[Federal Register Volume 60, Number 130 (Friday, July 7, 1995)]
[Proposed Rules]
[Pages 35342-35343]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-16546]



 ========================================================================
 Proposed Rules
                                                 Federal Register
 ________________________________________________________________________
 
 This section of the FEDERAL REGISTER contains notices to the public of 
 the proposed issuance of rules and regulations. The purpose of these 
 notices is to give interested persons an opportunity to participate in 
 the rule making prior to the adoption of the final rules.
 
 ========================================================================
 

  Federal Register / Vol. 60, No. 130 / Friday, July 7, 1995 / Proposed 
Rules  


[[Page 35342]]


OFFICE OF PERSONNEL MANAGEMENT

5 CFR Part 550

RIN 3206-AF89


Pay Administration (General); Severance Pay for Panama Canal 
Commission Employees

AGENCY: Office of Personnel Management.

ACTION: Proposed rule with request for comments.

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SUMMARY: The Office of Personnel Management (OPM) proposes to amend its 
regulations to exclude certain categories of employees of the Panama 
Canal Commission from entitlement to severance pay. On December 31, 
1999, the Republic of Panama will take over operation of the Panama 
Canal under the terms of the Panama Canal Treaty of 1977. The proposed 
changes would eliminate entitlement to severance pay for Panama Canal 
Commission employees who are offered reasonably comparable employment 
with a successor entity or who are hired more than 90 days after the 
publication of final regulations making these changes.

DATES: Comments must be received on or before September 5, 1995.

ADDRESSES: Send or deliver written comments to Donald J. Winstead, 
Assistant Director for Compensation Policy, Office of Personnel 
Management, Room 6H31, 1900 E Street NW., Washington, DC 20415.

FOR FURTHER INFORMATION CONTACT:
Frank Derby, (202) 606-2858.

SUPPLEMENTARY INFORMATION: Federal employees employed by the Panama 
Canal Commission will be affected by the transfer of control over the 
Panama Canal from the United States to the Republic of Panama under the 
terms of the Panama Canal Treaty of October 1, 1977. These proposed 
regulatory changes, requested by the Panama Canal Commission, address 
this unique transfer of function as it pertains to severance pay 
entitlements for certain Federal employees.
    Under the proposed regulations, severance pay under title 5, United 
States Code, would not be payable to those Panama Canal Commission 
employees who are offered ``reasonably comparable employment'' by one 
of the successor public or private entities that the government of the 
Republic of Panama vests with responsibility for performing functions 
previously performed by the Commission. In addition, severance pay 
would not be payable to employees who are appointed as Commission 
employees after the 90th day following publication of final regulations 
making these changes.
    The severance pay statute (5 U.S.C. 5595) permits the Office of 
Personnel Management (OPM) to exclude by regulation any employees, 
officers, or agencies that are not otherwise excluded by law. For 
example, under OPM's regulations, involuntarily separated employees are 
not entitled to severance pay if they are given a ``reasonable offer'' 
of continued Federal employment by the employing agency or a successor 
agency (5 CFR 550.704(b)(2)). Similarly, the regulations now being 
processed would eliminate entitlement to severance pay when Panama 
Canal Commission employees are offered ``reasonably comparable 
employment'' by an entity assuming the functions formerly performed by 
the Panama Canal Commission. This would prevent a windfall to 
Commission employees who are able to continue their Canal-related 
employment.
    The concept of ``reasonably comparable employment'' generally 
parallels the concept of ``reasonable offer'' found in OPM's current 
regulations. A ``reasonable offer'' is defined at 5 CFR 550.703 as one 
in which the position is--
    (1) In the employee's agency, including an agency to which the 
employee is transferred with his or her function;
    (2) Within the employee's commuting area;
    (3) Of the same tenure and work schedule;
    (4) Not lower than two grade or pay levels below the employee's 
current grade or pay level.
    The positions that will be offered to Panama Canal Commission 
employees will be in the successor entities to which the Canal 
functions are being transferred under the terms of the treaty. The 
proposed regulations also provide that a ``reasonably comparable'' 
offer of employment to Panama Canal Commission employees must be (1) 
Within the employee's commuting area, (2) of the same tenure and work 
schedule, and (3) not more than 20 percent below the employee's Panama 
Canal Commission rate of basic pay. (The 20-percent maximum pay 
differential is based on the current ``reasonable offer'' provision 
regarding pay levels. Ten percent represents the approximate difference 
in pay levels between most General Schedule grades (e.g., GS-8, step 1, 
and GS-7, step 1). Thus, 20 percent would be the approximate difference 
in pay between a grade and the grade two grades lower (e.g., GS-9, step 
1, compared to GS-7, step 1).) Therefore, the definition of 
``reasonably comparable employment'' contains all of the elements of a 
``reasonable offer'' in the current regulations.
    Under the proposed regulations, a Panama Canal Commission employee 
is also excluded from entitlement to severance pay if he or she accepts 
reasonably comparable employment within 30 days after separation from 
Commission employment. If severance payments are made before an 
individual's entitlement to severance pay is invalidated by post-
separation acceptance of reasonably comparable employment, those 
payments would be considered erroneous and subject to recovery as a 
debt due the United States Government. The 30-day rule ensures that 
employees who have only a short break in their Canal-related employment 
do not obtain an unwarranted windfall. We believe 30 days is sufficient 
to prevent abuse. At the same time, 30 days is a short enough period 
that the amount of erroneous payments should be minimal, keeping the 
administrative problems associated with recovery efforts to a minimum 
as well.
    The restriction on severance pay entitlement for those individuals 
hired by the Panama Canal Commission after the 90th day following 
publication of final regulations making these changes is similar in 
concept to the restriction in Sec. 550.704(b)(3) of the current 
regulations. That section denies eligibility for severance pay to 

[[Page 35343]]
individuals who are appointed in an agency within 1 year before the 
date the agency is scheduled by law or Executive order to be 
terminated. A longer period of time is being established for the Panama 
Canal Commission employees to ensure that the Panama Canal Commission 
can determine its severance pay liabilities well in advance of the 
transfer of Canal operations.
    Under the Panama Canal Treaty of 1977, the Canal operation must be 
transferred to the Republic of Panama free of any debt or encumbrances. 
Thus, severance pay liabilities must be estimated in advance and 
prefunded. This prefunding would require increasing Canal tolls paid by 
the world shipping community. Furthermore, we believe a special rule is 
justified for this unique situation. In this case, an organization or 
operation is not being ``terminated'' in the normal sense, but instead 
is being transferred to a foreign government under a treaty signed over 
20 years before the transfer. (It should be noted that, prior to 1990, 
OPM regulations provided for a 5-year rule instead of the current 1-
year rule in Sec. 550.704(b)(3).)
    The proposed regulations provide that those employees who resign 
before receiving notice of the successor entity's intention not to 
offer them reasonably comparable employment will be considered 
voluntarily separated and not entitled to severance pay. This is 
consistent with the current regulatory provision at Sec. 550.706, which 
provides that an employee who resigns is considered voluntarily 
separated unless he or she has received definite notice of involuntary 
separation (5 CFR 550.706). In the case of Panama Canal Commission 
employees, there is no loss of continued employment unless the employee 
is not offered a job with one of the Canal successor entities. If an 
employee is officially notified that he or she will not be offered 
reasonably comparable employment and subsequently resigns, the 
resignation would be considered to be an involuntary separation under 
Sec. 550.706.
    Since the transfer of control of the Panama Canal is a unique 
situation, the special severance pay rules we are proposing are 
consolidated in a separate section at the end of subpart G 
Sec. 550.714.

Regulatory Flexibility Act

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

List of Subjects in 5 CFR Part 550

    Administrative practice and procedure, Claims, Government 
employees, Wages.

Office of Personnel Management.
James B. King,
Director.

    Accordingly, OPM proposes to amend part 550 of title 5, Code of 
Federal Regulations, as follows:

PART 550--PAY ADMINISTRATION (GENERAL)

Subpart G--Severance Pay

    1. The authority citation for subpart G is revised to read as 
follows:

    Authority: 5 U.S.C. 5595; E.O. 11257, November 13, 1965, 3 CFR 
1964-1965 Comp., p357.

    2. Section 550.714 is added to read as follows:


Sec. 550.714  Panama Canal Commission Employees.

    (a) Notwithstanding any other provisions of this subpart, an 
employee separated from employment with the Panama Canal Commission as 
a result of the implementation of any provision of the Panama Canal 
Treaty of 1977 and related agreements shall not be entitled to 
severance pay if he or she--
    (1) Receives a written offer of reasonably comparable employment 
when such offer is made before separation from Commission employment;
    (2) Accepts reasonably comparable employment within 30 days after 
separation from Commission employment; or
    (3) Was hired by the Commission on or after (date to be inserted is 
the date 90 days after publication of final regulations in the Federal 
Register).
    (b) The term reasonably comparable employment means a position that 
meets all the following conditions--
    (1) The position is with a public or private entity assuming 
functions previously performed by the Panama Canal Commission for or on 
behalf of the Republic of Panama;
    (2) The rate of basic pay of the position is not more than 20 
percent below the employee's rate of basic pay as a Panama Canal 
Commission employee;
    (3) The position is within the employee's commuting area;
    (4) The position carries no fixed time limitation as to length of 
appointment; and
    (5) The work schedule (that is, part-time or full-time) of the 
position is the same as that of the position held by the employee at 
the Panama Canal Commission.
    (c) A Panama Canal Commission employee who resigns prior to 
receiving an official written notice that he or she will not be offered 
reasonably comparable employment shall be considered to be voluntarily 
separated. Section 550.706(a) shall be applied, as appropriate, to any 
employee who resigns after receiving such notice.
    (d) Except as otherwise provided by paragraphs (a) through (c) of 
this section, the provisions of this subpart remain applicable to 
Panama Canal Commission employees.

[FR Doc. 95-16546 Filed 7-6-95; 8:45 am]
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