64188 Federal Register / Vol. 62, No. 233 / Thursday, December 4, 1997 / Proposed Rules

List of Subjects in 12 CFR Part 708b

Bank deposit insurance, Credit

unions, Reporting and recordkeeping

requirements.

By the National Credit Union

Administration Board on November 24, 1997.

Becky Baker,

Secretary of the Board.

Accordingly, NCUA proposes to

amend 12 CFR part 708b as follows:

PART 708b—MERGERS OF

FEDERALLY-INSURED CREDIT

UNIONS; VOLUNTARY TERMINATION

OR CONVERSION OF INSURED

STATUS

1. The authority citation for part 708b

continues to read as follows:

Authority: 12 U.S.C. 1766, 1785, 1786,

1789.

2. In § 708b.301, paragraph (a)(1) is

amended by revising the second

paragraph of the Notice of Proposal to

Terminate Federal Insurance and

paragraph (b)(1) is amended by revising

the third paragraph of the Notice of

Proposal to Merge and Terminate

Federal Insurance to read as follows:

§ 708b.301 Termination of insurance.

(a) * * *

(1) Notice of Proposal to Terminate

Federal Insurance

* * * * *

If approved, any deposits made by you

after the date of termination, either new

deposits or additions to existing accounts,

will not be insured by the NCUA or any other

entity. In the event the credit union fails,

these deposits are not insured by the federal

government. No provision has been made for

alternative insurance, therefore, these

deposits will be uninsured.

* * * * *

(b) * * *

(1) Notice of Proposal to Merge and

Terminate Federal Insurance

* * * * *

Any deposits made by you after the

effective date of the merger, either new

deposits or additions to existing accounts,

will not be insured by the NCUA or any other

entity. In the event the credit union fails,

these deposits are not insured by the federal

government. No provision has been made for

alternative insurance, therefore, these

deposits will be uninsured. Accounts in the

merging Credit Union on the date of the

merger, up to a maximum of $100,000 for

each member, will continue to be insured, as

provided in the Federal Credit Union Act, for

one (1) year after the close of business on the

date of the merger, but any withdrawals after

the close of business on that date will reduce

the insurance coverage by the amount of the

withdrawal.

* * * * *

3. In § 708b.302, paragraph (a)(1) is

amended by adding two sentences at the

end of the second paragraph of the

Notice of Proposal to Convert to

Nonfederally-Insured Status, paragraph

(a)(2) is amended by adding a sentence

at the end of the second paragraph of

the ballot, paragraph (b)(1) is amended

by adding two sentences at the end of

the second paragraph of the Notice of

Proposal to Merge and Convert to

Nonfederally-Insured Status and

paragraph (b)(2) is amended by adding

a sentence at the end of the second

paragraph of the ballot to read as

follows:

§ 708b.302 Conversion of insurance.

(a) * * *

(1) Notice of Proposal to Convert to

Nonfederally-Insured Status

* * * * *

* * * The insurance provided by the

National Credit Union Administration, an

independent agency of the United States, is

backed by the full faith and credit of the

United States government. The private

insurance you will receive from

llllllllll is not guaranteed by

the federal or any state government.

(2) * * * The private insurance provided

by llllllllll is not backed by the

full faith and credit of the United States

government as is the federal insurance

provided by the National Credit Union

Administration.

* * * * *

(b) * * *

(1) Notice of Proposal to Merge and

Convert to Nonfederally-Insured Status

* * * * *

* * * The insurance provided by the

National Credit Union Administration, an

independent agency of the United States, is

backed by the full faith and credit of the

United States government. The private

insurance you will receive from

llllllllll is not guaranteed by

the federal or any state government.

(2) * * * The private insurance provided

by llllllllll is not backed by the

full faith and credit of the United States

government as is the federal insurance

provided by the National Credit Union

Administration.

* * * * *

[FR Doc. 97–31502 Filed 12–3–97; 8:45 am]

BILLING CODE 7535–01–P

RAILROAD RETIREMENT BOARD

20 CFR Part 211

RIN 3220–AB23

Creditable Railroad Compensation

AGENCY: Railroad Retirement Board.

ACTION: Proposed rule.

SUMMARY: The Railroad Retirement

Board hereby proposes to amend its

regulations to limit the crediting of pay

for time lost to periods prior to the

judgment or agreement establishing that

payment or in the case of pay for time

lost not attributable to a judgment or

settlement, prior to the date of payment.

DATES: Comments must be received on

or before February 2, 1998.

ADDRESSES: Secretary to the Board,

Railroad Retirement Board, 844 North

Rush Street, Chicago, Illinois 60611.

FOR FURTHER INFORMATION CONTACT:

Thomas W. Sadler, Senior Attorney,

Railroad Retirement Board, 844 N. Rush

Street, Chicago, Illinois 60611,

telephone 312–751–4513, TTD 312–

751–4701.

SUPPLEMENTARY INFORMATION: Payments

made for periods during which an

employee is absent from the active

service of an employer are considered to

be ‘‘pay for time lost’’ and creditable

compensation under the Railroad

Retirement Act. Pay for time lost

includes pay received due to an injury

or due to loss of earnings attributable to

the employee being placed in a position

paying less money. Employers are

required to allocate pay for time lost to

the months in which the time was

actually lost. Pursuant to section 211.3

of the current regulations, the Board

will accept an allocation of pay for time

lost for periods after the judgment or

settlement, and after the payment is

made. The practice has been costly to

the railroad retirement system in that

taxes under the Railroad Retirement Tax

Act are imposed on railroad

compensation at the time of payment up

to the maximum taxable amount for the

year in which the payment is made.

Accordingly, if a personal injury suit is

settled in 1997 and the railroad agrees

to pay the employee $300,000 to be

allocated as pay for time lost over the

period 1997 through 2002 with $50,000

being designated to each year as pay for

time lost, the employee would receive

six years of retirement credit, but taxes

would cover only one year of those

additional credits.

There is no requirement in the statute

that pay for time lost be creditable

prospectively and, in the view of the

majority of the Board, to allow

prospective crediting of pay for time lost

cannot be justified in view of the

additional, potentially large costs to the

system.

Section 1(h)(2) of the Railroad

Retirement Act requires that pay for

time lost must be paid with respect to

an identifiable period of absence. This

language, in the view of a majority of

the Board, suggests that pay for time lost

should be credited only to a known

period of absence in the past. It is

impossible to predict whether or not an
Federal Register / Vol. 62, No. 233 / Thursday, December 4, 1997 / Proposed Rules 64189

employee will remain absent from work

in the future as a result of injury;

accordingly, there is no truly

identifiable period for prospective

crediting of pay for time lost. Moreover,

to allow parties to private litigation to

pass on a portion of the costs of

litigation to a Federal benefit program

simply makes no sense.

Based on its review of the statutory

language and the legislative history, a

majority of the Board, Labor Member

dissenting, proposes to amend its

regulations to prohibit crediting of pay

for time lost beyond the date of the

judgment or settlement or, in the

absence of a judgment or settlement,

beyond the date of payment. The

proposed regulation excepts from these

restrictions the crediting of deemed

service months pursuant to section

3(i)(4) of the Railroad Retirement Act.

That section provides that an employee

who has performed service for

compensation in less than twelve

months of a calendar year, but has

received compensation in excess of the

amount that may be credited to the

months of actual service, may have the

excess credited to an additional month

or months in that same year.

The Labor Member has made a

proposal that he believes resolves the

financial problem with the existing

procedure by requiring that taxes be

paid in each of the years for which pay

for time lost credit is sought. While the

majority appreciates the Labor

Member’s efforts in attempting to

resolve the problems with the current

policy, the majority does not believe

that the payment of taxes will fully fund

the additional benefit payment and

believes that the better approach would

be to scrap what it believes to be a bad

policy rather than tinker with it.

Employees who negotiate prospective

pay for time lost credits do so because

without the additional credits they

would not meet the service requirement

of 20 years for an occupational

disability annuity. Accordingly, without

the prospective pay for time lost credits,

no benefits would be payable to these

employees until they reach age 60 or

become totally and permanently

disabled. Railroad retirement taxes paid

for several years of pay for time lost will

not cover the additional costs to the

system of the occupational disability

annuities that otherwise would not have

been paid. Moreover, under the

regulations, a month of pay for time lost

credit may be granted based on an

allocation of compensation to the month

of at least 10 times the employee’s daily

wage rate. Accordingly, taxes would be

payable on an allocation of as little as

fifty percent of the employee’s normal

monthly compensation, but the

employee would receive a full month

credit for retirement purposes. The

Labor Member’s proposal does nothing

to address this shortfall. The majority

simply does not believe that it is

appropriate to use trust fund moneys to

subsidize the costs of private litigation.

Finally, the majority views the Labor

Member’s proposal as, in effect,

allowing employees to purchase

retirement credit. In the view of the

majority, this is simply bad policy.

Views of the Labor Member of the

Board

Section 1(h) of the Railroad

Retirement Act authorizes the crediting

of pay for time lost as compensation

insofar as the employee and his or her

railroad employer agree to that crediting

in connection with an on-the-job injury.

That provision thereby encourages the

settlement of disputes and permits the

allocation of loss between parties, in

whatever way those parties themselves

see fit and so negotiate, see 211.3(b) of

the Board regulation 20 CFR § 211.3(b).

The majority, by limiting the

employer’s ability to provide for future

lost wages as the result of an on-the-job

injury, as proposed in this rule,

interferes with an employer’s and

employee’s ability to settle Federal

Employers’ Liability Act (FELA) claims.

This needless intrusion into FELA

disputes by the Board will only increase

litigation of disputes which could easily

have been settled. It also prevents

personal injury settlements from

achieving the goal of making injured

employees, as far as possible, whole.

The majority of the Board states that

pay for time lost is being credited

prospectively, after the date of

settlement or judgment (or, in the

absence of a settlement or judgment,

after the date of payment), without taxes

under the Railroad Retirement Tax Act

being paid for those payments. This can

be true where pay for time lost in the

future is compensated for by a lump

sum payment at the time of settlement.

The Labor Member notes the majority

says the current procedures are costly,

but never states what that cost is, as

requested by OMB. Nevertheless, the

Labor Member has a proposal, explained

below, that directly addresses this

concern.

The majority also suggests that the

statute, by providing that pay for time

lost may only be credited to an

identifiable period of lost time,

precludes prospective crediting of pay

for time lost. This view reads more into

the statute than is actually there. The

Labor Member agrees with the majority

that pay for time lost may be credited

only to an identifiable period of lost

time. That, he notes, does not mean that

the statute precludes, in any way, the

crediting of pay for time lost to a period

of lost time after the date of settlement

where agreed to by the parties. This was

recognized by the Board as early as 1947

in an opinion by the Board’s General

Counsel, L–47–146. Indeed, the cases

where pay for time lost is allocated into

the future are generally those where the

employee is so badly injured that he or

she will never again be able to work in

the railroad industry. The only way the

employee may be made whole in such

cases is by paying the employee for

future lost wages and providing the

retirement credits that would accrue

from such future lost wages. As noted

above, the Labor Member believes that

the past policy of allowing the crediting

of pay for time lost into the future has

facilitated out-of-court settlement of

disputes and has served the interests not

only of employees, but also of

employers. Although it is the opinion of

the Labor Member that the past policy

is good policy, he believes that the

problem with prospective crediting of

pay for time lost noted by the majority

can be addressed by simply prohibiting

pay for time lost in the future to be paid

in the form of a lump sum. The Labor

Member proposes that prospective

crediting of pay for time lost be limited

to periodic payments made in the year

or years for which the credit is sought

and where the employment taxes are

paid with respect to those payments.

Such payments are in the nature of wage

continuation payments or dismissal

payments which are clearly

compensation under the Act, see 20 CFR

211.9.

For example, John Doe and ABC

Railroad enter into a settlement

agreement in July 1996 pursuant to

which John Doe retains an employment

relationship with ABC Railroad through

1998 and ABC Railroad agrees to pay

John Doe pay for time lost in the amount

of $150,000 for the years 1996 ($50,000),

1997 ($50,000), and 1998 ($50,000).

ABC issues a check to John Doe in 1996

for $50,000, minus the employee tax

under the Railroad Retirement Tax Act,

and pays the employer tax and the

withheld employee tax under the

Railroad Retirement Tax Act. ABC

Railroad makes the same payments to

John Doe on January 1, 1997 and

January 1, 1998. John Doe would, under

the Labor Member’s proposal, receive

credit for pay for time lost in 1996,

1997, and 1998. If ABC Railroad were to

pay the $150,000 in a lump sum in

1996, John Doe would receive credit

only in 1996. The payments in the
64190 Federal Register / Vol. 62, No. 233 / Thursday, December 4, 1997 / Proposed Rules

above example would be reported on

the Employer’s Annual Report of

Compensation required under 20 CFR

209.6 along with other wages paid to

other employees that year. Pay for time

lost payments would be

indistinguishable from regular wages.

The Labor Member believes that his

proposal would address the concern of

the majority by fully funding the

prospective pay for time lost credits

while continuing to allow railroad

employees and railroad employers to

use pay for time lost allocations in a

positive way to resolve disputes.

With the modification he suggested,

the Labor Member feels there is no

further justification in the majority’s

position on this regulation. The majority

has indicated that it is better to scrap a

‘‘bad’’ regulation rather than ‘‘tinker’’

with it. The Labor Member believes that

making employees who are injured in

service to the rail industry whole is not

tinkering. It is a moral obligation.

The majority also believes that the

Labor Member’s proposal amounts to

allowing employees to purchase

retirement credits. This is true. It would

be allowed, however, for only those

employees who have demonstrated

through long years of service a career

commitment to the rail industry, and

then, only when they have been

severely injured or otherwise

incapacitated while performing rail

service. Finally, it would be further

limited to only those in the foregoing

category who receive compensation

from a settlement based on a conviction

of both the railroad and the employee

that the railroad would probably be

found negligent in causing the

employee’s injury.

The majority points out that the

additional tax paid for several years of

pay for time lost will not finance the

additional benefits which would be paid

under the Labor Member’s proposal.

The Labor Member believes that this is

true but irrelevant. Completely aside

from the obligation to make injured

employees whole, whatever the cost, is

the well established, clearly understood,

and universally accepted feature of

social insurance programs that the

contributions paid by a disabled

participant will rarely ever finance the

actual benefits paid to such individual.

Covering the cost of such eventualities

from contributions of the remaining

participants, including the negligent

railroads, is the purpose of an insurance

program. Disability benefits would

virtually never be paid by any program

under the condition laid down in this

regulation by the Board majority.

The majority notes that ten times the

employee’s daily rate of pay is too low

an amount for a month of compensation.

The Labor Member points out that an

employee who is not injured need

perform only one hour of service to get

a month of railroad retirement credit.

However, whenever low compensation

months are used to obtain additional

service, the compensation average on

which the annuity is based is depressed,

producing a lower benefit. In any event,

the ten times daily pay rate rule has

been set by regulation by a previous

Board after full and careful review of the

issue. The issue ought not be reopened

now.

Finally, the Labor Member notes that

the majority references ‘‘employees who

negotiate’’ pay for time lost. This

terminology clearly acknowledges that,

under current procedures, prospective

credit can be given only when the

railroads have agreed to do so. Thus, the

railroads already control the use of this

procedure through their right to simply

refuse to go along with prospective

crediting. Therefore, there is no need for

the regulation change herein proposed

by the Board majority.

The Office of Management and Budget

has determined that this is a significant

regulatory action under Executive Order

12866. There are no information

collections associated with this rule.

List of Subjects in 20 CFR Part 211

Pensions, Railroad employees,

Railroad retirement.

For the reasons set out in the

preamble, chapter II of title 20 of the

Code of Federal Regulations is amended

as follows:

PART 211—[AMENDED]

1. The authority citation for part 211

continues to read as follows:

Authority: 45 U.S.C. 231(f).

2. Section 211.3 is amended by

adding paragraph (c):

§ 211.3 Compensation paid for time lost.

* * * * *

(c)(1) Except as provided in paragraph

(c)(2) of this section, pay for time lost

may not be credited to any period after

the date of the judgment or settlement

agreement providing pay for time lost. If

the payment is not the result of a

judgment or settlement, pay for time lost

may not, except as provided in

paragraph (c)(2) of this section, be

credited to any period after the date of

payment.

(2) Pay for time lost may be creditable

as deemed service under section 3(i)(4)

of the Railroad Retirement Act in the

year in which either the judgment or

settlement occurred or in the case of pay

for time lost not attributable to a

judgment or settlement, in the year in

which the payment occurred.

Dated: November 21, 1997.

By Authority of the Board.

For the Board.

Beatrice Ezerski,

Secretary to the Board.

[FR Doc. 97–31725 Filed 12–3–97; 8:45 am]

BILLING CODE 7905–01–P

DEPARTMENT OF THE TREASURY

Internal Revenue Service

26 CFR Part 1

[REG–105160–97]

RIN 1545–AV17

Qualified Nonrecourse Financing

Under Section 465(b)(6); Hearing

Cancellation

AGENCY: Internal Revenue Service,

Treasury.

ACTION: Cancellation of notice of public

hearing on proposed regulations.

SUMMARY: This document provides

notice of cancellation of a public

hearing on proposed regulations under

section 465(b)(6) regarding qualified

nonrecourse financing.

DATES: The public hearing originally

scheduled for Wednesday, December 10,

1997, beginning at 10:00 a.m. is

cancelled.

FOR FURTHER INFORMATION CONTACT:

Mike Slaughter of the Regulations Unit,

Assistant Chief Counsel (Corporate),

(202) 622–7190, (not a toll-free number).

SUPPLEMENTARY INFORMATION: The

subject of the public hearing is proposed

regulations under section 465 of the

Internal Revenue Code. A notice of

proposed rulemaking and notice of

public hearing appearing in the Federal

Register on Wednesday, August 13,

1997 (62 FR 43295), announced that the

public hearing on proposed regulations

under section 465 of the Internal

Revenue Code would be held on

Wednesday, December 10, 1997,

beginning at 10:00 a.m., in Room 2615,

Internal Revenue Building, 1111

Constitution Avenue, NW., Washington,

D.C.

The public hearing scheduled for

Wednesday, December 10, 1997 is

cancelled.

Cynthia E. Grigsby,

Chief, Regulations Unit, Assistant Chief

Counsel (Corporate).

[FR Doc. 97–31806 Filed 12–3–97; 8:45 am]

BILLING CODE 4830–01–P