[Federal Register Volume 66, Number 249 (Friday, December 28, 2001)]
[Rules and Regulations]
[Pages 67069-67070]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 01-31901]



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 Rules and Regulations
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  Federal Register / Vol. 66, No. 249 / Friday, December 28, 2001 / 
Rules and Regulations  

[[Page 67069]]



OFFICE OF PERSONNEL MANAGEMENT

5 CFR Part 531

RIN: 3206-AI81


Locality-Based Comparability Payments

AGENCY: Office of Personnel Management.

ACTION: Final rule.

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SUMMARY: The Office of Personnel Management is issuing final 
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 change was prompted by an Executive order that delegated the 
President's authority to establish such limitations to the President's 
Pay Agent. The final regulations will ensure that all employees 
receiving locality payments are treated consistently.

EFFECTIVE DATE: This regulation is effective on December 28, 2001.

FOR FURTHER INFORMATION CONTACT: Jeanne Jacobson, (202) 606-2858, FAX: 
(202) 606-0824, or e-mail: [email protected].

SUPPLEMENTARY INFORMATION: On March 24, 2000, the Office of Personnel 
Management (OPM) published a proposed rule (65 FR 15875) to revise the 
locality pay regulations in subpart F of part 531 of title 5, Code of 
Federal Regulations. This proposed rule clarified and redefined 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. The proposed rule had a 60-day public comment 
period, during which OPM did not receive any formal comments. 
Therefore, we are adopting the proposed rule as final without change.

Background

    Locality-based comparability payments are authorized under 5 U.S.C. 
5304. By law, locality payments automatically apply to General Schedule 
(GS) 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)(2)(A) 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)(2)(B) of title 5, United States Code, 
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. Section 8 of Executive Order 13106 of December 7, 
1998, delegated the President's authority under section 5304(g)(2)(B) 
of title 5, United States Code, to determine such limitations for 
categories of positions covered by 5 U.S.C. 5304(h)(1)(F) to the 
President's Pay Agent.

Final Regulations

    These final regulations amend 5 CFR 531.604 by revising paragraph 
(c) 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). This includes senior-level, 
SES, Federal Bureau of Investigation (FBI) and Drug Enforcement 
Administration (DEA) SES, administrative law judge, and contract 
appeals board positions. This final rule does not change the locality 
pay cap applicable to members of the SES and other categories of 
positions specified in 5 U.S.C. 5304(h)(1)(A)-(E). The final rule 
merely clarifies the level III locality pay cap prescribed in law at 5 
U.S.C. 5304(g)(2)(A).
    The final rule also amends Sec. 531.604 by revising paragraph (c) 
to provide that, for categories of non-GS employees under 5 U.S.C. 
5304(h)(1)(F) (i.e., the catch-all category of positions previously 
described), 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.
    The final regulations include pay protection for any employee who 
otherwise would suffer a reduction in his or her locality rate of pay 
under the locality pay cap provisions. It is possible that the locality 
pay cap for a group of non-GS employees under 5 U.S.C. 5304(h)(1)(F) 
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, Sec. 531.606(c)(3) of the final 
regulations limit an affected employee's locality pay cap to 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

[[Page 67070]]

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 final regulations add a new paragraph (d) to Sec. 531.604 to 
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 final regulations also clarify the definition of employee in 
Sec. 531.602 to include positions in the FBI and DEA SES under 5 U.S.C. 
5304(h)(1)(C) and other non-GS employee categories under 5 U.S.C. 
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.
    The President's Pay Agent has reviewed and approved this final 
rule.

Waiver of Delay in Effective Date

    Pursuant to 5 U.S.C. 553(d)(3), I find that good cause exists to 
make these regulations effective in less than 30 days. These 
regulations must be made effective prior to January 1, 2002. If they 
become effective after the January 2002 statutory pay adjustments, 
agencies may be forced in some scenarios to use the pay protection 
provision to freeze the pay of a few employees whose pay was capped at 
level III of the Executive Schedule.

Execute Order 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 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.

    Office of Personnel Management.
Kay Coles James,
Director.

    Accordingly, OPM is amending 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 the Federal Employees Pay Comparability Act of 1990 
(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 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 means--* * *
    (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 means--* * *
    (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--
    (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. 01-31901 Filed 12-27-01; 8:45 am]
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