Federal Register / Vol. 64, No. 32 /Thursday, February 18, 1999 / Notices 8141

of Directors, along with

recommendations, to inform the

Corporation’s interpretation of the

presence requirement and to provide the

basis for any remedial action, such as a

rulemaking or a request for legislative

action by the Congress.

DATES: Comments and requests to

provide oral testimony should be

received by the Corporation on or before

March 22, 1999.

ADDRESSES: Comments and requests

should be submitted to the Office of the

General Counsel, Legal Services

Corporation, 750 First St. NE., 11th

Floor, Washington, DC 20002–4250.

FOR FURTHER INFORMATION CONTACT:

Suzanne B. Glasow, Office of the

General Counsel, 202–336–8817.

SUPPLEMENTARY INFORMATION: The

Corporation’s appropriations act

prohibits LSC-funded recipients from

providing legal assistance to an alien

unless the alien is present in the United

States and falls into certain delineated

categories. See Section 504(a)(11) of

Pub. L. 104–134, incorporated by

reference in Pub. L. 105–277. Although

there is general agreement that present

in the United States means to be

physically in the United States, it is not

clear when an alien must be present.

One interpretation of the language

would require an alien to be physically

present in the United States any time

the alien is provided legal assistance

from an LSC recipient. Another is that

the alien must be physically present

only when legal representation is

commenced. A third is that the alien

must be physically present only when

the cause of action for which the

recipient provides legal assistance

occurs.

Although the presence requirement

applies to all categories of aliens listed

in the Corporation’s appropriations act,

the aliens most affected are the seasonal

agricultural workers, which would

include H–2A workers, Special

Agricultural Workers (SAWS), and

permanent resident aliens who perform

seasonal agricultural work. For example,

H–2A workers, as a rule, are not in the

United States long enough for the

resolution of many of their legal matters,

making effective representation for this

class of aliens questionable. Similarly, it

is not uncommon for permanent

resident aliens who are farm workers to

temporarily leave the United States at

the end of the agricultural season while

their legal matters are still pending.

On November 16, 1998, the

Corporation’s Board of Directors

(‘‘Board’’) voted to confer on the Board

Chairman the authority to establish a

special panel to study the issue and

make a report to the Board with

recommendations to inform the

Corporation’s interpretation of the

presence requirement. See LSC Board

Resolution 98–011. Subsequently, a

Commission was established and the

Commission held an organizational

meeting at the Corporation on February

2, 1999. Members of the Commission are

John N. Erlenborn, Chairman (member

of the LSC Board); Professor T.

Alexander Aleinikoff, Georgetown

University Law Center; Gilbert F.

Casellas, Esquire, The Swarthmore

Group; Professor Sarah H. Cleveland,

University of Texas School of Law;

Professor Nancy H. Rogers, Ohio State

University College of Law (member of

the LSC Board). Serving as the reporter

for the Commission is Professor Enid

Trucios-Haynes, Louis D. Brandeis

School of Law, University of Louisville.

Public Comment

The Commission seeks public

comment on the facts and circumstances

surrounding the representation of aliens

who are affected by the presence

requirement, with a particular emphasis

on seasonal agricultural workers.

Comments are specifically requested on

the following questions. How long are

seasonal agricultural workers typically

in the United States? When does the

seasonal agricultural worker normally

seek legal representation? What are the

common claims of seasonal agricultural

workers seeking legal representation?

When do the claims of seasonal

agricultural workers generally ripen?

How long does it typically take to

resolve a seasonal agricultural worker’s

legal claims? What is the established

practice of LSC recipients in

representing seasonal agricultural

aliens? What is the likelihood that

private counsel is available to represent

aliens who are in the United States

under temporary visas or who may

temporarily leave the United States?

Under what circumstances do seasonal

agricultural workers commonly leave

the United States? What are the

implications of the presence

requirement on recipient attorneys’

professional obligations to their clients?

Oral testimony

Oral testimony at the public hearings

will be at the invitation of the

Commission. Any person interested in

providing oral testimony may submit a

written request to do so in the written

public comments or in a separate

correspondence.

Public Hearings

Two public hearings will be held by

the Commission. The two hearings are

scheduled for March 27, 1999, and April

10, 1999. Additional information on the

hearings will be noticed in the Federal

Register.

Dated: February 12, 1999.

Victor M. Fortuno,

General Counsel.

[FR Doc. 99–3981 Filed 2–17–99; 8:45 am]

BILLING CODE 7050–01–P

OFFICE OF MANAGEMENT AND

BUDGET

Office of Federal Procurement Policy

Cost Accounting Standards Board;

Notice

AGENCY: Cost Accounting Standards

Board, Officer of Federal Procurement

Policy, OMB.

ACTION: None.

SUMMARY: The Cost Accounting

Standards Board (CASB) hereby extends

an invitation for interested parties to

provide comments on the following

letter sent to organizations that

responded to the Staff Discussion Paper

(61 FR 49533, 9/20/96) on the treatment

of the costs under government contracts

for post-retirement benefit (PRB) plans.

While a consensus emerged on many of

the issues, the topics relating to the

validity (compellability) of the postretirement benefit obligation as a

prerequisite for use of accrual

accounting and the need, if any, to

substantiate accruals by funding,

engendered forceful, diverse, and often

irreconcilable arguments. To promote a

fuller dialogue and understanding of the

issues before the Board, the Board is

asking individuals to consider and

comment on the opposing viewpoints

discussed in the letter and to possibly

expand on their own comments, if any.

DATES: Comments must be in writing,

including an electronic copy of your

comments in WordPerfect 6.1 or ASCII

format, and must be received by March

15, 1999.

ADDRESSES: Comments should be

addressed to the Cost Accounting

Standards Board, Office of Federal

Procurement Policy, 725 17th Street,

NW, Room 9013, Washington, D.C.

20503. Attn: CASB Docket No. 96–02.

FOR FURTHER INFORMATION CONTACT: Rein

Abel, Director of Research, Cost
8142 Federal Register / Vol. 64, No. 32 /Thursday, February 18, 1999 / Notices

Accounting Standards Board (telephone:

202–395–3254).

Richard C. Loeb,

Executive Secretary; Cost Accounting

Standards Board.

Executive Office of the President, Office of

Management and Budget, Washington, D.C.

20503

January 12, 1999.

Cost Accounting Standards Board

SUBJECT: Costs of Post-Retirement

Benefit Plans, CASB Docket No. 96–02.

To Members of the Government

contracting community:

Your organization responded to the

Staff Discussion Paper (61 Fed. Reg.

49533; 9/20/96) of the treatment of the

costs under government contracts for

post-retirement benefit (PRB) plans.

While a consensus emerged on many of

the issues, the topics relating to the

validity (compellability) of the postretirement benefit obligation as a

prerequisite for accrual accounting

(Topic C) and the need, if any, to

substantiate accruals by funding (Topic

G) engendered forceful, diverse, and

often irreconcilable arguments. To

promote a fuller dialogue and

understanding of the issues before the

Board, is asking you to consider and

comment on the opposing viewpoints

discussed in this letter and to possibly

expand on your own comments. The

Board intends to widely distribute this

letter and to invite other interested

parties to also provide comments on

these topics.

The Board is considering the adoption

of Financial Accounting Standards

Board Statement 106 (SFAS 106),

‘‘Employer’s Accounting for

Postretirement Benefits Other Than

Pensions,’’ as the basis for the

measurement of post-retirement benefit

costs and assignment of those costs to

cost accounting periods. Under SFAS

106, it is the ‘‘substantive plan’’ that

creates a liability warranting its

recognition for financial statement

purposes. However, corporations often

downplay the firmness of this liability

in the footnotes to their financial

statements. For instance, General

Motors (GM) repetitively included

reservations about the nature of these

liabilities in its Financial Statements,

e.g., Note 5 of GM’s 1993 Financial

Statement stated:

The Corporation has disclosed in the

financial statements certain amounts

associated with estimated future post

retirement benefits other than pensions and

characterized such amounts as ‘accumulated

post retirement benefit obligations’,

‘liabilities’, or ‘obligations.’ Notwithstanding

the recording of such amounts and the use

of these terms, the Corporation does not

admit or otherwise acknowledge that such

amounts or existing post retirement benefit

plans of the Corporation (other than

pensions) represent legally enforceable

liabilities of the Corporation.

The perception, particularly among

Government commenters, the any PRB

liability recognized in the financial

statements might be a ‘‘soft’’ liability

has led to proposals that funding should

be used as a tool in validating these

liabilities.

Requiring Funding To Substantiate the

Post-Retirement Benefit Cost Accrual

In Standards previously promulgated

by the CAS Board dealing with pension

and insurance costs, the applicable

Standards required that pension and

retiree insurance costs be funded.

Therefore, it could be argued that to

maintain consistency with the

promulgations of the original CAS

Board and amendments promulgated by

the current Board, the Board will have

to consider funding as a prerequisite for

the use of accrual accounting for the

costs of post-retirement benefit costs.

Industry representatives have pointed

out the difference between the basis for

the funding requirements in the pension

Standards and the basis for a potential

funding requirement under the postretirement benefits case. The Aerospace

Industries Association made the point

as follows:

Public policy, as articulated in the tax

code, has long encouraged pension plan

sponsors to fund their programs at an

adequate level. While industry does not agree

that funding has any place in the Cost

Accounting Standards, the addition of a

funding requirement in the recent changes to

CAS 412, as well as explicit recognition of

tax deductible limits, did not create tension

between public policies as expressed in the

Internal Revenue Code and the Cost

Accounting Standards.

In contrast, however, Congress has

intentionally discouraged prefunding of postretirement medical benefits. It would be

inconsistent for the Cost Accounting

Standards Board to in essence force

contractors to fund these post-retirement

benefit costs.

In general, industry commenters

argued against any funding requirement.

The following comments made by

General Electric capture the essence of

the industry arguments:

The CASB and staff need to recognize that

funding, per se, does not prove or disprove

the validity of the PRB liability. The Staff

Discussion Paper appears to have a bias

toward funding. Although funding may be an

important business consideration, the Board

needs to first address the appropriate

accounting method absent the ‘‘funding’’

issue. There are many reasons for funding or

not funding a PRB liability but these reasons

generally deal with cash flow consequences

and income tax considerations. The Board

needs to focus on the proper method of

measuring, assigning and allocating PRB

costs based on the existence of the liability

rather than on the existence of funding.

Funding is an allowability issue which is

already addressed in FAR 31.205–6(o).

Boeing also expressed the belief that

funding does not necessarily

substantiate the liability, but suggested

that more restrictive measures of the

accrual or cash accounting be used

where the contractual rights to a benefit

are lacking. Boeing commented that:

The Government’s concern is that accrual

accounting will result in reimbursing a

contractor for costs the contractor has not

expended. This concern should not structure

proper accounting. The accounting must be

based upon the likelihood that the contractor

will liquidate the liability. If the likelihood

is in some doubt or remote then the costs

should be recognized on more limited

accrual basis, i.e., terminal funding or those

vested, or if not appropriate on a cash basis.

Otherwise the costs must be recognized on an

accrual basis over the period of time the

benefit is earned.

The American Bar Association (ABA)

noted, for financial accounting

purposes, the threshold for recognition

is met by a probability that an obligation

exists. But rather than suggesting the

use of more restrictive accounting or

actuarial methods, the American Bar

Association (ABA) indicated there are

situations when the funding of the

annual accrual can serve a legitimate

purpose. The ABA wrote:

* * * Certainly, the FASB considered this

issue and determined that some estimate of

future expenditures was preferable to no

estimate at all.

* * * * *

Require funding of PRB costs only if

payment cannot be compelled, or if research

discloses a significant incidence of

contractors, defaulting on PRB obligations.

The Discussion Paper asks whether funding

should be required to ‘‘substantiate’’ accrued

PRB costs. We believe that a valid accrual

does not need to be ‘‘substantiated’’ through

funding for accounting purposes. This

principle applies to pension costs as well as

to PRBs. Funding requirements are, at

bottom, a matter of procurement policy and

not a cost accounting.

We do, however, agree that contractors

should not be permitted to accrue costs

without funding them in cases where the

payment cannot be compelled. In such cases,

no valid liability has been incurred unless

the liability is funded. Additionally, if

circumstances indicate that a contractor is

likely to default on its PRB obligations,

accrual without funding should not be

allowed.

The National Defense Industrial

Association also acknowledged that

funding could be one means to
Federal Register / Vol. 64, No. 32 /Thursday, February 18, 1999 / Notices 8143

substantiate (validate) the obligation

when it commented.

If it can be determined that there is a valid

obligation to pay, determining an annual

estimate of the cost of that liability is

feasible. Once an obligation to pay is

established, there are two limitations the

CASB needs to establish. The first is

delineating the methods for arriving at a

reasonable estimate of the cost of the

liability. The second task is to provide for

subsequent period adjustments as

circumstances change. It is clear that funding

validates a liability. It is also clear that

funding does not match cost with products.

It is also clear that the use of funding (or any

other cash payment) as a determinant of cost

incurrence decreases uniformity and

consistency in accounting.

On the other hand, the comments

from the Office of the Under Secretary

of Defense for Acquisition and

Technology (OUSD) articulate the

concern of some members of the

Government procurement community

that any potential risk that the liability

may not be liquidated is unacceptable.

The OUSD unequivocally stated:

Yes, funding is necessary to substantiate

accrual of costs. The level of funding

necessary is 100 percent of the maximum

amount of possible funding in accordance

with the contractor’s funding vehicle.

Permitting funding at less than 100 percent

of the cost accrual results in a potential risk

that the liabilities for which the Government

has paid its fair share might never be

liquidated. A 100 percent funding

requirement assures the Government that the

money will be available when the liability

must be paid. If there are valid reasons to

accrue the liabilities, the accruals should be

fully funded. Permitting less than 100

percent funding effectively results in the

Government providing a long-term interest

free loan to contractors. Permitting funding at

less than 100 percent of the cost accrual

would require that earnings on the unfunded

amounts be imputed each year to preclude

increased costs to the Government resulting

from lost earnings on the unfunded amounts.

CAS Board Concerns Currently Under

Consideration:

The CAS Board’s concern is that

SFAS 106 recognition of the obligation

for the ‘‘substantive plan’’ is

inappropriate for Government contract

cost accounting. In fact, the Board is

concerned that the mere existence of a

written description of the plan does not

ensure that there is a contractual and

enforceable, that is, compellable,

obligation to pay the promised benefit.

The Board is particularly concerned

about he eventual settlement of (i.e.,

disbursement for) the liability accrued

for post-retirement benefit costs. Under

SFAS 106, there is an intentional and

notable lack of this concern in that there

is no control over (i) an entity’s having

accrued post-retirement benefit costs for

any number of years under its extant

substantive post-retirement benefit plan,

(ii) then subsequently abrogating the

plan in whole or in part, and (iii)

recognizing a ‘‘gain’’ on the reversal of

the prior accruals. Indeed, pre- and

post- SFAS 106, there have been

instances of companies taking just such

actions. Comparing the case of postretirement benefit costs to that of

pensions this respect is even more

instructive in that pensions have

funding (and vesting) requirements

imposed by other authorities (e.g., the

Internal Revenue Code, the Employee

Retirement Income Security Act) which

bolster the notion that the cost accrued

for pensions will lead to an actual

disbursement in the future. Despite this

collateral support for pension accrual,

the Board included a funding

requirement in its rules for both

qualified and nonqualified pension

plans. As it deliberates on the issue of

post-retirement benefit costs, a natural

extension of its funding requirement for

pension costs would be to incorporate a

similar requirement for post-retirement

benefit costs.

Request for Additional Comments and

Rationale

To ensure all facts of this issue are

fully considered from all perspectives,

the Board would like interested parties

that oppose or question the

establishment of a funding requirement

to suggest alternatives to funding which

would provide similar or equivalent

support for the compellability of the

post-retirement benefit obligation as that

which is provided by a funding

requirement. In addition, if you believe

that accrual of post-retirement benefit

costs solely in accordance with SFAS

106 criteria, without any further

validation of the ensuing liability, is an

adequate method for recognizing PRD

costs for contract costing purposes, then

the Board request that you provide

arguments for accepting the

‘‘substantive plan’’ as the basis for

contract cost measurement.

Conversely, for those that believe that

there is no realistic alternative to a

funding requirement, the Board asks

that you set forth the arguments in favor

of funding.

Submission of Comments

Comments regarding this request

should be addressed to the Cost

Accounting Standards Board, Office of

Federal Procurement Policy, 725 17th

Street, N.W., Room 9001, Washington,

D.C. 20503, Attn: CASB Docket No. 96–

02. It is requested that your comments

be provided no later than March 15,

1999 in order to receive full

consideration. Please include an

electronic copy of your comments in

Word Perfect 6.1 or ASCII format.

For further information, please

contact Rein Abel, Director of Research,

Cost Accounting Standards Board

(telephone: 202–395–3254).

Sincerely,

Richard C. Lomb,

Executive Secretary.

[FR Dos. 99–3955 Filed 2–17–99; 8:45 am]

BILLING CODE 3110–01–M

NATIONAL COUNCIL ON DISABILITY

Advisory Committee Conference Call

AGENCY: National Council on Disability

(NCD).

SUMMARY: This notice sets forth the

schedule of the forthcoming conference

call for NCD’s advisory committee—

International Watch. Notice of this

meeting is required under Section 10

(a)(1)(2) of the Federal Advisory

Committee Act (Pub. L. 92–463).

INTERNATIONAL WATCH: The purpose of

NCD’s International Watch is to share

information on international disability

issues and to advise NCD’s International

Committee on developing policy

proposals that will advocate for a

foreign policy that is consistent with the

values and goals of the Americans With

Disabilities Act.

DATES: March 17, 1999, 12:00 noon–1:00

p.m. est.

FOR INTERNATIONAL WATCH INFORMATION,

CONTACT: Lois T. Keck, Ph.D., Research

Specialist, National Council on

Disability, 1331 F Street NW., Suite

1050, Washington, DC 20004–1107;

202–272–2004 (Voice), 202–272–2074

(TTY), 202–272–2022 (Fax),

lkeck@ncd.gov (e-mail).

AGENCY MISSION: The National Council

on Disability is an independent federal

agency composed of 15 members

appointed by the President of the

United States and confirmed by the U.S.

Senate. Its overall purpose is to promote

policies, programs, practices, and

procedures that guarantee equal

opportunity for all people with

disabilities, regardless of the nature of

severity of the disability; and to

empower people with disabilities to

achieve economic self-sufficiency,

independent living, and inclusion and

integration into all aspects of society.

This committee is necessary to

provide advice and recommendations to

NCD on international disability issues.

We currently have balanced

membership representing a variety of

disabling conditions from across the

United States.