Document Headings

                    Document headings vary by document type but may contain                    the following:                  
                -                       the agency or agencies that issued and signed a document                    
                -                       the number of the CFR title and the number of each part                      the document amends, proposes to amend, or is directly                      related to                    
                -                       the agency docket number / agency internal file number                    
                -                       the RIN which identifies each regulatory action listed in                      the Unified Agenda of Federal Regulatory and Deregulatory                      Actions                    

                    See the                                          Document Drafting Handbook                                        for more details.                  

###### Office of Personnel Management

          - 5 CFR Parts 531 and 550
          - RIN 3206-AL61

# AGENCY:

U.S. Office of Personnel Management.

# ACTION:

Proposed rule with request for comments.

# SUMMARY:

The U.S. Office of Personnel Management is issuing proposed regulations to conform with provisions of the National Defense Authorization Act for Fiscal Year 2008. The proposed regulations revise the rules regarding setting pay for certain employees who move from nonappropriated fund instrumentality (NAFI) positions to General Schedule positions. Also, the proposed regulations allow certain NAFIs to collect debts owed to them by Federal employees via salary offset and allow Federal agencies to collect debts by offsetting salary payments of certain NAFI employees.

# DATES:

Comments must be received on or before October 27, 2008.

# ADDRESSES:

You may submit comments, identified by RIN “3206-AL61,” using any of the following methods:

*Federal eRulemaking Portal: http://www.regulations.gov.*                         Follow the instructions for submitting comments.                    

*E-mail:  pay-performance-policy@opm.gov.*

*Fax:*                         (202) 606-0824.                    

*Mail:*                         Jerome D. Mikowicz, Deputy Associate Director for Pay and Leave Administration, Room 7H31, 1900 E Street, NW., Washington, DC 20415-8200.                    

# FOR FURTHER INFORMATION CONTACT:

                        David Barash by telephone at (202) 606-2858; by fax at (202) 606-0824; or by e-mail at                         *pay-performance-policy@opm.gov.*

# SUPPLEMENTARY INFORMATION:

The U.S. Office of Personnel Management (OPM) is issuing proposed regulations to revise the rules regarding setting pay for certain employees who move from nonappropriated fund instrumentality (NAFI) positions to General Schedule (GS) positions. Also, the proposed regulations allow certain NAFIs to collect debts owed to them by Federal employees via salary offset and allow Federal agencies to collect debts by offsetting salary payments of certain NAFI employees. The proposed regulations conform with sections 652 and 1114 of the National Defense Authorization Act for Fiscal Year 2008 (Pub. L. 110-181, January 28, 2008), hereafter referred to as “the Act.” These amendments became effective on January 28, 2008.

## Pay Setting Upon Movement From a NAFI to a GS Position

Section 1114 of the Act amends 5 U.S.C. 5334(f) to provide that a NAFI employee in the Department of Defense (DOD) or the United States Coast Guard (USCG) (as described in 5 U.S.C. 2105(c)) who moves voluntarily to a GS position in DOD or USCG, respectively, without a break in service of more than 3 days may (at the employing agency's discretion) have the GS rate of basic pay set at the lowest step rate of the applicable GS grade that equals or exceeds the former NAFI rate. Under previous law, the employee's GS rate of basic pay could not exceed the formerly applicable NAFI rate in such voluntary movements; thus, setting the rate at a GS step for these former NAFI employees generally resulted in a reduction in pay. The amendment permits DOD and USCG to set pay at the next higher step rate, avoiding a pay reduction.

Therefore, we propose revising the regulations at 5 CFR 531.216 governing setting pay when a NAFI employee in DOD or USCG moves to a GS position in DOD or USCG, respectively, without a break in service of more than 3 days, to conform with changes made by the Act.

Paragraph (c)(1) in § 531.216 currently states that when an employee covered under this section moves voluntarily, the agency may set the employee's initial payable rate of basic pay at any step rate in the highest applicable rate range currently in effect for the employee's GS position of record and official worksite which does not exceed the employee's NAFI highest previous rate of pay, except as provided in paragraph (c)(2) or (3) of § 531.216. We propose revising this provision to allow DOD and USCG to set the employee's initial payable rate of basic pay at the lowest step of the applicable GS grade that equals or exceeds the NAFI highest previous rate, or at a lower step. We also propose clarifying that pay may not be set above the maximum (step 10) rate of the rate range.

We propose similar revisions in paragraph (c)(2) of § 531.216, which provides the rules for setting pay when a covered NAFI employee moves voluntarily and the highest applicable rate range would be different if the official worksite for the employee's GS position of record were located at the place where the employee was stationed while earning the NAFI highest previous rate.

                    Paragraph (d) of § 531.216 provides the rules for when a covered NAFI employee is moved involuntarily. Under paragraph (d)(1) of § 531.216, a covered employee who is moved involuntarily is entitled to an initial payable rate of basic pay at the lowest step rate of the grade that is equal to or greater than the employee's rate of basic pay in the NAFI position immediately before the move. Paragraph (d)(2) of § 531.216 currently states that an agency may set the initial payable rate of basic pay at a step rate within the highest applicable rate range for the employee's GS position of record and official worksite that does not exceed the employee's NAFI highest previous rate (consistent with the method prescribed in paragraphs (c)(1) and (2)) if that provides a higher rate of basic pay than the employee's entitlement under paragraph (d)(1). We propose revising paragraph (d)(1) of § 531.216 to clarify that, if the employee's former NAFI rate exceeds the range maximum, the agency must identify the maximum step rate (step 10) as the employee's maximum payable rate. We also propose revising paragraph (d)(2)(i) in § 531.216 so an agency may set the initial payable rate of basic pay at the lowest step rate within the highest applicable rate range for the employee's GS position of record and official worksite that equals or exceeds the employee's NAFI highest previous rate, or any lower step rate (consistent with the proposed revisions to paragraphs (c)(1) and (2)) if that provides a higher                           ( print page 50576)                        rate of basic pay than the employee's entitlement under paragraph (d)(1).                

                    We are also taking this opportunity to clarify certain provisions. Section 531.216 uses the phrases “without a change in employing agency” and “same agency” to refer to movements within DOD and within USCG. However, these phrases are inconsistent with the definition of                     *agency*                     in 5 CFR 531.203, which means (in part) an executive agency. For example, USCG is a component of the U.S. Department of Homeland Security (DHS) and is not an executive agency itself. The NAFI pay setting regulations at § 531.216 do not apply to a NAFI employee in the USCG who moves to a GS position within DHS, but outside of USCG. Therefore, we propose to clarify the regulations by replacing the phrases “without a change in employing agency”, “different agency”, and “same agency” in paragraphs (a), (c)(1) and (d)(1) of § 531.216 with more descriptive and accurate phrases such as, “from a NAFI position in the Department of Defense or the Coast Guard to a GS position in the Department of Defense or the Coast Guard, respectively”.                

## Salary Offset

                    Section 652 of the Act provides that employees of a NAFI of DOD or USCG (as described in 5 U.S.C. 2105(c)) are covered by the salary offset law in 5 U.S.C. 5514. Section 5514 provides authority for collection of debts owed the Federal Government by offset of Federal employee salary payments. This amendment allows DOD and USCG NAFIs to collect debts owed to them by Federal employees via salary offset. It also allows Federal agencies to collect debts by offsetting salary payments of DOD and USCG NAFI employees. Therefore, we are proposing to revise the regulations at 5 CFR 550.1103 to add “any nonappropriated fund instrumentality described in 5 U.S.C. 2105(c)” to the definition of                     *agency.*

                    In addition, we are proposing to revise the regulations at 5 CFR 550.1103 to change the name of the Postal Rate Commission to Postal Regulatory Commission in the definition of                     *agency*                     as a result of section 604 of the Postal Accountability and Enhancement Act (Pub. L. 109-435, December 20, 2006), which amended 5 U.S.C. 5514(a)(5)(B), to reflect the Commission's change in name. We also propose adding “If an agency under this definition is a component of an agency, the broader definition of                     *agency*                     may be used in applying the provisions of 5 U.S.C. 5514(b) (concerning the authority to prescribe regulations).” This provision makes clear, for example, that DOD may issue salary offset regulations that cover the military departments and DOD NAFIs (as described in 5 U.S.C. 2105(c)), even though each of those DOD components is itself an                     *agency*                     under the definition of                     *agency*                     in proposed § 550.1103. Since DOD is an executive department, it is a covered agency and can issue salary offset regulations that cover employees in every part of DOD, including employees in any DOD component that has separate status as an agency.                

## E.O. 12866, Regulatory Review

This rule has been reviewed by the Office of Management and Budget in accordance with E.O. 12866.

## Regulatory Flexibility Act

I certify that these regulations will not have a significant economic impact on a substantial number of small entities because they will apply only to Federal agencies and employees.

# List of Subjects in 5 CFR Parts 531 and 550

      - Administrative practice and procedure; Claims; Government employees; Law enforcement officers; Wages

Office of Personnel Management.

Michael W. Hager,

Acting Director.

Accordingly, OPM is proposing to amend 5 CFR parts 531 and 550 as follows:

# PART 531—PAY UNDER THE GENERAL SCHEDULE

1. The authority citation for part 531 is revised to read as follows:

Authority:5 U.S.C. 5115, 5307, and 5338; sec. 4 of Pub. L. 103-89, 107 Stat. 981; and E.O. 12748, 56 FR 4521, 3 CFR, 1991 Comp., p. 316; Subpart B also issued under 5 U.S.C. 5303(g), 5305, 5333, 5334(a) and (b), and 7701(b)(2); Subpart D also issued under 5 U.S.C. 5335 and 7701(b)(2); Subpart E also issued under 5 U.S.C. 5336; Subpart F also issued under 5 U.S.C. 5304 and 5305; and E.O. 12883, 58 FR 63281, 3 CFR, 1993 Comp., p. 682 and E.O. 13106, 63 FR 68151, 3 CFR, 1998 Comp., p. 224.

# Subpart B—Determining Rate of Basic Pay

2. In § 531.216, paragraphs (a), (c)(1), (c)(2)(i), (c)(2)(ii), (d)(1), and (d)(2)(i) are revised to read as follows:

§ 531.216 

                            (a)                             *General.*                             This section governs the setting of pay for an employee who moves to a GS position in the Department of Defense or the Coast Guard from a position in a nonappropriated fund instrumentality (NAFI) (as described in 5 U.S.C. 2105(c)) of the Department of Defense or the Coast Guard, respectively, without a break in service of more than 3 days. If an employee moves from a NAFI position to a GS position with a break of more than 3 days or moves from a NAFI position in the Department of Defense or the Coast Guard to a GS position outside of the Department of Defense or the Coast Guard, respectively, the employee has no special conversion rights and this section does not apply.                        

* * * * *

(c) * * *  (1) For a Department of Defense or Coast Guard employee who moves voluntarily, without a break in service of more than 3 days, from a NAFI position in the Department of Defense or the Coast Guard to a GS position in the Department of Defense or the Coast Guard, respectively, the agency may set the employee's initial payable rate of basic pay at the lowest step rate in the highest applicable rate range currently in effect for the employee's GS position of record and official worksite which equals or exceeds the employee's NAFI highest previous rate of pay, or any lower step rate, except as provided in paragraph (c)(2) or (3) of this section. The employee's initial payable rate of basic pay may not exceed the maximum step rate (step 10).

(2) * * *

(i) Compare the NAFI highest previous rate to the highest applicable rate range currently in effect in the location where the employee was stationed while earning that rate. The highest applicable rate range is determined based on the pay schedules that would be applicable to the employee's current GS position of record if the employee were stationed in that location. Identify the lowest step rate in the highest applicable rate range that was equal to or exceeded the NAFI highest previous rate. If the NAFI highest previous rate is less than the range minimum, identify the minimum step rate (step 1). If the NAFI highest previous rate exceeds the range maximum, identify the maximum step rate (step 10).

                            (ii) Identify the step rate in the highest applicable rate range for the employee's current official worksite and position of record that corresponds to the step rate derived under paragraph (c)(2)(i) of this section. That corresponding rate is the maximum payable rate at which the agency may set the employee's pay                                   ( print page 50577)                                under this section, except as provided by paragraph (c)(3) of this section. The agency may set the employee's rate of basic pay at any step rate that does not exceed that maximum payable rate.                        

* * * * *

(d) * * *  (1) For a Department of Defense or Coast Guard employee who is moved involuntarily (as defined in paragraph (d)(3) of this section), without a break in service of more than 3 days, from a NAFI position in the Department of Defense or the Coast Guard to a GS position with substantially the same duties in the Department of Defense or the Coast Guard, respectively, the employee is entitled to an initial payable rate of basic pay at the lowest step rate of the grade that is equal to or greater than the employee's rate of basic pay in the NAFI position immediately before the move. If the employee's former NAFI rate exceeds the range maximum, identify the maximum step rate (step 10).

(2) * * *

(i) The lowest step rate within the highest applicable rate range for the employee's GS position of record and official worksite that equals or exceeds the employee's NAFI highest previous rate, or any lower step rate (consistent with the method prescribed in paragraphs (c)(1) and (2) of this section);

* * * * *

# PART 550—PAY ADMINISTRATION (GENERAL)

# Subpart K—Collection by Offset From Indebted Government Employees

3. The authority citation for subpart K of part 550 continues to read as follows:

Authority:5 U.S.C. 5514; sec. 8(1) of E.O. 11609; redesignated in sec. 2-1 of E.O. 12107.

                        4. In § 550.1103, the definition of                         *agency*                         is revised to read as follows:                    

§ 550.1103 

* * * * *

*Agency*                             means an executive department or agency; a military department; the United States Postal Service; the Postal Regulatory Commission; any nonappropriated fund instrumentality described in 5 U.S.C. 2105(c); the United States Senate; the United States House of Representatives; any court, court administrative office, or instrumentality in the judicial or legislative branches of the Government; or a Government corporation. If an agency under this definition is a component of an agency, the broader definition of                             *agency*                             may be used in applying the provisions of 5 U.S.C. 5514(b) (concerning the authority to prescribe regulations).                        

* * * * *

[FR Doc. E8-19819 Filed 8-26-08; 8:45 am]

BILLING CODE 6325-39-P