[Congressional Bills 110th Congress]
[From the U.S. Government Publishing Office]
[S. 3013 Referred in House (RFH)]







110th CONGRESS
  2d Session
                                S. 3013


_______________________________________________________________________


                    IN THE HOUSE OF REPRESENTATIVES

                            October 2, 2008

 Referred to the Committee on Oversight and Government Reform, and in 
  addition to the Committee on Veterans' Affairs, for a period to be 
subsequently determined by the Speaker, in each case for consideration 
  of such provisions as fall within the jurisdiction of the committee 
                               concerned

_______________________________________________________________________

                                 AN ACT


 
 To provide for retirement equity for Federal employees in nonforeign 
 areas outside the 48 contiguous States and the District of Columbia, 
                        and for other purposes.

    Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled,

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Non-Foreign Area Retirement Equity 
Assurance Act of 2008'' or the ``Non-Foreign AREA Act of 2008''.

SEC. 2. EXTENSION OF LOCALITY PAY.

    (a) Locality-Based Comparability Payments.--Section 5304 of title 
5, United States Code, is amended--
            (1) in subsection (f)(1), by striking subparagraph (A) and 
        inserting the following:
                    ``(A) each General Schedule position in the United 
                States, as defined under section 5921(4), and its 
                territories and possessions, including the Commonwealth 
                of Puerto Rico and the Commonwealth of the Northern 
                Mariana Islands, shall be included within a pay 
                locality;'';
            (2) in subsection (g)--
                    (A) in paragraph (2)--
                            (i) in subparagraph (A), by striking 
                        ``and'' after the semicolon;
                            (ii) by redesignating subparagraph (B) as 
                        subparagraph (C);
                            (iii) by inserting after subparagraph (A) 
                        the following:
                    ``(B) positions under subsection (h)(1)(D) not 
                covered by appraisal systems certified under section 
                5382; and''; and
                            (iv) in subparagraph (C) (as redesignated 
                        by this paragraph), by striking ``under 
                        subsection (h)(1)(D)'' and inserting ``under 
                        subsection (h)(1)(E)''; and
                    (B) by adding at the end the following:
            ``(3) The applicable maximum under this subsection shall be 
        level II of the Executive Schedule for positions under 
        subsection (h)(1)(D) covered by appraisal systems certified 
        under section 5307(d).''; and
            (3) in subsection (h)(1)--
                    (A) in subparagraph (C) by striking ``and'' after 
                the semicolon;
                    (B) by redesignating subparagraph (D) as 
                subparagraph (E);
                    (C) by inserting after subparagraph (C) the 
                following:
                    ``(D) a Senior Executive Service position under 
                section 3132 stationed within the United States, but 
                outside the 48 contiguous States and the District of 
                Columbia in which the incumbent the day before the date 
                of enactment of the Non-Foreign Area Retirement Equity 
                Assurance Act of 2008 was eligible to receive a cost-
                of-living allowance under section 5941; and''; and
                    (D) in clause (iii) in the matter following 
                subparagraph (D), by inserting ``stationed in the 48 
                contiguous States and the District of Columbia, or 
                stationed within the United States, but outside the 48 
                contiguous States and the District of Columbia, in 
                which the incumbent the day before the date of 
                enactment of the Non-Foreign Area Retirement Equity 
                Assurance Act of 2008 was not eligible to receive a 
                cost-of-living allowance under section 5941; and'' 
                before the semicolon.
    (b) Allowances Based on Living Costs and Conditions of 
Environment.--Section 5941 of title 5, United States Code, is amended--
            (1) in subsection (a), by adding after the last sentence 
        ``Notwithstanding any preceding provision of this subsection, 
        the cost-of-living allowance rate based on paragraph (1) of 
        this subsection shall be the cost-of-living allowance rate in 
        effect on December 31, 2008, except as adjusted under 
        subsection (c).'';
            (2) by redesignating subsection (b) as subsection (d); and
            (3) by inserting after subsection (a) the following:
    ``(b) This section shall apply only to areas that are designated as 
cost-of-living allowance areas as in effect on December 31, 2008.
    ``(c)(1) The cost-of-living allowance rate payable under this 
section shall be adjusted on the first day of the first applicable pay 
period beginning on or after--
            ``(A) January 1, 2009; and
            ``(B) on January 1 of each calendar year in which a 
        locality-based comparability adjustment takes effect under 
        section 4 (2) and (3) of the Non-Foreign Area Retirement Equity 
        Assurance Act of 2008.
    ``(2)(A) In this paragraph, the term `applicable locality-based 
comparability pay percentage' means, with respect to calendar year 2009 
and each calendar year thereafter, the applicable percentage under 
section 4 (1), (2), or (3) of Non-Foreign Area Retirement Equity 
Assurance Act of 2008.
    ``(B) Each adjusted cost-of-living allowance rate under paragraph 
(1) shall be computed by--
            ``(i) subtracting 65 percent of the applicable locality-
        based comparability pay percentage from the cost-of-living 
        allowance percentage rate in effect on December 31, 2008; and
            ``(ii) dividing the resulting percentage determined under 
        clause (i) by the sum of--
                    ``(I) one; and
                    ``(II) the applicable locality-based comparability 
                payment percentage expressed as a numeral.
    ``(3) No allowance rate computed under paragraph (2) may be less 
than zero.
    ``(4) Each allowance rate computed under paragraph (2) shall be 
paid as a percentage of basic pay (including any applicable locality-
based comparability payment under section 5304 or similar provision of 
law and any applicable special rate of pay under section 5305 or 
similar provision of law).''.

SEC. 3. ADJUSTMENT OF SPECIAL RATES.

    (a) In General.--Each special rate of pay established under section 
5305 of title 5, United States Code, and payable in an area designated 
as a cost-of-living allowance area under section 5941(a) of that title, 
shall be adjusted, on the dates prescribed by section 4 of this Act, in 
accordance with regulations prescribed by the Director of the Office of 
Personnel Management under section 8 of this Act.
    (b) Department of Veterans Affairs.--Each special rate of pay 
established under section 7455 of title 38, United States Code, and 
payable in a location designated as a cost-of-living allowance area 
under section 5941(a)(1) of title 5, United States Code, shall be 
adjusted in accordance with regulations prescribed by the Secretary of 
Veterans Affairs that are consistent with the regulations issued by the 
Director of the Office of Personnel Management under subsection (a).
    (c) Temporary Adjustment.--Regulations issued under subsection (a) 
or (b) may provide that statutory limitations on the amount of such 
special rates may be temporarily raised to a higher level during the 
transition period described in section 4 ending on the first day of the 
first pay period beginning on or after January 1, 2011, at which time 
any special rate of pay in excess of the applicable limitation shall be 
converted to a retained rate under section 5363 of title 5, United 
States Code.

SEC. 4. TRANSITION SCHEDULE FOR LOCALITY-BASED COMPARABILITY PAYMENTS.

    Notwithstanding any other provision of this Act or section 5304 or 
5304a of title 5, United States Code, in implementing the amendments 
made by this Act, for each non-foreign area determined under section 
5941(b) of that title, the applicable rate for the locality-based 
comparability adjustment that is used in the computation required under 
section 5941(c) of that title shall be adjusted effective on the first 
day of the first pay period beginning on or after January 1--
            (1) in calendar year 2009, by using \1/3\ of the locality 
        pay percentage for the rest of United States locality pay area;
            (2) in calendar year 2010, by using \2/3\ of the otherwise 
        applicable comparability payment approved by the President for 
        each non-foreign area; and
            (3) in calendar year 2011 and each subsequent year, by 
        using the full amount of the applicable comparability payment 
        approved by the President for each non-foreign area.

SEC. 5. SAVINGS PROVISION.

    (a) Sense of Congress.--It is the sense of Congress that the 
application of this Act to any employee should not result in a decrease 
in the take home pay of that employee.
    (b) Sense of Congress.--It is the sense of Congress that the Bureau 
of Labor Statistics will conduct separate surveys pursuant to the 
establishment by the President's Pay Agent of 1 new locality area for 
the entire State of Hawaii and 1 new locality area for the entire state 
of Alaska, and that upon the completion of the phase in period no 
employee shall receive less than the Rest of the U.S. locality pay 
rate.
    (c) Savings Provisions.--
            (1) In general.--During the period described under section 
        4 of this Act, an employee paid a special rate under 5305 of 
        title 5, United States Code, who the day before the date of 
        enactment of this Act was eligible to receive a cost-of-living 
        allowance under section 5941 of title 5, United States Code, 
        and who continues to be officially stationed in an allowance 
        area, shall receive an increase in the employee's special rate 
        consistent with increases in the applicable special rate 
        schedule. For employees in allowance areas, the minimum step 
        rate for any grade of a special rate schedule shall be 
        increased at the time of an increase in the applicable locality 
        rate percentage for the allowance area by not less than the 
        dollar increase in the locality-based comparability payment for 
        a non-special rate employee at the same minimum step provided 
        under section 4 of this Act, and corresponding increases shall 
        be provided for all step rates of the given pay range.
            (2) Continuation of cost of living allowance rate.--If an 
        employee, who the day before the date of enactment of this Act 
        was eligible to receive a cost-of-living allowance under 
        section 5941 of title 5, United States Code, would receive a 
        rate of basic pay and applicable locality-based comparability 
        payment which is in excess of the maximum rate limitation set 
        under section 5304(g) of title 5, United States Code, for his 
        position (but for that maximum rate limitation) due to the 
        operation of this Act, the employee shall continue to receive 
        the cost-of-living allowance rate in effect on December 31, 
        2008 without adjustment until--
                    (A) the employee leaves the allowance area or pay 
                system; or
                    (B) the employee is entitled to receive basic pay 
                (including any applicable locality-based comparability 
                payment or similar supplement) at a higher rate,
        but, when any such position becomes vacant, the pay of any 
        subsequent appointee thereto shall be fixed in the manner 
        provided by applicable law and regulation.
            (3) Locality-based comparability payments.--Any employee 
        covered under paragraph (2) shall receive any applicable 
        locality-based comparability payment extended under section 4 
        of this Act which is not in excess of the maximum rate set 
        under section 5304(g) of title 5, United States Code, for his 
        position including any future increase to statutory pay caps 
        under 5318 of title 5, United States Code. Notwithstanding 
        paragraph (2), to the extent that an employee covered under 
        that paragraph receives any amount of locality-based 
        comparability payment, the cost-of-living allowance rate under 
        that paragraph shall be reduced accordingly, as provided under 
        section 5941(c)(2)(B) of title 5, United States Code.

SEC. 6. APPLICATION TO OTHER ELIGIBLE EMPLOYEES.

    (a) In General.--
            (1) Definition.--In this subsection, the term ``covered 
        employee'' means--
                    (A) any employee who--
                            (i) on--
                                    (I) the day before the date of 
                                enactment of this Act--
                                            (aa) was eligible to be 
                                        paid a cost-of-living allowance 
                                        under 5941 of title 5, United 
                                        States Code; and
                                            (bb) was not eligible to be 
                                        paid locality-based 
                                        comparability payments under 
                                        5304 or 5304a of that title; or
                                    (II) or after the date of enactment 
                                of this Act becomes eligible to be paid 
                                a cost-of-living allowance under 5941 
                                of title 5, United States Code; and
                            (ii) except as provided under paragraph 
                        (2), is not covered under--
                                    (I) section 5941 of title 5, United 
                                States Code (as amended by section 2 of 
                                this Act); and
                                    (II) section 4 of this Act; or
                    (B) any employee who--
                            (i) on the day before the date of enactment 
                        of this Act--
                                    (I) was eligible to be paid an 
                                allowance under section 1603(b) of 
                                title 10, United States Code;
                                    (II) was eligible to be paid an 
                                allowance under section 1005(b) of 
                                title 39, United States Code; or
                                    (III) was employed by the 
                                Transportation Security Administration 
                                of the Department of Homeland Security 
                                and was eligible to be paid an 
                                allowance based on section 5941 of 
                                title 5, United States Code; or
                            (ii) on or after the date of enactment of 
                        this Act--
                                    (I) becomes eligible to be paid an 
                                allowance under section 1603(b) of 
                                title 10, United States Code;
                                    (II) becomes eligible to be paid an 
                                allowance under section 1005(b) of 
                                title 39, United States Code; or
                                    (III) is employed by the 
                                Transportation Security Administration 
                                of the Department of Homeland Security 
                                and becomes eligible to be paid an 
                                allowance based on section 5941 of 
                                title 5, United States Code.
            (2) Application to covered employees.--
                    (A) In general.--Notwithstanding any other 
                provision of law, for purposes of this Act (including 
                the amendments made by this Act) any covered employee 
                shall be treated as an employee to whom section 5941 of 
                title 5, United States Code (as amended by section 2 of 
                this Act), and section 4 of this Act apply.
                    (B) Pay fixed by statute.--Pay to covered employees 
                under section 5304 or 5304a of title 5, United States 
                Code, as a result of the application of this Act shall 
                be considered to be fixed by statute.
                    (C) Performance appraisal system.--With respect to 
                a covered employee who is subject to a performance 
                appraisal system no part of pay attributable to 
                locality-based comparability payments as a result of 
                the application of this Act including section 5941 of 
                title 5, United States Code (as amended by section 2 of 
                this Act), may be reduced on the basis of the 
                performance of that employee.
    (b) Postal Employees in Non-Foreign Areas.--
            (1) In general.--Section 1005(b) of title 39, United States 
        Code, is amended--
                    (A) by inserting ``(1)'' after ``(b)'';
                    (B) by striking ``Section 5941,'' and inserting 
                ``Except as provided under paragraph (2), section 
                5941'';
                    (C) by striking ``For purposes of such section,'' 
                and inserting ``Except as provided under paragraph (2), 
                for purposes of section 5941 of that title,''; and
                    (D) by adding at the end the following:
            ``(2) On and after the date of enactment of the Non-Foreign 
        Area Retirement Equity Assurance Act of 2008--
                    ``(A) the provisions of that Act and section 5941 
                of title 5 shall apply to officers and employees 
                covered by section 1003(b) and (c) whose duty station 
                is in a nonforeign area; and
                    ``(B) with respect to officers and employees of the 
                Postal Service (other than those officers and employees 
                described under subparagraph (A)) section 6(b)(2) of 
                that Act shall apply.''.
            (2) Continuation of cost of living allowance.--
                    (A) In general.--Notwithstanding any other 
                provision of this Act, any employee of the Postal 
                Service (other than an employee covered by section 1003 
                (b) and (c) of title 39, United States Code, whose duty 
                station is in a nonforeign area) who is paid an 
                allowance under section 1005(b) of that title shall be 
                treated for all purposes as if the provisions of this 
                Act (including the amendments made by this Act) had not 
                been enacted, except that the cost-of-living allowance 
                rate paid to that employee--
                            (i) may result in the allowance exceeding 
                        25 percent of the rate of basic pay of that 
                        employee; and
                            (ii) shall be the greater of--
                                    (I) the cost-of-living allowance 
                                rate in effect on December 31, 2008 for 
                                the applicable area; or
                                    (II) the applicable locality-based 
                                comparability pay percentage under 
                                section 4.
                    (B) Rule of construction.--Nothing in this Act 
                shall be construed to--
                            (i) provide for an employee described under 
                        subparagraph (A) to be a covered employee as 
                        defined under subsection (a); or
                            (ii) authorize an employee described under 
                        subparagraph (A) to file an election under 
                        section 7 of this Act.

SEC. 7. ELECTION OF ADDITIONAL BASIC PAY FOR ANNUITY COMPUTATION BY 
              EMPLOYEES.

    (a) Definition.--In this section the term ``covered employee'' 
means any employee--
            (1) to whom section 4 applies;
            (2) who is separated from service by reason of retirement 
        under chapter 83 or 84 of title 5, United States Code, during 
        the period of January 1, 2009, through December 31, 2011; and
            (3) who files and election with the Office of Personnel 
        Management under subsection (b).
    (b) Election.--
            (1) In general.--An employee described under subsection (a) 
        (1) and (2) may file an election with the Office of Personnel 
        Management to be covered under this section.
            (2) Deadline.--An election under this subsection may be 
        filed not later than December 31, 2011.
    (c) Computation of Annuity.--
            (1) In general.--Except as provided under paragraph (2), 
        for purposes of the computation of an annuity of a covered 
        employee any cost-of-living allowance under section 5941 of 
        title 5, United States Code, paid to that employee during the 
        first applicable pay period beginning on or after January 1, 
        2009 through the first applicable pay period ending on or after 
        December 31, 2011, shall be considered basic pay as defined 
        under section 8331(3) or 8401(4) of that title.
            (2) Limitation.--The amount of the cost-of-living allowance 
        which may be considered basic pay under paragraph (1) may not 
        exceed the amount of the locality-based comparability payments 
        the employee would have received during that period for the 
        applicable pay area if the limitation under section 4 of this 
        Act did not apply.
    (d) Civil Service Retirement and Disability Retirement Fund.--
            (1) Employee contributions.--A covered employee shall pay 
        into the Civil Service Retirement and Disability Retirement 
        Fund--
                    (A) an amount equal to the difference between--
                            (i) employee contributions that would have 
                        been deducted and withheld from pay under 
                        section 8334 or 8422 of title 5, United States 
                        Code, during the period described under 
                        subsection (c) of this section if that 
                        subsection had been in effect during that 
                        period; and
                            (ii) employee contributions that were 
                        actually deducted and withheld from pay under 
                        section 8334 or 8422 of title 5, United States 
                        Code, during that period; and
                    (B) interest as prescribed under section 8334(e) of 
                title 5, United States Code, based on the amount 
                determined under subparagraph (A).
            (2) Agency contributions.--
                    (A) In general.--The employing agency of a covered 
                employee shall pay into the Civil Service Retirement 
                and Disability Retirement Fund an amount for applicable 
                agency contributions based on payments made under 
                paragraph (1).
                    (B) Source.--Amounts paid under this paragraph 
                shall be contributed from the appropriation or fund 
                used to pay the employee.
            (3) Regulations.--The Office of Personnel Management may 
        prescribe regulations to carry out this section.

SEC. 8. REGULATIONS.

    (a) In General.--The Director of the Office of Personnel Management 
shall prescribe regulations to carry out this Act, including--
            (1) rules for special rate employees described under 
        section 3;
            (2) rules for adjusting rates of basic pay for employees in 
        pay systems administered by the Office of Personnel Management 
        when such employees are not entitled to locality-based 
        comparability payments under section 5304 of title 5, United 
        States Code, without regard to otherwise applicable statutory 
        pay limitations during the transition period described in 
        section 4 ending on the first day of the first pay period 
        beginning on or after January 1, 2011; and
            (3) rules governing establishment and adjustment of saved 
        or retained rates for any employee whose rate of pay exceeds 
        applicable pay limitations on the first day of the first pay 
        period beginning on or after January 1, 2011.
    (b) Other Pay Systems.--With the concurrence of the Director of the 
Office of Personnel Management, the administrator of a pay system not 
administered by the Office of Personnel Management shall prescribe 
regulations to carry out this Act with respect to employees in such pay 
system, consistent with the regulations issued by the Office under 
subsection (a).

SEC. 9. EFFECTIVE DATES.

    (a) In General.--Except as provided by subsection (b), this Act 
(including the amendments made by this Act) shall take effect on the 
date of enactment of this Act.
    (b) Locality Pay and Schedule.--The amendments made by section 2 
and the provisions of section 4 shall take effect on the first day of 
the first applicable pay period beginning on or after January 1, 2009.

            Passed the Senate October 1 (legislative day, September 
      17), 2008.

            Attest:

                                                NANCY ERICKSON,

                                                             Secretary.