[Federal Register Volume 67, Number 243 (Wednesday, December 18, 2002)]
[Proposed Rules]
[Pages 77447-77448]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 02-31776]



[[Page 77447]]

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RAILROAD RETIREMENT BOARD

20 CFR Part 206

RIN 3220-AB56


Account Benefits Ratio

AGENCY: Railroad Retirement Board.

ACTION: Proposed rule.

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SUMMARY: The Railroad Retirement Board (Board) proposes to amend its 
regulations to add a new part to explain how it will compute the 
account benefits ratio. The Railroad Retirement and Survivors' 
Improvement Act of 2001 amended the Railroad Retirement Act to require 
that on an annual basis the Board compute an account benefits ratio for 
the most recent 10 preceding fiscal years and a projection of the 
account benefits ratio for the next 5 succeeding fiscal years. In 
determining the account benefits ratio, the Board has interpreted 
several terms utilized in that computation. Since the account benefits 
ratio will be used in determining the tier II tax rate for calendar 
years after 2003, we propose to issue this regulation to clarify how we 
will compute the account benefits ratio.

DATES: Comments should be submitted on or before February 18, 2003.

ADDRESSES: Any comments should be submitted to Beatrice Ezerski, 
Secretary to the Board, Railroad Retirement Board, 844 North Rush 
Street, Chicago, Illinois 60611-2092.

FOR FURTHER INFORMATION CONTACT: Marguerite P. Dadabo, Assistant 
General Counsel, (312) 751-4945, TDD (312) 751-4701.

SUPPLEMENTARY INFORMATION: Effective for calendar years after 2003, the 
tier II tax rate will be determined in accord with a formula that 
relies on the average account benefits ratio. See section 3241 of the 
Internal Revenue Code as amended by section 204 of Public Law 107-90. 
The Board has decided to set forth how it will compute the account 
benefits ratio so that all parties, rail labor, rail management and the 
public, will be aware of how we intend to compute the account benefits 
ratio. Part 206 of the Board's regulations deals with the manner by 
which the account benefits ratio will be computed. Section 206.1 
contains definitions of the terms that are used to compute the account 
benefits ratio. In making these calculations, the Board based its 
definitions on the language of the statute and the purpose of computing 
the account benefits ratio.
    The term ``total benefits and administrative expenses paid'' is 
computed on a cash basis, since the use of the word ``paid'' 
demonstrates that the computation should be made on a cash basis. In 
addition, ``total benefits paid'' is computed on the basis of net 
benefits paid, i.e. the gross benefits paid in a particular fiscal year 
minus any benefit overpayments actually recovered in that fiscal year. 
The purpose of computing the account benefits ratio is to ensure that 
there are adequate funds to pay benefits due under the Railroad 
Retirement Act. Using net benefits paid more accurately reflects the 
amount of benefits paid in a given year.
    The term ``assets'' is defined in the regulation as the total of 
the market value of all cash and investments held in the Railroad 
Retirement Account and the National Railroad Retirement Investment 
Trust (and for years before 2002, the Social Security Equivalent 
Benefits Account). Excluded from ``assets'' is the amount of accounts 
receivable. While a receivable may be viewed as an asset under certain 
circumstances, the language of the Railroad Retirement and Survivors' 
Improvement Act of 2001 leads us to conclude that Congress did not 
contemplate inclusion of accounts receivable in the computation of the 
account benefits ratio. By providing that the computation is to be made 
based on the fair market value of the assets in the Investment Trust 
and the accounts, Congress signaled that the computation should be made 
based on the amount of cash and the value of investments in the 
Investment Trust and the accounts. Moreover, disregarding accounts 
receivables in computing the account benefits ratio is consistent with 
the cash basis being used to determine total benefits and 
administrative expenses paid in a given fiscal year. The term 
``administrative expenses paid'' is also defined in the regulation. All 
Railroad Retirement Board administrative expenses are currently paid 
from a single administrative account. The only amounts recorded in the 
Railroad Retirement Account are ``cash transfers'' to that 
administrative account. The amount used for calculating the 
administrative expenses paid will be the amount of those cash transfers 
from the Railroad Retirement Account in each fiscal year. Also included 
in total administrative expenses will be those amounts transferred from 
the Railroad Retirement Account to the Limitation on the Office of 
Inspector General. The expenses of the Inspector General are 
appropriate railroad retirement program expenses that must be 
considered in determining total administrative expenses. Finally, the 
administrative expenses of the National Railroad Retirement Investment 
Trust will also be included in this term.

Collection of Information Requirements

    This rule does not impose additional information collection and 
record keeping requirements. Consequently, it need not be reviewed by 
the Office of Management and Budget under the authority of the 
Paperwork Reduction Act of 1995.

Regulatory Impact Statement

    Prior to publication of this proposed rule, the Board submitted 
this rule to the Office of Management and Budget for review pursuant to 
Executive Order 12866. Executive Order 12866 directs agencies to assess 
all costs and benefits of available regulatory alternatives and when 
regulation is necessary, to select regulatory approaches that maximize 
net benefits (including potential economic, environmental, public 
health and safety effects, distributive impacts, and equity). A 
regulatory impact analysis (RIA) must be prepared for rules that 
constitute significant regulatory action, including rules that have an 
economic effect of $100 million or more annually. This proposed rule is 
not a major rule in terms of the aggregate costs involved. The costs 
associated with the addition of a new part to the Board's regulations 
are administrative in nature, and include the costs associated with 
drafting and publishing the regulation as a proposed and then a final 
rule. We have determined that this proposed rule is not a major rule 
with economically significant effects because it would not result in 
increases in total expenditures of $100 million or more per year.
    The proposed rule is significant. Part 206 explains how the 
Railroad Retirement Board will compute the account benefits ratio in 
accordance with sections 108 and 204 of the Railroad Retirement and 
Survivors Improvement Act of 2001. The purpose of the proposed 
regulation is to provide a written explanation so that all parties, 
rail labor, rail management, and the public, will be aware of how the 
Board intends to compute the account benefits ratio. Thus, the proposed 
rule will benefit the agency's constituents, who will be aware of how 
the account benefits ratio is computed.
    Both the Regulatory Flexibility Act and the Unfunded Mandates Act 
of 1995 define ``agency'' by referencing the definition of ``agency'' 
contained in 5 U.S.C. 551(1). Section 551(1)(E) excludes from the term 
``agency'' an agency that is composed of representatives of the parties 
or of representatives of organizations of the

[[Page 77448]]

parties to the disputes determined by them. The Railroad Retirement 
Board falls within this exclusion (45 U.S.C. 231f(a)) and is therefore 
exempt from the Regulatory Flexibility Act and the Unfunded Mandates 
Act.
    Executive Order 13132 establishes certain requirements that an 
agency must meet when it promulgates a rule that imposes substantial 
direct compliance costs on State and local governments, preempts State 
law, or otherwise has Federalism implications. We have reviewed this 
proposed rule under the threshold criteria of Executive Order 13132 and 
have determined that it would not have a substantial direct effect on 
the rights, roles, and responsibilities of States or local governments.
    In accordance with the provisions of Executive Order 12866, this 
regulation has been reviewed by the Office of Management and Budget.

List of Subjects in 20 CFR part 206

    Railroad retirement.

    For the reasons set out in the preamble, the Railroad Retirement 
Board proposes to add Part 206 to Title 20, chapter II of the Code of 
the Federal Regulations to read as follows:

PART 206--ACCOUNT BENEFITS RATIO

Sec.
206.1 Definitions.
206.2 Computations.

    Authority: 45 U.S.C. 231f(b)(5); 45 U.S.C. 231u(a).


Sec.  206.1  Definitions.

    Except as otherwise expressly noted, as used in this part--
    Account benefits ratio means the amount determined by the Railroad 
Retirement Board by dividing the fair market value of the assets in the 
Railroad Retirement Account and the National Railroad Retirement 
Investment Trust (and for years prior to 2002, the Social Security 
Equivalent Benefits Account) as of the close of each fiscal year by the 
total benefits and administrative expenses paid from those accounts 
during the fiscal year.
    Administrative expenses paid means the amount of the cash transfers 
from the Railroad Retirement Account to the agency's single 
administrative fund. Also included in this term is the amount of the 
cash transfers from the Railroad Retirement Account to the Limitation 
on the Office of Inspector General and the administrative expenses paid 
by the National Railroad Retirement Investment Trust.
    Assets means the market value of cash and investments in the 
Railroad Retirement Account and the National Railroad Retirement 
Investment Trust (and for years before 2002, the Social Security 
Equivalent Benefits Account).
    Average account benefits ratio means for any calendar year, the 
average of the account benefits ratio for the 10 most recent fiscal 
years ending before such calendar year. If the amount computed is not a 
multiple of 0.1, such amount shall be increased to the next highest 
0.1.
    Total benefits paid means the total amount of benefits paid from 
the Railroad Retirement Account and the National Railroad Retirement 
Investment Trust in a fiscal year minus any benefit overpayments 
actually recovered during that fiscal year.


Sec.  206.2  Computation.

    (a) On or before November 1, 2003, the Railroad Retirement Board 
shall:
    (1) Compute the account benefits ratios for each of the most recent 
10 preceding fiscal years; and
    (2) Certify the account benefits ratio for each such fiscal year to 
the Secretary of the Treasury.
    (b) On or before November 1 of each year after 2003, the Railroad 
Retirement Board shall:
    (1) Compute the account benefits ratio for the fiscal year ending 
in such year; and
    (2) Certify the account benefits ratio for such fiscal year to the 
Secretary of the Treasury.
    (c) No later than May 1 of each year, beginning in 2003, the Board 
shall compute its projection of the account benefits ratio and the 
average account benefits ratios for each of the next succeeding 5 
fiscal years.

    Dated: December 12, 2002.

    By Authority of the Board,
Beatrice Ezerski,
Secretary to the Board.
[FR Doc. 02-31776 Filed 12-17-02; 8:45 am]
BILLING CODE 7905-01-P