This section of the FEDERAL REGISTER

contains notices to the public of the proposed

issuance of rules and regulations. The

purpose of these notices is to give interested

persons an opportunity to participate in the

rule making prior to the adoption of the final

rules.

Proposed Rules Federal Register

33785

Vol. 65, No. 102

Thursday, May 25, 2000

OFFICE OF PERSONNEL

MANAGEMENT

5 CFR Part 536

RIN 3206–AI88

Grade and Pay Retention

AGENCY: Office of Personnel

Management.

ACTION: Proposed rule.

SUMMARY: The Office of Personnel

Management is issuing proposed

regulations giving agencies

discretionary authority to grant pay

retention to certain employees moving

to positions under pay systems other

than the General Schedule or the

Federal Wage System. This new

flexibility would allow agencies to

prevent eligible employees from

suffering a reduction in pay that would

otherwise result from a management

action. The proposed regulations also

provide that grade retention will no

longer apply to employees moving into

the General Schedule or the Federal

Wage System from noncovered pay

systems.

DATES: Comments must be received on

or before July 24, 2000.

ADDRESSES: Comments may be sent or

delivered to Donald J. Winstead,

Assistant Director for Compensation

Administration, Workforce

Compensation and Performance Service,

Office of Personnel Management, Room

7H31, 1900 E Street NW., Washington,

DC 20415–8200 (FAX: (202) 606–0824

or EMAIL: payleave@opm.gov)

FOR FURTHER INFORMATION CONTACT:

Sharon Herzberg (202) 606–2858 or

FAX: (202) 606–0824 or EMAIL:

payleave@opm.gov.

SUPPLEMENTARY INFORMATION: Under 5

U.S.C. 5361–5365, agencies may grant

grade or pay retention to employees

covered by the General Schedule (GS)

pay system or the Federal Wage System

(FWS) when a reduction in grade or pay

is caused or influenced by a

management action and certain other

conditions are met. While the law

expressly provides that these provisions

apply to movements within or between

those two covered pay schedules, the

Office of Personnel Management (OPM)

has provided by regulation that these

provisions may also be applied to

certain employees who move from a

noncovered pay schedule to a covered

pay schedule. (See definition of

employee in 5 CFR 536.102.) This

regulatory extension of the grade and

pay retention provisions is authorized

by 5 U.S.C. 5365(b)(1), which allows

OPM to extend the application of ‘‘all or

portions’’ of the grade and pay retention

provisions to employees under

noncovered pay schedules who move to

a covered pay schedule.

The Department of Justice has

requested that we extend pay retention

to members of the Senior Executive

Service (SES) who move to immigration

judge (IJ) positions. While there is no

provision in statute or regulation that

permits management to direct the

movement of a member of the SES to an

IJ position, there are circumstances that

have resulted in the movement of an

SES member to a non-SES position that

has a lower rate of pay. Examples

include an SES member who voluntarily

accepts a non-SES position following

receipt of a notice of position

abolishment or a notice of directed

geographic reassignment (if there is no

mobility agreement), or other

management action that causes or

influences the employee to move to a

lower-paid position.

Prior to the Illegal Immigration

Reform and Immigrant Responsibility

Act of 1996, Public Law 104–208,

immigration judges were covered by the

GS pay system. Before the statute was

enacted, the Department of Justice was

able to offer pay retention to an SES

member who moved to an IJ position as

a result of a management action, as

described above. However, section 371

of the Act removed IJs from the GS pay

system and established a unique IJ pay

system with a top rate set at 92 percent

of the rate of basic pay for SES level ES–

5. As a result of the Act, immigration

judges are no longer under a ‘‘covered

pay system’’ and therefore are no longer

eligible for pay retention. Because the

statutory maximum IJ pay rate is less

than the rates of pay for ES–5 and ES–

6, an SES member who moves to an IJ

position without pay retention could

suffer a significant loss in pay. The

inability to grant pay retention to

employees who move between

noncovered pay systems has deprived

the Department of Justice of a needed

degree of flexibility.

At the request of the Department of

Justice, we reviewed this issue and

determined that we have authority

under the law to extend grade and pay

retention to employees who move to or

within noncovered pay schedules.

Under 5 U.S.C. 5365(b)(2), OPM is

authorized to apply ‘‘all or portions’’ of

the grade and pay retention provisions

to ‘‘individuals to whom such

provisions do not otherwise apply.’’ We

further concluded that it would be

appropriate as a matter of policy to

amend our regulations to provide

agencies with discretionary authority to

grant pay retention to employees

moving to or within noncovered pay

schedules. Since these other pay

schedules are generally not

administered by OPM, we concluded

that any use of the pay retention

authority in these circumstances should

be discretionary. We note that, under

some circumstances, grade and pay

retention benefits are already subject to

an agency’s discretion. (See 5 CFR

536.103(b) and 536.104(b).)

We concluded that this extension

should not apply to grade retention,

since that benefit was designed

specifically for retention of grades under

the GS and FWS pay systems. As

explained above, the law allows OPM to

selectively apply portions of the grade

and pay retention provisions. Under

current regulations, grade retention does

not apply to members of the Senior

Executive Service (SES) or employees in

senior-level positions under 5 U.S.C.

5376 (SL/ST) even if they move to a

covered pay schedule. (See 5 CFR

536.105(c).) However, the current

regulations are silent regarding grade

retention for administrative law judges

(ALJs). Thus, it is possible for an ALJ

who moves to a GS–14 position because

of a management action to have GS–15

established as a retained grade. For

consistency, we are proposing to amend

the regulations to provide that grade

retention does not apply to any

employee who moves from, between, or

within non-GS/FWS schedules—

including the pay schedules for SES

members, SL/ST positions, ALJs, and

IJs.

33786 Federal Register / Vol. 65, No. 102 / Thursday, May 25, 2000 / Proposed Rules

We are proposing that the normal

rules for adjusting a retained rate not be

applied to employees covered by a

regulatory extension of pay retention

under 5 U.S.C. 5365(b) who are not in

a GS or FWS position while receiving

pay retention, or who are in a GS or

FWS position but receiving a retained

rate in excess of the maximum rate of

the applicable basic pay schedule (GS or

FWS). Under the normal rules, a GS or

FWS employee’s retained rate is

adjusted by 50 percent of the dollar

increase in the maximum rate for the

employee’s grade. However, other pay

systems may not have the same type of

grade-based pay structure or are subject

to different annual pay adjustments.

For example, many senior-level pay

schedules are linked to the Executive

Schedule, which sometimes has not

been adjusted on an annual basis. This

can result in anomalous situations. If an

SES member at the ES–2 level (currently

$107,100) moves to a GS–15 position

and receives a retained rate, that

retained rate subsequently could be

increased to a rate above the ES–2 rate

in effect at some future date. (Note:

Retained rates for GS employees are

capped at the rate for level V of the

Executive Schedule, which limits this

problem; however, agencies are required

to adjust and maintain the ‘‘retained rate

of record’’ without regard to the level V

cap.) We are proposing to exercise our

authority under 5 U.S.C. 5365(b) not to

apply the retained rate adjustment

portion of the statutory pay retention

provisions for the categories of

employees described above. Thus, these

employees’ retained rates would be

frozen with no provision for any pay

adjustment.

These proposed regulations would not

impair any agency’s independent

authority to fix pay for employees under

a pay schedule administered by that

agency. The proposed extension of the

pay retention provisions would be

relevant only if the agency lacks any

other authority to establish a saved rate

for its employees. For example, the

Department of Justice does not have

authority to create a saved rate under

the IJ pay system based on the former

rate received by an SES member. The

proposed regulations would allow the

Department of Justice, at its discretion,

to extend pay retention to an SES

member moving to an IJ position. To be

entitled to pay retention, an employee

must also meet all other qualifying

conditions (e.g., the pay reduction is

caused or influenced by a management

action, not at the employee’s request or

because of personal cause; there is no

break in service; and there is no

declination of a reasonable offer).

To effect the policy change proposed

here, we propose to add a new

paragraph (d) to § 536.104 to give

agencies discretionary authority to

provide pay retention to any otherwise

eligible Federal ‘‘employee,’’ as defined

in 5 U.S.C. 2105. The definition of

employee in § 536.102 would be

broadened to include an ‘‘employee,’’ as

defined in 5 U.S.C. 2105, to whom pay

retention is granted under this

discretionary authority. However, we

are also proposing to add a sentence to

§ 530.102 that expressly excludes

officials in or moving from an Executive

Schedule position, since we believe pay

retention is not appropriate for such

officials. In addition, § 536.105(c),

which excludes certain employees from

grade retention, would be revised to

exclude any employee who moves from

a position not under a statutorily

covered pay schedule to a position

under a statutorily covered pay

schedule. Also, we propose to remove

paragraph (3) under the definition of

representative rate and paragraph (b) of

§ 536.203, since grade retention would

no longer apply to employees moving

from noncovered pay schedules.

We also propose to revise § 536.205(c)

to provide that an employee who moves

from a noncovered pay schedule to a

statutorily covered pay schedule and

who receives a retained rate in excess of

the maximum rate of the statutorily

covered pay schedule is not entitled to

any increase in basic pay when there is

an increase in the scheduled rates. In

addition, to clarify and simplify the

regulations, we propose to delete the

language in the existing § 536.205(g),

which we believe is unnecessary in

view of other provisions found

elsewhere in parts 531, 532 and 536.

Instead, we propose to revise

§ 536.205(g) to address how the rules for

administering a retained rate apply to

employees under an administratively

covered pay schedule who were granted

pay retention under § 536.104(d).

Specifically, the proposed change

provides that the retained rate of such

an employee will be frozen and that the

regular or normal rate to which the

employee otherwise would be entitled

(but for pay retention) must be treated

as a single-rate range in applying

paragraphs (b) and (d) of that section,

including the provisions governing the

150 percent cap established by 5 U.S.C.

5363(b)(2).

As noted above, eligibility for grade

and pay retention is subject to certain

exclusions, as provided in 5 CFR

536.105. Paragraph (a)(1) of that section

bars grade or pay retention for

employees who move from a position

that is not in an ‘‘agency’’ as defined in

5 U.S.C. 5102. This definition of

‘‘agency,’’ which is located in paragraph

(a) of section 5102, is used to exclude

employees in certain agencies from

coverage under the GS classification and

pay system. Other employees are

excluded from the GS system if they fall

under one of the categories of

employees listed in paragraph (c) of

section 5102 or if they are excluded by

some other provision of law.

The exclusion in § 536.105(a)(1) is not

statutory, but reflects a limitation OPM

imposed simultaneous with the

regulatory extension of grade and pay

retention eligibility to employees

moving to a covered pay schedule from

a noncovered pay schedule. Recently

OPM approved a variation to

§ 536.105(a)(1) at the request of the

Department of Defense (DOD). (See

Notice of OPM Variation, Notice No.

99–47, November 3, 1999.) While DOD

is a covered agency under 5 U.S.C. 5102,

several DOD subcomponents are

expressly excluded from the definition

of ‘‘agency’’ in 5 U.S.C. 5102(a)—

namely, the National Security Agency,

the Defense Intelligence Agency, and

the National Imagery and Mapping

Agency. Therefore, employees in these

subcomponents are barred by

§ 536.105(a)(1) from receiving grade and

pay retention upon movement to a

covered pay schedule. DOD requested

that OPM approve a variation to 5 CFR

536.105(a)(1) to allow otherwise eligible

employees who move to GS or FWS

positions from positions in these DOD

subcomponents to receive grade or pay

retention, even though these DOD

subcomponents are excluded from the

definition of an ‘‘agency’’ in 5 U.S.C.

5102(a). OPM agreed that a variation

was warranted to ensure equal treatment

of DOD employees.

Upon further consideration, we

believe that the provision in

§ 536.105(a)(1) barring grade or pay

retention for employees who move from

a position that is not is an agency as

defined in 5 U.S.C. 5102 should be

removed altogether. The current rule

results in inequitable treatment of

employees by providing different

benefits based on the specific method

used to exclude an employee from

coverage under the GS system. For pay

retention purposes, we believe it should

not matter whether an employee is

excluded from the GS system under

paragraph (a) or (c) of 5 U.S.C. 5102 or

under some other provision of law.

Therefore, we propose to remove the

existing paragraph (a)(1) from § 536.105.

This will extend pay retention eligibility

to certain categories of non-GS

employees. (Grade retention is not at

issue, since we are already proposing to

Federal Register / Vol. 65, No. 102 / Thursday, May 25, 2000 / Proposed Rules 33787

bar grade retention for all employees in

or moving from non-GS/FWS pay

systems.)

E.O. 12866, Regulatory Review

This rule has been reviewed by the

Office of Management and Budget in

accordance with Executive Order 12866.

Regulatory Flexibility Act

I certify that these regulations would

not have a significant economic impact

on a substantial number of small entities

because they would only apply to

Federal agencies and employees.

List of Subjects in 5 CFR Part 536

Administrative practice and

procedure, Freedom of information,

Government employees, Reporting and

recordkeeping requirements, Wages.

U.S. Office of Personnel Management.

Janice R. Lachance,

Director.

Accordingly, OPM is proposing to

amend part 536 of title 5 of the Code of

Federal Regulations as follows:

PART 536—GRADE AND PAY

RETENTION

1. The authority citation for part 536

continues to read as follows:

Authority: 5 U.S.C. 5361–5366; sec. 7202(f)

of the Omnibus Budget Reconciliation Act of

1990 (Pub. L. 101–508), 104 Stat. 1338–336;

sec. 4 of the Performance Management and

Recognition System Termination Act of 1993

(Pub. L. 103–89), 107 Stat. 981; § 536.307 also

issued under 5 U.S.C. 552, Freedom of

Information Act, Pub. L. 92–502.

Subpart A—Definitions; Coverage and

Applicability

2. In § 536.102, the definition of

Representative rate is amended by

adding ‘‘or’’ after the semicolon at the

end of paragraph (1), removing the ‘‘or’’

at the end of paragraph (2), and

replacing the semicolon with a period,

and removing paragraph (3); and the

definition of employee is revised to read

as follows:

§ 536.102 Definitions.

* * * * *

Employee means an employee as

defined in 5 U.S.C. 5361 and also an

individual who moves from a position

which is not under a statutorily covered

pay schedule to a position which is

under a statutorily covered pay

schedule, provided that the individual’s

employment immediately prior to the

move was not on a temporary or term

basis. Employee also means an

employee as defined in 5 U.S.C. 2105

who is granted pay retention under

§ 536.104(d), subject to the limitations

set forth in this part. However,

employee does not include an official in

or moving from an Executive Schedule

position.

* * * * *

3. In § 536.104, a new paragraph (d)

is added to read as follows:

§ 536.104 Coverage and applicability of

pay retention.

* * * * *

(d) The head of an agency may apply

the pay retention provisions of this part

to an individual not under a statutorily

covered pay schedule (as defined in 5

U.S.C. 5361) whose rate of basic pay

would otherwise be reduced as the

result of a management action, provided

that individual is an employee as

defined in 5 U.S.C. 2105 (excluding an

official in or moving from an Executive

Schedule position). Coverage is subject

to all other qualifying conditions and

limitations established in this part.

4. In § 536.105, paragraph (a)(1) is

removed, paragraphs (a)(2) through

(a)(5) are redesignated as (a)(1) through

(a)(4), respectively, and paragraph (c) is

revised to read as follows:

§ 536.105 Exclusions.

* * * * *

(c) Grade retention under § 536.103

does not apply to an employee who—

(1) Moves to a position not under a

statutorily covered pay schedule; or

(2) Moves from a position not under

a statutorily covered pay schedule to a

position under a statutorily covered pay

schedule.

5. Section 536.203 is revised to read

as follows:

§ 536.203 Determination of retained grade.

An employee who is in a position

under a statutorily covered pay

schedule immediately prior to the

action that gives entitlement to grade

retention shall retain the grade held

immediately prior to the action.

6. In § 536.205, paragraphs (c) and (g)

are revised to read as follows:

§ 536.205 Determination of rate of basic

pay.

* * * * *

(c) When an increase in the scheduled

rates of the grade of the employee’s

position occurs while the employee is

under pay retention, the employee is

entitled to 50 percent of the amount of

the increase in the maximum rate of

basic pay payable for the grade of the

employee’s current position. This

paragraph does not apply to employees

who move from a noncovered pay

schedule to a statutorily covered pay

schedule and who are receiving a

retained rate in excess of the maximum

payable rate of the applicable covered

pay schedule.

* * * * *

(g) Notwithstanding paragraphs (b),

(c), and (d) of this section, for an

employee who is not in a position under

a statutorily covered pay schedule while

receiving a retained rate (as allowed by

§ 536.104(d))—

(1) The retained rate is compared to

the rate of basic pay that otherwise

would apply to the employee but for the

retained rate (instead of comparing it to

the maximum rate of the rate range for

the employee’s position) and is

terminated when the retained rate falls

below the employee’s otherwise

applicable rate;

(2) The retained rate is capped at 150

percent of the rate of basic pay that

otherwise would apply to the employee

but for the retained rate (instead of 150

percent of the maximum rate of the rate

range for the employee’s position); and

(3) The retained rate is frozen and

may not be increased.

[FR Doc. 00–13052 Filed 5–24–00; 8:45 am]

BILLING CODE 6325–01–P

DEPARTMENT OF AGRICULTURE

Rural Utilities Service

7 CFR Part 1735

RIN 0572–AB56

General Policies, Types of Loans, Loan

Requirements—Telecommunications

Program

AGENCY: Rural Utilities Service, USDA.

ACTION: Supplemental proposed rule.

SUMMARY: The Rural Utilities Service

(RUS) is proposing to amend its

regulations to update the criteria for

determining ‘‘reasonably adequate

service’’ levels for local exchange

carriers and providers of specialized

telecommunications service. This

supplemental proposed rule is part of an

ongoing RUS project to modernize

agency policies in order to provide

borrowers with the flexibility to

continue providing reliable, modern

telephone service at reasonable costs in

rural areas, while maintaining the

security and feasibility of the

Government’s loans.

DATES: Written comments on this

supplemental proposed rule must be

received by RUS by or carry a postmark

or equivalent of June 26, 2000.

ADDRESSES: Submit written comments

on this supplemental proposed rule to

Roberta D. Purcell, Assistant

Administrator, Telecommunications