR 82658 (Nov. 24, 2023) the Act Wagner-Peyser Act of 1933 AI artificial intelligence AJC(s) American Job Center(s) (also known as one-stop(s) or one-stop center(s)) APA Administrative Procedure Act ARS Agricultural Recruitment System BLS U.S. Bureau of Labor Statistics CARES Act Coronavirus Aid, Relief, and Economic Security Act CFR Code of Federal Regulations CHIP Children's Health Insurance Program Complaint System Employment Service and Employment-Related Law Complaint System COVID-19 coronavirus disease 2019 CSRA Civil Service Reform Act of 1978 DOL or the Department U.S. Department of Labor DVOP Disabled Veterans' Outreach Program ED U.S. Department of Education E.O. Executive Order ES Wagner-Peyser Act Employment Service ETA Employment and Training Administration FR  Federal Register FTE(s) Full-Time Equivalent(s) IPA Intergovernmental Personnel Act of 1970 IT information technology LVER Local Veterans' Employment Representative MiDAS Michigan Integrated Data Automated System MSFW(s) migrant and seasonal farmworker(s) NAICS North American Industry Classification System NFJP National Farmworker Jobs Program NPRM or proposed rule notice of proposed rulemaking OIRA Office of Information and Regulatory Affairs OMB Office of Management and Budget OPM Office of Personnel Management PRA Paperwork Reduction Act of 1995 Pub. L. Public Law RESEA Reemployment Services and Eligibility Assessment RFA Regulatory Flexibility Act RMA(s) Regional Monitor Advocate(s) Secretary Secretary of Labor SMA(s) State Monitor Advocate(s) SNAP Supplemental Nutrition Assistance Program SOC Standard Occupational Classification SSA Social Security Act Stat. United States Statutes at Large SWA(s) State Workforce Agency/ies TAA Trade Adjustment Assistance UI Unemployment Insurance UMRA Unfunded Mandates Reform Act of 1995 Uniform Guidance Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards U.S.C. United States Code WIA Workforce Investment Act WIOA Workforce Innovation and Opportunity Act II. Background The Wagner-Peyser Act of 1933, 29 U.S.C. 49 et seq., established the ES program, which is a nationwide program of labor exchange services. The ES program seeks to improve the functioning of the Nation's labor markets by matching job seekers with employers that are seeking workers. Section 3(a) of the Wagner-Peyser Act directs the Secretary of Labor (Secretary) to assist States in coordinating the State public service employment offices throughout the country by developing and prescribing minimum standards of efficiency and promoting uniformity in the operation of the system of public employment offices. The Department has historically relied on the Secretary's authority in secs. 3(a) and 5(b) to require States to provide labor exchange services with State “merit staff,” meaning government employees hired and managed under a merit-based personnel system described in title 5 of the Code of Federal Regulations (CFR) at part 900, subpart F. Beginning in the early 1990s, the Department provided Colorado and Massachusetts with limited flexibility to set their own staffing requirements for the provision of ES services. The flexibility permitted Colorado to use county and State merit staff to deliver ES services. Colorado devolved responsibility for ES activity to the counties through workforce development boards. In Massachusetts, the Department approved use of non-State-merit staff in four of the State's 16 local areas. In 1998, the Department permitted Michigan to use State and local merit staff to deliver ES services, pursuant to a settlement agreement arising out of Michigan v. Herman, 81 F. Supp. 2d 840 (W.D. Mich. 1998). In 2014, Congress passed the Workforce Innovation and Opportunity Act (WIOA), Public Law 113-128, to modernize the Nation's workforce development system. Like the Workforce Investment Act (WIA) before it, WIOA did not include an ES merit-staffing requirement. Regulations implementing WIOA were published in the Federal Register on August 19, 2016 (81 FR 56072) and were effective on October 18, 2016. Among the provisions codified in the 2016 WIOA regulations was § 652.215, which continued to require the use of State merit-staffing for the delivery of ES services, except for the three States for which the Department previously granted exemptions: Colorado, Massachusetts, and Michigan. Through rulemaking effective on February 5, 2020, the Department removed the requirement that ES services be provided only by State merit staff ( Wagner-Peyser Act Staffing Flexibility; Final Rule, 85 FR 592 (Jan. 6, 2020)), hereafter referred to as the 2020 Final Rule. In the preamble to the 2020 Final Rule, the Department explained that it sought to allow States maximum flexibility in staffing arrangements to allow them to better align WIOA and ES staffing. Following the 2020 Final Rule, the Department approved several States to use a variety of staffing models to provide their ES services, as described in their approved WIOA State plans. In 2023, the Department again changed the requirements in § 652.215 through notice-and-comment rulemaking to reinstate the requirement that States use State merit staff to deliver ES services and reinstated the exemptions for Massachusetts, Michigan, and Colorado. These regulations were published in the Federal Register on November 24, 2023 ( Wagner-Peyser Act Staffing; Final Rule, 88 FR 82658) (the 2023 Final Rule) and became effective on January 23, 2024. The Department also provided 24 months for States to comply with the State merit-staffing requirements in § 652.215. This meant that States would have to comply with the provisions in § 652.215 by January 22, 2026. On July 1, 2025, the Department published a notice of proposed rulemaking (NPRM or proposed rule) proposing the removal of the State merit-staffing requirement. The NPRM proposed removing the entirety of § 652.215, including the compliance date. The Department invited the public to comment on the proposal and provided a 60-day comment period that ended on September 2, 2025. Through a final rule published on January 21, 2026, the Department extended the compliance date for States to comply with the State merit-staffing requirements in § 652.215 to January 21, 2027. III. Discussion on Statutory Basis for Merit-Staffing Requirement The Department is removing the requirement that ES services must be delivered by State merit staff and reestablishing the flexibility permitted under the 2020 Final Rule, because the best reading of the Wagner-Peyser Act is that there is no statutory basis for the Department to require States to deliver ES services using only State merit staff, as the Department articulated in the NPRM. Section 3(a) of the Wagner-Peyser Act, which the Department historically relied on to impose the State merit-staffing requirement, requires the Department to assist in coordinating State ES offices in developing and prescribing “minimum standards of efficiency” in the provision of ES programs but notably does not explicitly require the use of State merit staff. While the Department has previously suggested that sec. 5(b) also supports a State merit-staffing requirement, that section does not impose such a requirement, but rather simply requires the Department to make certifications to the U.S. Department of the Treasury regarding the coordination of ES and Unemployment Insurance (UI), only the latter of which expressly requires merit-staffing for certain activities under 42 U.S.C. 503. The Department also previously relied on the Intergovernmental Personnel Act (IPA), 42 U.S.C. 4728, as amended, which listed the Wagner-Peyser Act as one of the two acts administered by the Department with a requirement to provide services through merit-staffing. The Office of Personnel Management (OPM) regulations implementing the IPA likewise list the Wagner-Peyser Act as having a statutory requirement for merit-staffing, citing sec. 5(b) of the Wagner-Peyser Act, 29 U.S.C. 49d(b). See 5 CFR part 900, subpart F, Appendix A. However, sec. 5(b) does not impose any statutory requirement for merit-staffing ES services. Rather, as noted earlier in this section, it merely requires the Secretary to certify that States are complying with sec. 303(a)(1) of the Social Security Act (SSA), 42 U.S.C. 503(a)(1) (which requires the use of merit staff by States in administering their UI programs) and that States are coordinating ES activities with the provision of UI claimant services. The IPA and its implementing regulations apply when a federally funded program requires state or local agencies to establish a merit personnel system in order to receive funds. The Department notes that in March 2025, OPM issued updated IPA guidance stating that the IPA does not prescribe any particular staffing method to meet the merit personnel requirement. See Certifying the Use of a Merit Personnel System as Required by the Intergovernmental Personnel Act of 1970, 90 FR 11659 (Mar. 11, 2025). Under the updated IPA guidance, state and local agencies have discretion to determine the most appropriate staffing method for their merit personnel system, absent any statutory or regulatory requirement for a specific staffing method. Importantly though, there is no indication that Congress, in including the Wagner-Peyser Act in sec. 208 of the IPA, intended to impose a merit-staffing requirement not found in the Act itself, or implied to amend the Act itself to include such a requirement. Rather, as the Department noted in the NPRM, this appears to reflect the existing merit system functions being carried out by the Department at that time. Neither the IPA nor the OPM regulations contain an independent legal requirement for merit-staffing in the ES. Even if the IPA could be interpreted to suggest that Congress recognized a merit-staffing requirement in the Wagner-Peyser Act, the plain language of the statute is clear that no such requirement existed at the time the IPA was passed, apart from the Department's regulation requiring merit-staffing. If a statutory requirement had existed, Congress would not have needed to add a provision requiring merit staff in annual appropriations acts, as it did every year from 1946 to 1963 (see former 29 U.S.C. 49n). Additionally, the question of Congress' intent in enacting the IPA, and the Department's authority to impose a merit-staffing requirement via regulation more generally, was considered by the court in Michigan v. Herman, 81 F. Supp. 2d 840 (W.D. Mich. 1998). After reviewing the text and legislative history of the Wagner-Peyser Act and the IPA, the court concluded that the Wagner-Peyser Act “does not explicitly require merit-staffing.” Id. at 847-48. The Department acknowledges that while the court concluded that the Act does not explicitly require merit-staffing, the court also concluded that the Department, citing Chevron, U.S.A. v. National Resources Defense Council, 467 U.S. 837 (1984), had discretion to require merit-staffing because the language in sec. 3(a) was “broad enough to permit the [Secretary] to require merit staffing” Id. The district court reasoned that “[w]hile there is ample basis for a conflicting interpretation of the Wagner-Peyser Act's requirements, given the deference owed to the agency charged with administering the Act, the Court can find no compelling indications that the [Department's] construction of the statute is wrong.” Herman, 81 F. Supp. 2d at 848. But the framework under which the district court reached its decision is no longer legally defensible. In 2024, the U.S. Supreme Court decided Loper Bright Enterprises v. Raimondo (603 U.S. 369 (2024)), which overruled Chevron. Recognizing that for all statutes there is a single, best reading, the Court in Loper Bright held that under the Administrative Procedure Act (APA), 5 U.S.C. 551 et seq., courts must exercise independent judgment to determine if an agency has acted within its statutory authority and may not defer to the agency's interpretation simply because a statute is ambiguous. The Court recognized that the best reading of a statute may in fact be that Congress delegated discretionary authority to an agency. But ambiguities alone are not necessarily delegations. Id. at 404. And even when the best reading of the statute is that it delegates discretionary authority to an agency, reviewing courts must still independently interpret the statute and effectuate Congress' intent subject to constitutional limits by policing the boundaries of that delegation. Id. at 395, 404. Under Loper Bright, courts are to “interpret statutes, no matter the context, based on the traditional tools of statutory construction, not individual policy preferences.” Id. at 403. In light of the Loper Bright decision, the Department has reassessed the State merit-staffing requirement in the ES program and has determined that the State merit-staffing requirement does not comport with the best reading of the statute. Contrasting the Wagner-Peyser Act with sec. 303(a)(1) of the SSA, which Congress enacted almost contemporaneously with the Wagner-Peyser Act and which explicitly requires merit-staffing, supports this reading of the Wagner-Peyser Act. The Wagner-Peyser Act was enacted in 1933. The Department consistently applied a merit-staffing requirement beginning in 1934. The SSA was enacted in 1935, with a later 1939 amendment adding an explicit merit-staffing requirement in sec. 303(a)(1) of the SSA. Congress clearly knew how to legislate a merit-staffing requirement. That neither sec. 3(a) nor sec. 5(b) of the Wagner-Peyser Act contains an explicit merit-staffing requirement supports the Department's reading of the Wagner-Peyser Act. The Department acknowledged as much when arguing in Herman that the Department had authority to require State merit-staffing. 81 F. Supp. 2d at 844 (W.D. Mich. 1998) (“[The Department] acknowledges that the Wagner-Peyser Act does not explicitly impose or authorize a merit staffing requirement.”). As noted earlier in this section, the IPA does not provide independent authority to require merit-staffing. Based on the contemporaneous histories of the Wagner-Peyser Act and the SSA, with the latter containing an explicit merit-staffing requirement absent in the former, and Loper Bright' s directive that there can only be one single best reading of a statute, the Department has determined that the single best reading of the Wagner-Peyser Act is that it does not provide statutory authority for the Department to require merit-staffing for the delivery of Wagner-Peyser Act ES services. Accordingly, the Department is removing the State merit-staffing requirement, consistent with the directives in Executive Order (E.O.) 14219, “Ensuring Lawful Governance and Implementing the President's `Department of Government Efficiency' Deregulatory Initiative,” dated February 19, 2025; the Presidential Memorandum titled “Directing the Repeal of Unlawful Regulations,” dated April 9, 2025; and Office of Management and Budget (OMB) Memorandum M-25-28, “Guidance Implementing the President's Memorandum Directing the Repeal of Unlawful Regulations,” dated May 7, 2025. The Department is eliminating the State merit-staffing requirement by removing § 652.215 from the Wagner-Peyser Act regulations. In addition to the merit-staffing requirement in paragraph (a), § 652.215 includes an exception for Colorado, Massachusetts, and Michigan to continue to use staffing flexibilities in paragraph (b), a requirement for these three States to participate in an evaluation concerning their delivery of ES services in paragraph (c), and a date by which all States must comply with the requirements of the section in paragraph (d). Without a State merit-staffing requirement in paragraph (a), the remaining paragraphs are no longer necessary. As such, the Department is removing all paragraphs of § 652.215 from the CFR. As a result of this rulemaking, States are able to use whichever lawful staffing method they choose. Even assuming, notwithstanding the text of the Wagner-Peyser Act and the SSA, that Congress delegated to the Department discretion to require merit-staffing, this rulemaking would be a valid exercise of that discretion. The Department is removing regulatory requirements that are unduly burdensome and that relate to the employment of personnel only at the State level. The Department concludes that a uniform Federal staffing mandate is not necessary to achieve the Act's objectives of providing minimum standards of efficiency. The Department further concludes that States should retain flexibility to determine the staffing structures best suited to their labor markets, workforce systems, and administrative arrangements. This conclusion is informed by the Department's own experience administering the Wagner-Peyser Act. For decades, the Department permitted Colorado, Massachusetts, and Michigan to operate under alternative staffing arrangements. During that time, the Department continued to oversee these States' compliance with the Wagner-Peyser Act and its implementing regulations while allowing them flexibility to deliver Employment Service activities through staffing models other than exclusive State merit staffing. The Department's experience with these States demonstrates that alternative staffing can achieve effective administration of Employment Service programs and minimum standards of efficiency. Regardless of staffing model, States remain responsible for compliance with all applicable statutory and regulatory requirements. States must continue to provide all required Employment Service activities and remain accountable for performance outcomes. The Department retains oversight authority to ensure compliance with applicable performance standards regardless of the staffing model selected by a State. The Department has considered comments asserting that State merit staffing promotes professionalism, neutrality, accountability, continuity of operations, and service quality. However, the Department concludes that those objectives can be achieved through alternative staffing models and do not require a uniform Federal mandate. The Department's longstanding experience with alternative staffing arrangements in Colorado, Massachusetts, and Michigan demonstrates that States can satisfy Federal program requirements while using different personnel structures. Accordingly, even if the Department possessed discretion to maintain the merit-staffing requirement, it would determine that removal of the requirement is the preferable policy choice because it affords States greater flexibility while preserving accountability for program performance and compliance with Federal law. While the Department provides oversight of the program, under the Act and regulations, States are responsible for administering ES funds and for providing all required program services through ES-funded staff. 29 U.S.C. 49f; 20 CFR 652.3, 652.203. Any regulatory burden imposed on States, including on States' administration of their own personnel, must be no more than is necessary to achieve program objectives. See, e.g., E.O. 12866, “Regulatory Planning and Review” (prioritizing minimization of regulatory burden on entities such as States and avoidance of undue interference with State governments in the exercise of their governmental functions); E.O. 13132, “Federalism” (“With respect to Federal statutes and regulations administered by the States, the national government shall grant the States the maximum administrative discretion possible. Intrusive Federal oversight of State administration is neither necessary nor desirable.”). The flexibility provided in this rule, which advances the goal of affording States maximum discretion, will allow States to deliver ES services efficiently with limited resources, using State merit staff, other State staff, subawards to local governments or private entities, a combination of these arrangements, or other staffing arrangements allowable under the Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance) at 2 CFR part 200. This flexibility promotes not only State innovation, but also greater alignment and integration with the services delivered through WIOA title I programs. The Department notes that staffing arrangements other than State-employee staffing would properly be considered subawards and the entities providing services under these arrangements would properly be considered subrecipients. These subawards and subrecipients would be subject to the requirements in the at 2 CFR part 200. Regardless of the staffing method employed, States still must provide services required under the Wagner-Peyser Act. These services include job search and placement assistance for job seekers, recruitment services and special technical services for employers, reemployment services for UI claimants, labor exchange services for workers who have received notice of permanent or impending layoff, referrals and financial aid application assistance for training and educational resources and programs, and the development and provision of labor market and occupational information. These services help the labor market to function more efficiently by matching employers with available workers. The Department further notes that this rulemaking is narrowly tailored to address only the State merit-staffing requirement in § 652.215 and does not impact other changes made by the Department in parts 651, 652, 653, and 658 in the 2023 Final Rule. The recruitment and staffing requirements described at §§ 653.107, 653.108, and 653.111, which relate to migrant and seasonal farmworker (MSFW) outreach staff, State Monitor Advocates (SMA), and significant MSFW one-stop centers, are not changed by this final rule. For instance, the SMA must continue to be a State Workforce Agency (SWA) official and a senior-level ES staff employee, who reports directly to the State Administrator or their designee, as permitted by § 653.108(c)(2), and must be protected against retaliation for performing their work, as described at § 653.108(a). IV. Notice of Proposed Rulemaking On July 1, 2025, the Department published an NPRM in the Federal Register proposing the removal of the State merit-staffing requirement. The NPRM proposed removing the entirety of § 652.215, including the compliance date. The Department invited the public to comment on the proposal and provided a 60-day comment period that ended on September 2, 2025. Comments received before 11:59:59 p.m. E.D.T. on September 2, 2025, were considered to be submitted on time, as were emails with time stamps prior to the close of the comment period and letters with a postmark or courier acceptance date on or before September 2, 2025. During the public comment period, 456 comments were received. The Department read every comment received before the end of the comment period, and considered every substantive comment. Comments came from a wide range of stakeholders, from State government employees and unions to workforce development boards and elected officials. The Department identified eight separate form letter campaigns, and the majority of submissions, 303, appeared to result from these letter writing campaigns. The Department identified 62 comments that were unique and substantive. These comments responded to specific subjects within the proposed changes to the regulations; the Department discusses the comments by topic in the sections that follow. V. Discussion of Public Comments A. Comments Regarding the Department's Statutory Authority To Require State Merit-Staffing for ES Service Delivery Commenters disagreed about the Department's statutory authority to require State merit-staffing for ES service delivery. A State government agency, a professional association, and an anonymous commenter expressed support for the Department's conclusion that it lacks the legal authority to require merit-staffing for ES services. In particular, these commenters agreed with the Department's interpretation that the authorization to set “minimum standards of efficiency” under sec. 3(a) of the Wagner-Peyser Act does not provide a statutory basis for requiring the use of State merit staff to deliver ES services. A State government agency and a professional association asserted that the correct interpretation of the Wagner-Peyser Act is to allow States to design staffing models to achieve the best outcomes, with the professional association further stating that this flexibility would allow the best use of Wagner-Peyser funding. An anonymous commenter reasoned that the proposed rule was consistent with administrative law in light of Loper Bright and would reduce litigation risk. Conversely, other commenters, including several unions and a Federal elected official, generally stated that the legislative history and statutory framework of the Wagner-Peyser Act, along with what they described as the inherently governmental nature of ES functions, reflect Congress' clear intent to preserve a professional, merit-based public workforce as a foundation of the ES system. A union argued against removing the merit-staffing requirement, including in the three States that the Department previously granted “alternative staffing demonstration waivers” (Colorado, Massachusetts, and Michigan), stating that the proposed rule would dismantle a longstanding, legally grounded requirement and instead permit private entities to receive Wagner-Peyser Act funds. A union stated that the Department's decision to remove the merit-staffing requirement was arbitrary and capricious. A union remarked that multiple presidential administrations—both Democratic and Republican—have recognized the statutory requirement for merit-based staffing under the Wagner-Peyser Act. A few individual commenters and form letter campaigns elaborated that Congress has historically intervened to block privatization attempts, recognizing the essential role of public accountability in employment services. One such individual commenter, a form letter campaign, and comments from unions cited a 2006 example in which the Bush administration proposed privatizing employment services and Congress blocked the effort through the appropriations process, prohibiting DOL from finalizing the proposed rules, which were later withdrawn by the Obama administration. One of the unions remarked that such congressional efforts affirm the notion of “a statutory requirement for the establishment and maintenance of personnel standards on a merit basis” in Wagner-Peyser Act-funded programs. Similarly, a union and a think tank asserted that DOL's proposed rule represents a “fundamental departure” from the Wagner-Peyser Act's statutory framework and legislative history, both of which, they argued, affirm Congress' intent to ensure that ES programs are carried out by a professional, merit-based public workforce. A union remarked that the 1939 amendments to the SSA further cemented a State merit system by requiring unemployment compensation payment be delivered through public employment offices and by establishing Federal merit-staffing standards for UI programs. The Department agrees that Congress designed the Wagner-Peyser Act to establish a national system of public employment offices. However, the Department disagrees that all of the ES functions are inherently governmental and that any of the legislative history laid out by the commenters trumps the plain language of the statute to support the contention that the Department has authority to require State merit-staffing for the delivery of ES services. The Department acknowledges that this position is a departure from the Department's longstanding practice from roughly 1934 to 2020. As explained earlier in this preamble, the Wagner-Peyser Act does not explicitly require that ES services be delivered exclusively by merit-based State employees. Several commenters raised the connection to the SSA, which Congress enacted almost contemporaneously with the Wagner-Peyser Act. Notably, the SSA, in sec. 303(a)(1), contains an explicit merit-staffing requirement. The Wagner-Peyser Act does not. Accordingly, the Department has concluded that, because the Wagner-Peyser Act contains neither an explicit merit-staffing requirement nor an express delegation to the Secretary to decide whether to require one, the Department lacks authority to impose such. The Department determines, consistent with E.O. 14219, that this approach is the single best reading of the statutory framework and judicial interpretations of the Wagner-Peyser Act. It also aligns with the broader goals of WIOA, which emphasize integrated service delivery and State-level innovation. Multiple commenters, including a farmworker advocacy organization, unions, a think tank, and form letter campaigns, expressed opposition to the Department's conclusion that it lacks the legal authority to require merit-staffing for ES services. A few commenters, including a union, an advocacy organization, and a think tank, stated that the Department's authority under sec. 3(a) of the Wagner-Peyser Act to prescribe minimum standards of efficiency, together with the Wagner-Peyser Act's establishment of a national system of public employment services offices, has long been understood to permit the Department to require State merit-staffing. According to these commenters, the NPRM's shift away from that interpretation lacks a legal rationale and would conflict with a settled statutory and regulatory framework. Multiple commenters provided examples of Federal actions on merit-staffing to support their opposition to the Departmental conclusion that it lacks authority for the merit requirement. Several commenters, including a union, a think tank, and an advocacy organization, asserted that Congress has reaffirmed ES merit-staffing through related statutes and decades of implementation, with the union and the think tank describing repeated Congressional actions dating back to the 1930s, and an individual commenter stating that the Department “omits 80 years of ES legislative, appropriation, and administrative history in its explanation.” Two unions, a think tank, an advocacy organization, and an individual commenter argued that the Department previously withheld certification from States that lacked merit personnel systems and used that leverage to ensure public merit-based ES staffing. Two unions wrote that in 2000 the Department turned down requests for waivers of the merit-staffing requirement when it issued the WIA implementing regulations. A union and an advocacy organization described appropriations provisions from the mid-2000s that blocked prior efforts to relax or rescind merit-staffing as further Congressional reinforcement of merit system requirements. A union and an individual commenter reasoned that WIOA amended rather than replaced the Wagner-Peyser Act and did not authorize non-merit-staffing with Wagner-Peyser funds, reasoning that Department's longstanding position treats merit-staffing as legally required rather than discretionary. Several unions and individual commenters pointed to language in sec. 3(a) that requires the Secretary to promote uniformity in administrative procedure in the ES program as authority for a State merit-staffing requirement. Disagreeing with the Department's reasoning in the proposed rule that sec. 5(b) of the Wagner-Peyser Act does not create a State merit-staffing requirement but instead only requires certifying coordination between ES and UI programs, an individual commenter reasoned that the Department has instead relied on sec. 5(b) of the Wagner-Peyser Act to preserve merit-staffing protections and ensure impartial delivery of ES and UI services in accordance with statutory intent. A union wrote that the alignment of ES and UI demonstrates that ES functions are inherently governmental and therefore must be delivered by public, merit-based State employees, asserting that this long-standing integration supports the Department's authority to require merit-staffing. A think tank asserted that in light of the text in sec. 3(a) of the Wagner-Peyser Act on standards of efficiency and administrative uniformity, as well as Congress' identification of the Act in the IPA in transferring merit-staffing functions, the statutory and historical record of Congressional support for merit-staffing is not ambiguous and thus is not subject to Loper Bright, concluding that the Department's position that Loper Bright compels revisiting the regulation of merit-staffing in the ES program is inaccurate. The Department appreciates the detailed perspectives offered by these commenters. However, after careful review of the statutory text, legislative history, and relevant case law, the Department reaffirms its conclusion that it lacks the legal authority to require States to use merit-staffed personnel to deliver ES services under the Wagner-Peyser Act. As noted earlier in this preamble, sec. 3(a) of the Wagner-Peyser Act authorizes the Secretary to establish “minimum standards of efficiency” for State ES operations. The best reading of this delegation is that it authorizes the Department to prescribe performance and operational benchmarks governing the delivery of Employment Service activities. While staffing decisions may affect the efficiency with which services are delivered, a staffing model is not itself a “standard of efficiency.” A requirement that services be delivered exclusively by State merit staff does not establish a performance or operational benchmark governing the operation of the Employment Service; rather, it dictates the employment status of the individuals providing those services. The Department interprets sec. 3(a) as enabling it to ensure that services are delivered effectively and efficiently to job seekers and employers ( e.g., ensuring coordination and nonduplication), but not to dictate the employment status or classification of the individuals providing those services. Likewise, authority to promote uniformity in administrative procedure under sec. 3(a) does not constitute authority to require State merit-staffing. The Department encourages States to establish policies on service delivery to improve quality and consistency regardless of staffing model. The Department notes that, regardless of how States staff their ES program, they still must provide all of the services the Wagner-Peyser Act requires, and other Wagner-Peyser Act rules found in 20 CFR parts 651, 652, 653, and 658 still ensure uniformity of service. For example, § 652.3 establishes minimum requirements for public labor exchange systems, § 652.207 requires States to provide universal access to the ES, and § 653.101 establishes minimum requirements for the provision of services to MSFWs. Additionally, the ES program is a mandatory one-stop partner program, and the one-stop center certification requirements in the WIOA regulations at 20 CFR 678.800 support consistency across service locations. In addition, States, as Wagner-Peyser Act grantees, still must oversee all operations of the Wagner-Peyser Act, regardless of whether or not they ultimately decide to take advantage of the staffing flexibility provided by this final rule. Consistent with 20 CFR 683.400, the Department will continue to conduct monitoring to ensure States are complying with all of the requirements of the Wagner-Peyser Act, its implementing regulations, and 2 CFR parts 200 and 2900. The Department acknowledges that it previously interpreted secs. 3(a) and 5(b) to support authority for a merit-staffing requirement. Accordingly, the Department may have previously sought to withhold certification from States to ensure compliance with the merit-staffing requirement. Seeking to withhold certification in those instances does not indicate that the statute in fact required such staffing. Rather, it demonstrated the Department's legal analysis at the time that the statute permitted merit-staffing. And therefore the Department sought to set conditions for participation in the ES program through regulation and administrative practice. However, the Department now concludes that the statutory text does not support such a wide grant of Departmental discretion. A more limited interpretation of the Department's regulatory authority is particularly warranted in light of the Loper Bright decision, which instructed courts to “independently identify and respect [constitutional] delegations of authority, police the outer statutory boundaries of those delegations, and ensure that agencies exercise their discretion consistent with the APA.” 603 U.S. at 404. Doing so requires using “all relevant interpretive tools” to determine the “best” reading of a statute; a merely “permissible” reading is not enough. Id. at 400. The absence of an express requirement for merit-staffing in the Wagner-Peyser Act supports the Department's revised view that the Department does not have authority to require States to use State merit staff to deliver ES services. With this final rule, States will have the flexibility to determine the best staffing model for ES service delivery for their State. Regarding WIOA, the Department agrees that WIOA amended but did not repeal the Wagner-Peyser Act. However, WIOA also did not codify a merit-staffing requirement. Instead, it emphasized State flexibility. This organizing principle is more evident in the integration of services through American Job Centers (AJCs). The Department finds no indication in WIOA's text or legislative history that Congress intended to codify a mandatory merit-staffing requirement. Finally, the Department disagrees with the assertion that the statutory and historical record is so unambiguous as to preclude reinterpretation under Loper Bright. Accordingly, while the Department acknowledges the historical context and prior enforcement practices cited by commenters, this final rule reflects a legally sound and statutorily faithful interpretation of the Wagner-Peyser Act. 1. Comments Regarding the Intergovernmental Personnel Act of 1970 and the Civil Service Reform Act of 1978 Several commenters, including an anonymous commenter, a think tank, an advocacy organization, two unions, a farmworker advocacy organization, and an individual commenter, cited the IPA and its implementing regulations to support their position that the Department has statutory authority to require State merit-staffing, asserting that Congress' passage of and amendment to the IPA to maintain merit-staffing in the ES represents Congressional ratification of a statutory requirement for merit-staffing in the Wagner-Peyser Act. The Department disagrees with the commenters' description of the IPA and its impact on merit-staffing in the ES. Certain Federal grant programs require, as a condition of eligibility, that State and local agencies that receive grants establish merit personnel systems for personnel engaged in administration of the grant-aided program. These merit personnel systems are in some cases required by specific Federal grant statutes and in other cases are required by regulations of the Federal grantor agencies. Title II of the IPA, as amended, transfers to OPM all “functions, powers, and duties” relating to the prescription of standards for these federally required merit personnel systems, including the functions, powers, and duties of the Secretary of Labor under “the Act of June 6, 1933” ( i.e., the Wagner-Peyser Act). 42 U.S.C. 4728(a). Importantly, however, the IPA and its implementing regulations at 5 CFR part 900, subpart F, do not independently impose a merit-staffing requirement on all federally funded programs. Rather, the IPA and the OPM regulations provide standards for merit systems only when such systems are otherwise required by law or regulation. As noted already, the Wagner-Peyser Act does not contain a merit-staffing requirement. Nor did Congress, by referencing the Wagner-Peyser Act in the IPA, ratify any prior departmental interpretation that the Act authorized a merit-staffing requirement. To effect ratification of prior agency action, Congress must recognize that the action was unauthorized when taken and must expressly ratify it in clear and unequivocal statutory language. EEOC v. CBS, Inc., 743 F.2d 969, 974 (2d Cir. 1984). Legislative acquiescence, awareness, or accommodation is insufficient. Even statutory provisions that explicitly acknowledge and extend existing agency practices do not ratify the agency's underlying claim of authority unless they “expressly approved the agency's interpretation.” Tiger Lily, LLC v. HUD, 992 F.3d 518, 524 (6th Cir. 2021) (holding that congressional recognition and temporary extension of an eviction moratorium did not ratify the agency's unlawful imposition of the moratorium); accord Alabama Ass'n of Realtors v. HHS, 539 F. Supp. 3d 29, 42 (D.D.C. 2021), aff'd, 594 U.S. 758 (“To [ratify], however, Congress must make its intention explicit.”). The IPA neither amended section 3(a) or 5(b) of the Wagner-Peyser Act nor expressly approved any departmental interpretation of those provisions. At most, it transferred administrative functions that the Department was exercising at the time. In 1963, the U.S. Department of Health, Education, and Welfare; DOL; and the U.S. Department of Defense jointly issued the predecessor to the current 5 CFR part 900 regulations, prior to the passage of the IPA and its resulting transfer of functions. That predecessor regulation was codified at 45 CFR part 70. In prescribing merit standards under the Wagner-Peyser Act at that time, the regulations at part 70 cited as authority a provision in the Department's yearly congressional appropriation requiring merit-staffing (former 29 U.S.C. 49n). This provision was not repeated in the Department of Labor Appropriations Act, 1965 (Pub. L. 88-605, 78 Stat. 959, 960 (1964)), or in any such act thereafter. Thus, the current OPM regulations, as they relate to the Wagner-Peyser Act, originated not only from a former departmental interpretation of the Wagner-Peyser Act, but also in a long-expired appropriations rider. Notwithstanding DOL's imposition of a merit-staffing requirement at the time of the IPA's enactment, there was no longer any corresponding statutory requirement in the Wagner-Peyser Act. While Appendix A to OPM's regulations does include the Wagner-Peyser Act as a program that requires merit-staffing by virtue of sec. 5(b), sec. 5(b) contains no such statutory requirement. As explained, the enumeration of the Wagner-Peyser Act among the list of programs requiring merit-staffing largely reflects Department practice at the time OPM took over administration of the merit system functions. Accordingly, the IPA does not support any proposition that the Department has authority to require merit-staffing under the Wagner-Peyser Act. A union and a think tank reasoned that the enactment of the Civil Service Reform Act of 1978 (CSRA) reinforced the existence of authority for the merit-staffing requirement. A union stated that the CSRA implementing regulations have consistently affirmed the conclusion that the merit system requirement is “a statutory requirement for the establishment and maintenance of personnel standards on a merit basis” in Wagner-Peyser Act-funded programs. Another union stated that the CSRA modernized Pennsylvania's merit-based hiring system to ensure that all applicants meet uniform qualifications, which has strengthened recruitment and improved performance outcomes within the ES. Lastly, another union said that for over 80 years—until 2020—Federal regulations consistently required a merit-based system for employment in programs funded by the Wagner-Peyser Act. The commenter provided an example that DOL, and later OPM, reflected Congress' intent to uphold merit standards through various legislative updates, including the CSRA and the WIA. The Department disagrees with the conclusion that the CSRA affirmed the existence of a statutory requirement for merit-staffing in Wagner-Peyser Act-funded programs. The CSRA amended the IPA and modernized the Federal civil service system. It did not, however, impose merit-staffing requirements on State-administered programs. The CSRA maintained the merit protections for programs outlined in the IPA. As noted, inclusion of the Wagner-Peyser Act in the list of programs with a merit-staffing requirement in the IPA originated from the Department's former regulatory posture and a long-expired appropriations rider. Additionally, while the CSRA may have influenced the development of State merit systems, such as in Pennsylvania, it does not extend Federal merit system requirements to State employees unless required by another statute. The Department acknowledges that from the 1930s until 2020, Department regulations required merit-staffing for ES programs. However, this long-standing regulatory practice does not transform a regulatory requirement into a statutory one. In the WIA interim final rule preamble, the Department stated that the “regulations reflect[ed] the Department's interpretation of the Wagner-Peyser Act, affirmed in [ Michigan v. Herman ], to require that job finding, placement and reemployment services funded under the Act . . . be delivered by public merit-staff employees.” 64 FR 18662, 18691 (Apr. 15, 1999). The Department described its interpretation as that affirmed in Herman, in which the court held that the Department could require merit-staffing, but not that it must. And the court's opinion in that case describes the Department's own interpretation of the statute as one giving “discretion to the Secretary” to require merit-staffing. Herman, 81 F. Supp. 2d at 846. In the WIA final rule, the Department did not address whether the Wagner-Peyser Act obligated the Department to impose a merit-staffing requirement for Wagner-Peyser Act-funded services. 65 FR 49294, 49385 (Aug. 11, 2000). Instead, the Department simply noted that the final WIA regulation imposed a merit-staffing requirement reflecting the Department's authority under the Wagner-Peyser Act, as affirmed in Herman, to require Wagner-Peyser Act-funded services be provided by merit staff. Thus, in the WIA final rule, the Department did not opine on whether sec. 3(a) mandated the imposition of a merit-staffing requirement for Wagner-Peyser Act funded services. Finally, in the WIOA NPRM, the Department explained that the Department has maintained the policy of requiring merit-staffing since the earliest years of the ES and that Herman upheld this policy. 80 FR 20805 (Apr. 16, 2015). The Department explained that it would continue this policy from WIA to WIOA. Notably, the WIOA NPRM did not suggest that there was a statutory requirement in the Wagner-Peyser Act for merit staff. The preambles in the WIA and WIOA rulemakings demonstrate that since the decision in Herman, the Department has not interpreted the Wagner-Peyser Act to include an explicit statutory requirement that Wagner-Peyser Act services be delivered by State merit staff. Instead, the Department has previously interpreted this provision to give it the discretion to impose a merit-staffing requirement. The Department now determines that the best reading of the statute is that it does not authorize the Department to require merit-staffing. 2. Comments Regarding Michigan v. Herman Some commenters, including unions and a form letter campaign, cited Michigan v. Herman to support the argument that the Department has authority to require State merit-staffing. A form lett