[Federal Register Volume 68, Number 114 (Friday, June 13, 2003)]
[Rules and Regulations]
[Pages 35270-35273]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 03-14970]


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OFFICE OF PERSONNEL MANAGEMENT

5 CFR Parts 831 and 842

RIN 3206-AJ82


Voluntary Early Retirement Under the Homeland Security Act of 
2002

AGENCY: Office of Personnel Management.

ACTION: Interim rule with request for comments.

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SUMMARY: The Office of Personnel Management (OPM) is issuing interim 
voluntary early retirement authority (VERA) regulations. These 
regulations implement the VERA provisions of the Homeland Security Act 
of 2002, which apply to most executive branch agencies. These interim 
regulations explain how an agency requests authority from OPM to offer 
voluntary early retirement to its employees.

DATES: These regulations are effective June 13, 2003. OPM will consider 
written comments if received no later than August 12, 2003.

ADDRESSES: Send written comments to Ellen E. Tunstall, Deputy Associate 
Director for Talent and Capacity Policy, Office of Personnel 
Management, Room 6500, 1900 E Street NW., Washington, DC 20415.

FOR FURTHER INFORMATION CONTACT: Charles W. Gray at 202-606-0960, FAX 
at 202-606-2329, TTY at 202-418-3134, or e-mail at [email protected].

SUPPLEMENTARY INFORMATION Section 1313(b) of the ``Homeland Security 
Act of 2002'' (Public Law 107-296, 116 Stat. 2135) provides agencies 
the option to offer voluntary early retirement when restructuring as 
well as when downsizing. Previously, voluntary early retirement was 
only available in downsizing situations.
    Subsection 1313(b)(1) of Public Law 107-296 covers employees under 
the Civil Service Retirement System (CSRS), and is codified in 5 U.S.C. 
8336(d)(2). Section 831.114 is revised to implement the new voluntary 
early retirement provisions under CSRS.
    Subsection 1313(b)(2) of Public Law 107-296 covers employees under 
the Federal Employees Retirement System (FERS), and is codified in 5 
U.S.C. 8414(b)(1). Section 842.213 is revised to implement the new 
voluntary early retirement provisions under FERS.
    The voluntary early retirement provisions are the same under CSRS 
and FERS. The revised regulations explain which employees are 
potentially eligible for voluntary early retirement, how an agency 
requests voluntary early retirement authority from OPM, and how the 
agency manages the voluntary early retirement authority after approval.
    Under the interim regulations, an agency's human capital plan and/
or voluntary separation incentive plan may be used to satisfy the 
requirements for requesting a voluntary early retirement authority if 
it contains the information required in the VERA regulations.

Waiver of Notice of Proposed Rulemaking and Delay in Effective Date

    Pursuant to 5 U.S.C. 553(b)(3)(B), I find that good cause exists 
for waiving the general notice of proposed rulemaking. Also, pursuant 
to 5 U.S.C. 553(d)(3), I find that good cause exists to make this rule 
effective in less than 30 days.
    OPM has already promulgated interim regulations regarding use of 
the Voluntary Separation Incentive Payment (VSIP) authority pursuant to 
Congressional mandate. While agencies may now receive OPM approval to 
use VSIP to reshape their workforces, they cannot use VERA for that 
purpose until these regulations are available. In this case, compliance 
with notice and comment procedures, as well as with the 30-day waiting 
period, would severely undercut the usefulness of the VSIP authority 
and would deny employees who have not attained full retirement 
eligibility the opportunity to be considered for VSIPs. The alternative 
to reshaping the workforce through voluntary measures such as early 
retirement is generally reduction in force--a tool that is disruptive 
and costly both to employees and agencies. The inability of agencies to 
offer this option to employees undermines the intent of Congress and 
the Administration in providing agencies with the ability to use both 
the VERA and VSIP flexibilities for workforce reshaping and impacts 
employee options for ``soft landings.''
    This regulation is needed to allow agencies to immediately use the 
VERA flexibilities that Congress accorded to them in the Homeland 
Security Act (Act). Prior to the enactment of this Act, agencies could 
obtain from OPM the authority to offer individuals voluntary early 
retirement based on a need to downsize. Also, if they had their own 
VSIP law, they could offer VSIP to their employees on the same basis. 
In the Act, however, Congress introduced the ability to request 
authority from OPM to offer VERA or VSIP, or both, based on a need for 
workforce reshaping. This is a flexibility that Congress deemed 
necessary to ensure that agencies could accomplish their respective 
missions, which, in many cases, have changed significantly since 
September 11, 2001. The VERA flexibility is designed so that it may be 
used in tandem with the VSIP flexibility. In fact, the VSIP authority 
may be ineffective in some instances, or not fully effective, if there 
is not a corresponding VERA authority to allow employees to retire 
early.
    Moreover, delaying the effective date for OPM's VERA regulations 
could lessen the usefulness of VSIPs for reshaping this year. The 
financial advantage of VSIP rapidly diminishes the later it is used in 
a fiscal year, because the cost of the VSIP payment and the payout for 
accrued leave is more likely to exceed the amount of the employee's 
salary for the remainder of the year. Congress's inclusion of the new 
VERA flexibilities in the Homeland Security Act indicates that it 
intended for agencies to use these flexibilities this year. Waiver of 
the requirements regarding notice, comment, and the effective date is 
necessary to ensure that Congress' intent is honored.
    Finally, OPM will issue final regulations within 1 year of the 
publication of these interim regulations or these regulations will 
sunset.

Regulatory Flexibility Act

    I certify that this regulation will not have a significant economic 
impact on a substantial number of small entities because it affects 
only certain Federal employees.

Executive Order 12866, Regulatory Review

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

List of Subjects

5 CFR Part 831

    Administrative practice and procedure, Alimony, Claims, 
Firefighters, Government employees,

[[Page 35271]]

Income taxes, Intergovernmental regulations, Law enforcement officers, 
Pensions, Reporting and recordkeeping requirements, Retirement.

5 CFR Part 842

    Air Traffic Controllers, Alimony, Firefighters, Government 
employees, Law enforcement officers, Pensions, Retirement.

Office of Personnel Management.
Kay Coles James,
Director.

0
Accordingly, OPM amends parts 831 and 842 of title 5, Code of Federal 
Regulations, as follows:

PART 831--RETIREMENT

0
1. The authority citation for part 831 is revised to read as follows:

    Authority: 5 U.S.C. 8347; Sec. 831.102 also issued under 5 
U.S.C. 8334; Sec. 831.106 also issued under 5 U.S.C. 552a; Sec. 
831.108 also issued under 5 U.S.C. 8336(d)(2); Sec. 831.114 also 
issued under 5 U.S.C. 8336(d)(2), and section 1313(b)(5) of Pub. L. 
107-296, 116 Stat. 2135; Sec. 831.201(b)(1) also issued under 5 
U.S.C. 8347(g); Sec. 831.201(b)(6) also issued under 5 U.S.C. 
7701(b)(2); Sec. 831.201(g) also issued under sections 11202(f), 
11232(e), and 11246(b) of Pub. L. 105-33, 111 Stat. 251; Sec. 
831.201(g) also issued under sections 7(b) and 7(e) of Pub. L. 105-
274, 112 Stat. 2419; Sec. 831.201(i) also issued under sections 3 
and 7(c) of Pub. L. 105-274, 112 Stat. 2419; Sec. 831.204 also 
issued under section 102(e) of Pub. L. 104-8, 109 Stat. 102, as 
amended by section 153 of Pub. L. 104-134, 110 Stat. 1321; Sec. 
831.205 also issued under section 2207 of Pub. L. 106-265, 114 Stat. 
784; Sec. 831.301 also issued under section 2203 of Pub. L. 106-265, 
114 Stat. 780; Sec. 831.303 also issued under 5 U.S.C. 8334(d)(2) 
and section 2203 of Pub. L. 106-235, 114 Stat. 780; Sec. 831.502 
also issued under 5 U.S.C. 8337; Sec. 831.502 also issued under 
section 1(3), E.O. 11228, 3 CFR 1964-1965 Comp. p. 317; Sec. 831.663 
also issued under sections 8339(j) and (k)(2); Secs. 831.663 and 
831.664 also issued under section 11004(c)(2) of Pub. L. 103-66, 107 
Stat. 412; Sec. 831.682 also issued under section 201(d) of Pub. L. 
99-251, 100 Stat. 23; Sec. 831.912 also issued under Appendix C to 
Pub. L. 106-554, 114 Stat. 2763A-125; subpart V also issued under 5 
U.S.C. 8343a and section 6001 of Pub. L. 100-203, 101 Stat. 1330-
275; Sec. 831.2203 also issued under section 7001(a)(4) of Pub. L. 
101-508, 104 Stat. 1388-328.

Subpart A--Administration and General Provisions

0
2. Section 831.114 is revised to read as follows:


Sec.  831.114  Voluntary early retirement-substantial delayering, 
reorganization, reduction in force, transfer of function, or other 
workforce restructuring.

    (a) A ``specific designee'' is defined as a senior officer or 
official within an agency who has been specifically designated to sign 
requests for voluntary early retirement authority for or in place of 
the head of the agency. Examples include the Chief Human Capital 
Officer or the Assistant Secretary for Administration.
    (b) 5 U.S.C. 8336(d)(2) covers both the basis for an agency's 
request for voluntary early retirement authority and OPM's subsequent 
determination concerning the request.
    (c) An agency's request for voluntary early retirement authority 
must be signed by the head of the agency or by a specific designee with 
that authority.
    (d) The request must contain the following information:
    (1) Identification of the agency or organizational unit(s) for 
which the agency requests the authority;
    (2) Reasons why the agency needs voluntary early retirement 
authority. This must include a detailed summary of the agency's 
personnel and/or budgetary situation that will result in an excess of 
personnel because of a substantial delayering, reorganization, 
reduction in force, transfer of function, or other workforce 
restructuring or reshaping, consistent with agency human capital goals;
    (3) The date on which the agency expects to effect the substantial 
delayering, reorganization, reduction in force, transfer of function, 
or other workforce restructuring or reshaping;
    (4) The time period during which the agency plans to offer 
voluntary early retirement;
    (5) The total number of non-temporary employees in the agency (or 
specified component(s));
    (6) The total number of non-temporary employees in the agency (or 
specified component(s)) who may be involuntarily separated, downgraded, 
transferred, or reassigned as a result of the substantial delayering, 
reorganization, reduction in force, transfer of function, or other 
workforce restructuring or reshaping;
    (7) The total number of employees in the agency (or specified 
component(s)) who are eligible for voluntary early retirement;
    (8) An estimate of the total number of employees in the agency (or 
specified component(s)) who are expected to retire early during the 
period covered by the request for voluntary early retirement authority; 
and
    (9) A description of the types of personnel actions anticipated as 
a result of the agency's need for voluntary early retirement authority. 
(Examples include separations, transfers, reassignments, and 
downgradings.)
    (e) OPM will evaluate a request for voluntary early retirement 
based on:
    (1) A specific request to OPM from the agency for voluntary early 
retirement authority;
    (2) A voluntary separation incentive payment implementation plan, 
as discussed in part 576, subpart A, of this chapter, which must 
outline the intended use of the incentive payments and voluntary early 
retirement; or
    (3) The agency's human capital plan, which must outline its 
intended use of voluntary separation incentive payments and voluntary 
early retirement authority, and the changes in organizational structure 
it expects to make as the result of projected separations and early 
retirements.
    (f) Regardless of the method used, the request must include all of 
the information required by paragraph (d) of this section.
    (g) OPM may approve an agency's request for voluntary early 
retirement authority to cover the entire period of the substantial 
delayering, reorganization, reduction in force, transfer of function, 
or other workforce restructuring or reshaping described by the agency, 
or the initial portion of that period with a requirement for subsequent 
information and justification if the period covers multiple years.
    (h) After OPM approves an agency's request, the agency must 
immediately notify OPM of any subsequent changes in the conditions that 
served as the basis for the approval of the voluntary early retirement 
authority. Depending upon the circumstances involved, OPM will modify 
the authority as necessary to better suit the agency's needs.
    (i) The agency may limit voluntary early retirement offers based 
on:
    (1) An established opening and closing date that is announced to 
employees at the time of the offer; or
    (2) The acceptance of a specified number of applications for 
voluntary early retirement, provided that, at the time of the offer, 
the agency notified employees that it retained the right to limit the 
number of voluntary early retirements.
    (j) Within the timeframe specified for its approved VERA, the 
agency may subsequently establish a new or revised closing date, or 
reduce or increase the number of early retirement applications it will 
accept, if management's downsizing and/or reshaping needs change. If 
the agency issues a revised closing date, or a revised number of 
applications to be accepted, the new date or number of applications 
must be announced to the same group of employees included in the 
original announcement. If the agency issues a

[[Page 35272]]

new window period with a new closing date, or a new instance of a 
specific number of applications to be accepted, the new window period 
or number of applications to be accepted may be announced to a 
different group of employees as long as they are covered by the 
approved VERA.
    (k) An employee who separates from the service voluntarily after 
completing 25 years of service, or becoming age 50 and completing 20 
years of service, is entitled to an annuity if, on the date of 
separation, the employee:
    (1) Is serving in a position covered by a voluntary early 
retirement offer; and
    (2) Meets the conditions covered in 5 U.S.C. 8336(d)(2).
    (l) Agencies are responsible for ensuring that employees are not 
coerced into voluntary early retirement. If an agency finds any 
instances of coercion, it must take appropriate corrective action.
    (m) An agency may not offer or process voluntary early retirements 
beyond the stated expiration date of a VERA or offer early retirements 
to employees who are not within the scope of the VERA approved by OPM.
    (n) OPM may terminate a voluntary early retirement authority if it 
determines that the agency is no longer undergoing the condition(s) 
that formed the basis for its approval.
    (o) OPM may amend, limit, or terminate a voluntary early retirement 
authority to ensure that voluntary early retirement authority 
regulations are being properly followed.
    (p) Agencies must provide OPM with interim and final reports for 
each voluntary early retirement authority, as covered in OPM's approval 
letter to the agency. OPM may suspend or cancel a voluntary early 
retirement authority if the agency is not in compliance with the 
reporting requirements or reporting schedule specified in OPM's 
voluntary early retirement authority approval letter.
    (q) The terms, conditions, and procedures in this section do not 
apply to the General Accounting Office.

PART 842--FEDERAL EMPLOYEES RETIREMENT SYSTEM--BASIC ANNUITY

0
3. The authority citation for part 842 is revised to read as follows:

    Authority: 5 U.S.C. 8461(g); Secs. 842.104 and 842.106 also 
issued under 5 U.S.C. 8461(n); Sec. 842.104 also issued under 
sections 3 and 7(c) of Pub. L. 105-274, 112 Stat. 2419; Sec. 842.105 
also issued under 5 U.S.C. 8402(c)(1) and 7701(b)(2); Sec. 842.106 
also issued under section 102(e) of Pub. L. 104-8, 109 Stat. 102, as 
amended by section 153 of Pub. L. 104-134, 110 Stat. 1321; Sec. 
842.107 also issued under sections 11202(f), 11232(e), and 11246(b) 
of Pub. L. 105-33, 111 Stat. 251; Sec. 842.107 also issued under 
section 7(b) of Pub. L. 105-274, 112 Stat. 2419; Sec. 842.108 also 
issued under section 7(e) of Pub. L. 105-274, 112 Stat. 2419; Sec. 
842.213 also issued under 5 U.S.C. 8414(b)(1)(B) and section 
1313(b)(5) of Pub. L. 107-296, 116 Stat. 2135; Secs. 842.604 and 
842.611 also issued under 5 U.S.C. 8417; Sec. 842.607 also issued 
under 5 U.S.C. 8416 and 8417; Sec. 842.614 also issued under 5 
U.S.C. 8419; Sec. 842.615 also issued under 5 U.S.C. 8418; Sec. 
842.703 also issued under section 7001(a)(4) of Pub. L. 101-508, 104 
Stat. 1388; Sec. 842.707 also issued under section 6001 of Pub. L. 
100-203, 101 Stat. 1300; Sec. 842.708 also issued under section 4005 
of Pub. L. 101-239, 103 Stat. 2106 and section 7001 of Pub. L. 101-
508, 104 Stat. 1388; subpart H also issued under 5 U.S.C. 1104; Sec. 
842.810 also issued under Appendix C to Pub. L. 106-554, 114 Stat. 
2763A-125.

Subpart B--Eligibility

0
4. Section 842.213 is revised to read as follows:


Sec.  842.213  Voluntary early retirement-substantial delayering, 
reorganization, reduction in force, transfer of function, or other 
workforce restructuring.

    (a) A ``specific designee'' is defined as a senior officer or 
official within an agency who has been specifically designated to sign 
requests for voluntary early retirement authority for or in place of 
the head of the agency. Examples include the Chief Human Capital 
Officer or the Assistant Secretary for Administration.
    (b) 5 U.S.C. 8414(b)(1)(B) covers both the basis for an agency's 
request for voluntary early retirement authority and OPM's subsequent 
determination concerning the request.
    (c) An agency's request for voluntary early retirement authority 
must be signed by the head of the agency or by a specific designee with 
that authority.
    (d) The request must contain the following information:
    (1) Identification of the agency or organizational unit(s) for 
which the agency requests the authority;
    (2) Reasons why the agency needs voluntary early retirement 
authority. This must include a detailed summary of the agency's 
personnel and/or budgetary situation that will result in an excess of 
personnel because of a substantial delayering, reorganization, 
reduction in force, transfer of function, or other workforce 
restructuring or reshaping, consistent with agency human capital goals;
    (3) The date on which the agency expects to effect the substantial 
delayering, reorganization, reduction in force, transfer of function, 
or other workforce restructuring or reshaping;
    (4) The time period during which the agency plans to offer 
voluntary early retirement;
    (5) The total number of non-temporary employees in the agency (or 
specified component(s));
    (6) The total number of non-temporary employees in the agency (or 
specified component(s)) who may be involuntarily separated, downgraded, 
transferred, or reassigned as a result of the substantial delayering, 
reorganization, reduction in force, transfer of function, or other 
workforce restructuring or reshaping;
    (7) The total number of employees in the agency (or specified 
component(s)) who are eligible for voluntary early retirement;
    (8) An estimate of the total number of employees in the agency (or 
specified component(s)) who are expected to retire early during the 
period covered by the request for voluntary early retirement authority; 
and
    (9) A description of the types of personnel actions anticipated as 
a result of the agency's need for voluntary early retirement authority. 
(Examples include separations, transfers, reassignments, and 
downgradings.)
    (e) OPM will evaluate a request for voluntary early retirement 
based on:
    (1) A specific request to OPM from the agency for voluntary early 
retirement authority;
    (2) A voluntary separation incentive payment implementation plan, 
as discussed in part 576, subpart A, of this chapter, which must 
outline the intended use of the incentive payments and voluntary early 
retirement; or
    (3) The agency's human capital plan, which must outline its 
intended use of voluntary separation incentive payments and voluntary 
early retirement authority, and the changes in organizational structure 
it expects to make as the result of projected separations and early 
retirements.
    (f) Regardless of the method used, the request must include all of 
the information required by paragraph (d) of this section.
    (g) OPM may approve an agency's request for voluntary early 
retirement authority to cover the entire period of the substantial 
delayering, reorganization, reduction in force, transfer of function, 
or other workforce restructuring or reshaping described by the agency, 
or the initial portion of that period with a requirement for subsequent 
information and justification if the period crosses multiple years.
    (h) After OPM approves an agency's request, the agency must 
immediately

[[Page 35273]]

notify OPM of any subsequent changes in the conditions that served as 
the basis for the approval of the voluntary early retirement authority. 
Depending upon the circumstances involved, OPM will modify the 
authority as necessary to better suit the agency's needs.
    (i) The agency may limit voluntary early retirement offers based 
on:
    (1) An established opening and closing date that is announced to 
employees at the time of the offer; or
    (2) The acceptance of a specified number of applications for 
voluntary early retirement, provided that, at the time of the offer, 
the agency notified employees that it retained the right to limit the 
number of voluntary early retirements.
    (j) Within the timeframe specified for its approved VERA, the 
agency may subsequently establish a new or revised closing date, or 
reduce or increase the number of early retirement applications it will 
accept, if management's downsizing and/or reshaping needs change. If 
the agency issues a revised closing date, or a revised number of 
applications to be accepted, the new date or number of applications 
must be announced to the same group of employees included in the 
original announcement. If the agency issues a new window period with a 
new closing date, or a new instance of a specific number of 
applications to be accepted, the new window period or number of 
applications to be accepted may be announced to a different group of 
employees as long as they are covered by the approved VERA.
    (k) An employee who separates from the service voluntarily after 
completing 25 years of service, or becoming age 50 and completing 20 
years of service, is entitled to an annuity if, on the date of 
separation, the employee:
    (1) Is serving in a position covered by a voluntary early 
retirement offer; and
    (2) Meets the conditions covered in 5 U.S.C. 8414(b)(1)(B).
    (l) Agencies are responsible for ensuring that employees are not 
coerced into voluntary early retirement. If an agency finds any 
instances of coercion, it must take appropriate corrective action.
    (m) An agency may not offer or process voluntary early retirements 
beyond the stated expiration date of a VERA or offer early retirements 
to employees who are not within the scope of the VERA approved by OPM.
    (n) OPM may terminate a voluntary early retirement authority if it 
determines that the agency is no longer undergoing the condition(s) 
that formed the basis for its approval.
    (o) OPM may amend, limit, or terminate a voluntary early retirement 
authority to ensure that voluntary early retirement authority 
regulations are being properly followed.
    (p) Agencies must provide OPM with interim and final reports for 
each voluntary early retirement authority, as covered in OPM's approval 
letter to the agency. OPM may suspend or cancel a voluntary early 
retirement authority if the agency is not in compliance with the 
reporting requirements or reporting schedule specified in OPM's 
voluntary early retirement authority approval letter.
    (q) The terms, conditions, and procedures in this section do not 
apply to the General Accounting Office.
    (r) The authority to VERA to restructure the workforce terminates 
June 14, 2004.

[FR Doc. 03-14970 Filed 6-10-03; 4:46 pm]
BILLING CODE 6325-38-P