This section of the FEDERAL REGISTER

contains regulatory documents having general

applicability and legal effect, most of which

are keyed to and codified in the Code of

Federal Regulations, which is published under

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REGISTER issue of each week.

Rules and Regulations Federal Register

60285 

Vol. 75, No. 189 

Thursday, September 30, 2010 

OFFICE OF PERSONNEL 

MANAGEMENT 

5 CFR Part 531 

RIN 3206–AM25 

General Schedule Locality Pay Areas 

AGENCY: U.S. Office of Personnel 

Management. 

ACTION: Interim rule with request for 

comments. 

SUMMARY: On behalf of the President’s 

Pay Agent, the U.S. Office of Personnel 

Management is issuing interim 

regulations on the locality pay program 

for General Schedule employees. The 

interim regulations establish separate 

locality pay areas for the States of 

Alaska and Hawaii and extend coverage 

of the Rest of U.S. locality pay area to 

include American Samoa, the 

Commonwealth of Puerto Rico, the 

Commonwealth of the Northern Mariana 

Islands, the Territory of Guam, the U.S. 

Virgin Islands, and all other U.S. 

possessions listed in 5 CFR 591.205, 

applicable on the first day of the first 

pay period beginning on or after January 

1, 2011. 

DATES: Effective Date: The regulations 

are effective November 1, 2010. 

Applicability Date: The regulations 

apply on the first day of the first pay 

period beginning on or after January 1, 

2011. 

Comment Date: We must receive 

comments on or before November 29, 

2010. 

ADDRESSES: Send or deliver comments 

to Jerome D. Mikowicz, Deputy 

Associate Director for Pay and Leave, 

Office of Personnel Management, Room 

7H31, 1900 E Street, NW., Washington, 

DC 20415–8200; FAX: (202) 606–4264; 

or e-mail: pay-performancepolicy@opm.gov. 

FOR FURTHER INFORMATION CONTACT: 

Allan Hearne, (202) 606–2838; FAX: 

(202) 606–4264; e-mail: payperformance-policy@opm.gov. 

SUPPLEMENTARY INFORMATION: Section 

5304 of title 5, United States Code, 

authorizes locality pay for General 

Schedule (GS) employees with duty 

stations in the United States and its 

territories and possessions. The NonForeign Area Retirement Equity 

Assurance Act of 2009 (NAREA), Public 

Law 111–84, title XIX, subtitle B 

(October 28, 2009), extended locality 

pay to the States of Alaska and Hawaii 

and the U.S. territories and possessions 

effective in January 2010. While the 

statute included a sense of Congress that 

one locality pay area cover the entire 

State of Alaska and one cover the entire 

State of Hawaii, it did not actually 

establish any new locality pay areas. 

Section 5304(f) of title 5, United 

States Code, authorizes the President’s 

Pay Agent (the Secretary of Labor, the 

Director of the Office of Management 

and Budget, and the Director of the 

Office of Personnel Management) to 

determine locality pay areas. The 

boundaries of locality pay areas must be 

based on appropriate factors, which may 

include local labor market patterns, 

commuting patterns, and the practices 

of other employers. The Pay Agent must 

give thorough consideration to the 

views and recommendations of the 

Federal Salary Council (Council), a body 

composed of experts in the fields of 

labor relations and pay policy and 

representatives of Federal employee 

organizations. The President appoints 

the members of the Council, which 

submits annual recommendations to the 

Pay Agent about the locality pay 

program. 

The Federal Salary Council has been 

unable to meet to consider what locality 

pay areas should be established for the 

States of Alaska and Hawaii and the 

U.S. territories and possessions. Since 

establishing locality pay areas by 

regulation takes a substantial amount of 

time, we are publishing this interim rule 

now, even though the Council has not 

yet met, to insure these new locality pay 

areas are established in time for the 

January 2011 pay adjustments. We are 

hopeful the Council will be able to meet 

during the comment period for these 

regulations to formulate and submit 

recommendations. 

In the absence of Council 

recommendations, the Pay Agent has 

concluded that separate locality pay 

areas should be established for the 

States of Alaska and Hawaii. We have 

non-Federal salary survey data collected 

under the National Compensation 

Survey (NCS) that can be used to set and 

adjust locality pay rates for these 

locations. This is the same survey 

source currently used in the other 

locality pay areas. In fact, the Council’s 

recommendation letter of November 4, 

2009, included a pay disparity for 

Alaska (based on a survey of Anchorage) 

of 54.98 percent and a pay disparity for 

Hawaii (based on a survey of Honolulu) 

of 38.41 percent. These measures were 

generated using the methodology 

adopted by the Council and the Pay 

Agent and salary surveys conducted by 

the Bureau of Labor Statistics (BLS) and 

both are well above the Rest of U.S. 

locality pay area pay disparity of 27.81 

percent included in our 2009 annual 

report to the President. Establishing 

single pay areas for all of Alaska and all 

of Hawaii also coincides with a sense of 

Congress provision that these locations 

each be covered by a single separate 

locality pay area. Since it is not feasible 

for BLS to conduct salary surveys using 

the current survey methods at current 

budget levels in additional locations in 

Alaska, Hawaii, or the U.S. territories 

and possessions, the Pay Agent 

concludes Alaska and Hawaii should 

become whole-State locality pay areas 

and the other locations should be part 

of the Rest of U.S. (RUS) locality pay 

area. This decision may be revisited if 

the Federal Salary Council makes a 

different recommendation when it next 

convenes. 

Impact and Implementation 

This rule will affect rates of pay for 

about 44,100 civilian white-collar 

employees in the States of Alaska and 

Hawaii, the Commonwealths of Puerto 

Rico and the Northern Mariana Islands, 

Guam, the U.S. Virgin Islands, and other 

U.S. possessions. Under the rule, 

approved locality pay rates would likely 

be higher than in the RUS locality pay 

area for employees in Alaska and 

Hawaii. Federal civilian white-collar 

employees in the U.S. territories and 

possessions will be covered by the RUS 

locality pay rate. 

Waiver of Notice of Proposed 

Rulemaking 

Pursuant to 5 U.S.C. 553(b)(3)(B), I 

find that good cause exists for waiving 


jdjones on DSK8KYBLC1PROD with RULES
60286 Federal Register / Vol. 75, No. 189 / Thursday, September 30, 2010 / Rules and Regulations 

the general notice of proposed 

rulemaking. Notice is being waived to 

comply with the intent of Congress that 

employees affected by the NAREA in 

Alaska and Hawaii have separate 

locality pay areas established for 

January 2011 pay adjustments. In 

addition, notice is being waived to 

ensure that employees in the U.S. 

territories and possessions who are 

affected by the NAREA are included in 

the RUS locality pay area in time for the 

January 2011 pay adjustments. I find 

that provision of the general notice of 

proposed regulations is both 

impracticable and unnecessary in this 

instance because Congress has indicated 

its intent that these changes be effected 

in time for the January 2011 pay 

adjustments, and because the process of 

promulgating proposed and final rules 

to establish these changes would 

introduce unnecessary delay resulting 

in effecting these changes beyond the 

date on which the January 2011 pay 

adjustments take effect. In addition, 

since the latest available data indicates 

that, for Alaska and Hawaii, the locality 

pay rates will be higher than that for the 

RUS locality pay area, the process of 

promulgating proposed and final rules 

would be contrary to the public interest 

in that it would cause unnecessary 

delay in applying the higher locality pay 

rates in these areas in time for the 

January 2011 pay adjustments. 

E.O. 12866, Regulatory Review 

The Office of Management and Budget 

has reviewed this rule in accordance 

with E.O. 12866. 

Paperwork Reduction Act 

This document does not contain 

proposed information collection 

requirements subject to the Paperwork 

Reduction Act of 1995, Public Law 104– 

13. 

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 Part 531 

Government employees, Law 

enforcement officers, Wages. 

John Berry, 

Director, U.S. Office of Personnel 

Management. 

■ Accordingly, OPM amends 5 CFR part 

531 as follows: 

PART 531—PAY UNDER THE 

GENERAL SCHEDULE 

■ 1. The authority citation for part 531 

continues 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; 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 F—Locality-Based 

Comparability Payments 

■ 2. In § 531.603, paragraph (b) is 

revised to read as follows: 

§ 531.603 Locality pay areas. 

* * * * * 

(b) The following are locality pay 

areas for the purposes of this subpart: 

(1) Alaska—consisting of the State of 

Alaska; 

(2) Atlanta-Sandy Springs-Gainesville, 

GA–AL—consisting of the AtlantaSandy Springs-Gainesville, GA–AL 

CSA; 

(3) Boston-Worcester-Manchester, 

MA–NH–RI–ME—consisting of the 

Boston-Worcester-Manchester, MA–RI– 

NH CSA, plus Barnstable County, MA, 

and Berwick, Eliot, Kittery, South 

Berwick, and York towns in York 

County, ME; 

(4) Buffalo-Niagara-Cattaraugus, NY— 

consisting of the Buffalo-NiagaraCattaraugus, NY CSA; 

(5) Chicago-Naperville-Michigan City, 

IL–IN–WI—consisting of the ChicagoNaperville-Michigan City, IL–IN–WI 

CSA; 

(6) Cincinnati-MiddletownWilmington, OH–KY–IN—consisting of 

the Cincinnati-Middletown-Wilmington, 

OH–KY–IN CSA; 

(7) Cleveland-Akron-Elyria, OH— 

consisting of the Cleveland-AkronElyria, OH CSA; 

(8) Columbus-Marion-Chillicothe, 

OH—consisting of the ColumbusMarion-Chillicothe, OH CSA; 

(9) Dallas-Fort Worth, TX—consisting 

of the Dallas-Fort Worth, TX CSA; 

(10) Dayton-Springfield-Greenville, 

OH—consisting of the DaytonSpringfield-Greenville, OH CSA; 

(11) Denver-Aurora-Boulder, CO— 

consisting of the Denver-AuroraBoulder, CO CSA, plus the Ft. CollinsLoveland, CO MSA; 

(12) Detroit-Warren-Flint, MI— 

consisting of the Detroit-Warren-Flint, 

MI CSA, plus Lenawee County, MI; 

(13) Hartford-West HartfordWillimantic, CT–MA—consisting of the 

Hartford-West Hartford-Willimantic, CT 

CSA, plus the Springfield, MA MSA and 

New London County, CT; 

(14) Hawaii—consisting of the State of 

Hawaii; 

(15) Houston-Baytown-Huntsville, 

TX—consisting of the HoustonBaytown-Huntsville, TX CSA; 

(16) Huntsville-Decatur, AL— 

consisting of the Huntsville-Decatur, AL 

CSA; 

(17) Indianapolis-AndersonColumbus, IN—consisting of the 

Indianapolis-Anderson-Columbus, IN 

CSA, plus Grant County, IN; 

(18) Los Angeles-Long BeachRiverside, CA—consisting of the Los 

Angeles-Long Beach-Riverside, CA CSA, 

plus the Santa Barbara-Santa MariaGoleta, CA MSA and all of Edwards Air 

Force Base, CA; 

(19) Miami-Fort Lauderdale-Pompano 

Beach, FL—consisting of the Miami-Fort 

Lauderdale-Pompano Beach, FL MSA, 

plus Monroe County, FL; 

(20) Milwaukee-Racine-Waukesha, 

WI—consisting of the MilwaukeeRacine-Waukesha, WI CSA; 

(21) Minneapolis-St. Paul-St. Cloud, 

MN–WI—consisting of the MinneapolisSt. Paul-St. Cloud, MN–WI CSA; 

(22) New York-Newark-Bridgeport, 

NY–NJ–CT–PA—consisting of the New 

York-Newark-Bridgeport, NY–NJ–CT– 

PA CSA, plus Monroe County, PA, 

Warren County, NJ, and all of Joint Base 

McGuire-Dix-Lakehurst; 

(23) Philadelphia-Camden-Vineland, 

PA–NJ–DE–MD—consisting of the 

Philadelphia-Camden-Vineland, PA– 

NJ–DE–MD CSA excluding Joint Base 

McGuire-Dix-Lakehurst, plus Kent 

County, DE, Atlantic County, NJ, and 

Cape May County, NJ; 

(24) Phoenix-Mesa-Scottsdale, AZ— 

consisting of the Phoenix-MesaScottsdale, AZ MSA; 

(25) Pittsburgh-New Castle, PA— 

consisting of the Pittsburgh-New Castle, 

PA CSA; 

(26) Portland-Vancouver-Hillsboro, 

OR–WA—consisting of the PortlandVancouver-Hillsboro, OR–WA MSA, 

plus Marion County, OR, and Polk 

County, OR; 

(27) Raleigh-Durham-Cary, NC— 

consisting of the Raleigh-Durham-Cary, 

NC CSA, plus the Fayetteville, NC MSA, 

the Goldsboro, NC MSA, and the 

Federal Correctional Complex Butner, 

NC; 

(28) Richmond, VA—consisting of the 

Richmond, VA MSA; 

(29) Sacramento—Arden-Arcade— 

Yuba City, CA–NV—consisting of the 

Sacramento—Arden-Arcade—Yuba 

City, CA–NV CSA, plus Carson City, 

NV; 


jdjones on DSK8KYBLC1PROD with RULES
Federal Register / Vol. 75, No. 189 / Thursday, September 30, 2010 / Rules and Regulations 60287 

(30) San Diego-Carlsbad-San Marcos, 

CA—consisting of the San DiegoCarlsbad-San Marcos, CA MSA; 

(31) San Jose-San Francisco-Oakland, 

CA—consisting of the San Jose-San 

Francisco-Oakland, CA CSA, plus the 

Salinas, CA MSA and San Joaquin 

County, CA; 

(32) Seattle-Tacoma-Olympia, WA— 

consisting of the Seattle-TacomaOlympia, WA CSA, plus Whatcom 

County, WA; 

(33) Washington-Baltimore-Northern 

Virginia, DC–MD–VA–WV–PA— 

consisting of the Washington-BaltimoreNorthern Virginia, DC–MD–VA–WV 

CSA, plus the Hagerstown-Martinsburg, 

MD–WV MSA, the York-HanoverGettysburg, PA CSA, and King George 

County, VA; and 

(34) Rest of U.S.—consisting of those 

portions of the United States and its 

territories and possessions as listed in 5 

CFR 591.205 not located within another 

locality pay area. 

[FR Doc. 2010–24495 Filed 9–29–10; 8:45 am] 

BILLING CODE 6325–01–P 

FEDERAL DEPOSIT INSURANCE 

CORPORATION 

12 CFR Part 360 

RIN 3064–AD55 

Treatment by the Federal Deposit 

Insurance Corporation as Conservator 

or Receiver of Financial Assets 

Transferred by an Insured Depository 

Institution in Connection With a 

Securitization or Participation After 

September 30, 2010 

AGENCY: Federal Deposit Insurance 

Corporation (FDIC). 

ACTION: Final rule. 

SUMMARY: The Federal Deposit 

Insurance Corporation (‘‘FDIC’’) has 

adopted an amended regulation 

regarding the treatment by the FDIC, as 

receiver or conservator of an insured 

depository institution, of financial 

assets transferred by the institution in 

connection with a securitization or a 

participation (the ‘‘Rule’’). The Rule 

continues the safe harbor for financial 

assets transferred in connection with 

securitizations and participations in 

which the financial assets were 

transferred in compliance with the 

existing regulation. The Rule also 

imposes further conditions for a safe 

harbor for securitizations or 

participations issued after a transition 

period. On March 11, 2010, the FDIC 

established a transition period through 

September 30, 2010. In order to provide 

for a transition to the new conditions for 

the safe harbor, the Rule provides for an 

extended transition period through 

December 31, 2010 for securitizations 

and participations. The Rule defines the 

conditions for safe harbor protection for 

securitizations and participations for 

which transfers of financial assets are 

made after the transition period; and 

clarifies the application of the safe 

harbor to transactions that comply with 

the new accounting standards for off 

balance sheet treatment as well as those 

that do not comply with those 

accounting standards. The conditions 

contained in the Rule will serve to 

protect the Deposit Insurance Fund 

(‘‘DIF’’) and the FDIC’s interests as 

deposit insurer and receiver by aligning 

the conditions for the safe harbor with 

better and more sustainable 

securitization practices by insured 

depository institutions (‘‘IDIs’’). 

DATES: Effective September 30, 2010. 

FOR FURTHER INFORMATION CONTACT: 

Michael Krimminger, Office of the 

Chairman, 202–898–8950; George 

Alexander, Division of Resolutions and 

Receiverships, (202) 898–3718; Robert 

Storch, Division of Supervision and 

Consumer Protection, (202) 898–8906; 

or R. Penfield Starke, Legal Division, 

(703) 562–2422, Federal Deposit 

Insurance Corporation, 550 17th Street, 

NW., Washington, DC 20429. 

SUPPLEMENTARY INFORMATION: 

I. Background 

In 2000, the FDIC clarified the scope 

of its statutory authority as conservator 

or receiver to disaffirm or repudiate 

contracts of an insured depository 

institution with respect to transfers of 

financial assets by an IDI in connection 

with a securitization or participation 

when it adopted a regulation codified at 

12 CFR 360.6 (the ‘‘Securitization 

Rule’’). This rule provided that the FDIC 

as conservator or receiver would not use 

its statutory authority to disaffirm or 

repudiate contracts to reclaim, recover, 

or recharacterize as property of the 

institution or the receivership any 

financial assets transferred by an IDI in 

connection with a securitization or in 

the form of a participation, provided 

that such transfer met all conditions for 

sale accounting treatment under 

generally accepted accounting 

principles (‘‘GAAP’’). The rule was a 

clarification, rather than a limitation, of 

the repudiation power. Such power 

authorizes the conservator or receiver to 

breach a contract or lease entered into 

by an IDI and be legally excused from 

further performance, but it is not an 

avoiding power enabling the 

conservator or receiver to recover assets 

that were previously sold and no longer 

reflected on the books and records on an 

IDI. 

The Securitization Rule provided a 

‘‘safe harbor’’ by confirming ‘‘legal 

isolation’’ if all other standards for off 

balance sheet accounting treatment, 

along with some additional conditions 

focusing on the enforceability of the 

transaction, were met by the transfer in 

connection with a securitization or a 

participation. Satisfaction of ‘‘legal 

isolation’’ was vital to securitization 

transactions because of the risk that the 

pool of financial assets transferred into 

the securitization trust could be 

recovered in bankruptcy or in a bank 

receivership. If the transfer satisfied this 

condition, the Securitization Rule 

confirmed that the transferred assets 

were ‘‘legally isolated’’ from the IDI in an 

FDIC conservatorship or receivership. 

The Securitization Rule, thus, addressed 

only purported sales which met the 

conditions for off balance sheet 

accounting treatment under GAAP. 

Since its adoption, the Securitization 

Rule has been relied on by 

securitization participants as assurance 

that investors could look to securitized 

financial assets for payment without 

concern that the financial assets would 

be interfered with by the FDIC as 

conservator or receiver. However, the 

implementation of new accounting rules 

has created uncertainty for 

securitization participants. 

Modifications to GAAP Accounting 

Standards 

On June 12, 2009, the Financial 

Accounting Standards Board (‘‘FASB’’) 

finalized modifications to GAAP 

through Statement of Financial 

Accounting Standards No. 166, 

Accounting for Transfers of Financial 

Assets, an Amendment of FASB 

Statement No. 140 (‘‘FAS 166’’) and 

Statement of Financial Accounting 

Standards No. 167, Amendments to 

FASB Interpretation No. 46(R) (‘‘FAS 

167’’) (the ‘‘2009 GAAP Modifications’’). 

The 2009 GAAP Modifications are 

effective for annual financial statement 

reporting periods that begin after 

November 15, 2009. The 2009 GAAP 

Modifications made changes that affect 

whether a special purpose entity (‘‘SPE’’) 

must be consolidated for financial 

reporting purposes, thereby subjecting 

many SPEs to GAAP consolidation 

requirements. These accounting changes 

may require some IDIs to consolidate an 

issuing entity to which financial assets 

have been transferred for securitization 

onto their balance sheets for financial 

reporting purposes primarily because an 

affiliate of the IDI retains control over 


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