[Federal Register Volume 65, Number 58 (Friday, March 24, 2000)]
[Proposed Rules]
[Pages 15875-15877]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 00-7256]


 ========================================================================
 Proposed Rules
                                                 Federal Register
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 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.
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  Federal Register / Vol. 65, No. 58 / Friday, March 24, 2000 / 
Proposed Rules  

[[Page 15875]]



OFFICE OF PERSONNEL MANAGEMENT

5 CFR Part 531

RIN 3206-AI81


Locality-Based Comparability Payments

AGENCY: Office of Personnel Management.

ACTION: Proposed rule with request for comments.

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SUMMARY: The Office of Personnel Management is issuing proposed 
regulations to clarify and redefine the limitations on locality rates 
of pay for categories of non-General Schedule employees approved by the 
President's Pay Agent to receive locality-based comparability payments. 
This proposed change was prompted by a recent Executive order that 
delegated the President's authority to establish such limitations to 
the President's Pay Agent. The proposed regulations would ensure that 
all employees receiving locality payments are treated consistently.

DATES: Comments must be received on or before May 23, 2000.

ADDRESSES: Comments may be sent or delivered to Donald J. Winstead, 
Assistant Director for Compensation Administration, Workforce 
Compensation and Performance Service, Office of Personnel Management, 
Room 7H31, 1900 E Street NW., Washington, DC 20415-8200 (FAX: (202) 
606-0824 or email: [email protected]).

FOR FURTHER INFORMATION CONTACT: Vincent Donahue, (202) 606-2858, FAX: 
(202) 606-0824, or email: [email protected].

SUPPLEMENTARY INFORMATION: The Office of Personnel Management (OPM) 
proposes to revise the locality pay regulations in subpart F of part 
531 of title 5, Code of Federal Regulations, to clarify and redefine 
the limitations on locality rates of pay for categories of non-General 
Schedule employees approved by the President's Pay Agent to receive 
locality payments. Section 8 of Executive Order 13106 of December 7, 
1998, delegated the President's authority under section 5304(g) of 
title 5, United States Code, to determine such limitations to the 
President's Pay Agent. To provide consistent treatment between General 
Schedule (GS) and non-GS employees receiving locality payments, OPM 
proposes to provide that (1) non-GS positions whose maximum scheduled 
annual rate of pay is less than or equal to the maximum payable 
scheduled annual rate of pay for GS-15 will be subject to a locality 
pay cap equal to the rate for level IV of the Executive Schedule, and 
(2) non-GS positions whose maximum scheduled annual rate of pay exceeds 
the maximum payable scheduled annual rate of pay for GS-15, but is not 
more than the rate for level IV of the Executive Schedule, will be 
subject to a locality pay cap equal to the rate for level III of the 
Executive Schedule. (See the definition of scheduled annual rate of pay 
in 5 CFR 531.602, as revised in these proposed regulations.)

Background

    Locality-based comparability payments are authorized under 5 U.S.C. 
5304. By law, locality payments automatically apply to General Schedule 
employees. The maximum rate of basic pay (excluding locality payments) 
for GS employees is the rate for GS-15, step 10, subject to a cap 
linked to the rate of pay for level V of the Executive Schedule. (See 5 
U.S.C. 5303(f).) GS rates of basic pay adjusted by locality payments 
are capped at the rate of pay for level IV of the Executive Schedule. 
(See 5 U.S.C. 5304(g)(1).)
    The locality pay law provides that the President may extend 
locality payments to various groups outside the GS pay system, such as 
members of the Senior Executive Service (SES), administrative law 
judges (ALJs), and other groups for which basic pay is limited to no 
more than the rate of pay for level IV of the Executive Schedule. (See 
5 U.S.C. 5304(h).) Executive Order 12883 of November 29, 1993, provided 
that the President's Pay Agent (the Secretary of Labor and the 
Directors of the Office of Management and Budget and the Office of 
Personnel Management) may act for the President in exercising the 
authority to extend locality payments to such non-GS groups.
    Section 5304(g) of title 5, United States Code, provides that 
locality rates approved for certain categories of non-GS employees 
specified in 5 U.S.C. 5304(h)(1)(A)-(E), including members of the SES 
and ALJs, are capped at the rate for level III of the Executive 
Schedule. Section 5304(g) provides that a level III locality pay cap 
applies to ``any positions under subsection (h)(1)(F) which the 
President may determine.'' Subsection (h)(1)(F) is a catch-all category 
of non-GS positions to which locality pay may be extended. This catch-
all category includes Executive agency positions not otherwise listed 
in the law whose rates of basic pay are limited to not more than the 
rate for level IV of the Executive Schedule. If the President 
determines that a level III cap does not apply to a particular category 
of non-GS positions, the locality pay cap for those positions is 
automatically set at level IV of the Executive Schedule (i.e., the 
locality pay cap for GS employees). (See 5 U.S.C. 5304(g)(1).)
    Since the inception of locality pay in January 1994, the 
President's Pay Agent has approved locality pay for a number of non-GS 
categories of positions under its delegated authority. However, 
Executive Order 12883 did not delegate to the Pay Agent the President's 
authority to determine whether the level IV or level III locality pay 
cap should apply to any group of non-GS positions under 5 U.S.C. 
5304(h)(1)(F) to whom locality pay is extended. Locality pay extension 
decisions for these positions were interpreted as automatically 
carrying a level III cap. (See 5 CFR 531.604(c).) Section 8 of 
Executive Order 13106 of December 7, 1998, has now delegated to the Pay 
Agent the President's authority to determine when the level III cap 
should apply to such non-GS employees.

Proposed Regulations

    The proposed regulations provide a rule for determining the 
locality pay cap for non-GS positions for which the President's Pay 
Agent approves the extension of locality payments. We propose to amend 
5 CFR 531.604 to clarify that a locality rate of pay may not exceed the 
rate for level III of the Executive Schedule for categories of 
positions specified in 5 U.S.C. 5304(h)(1)(A)-(E) (e.g., members of the 
SES and ALJs). The proposed revision of

[[Page 15876]]

Sec. 531.604 also provides that, for categories of non-GS employees 
under 5 U.S.C. 5304(h)(1)(F), locality rates of pay may not exceed (1) 
the rate for level IV of the Executive Schedule, if the maximum 
scheduled annual rate of pay for such positions is less than or equal 
to the maximum payable scheduled annual rate of pay for GS-15, or (2) 
the rate for level III of the Executive Schedule, if the maximum 
scheduled annual rate of pay for such positions exceeds the maximum 
payable scheduled annual rate of pay for GS-15, but is not more than 
the rate for level IV of the Executive Schedule. (See the definition of 
scheduled annual rate of pay in 5 CFR 531.602, as revised in these 
proposed regulations.)
    This proposed rule would fulfill the original intent of the 
locality pay law by not automatically providing a level III cap on 
locality payments for all groups of non-GS employees. This change would 
also provide for more consistent and equitable treatment of GS and non-
GS employees receiving locality payments. For example, non-GS employees 
with a maximum scheduled annual rate of pay that is no higher than the 
rate of basic pay for GS-15, step 10, would have the same locality pay 
cap as GS employees.
    The proposed regulations include pay protection for any employee 
who otherwise would suffer a reduction in his or her locality rate of 
pay under the proposed locality pay cap provisions. Although no 
employee would suffer an immediate reduction in pay, it is possible 
that the locality pay cap for a group of non-GS employees could be 
reduced from level III to level IV of the Executive Schedule as GS 
rates of basic pay increase. This could occur if the rate of basic pay 
for GS-15, step 10, becomes equal to or exceeds the maximum scheduled 
annual rate of pay for a non-GS group. To prevent reductions in pay 
that would otherwise occur, the regulations cap an affected employee's 
locality rate at the higher of (1) his or her locality rate on the day 
before the scheduled annual rate of pay for GS-15, step 10, becomes 
equal to or exceeds the maximum scheduled annual rate of pay for the 
group of non-GS employees or (2) the rate for level IV of the Executive 
Schedule. This means that the employee's locality rate would be frozen 
until it is exceeded by the rate for level IV of the Executive 
Schedule.
    The proposed regulations exclude experts and consultants appointed 
under 5 U.S.C. 3109 from the locality pay limitations. Unless otherwise 
authorized by law, the aggregate pay (including basic pay, locality 
pay, and premium pay) for experts and consultants appointed under 5 
U.S.C. 3109 may not exceed the daily rate for GS-15, step 10 (excluding 
locality pay or any other additional pay). (See 5 CFR 304.105.)
    The proposed regulations also clarify the definition of employee in 
Sec. 531.602 to include positions in the Federal Bureau of 
Investigation (FBI) and Drug Enforcement Administration (DEA) SES under 
5 U.S.C. 5304(h)(1)(C) and other non-GS employee categories under 
Sec. 5304(h)(1)(F) for which the President's Pay Agent has authorized 
locality payments. The regulations also amend paragraph (4) in the 
definition of scheduled annual rate of pay in Sec. 531.602 to include 
the rates of basic pay for employees in the FBI and DEA SES and other 
categories of non-GS positions for which the Pay Agent has authorized 
locality pay. The proposed regulations clarify that the scheduled 
annual rate of pay for such employees must exclude any locality-based 
pay adjustments, special basic pay adjustments analogous to special 
salary rates established under 5 U.S.C. 5305, or other additional pay 
of any kind.
    This rule has been reviewed and approved by the President's Pay 
Agent (the Secretary of Labor and the Directors of the Office of 
Management and Budget and the Office of Personnel Management).

E.O. 12866, Regulatory Review

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

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 531

    Government employees, Law enforcement officers, Wages.
Office of Personnel Management.

Janice R. Lachance,
Director.
    Accordingly, OPM is proposing to amend part 531 of title 5 of the 
Code of Federal Regulations 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), 5333, 5334(a), and 
7701(b)(2);
    Subpart C also issued under 5 U.S.C. 5304, 5305, and 5553; 
sections 302 and 404 of FEPCA, Pub. L. 101-509, 104 Stat. 1462 and 
1466; and section 3(7) of Pub. L. 102-378, 106 Stat. 1356;
    Subpart D also issued under 5 U.S.C. 5335(g) and 7701(b)(2);
    Subpart E also issued under 5 U.S.C. 5336;
    Subpart F also issued under 5 U.S.C. 5304, 5305(g)(1), and 5553; 
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 G also issued under 5 U.S.C. 5304, 5305, and 5553; 
section 302 of the Federal Employees Pay Comparability Act of 1990 
(FEPCA), Pub. L. 101-509, 104 Stat. 1462; and E.O. 12786, 56 FR 
67453, 3 CFR, 1991 Comp., p. 376.

Subpart F--Locality-Based Comparability Payments

    2. In Sec. 531.602, paragraph (2) of the definition of employee and 
paragraph (4) of the definition of scheduled annual rate of pay are 
revised to read as follows:


Sec. 531.602  Definitions

* * * * *
    Employee * * *
    (2) An employee in a category of positions described in 5 U.S.C. 
5304(h)(1)(A)-(F) for which the President (or designee) has authorized 
locality-based comparability payments under 5 U.S.C. 5304(h)(2) and 
whose official duty station is located in a locality pay area.
* * * * *
    Scheduled annual rate of pay * * *
    (4) For an employee in a category of positions described in 5 
U.S.C. 5304(h)(1)(A)-(F) for which the President (or designee) has 
authorized locality-based comparability payments under 5 U.S.C. 
5304(h)(2), the rate of basic pay fixed by law or administrative 
action, exclusive of any locality-based adjustments (including 
adjustments equivalent to local special rate adjustments under 5 U.S.C. 
5305) or other additional pay of any kind.
    3. In Sec. 531.604, paragraph (c) is revised and a new paragraph 
(d) is added to read as follows:


Sec. 531.604  Determining locality rates of pay.

* * * * *
    (c)(1) Locality rates of pay approved by the President (or 
designee) for employees in a category of positions described in 5 
U.S.C. 5304(h)(1)(A)-(E) may not exceed the rate for level III of the 
Executive Schedule.
    (2) Locality rates of pay approved by the President (or designee) 
for employees in a category of positions described in 5 U.S.C. 
5304(h)(1)(F) may not exceed--

[[Page 15877]]

    (i) The rate for level IV of the Executive Schedule, when the 
maximum scheduled annual rate of pay (excluding any retained rate) for 
such positions is less than or equal to the maximum payable scheduled 
annual rate of pay for GS-15; or
    (ii) The rate for level III of the Executive Schedule, when the 
maximum scheduled annual rate of pay (excluding any retained rate) for 
such positions exceeds the maximum payable scheduled annual rate of pay 
for GS-15, but is not more than the rate for level IV of the Executive 
Schedule.
    (3) If application of paragraph (c)(2) of this section would 
otherwise reduce an employee's existing locality rate of pay, the 
employee's locality rate of pay will be capped at the higher of--
    (i) The amount of his or her locality rate of pay on the day before 
paragraph (c)(2) of this section is applied, or
    (ii) The rate for level IV of the Executive Schedule.
    (d) Paragraph (c) of this section does not apply to experts and 
consultants appointed under 5 U.S.C. 3109 if the pay for those experts 
and consultants is limited to the highest rate payable under 5 U.S.C. 
5332 (i.e., the unadjusted maximum GS-15 rate). Pay limitations for 
such experts and consultants must be determined in accordance with 
Sec. 304.105 of this chapter.
[FR Doc. 00-7256 Filed 3-23-00; 8:45 am]
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