[Federal Register Volume 71, Number 90 (Wednesday, May 10, 2006)]
[Rules and Regulations]
[Pages 27185-27188]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 06-4319]



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  Federal Register / Vol. 71, No. 90 / Wednesday, May 10, 2006 / Rules 
and Regulations  

[[Page 27185]]



OFFICE OF PERSONNEL MANAGEMENT

5 CFR Part 724

RIN 3206-AJ93


Implementation of Title II of the Notification and Federal 
Employee Antidiscrimination and Retaliation Act of 2002--Judgment Fund

AGENCY: Office of Personnel Management.

ACTION: Final rule.

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SUMMARY: The Office of Personnel Management (OPM) is issuing final 
regulations to carry out the agency reimbursement provisions of Title 
II of the Notification and Federal Employee Antidiscrimination and 
Retaliation Act of 2002 (No FEAR Act). The No FEAR Act requires that 
the President or his designee promulgate rules to regulate agency 
reimbursement of the Judgment Fund for payments made to employees, 
former employees, or applicants for Federal employment because of 
actual or alleged violations of Federal antidiscrimination laws, 
Federal whistleblower protection laws, and/or retaliation claims 
arising from the assertion of rights under those laws. This rule 
implements the reimbursement provisions of Title II of the No FEAR Act.

DATES: Effective Date: The final rule is effective October 1, 2003.

FOR FURTHER INFORMATION CONTACT: Gary D. Wahlert by telephone at (202) 
606-2930; by FAX at (202) 606-2613; or by e-mail at [email protected].

SUPPLEMENTARY INFORMATION:

Background

    The United States and its citizens are best served when the Federal 
workplace is free of discrimination and retaliation. In order to 
maintain a productive workplace that is fully engaged with the many 
important missions before the Government, it is essential that the 
rights of employees, former employees and applicants for Federal 
employment under antidiscrimination, and whistleblower protection laws 
be steadfastly protected and that agencies that violate these rights be 
held accountable. Congress has found that agencies cannot be run 
effectively if they practice or tolerate discrimination. In addition, 
Congress has found that requiring Federal agencies to pay for any 
discrimination or whistleblower judgment, award, or settlement should 
improve agency accountability under these laws. Therefore, under 
authority delegated by the President, OPM is issuing final regulations 
to implement the reimbursement provisions of Title II of the Federal 
Employee Antidiscrimination and Retaliation Act of 2002 (No FEAR Act), 
Public Law 107-174.

Introduction

    On January 22, 2004, OPM published at 69 FR 2997 (2004) an interim 
final rule implementing the reimbursement provisions of the No FEAR 
Act, and provided a 60-day comment period. The rule was effective 
October 1, 2003. On March 31, 2004, OPM at 69 FR 16769 (2004) extended 
the comment period to April 26, 2004. OPM received 13 comments from 
Federal agencies or departments, five comments from civil rights 
organizations, and more than a hundred comments from individuals. OPM 
thanks all who provided comments--each comment has been carefully 
considered.

Hearings/Comment Period

    A significant number of commenters requested that OPM conduct 
public hearings on the No FEAR regulations and that OPM extend the 
comment period on the interim final rule published on January 22, 2004. 
OPM believes that the Administrative Procedures Act process for 
obtaining comments during the regulatory process is an appropriate 
method to capture public concerns and therefore has declined to conduct 
public hearings. However, to help ensure that OPM considers all 
concerns, OPM extended the comment period as noted previously.

Definition of Agency

    The regulation's definition of agency mirrors the statutory 
definition contained in section 103 of the No FEAR Act. One commenter 
pointed out, however, that the definition for agency is the one 
provided in 5 U.S.C 105. The commenter noted that this section of the 
statute does not include military departments as defined in 5 U.S.C. 
102 and suggested that military departments as a result would not 
reimburse the Judgment Fund. OPM has concluded that military 
departments are covered by the No FEAR Act because they are part of the 
Department of Defense. The statute at 5 U.S.C. 105 defines Executive 
Agency as including executive departments, one of which under 5 U.S.C. 
101 is the Department of Defense.
    The No FEAR Act requires agencies to reimburse the Judgment Fund 
for payments made in connection with proceedings involving Federal 
antidiscrimination and whistleblower protection laws. Section 724.102 
of the interim final rule defined such a payment as ``a disbursement 
from the Judgment Fund on or after October 1, 2003'' (the effective 
date of the reimbursement provision of the No FEAR Act). Thus, under 
the rule, if a payment is made from the Fund on or after that date 
based on a judgment, award, or settlement in such a proceeding, the 
agency is obligated to reimburse the Fund. A number of commenters 
expressed concern about this definition and suggested that it be 
modified. Some thought an agency's obligation to reimburse the Fund 
should occur only if a judgment, award, or settlement occurs on or 
after that date. Others thought that an agency should not be obligated 
in any proceedings to which it was not originally a party (see later 
discussion about financial implications generally under Agency 
Obligations). Some thought an agency's obligation should only accrue in 
proceedings that are initiated on or after October 1, 2003. OPM 
understands that there may be significant financial implications 
associated with this rule and that some may perceive the rule to be 
unfair. Nevertheless, OPM has determined that its definition of payment 
(and thus describing agencies' reimbursement obligations) reflects 
Congressional intent. OPM does believe, however, that the term payment 
is a broad concept and may include a

[[Page 27186]]

number of separate payments. For example, a judgment, award or 
settlement may call for separate payments over an extended period of 
time, subsequent payments may be based on some future condition, 
separate payments may be made to individual members of a class action, 
and separate payments may be made for attorney fees. Because there may 
be many payments involved in a given proceeding, OPM is responding to 
the previous comments by modifying the definition to clarify that 
``payment'' means the first disbursement in a particular proceeding. 
For example if the Judgment Fund made a disbursement in a proceeding 
before October 1, 2003, any subsequent disbursement made in that same 
proceeding on or after October 1, 2003, would not be considered 
payments that would obligate the agency involved to reimburse the Fund. 
However, if a proceeding was pending before October 1, 2003, and the 
first disbursement from the Fund in that proceeding occurred on or 
after October 1, 2003, the agency would be obligated to reimburse the 
Fund.
    One commenter stated that the types of actions on which payments 
from the Judgment Fund are made could be misunderstood. OPM agrees and 
has modified the definition in section 724.102 by inserting additional 
statutory references and using the phrase ``or retaliatory conduct'' as 
appropriate. This should help eliminate any confusion about which 
payments are covered by the No FEAR Act.
    Finally, with regard to payments, OPM notes that the No FEAR Act 
does not change the criteria or process for obtaining payments from the 
Judgment Fund; it only creates a reimbursement requirement for 
agencies. In other words, the No FEAR Act does not authorize agencies 
to make payments directly to employees, former employees, or applicants 
for Federal employment that, prior to the No FEAR Act, would have been 
made from the Judgment Fund. Judgments, awards, or settlements that 
were eligible for payment from the Judgment Fund before the No FEAR Act 
became effective will continue to be paid by the Judgment Fund.

Agency Obligations

    With regard to agency obligations, a number of commenters suggested 
that the regulations take into account the fact that the agency or 
organization currently assigned as a party to a proceeding may not have 
been the original party to the proceedings because of reorganization, 
transfer of function, etc. The No FEAR Act draws no distinctions 
between original and successor agencies in proceedings and OPM is 
reluctant to do so as well. By inserting a parenthetical phrase in 
section 724.103, OPM confirms that the obligation to reimburse the 
Judgment Fund extends to successor agencies. In those proceedings where 
financial considerations are paramount, OPM notes that Congress 
understood that an agency may need to complete its reimbursement of the 
Fund over a period of years under the circumstances described in 
section 102 of the Act, i.e., to avoid reductions in force, furloughs, 
other reductions in compensation or benefits for the workforce of the 
agency or to avoid an adverse effect on the mission of the agency. 
(Several commenters suggested that these circumstances be described in 
the regulations but OPM has declined since the Act itself is clear.) As 
further indication that Congress understood this potential 
circumstance, the No FEAR Act requires agencies to report on any 
adjustments in their budgets made in order to comply with reimbursement 
obligations.

Procedures

    Section 724.104(a) of the interim final rule stated that FMS would 
notify agencies within 15 business days after January 22, 2004, of any 
payments from the Judgment Fund between October 1, 2003, and January 
22, 2004, involving those agencies. This notice period has expired and 
thus OPM is deleting the provision from the final rule.
    Several commenters had questions about the means FMS would use to 
notify agencies under section 724.104(a) that a payment has been made 
from the Judgment Fund. OPM has clarified this section to reflect the 
intent that such notices be in writing.
    A number of commenters stated that section 724.104(b) is unclear 
about the time frame that would apply to an agency's obligation to 
reimburse the Judgment Fund or contact FMS to make arrangements. OPM 
notes that the intent of this provision is to require agencies to 
reimburse the Fund or contact FMS within 45 business days after they 
receive the FMS notice. Accordingly, OPM has modified the section to 
reflect this intent more clearly. Other suggestions included 
lengthening the time frames applicable to agencies and adding appeal 
procedures for agencies to follow if FMS' notices are disputed. OPM 
believes that the stated time frames are reasonable and appropriate and 
that, in the event there is a dispute between an agency and FMS, an 
agency may discuss that dispute with FMS without utilizing a special 
appeals procedure. Therefore, OPM declines to make additional 
modifications to Sec.  724.104(b).

Compliance

    A number of commenters stated that the Sec.  724.105 requirement 
for FMS to record on an annual basis and post on the FMS Web site 
information about agencies that fail to meet their Judgment Fund 
reimbursement obligations is an inadequate response to such failures. 
Several suggested alternatives such as posting the names of responsible 
officials, disciplining responsible officials, or notifying Congress. 
The No FEAR Act provides no specific enforcement authority and OPM 
declines to assume such a role without authorization. OPM notes, 
however, that agencies are required by the No FEAR Act to report to 
Congress and others on the amount of money required to be reimbursed to 
the Judgment Fund by those agencies. (OPM will issue separate 
regulations on this and other reporting requirements.) One commenter 
also suggested that a process be described for removing postings from 
FMS Web site once the Judgment Fund is reimbursed. OPM agrees that such 
a process would be appropriate and has amended section 724.105 so that 
postings will be removed during the annual posting following the date 
when the agency comes into compliance with the No FEAR Act.

Miscellaneous Comments

    A significant number of comments noted that the interim final rule 
on reimbursement of the Judgment Fund did not address the topics of 
notification, training, reporting, and disciplinary best practices that 
are covered by the No FEAR Act. As noted in the Supplementary 
Information in the interim final rule, OPM will issue regulations on 
each of these topics separately.
    A number of comments addressed subject matter covered by Title III 
of the No FEAR Act. Congress assigned the responsibility for issuing 
regulations under that Title to the Equal Employment Opportunity 
Commission. Since OPM lacks authority under Title III, it is unable to 
respond to those comments.

Immediate Implementation of Final Rule

    Immediate implementation of this final rule is based upon the 
exceptions found at 5 U.S.C. 553(b)(A), (b)(3)(B) and (d). The agency 
obligations under the No FEAR Act to reimburse the Judgment Fund began 
on October 1,

[[Page 27187]]

2003. Interim final rules covering these obligations were published on 
January 22, 2004, and were effective on October 1, 2003. It was 
essential, at the time of initial publication, that all agencies be 
placed in a position to understand their responsibilities regarding 
this requirement. The revisions to these rules make some adjustments to 
our description of agency obligations that we believe should be 
retroactive to October 1, 2003. OPM has determined under 5 U.S.C. 
553(b)(3)(A) that the reimbursement provision only affects the rules of 
agency organization, procedure, or practice and has no effect on the 
substantive rights of those entitled to payment from the Judgment Fund. 
OPM has determined under 5 U.S.C. 553(b)(3)(B) that it would be 
contrary to the public interest to delay promulgation of the rules 
governing the reimbursement provisions of the No FEAR Act. For the same 
reasons, OPM has determined under 5 U.S.C. 553(d)(3) that there is good 
cause for the final rule to become effective upon publication 
retroactive to October 1, 2003.

Regulatory Flexibility Act

    I certify that this regulation will not have a significant economic 
impact on a substantial number of small entities because the 
regulations pertain only to Federal employees and agencies.

E.O. 12866--Regulatory Review

    This final rule has been reviewed by the Office of Management and 
Budget under Executive Order 12866.

E.O. 13132

    This regulation will not have substantial direct effects on the 
States, on the relationship between the National Government and the 
States, or on distribution of power and responsibilities among the 
various levels of government. Therefore, in accordance with Executive 
Order 13132, it is determined that this rule does not have sufficient 
federalism implications to warrant preparation of a Federalism 
Assessment.

E.O. 12988--Civil Justice Reform

    This regulation meets the applicable standard set forth in sections 
3(a) and 3(b)(2) of Executive Order 12988.

Unfunded Mandates Reform Act of 1995

    This rule will not result in the expenditure by State, local and 
tribal governments, in the aggregate, or by the private sector, of 
$100,000,000 or more in any one year, and it will not significantly or 
uniquely affect small governments. Therefore, no actions were deemed 
necessary under the provisions of the Unfunded Mandates Reform Act of 
1995.

Congressional Review Act

    This action pertains to agency management, personnel and 
organization and does not substantially affect the rights or 
obligations of non-agency parties and, accordingly, is not a ``rule'' 
as that term is used by the Congressional Review Act (Subtitle E of the 
Small Business Regulatory Enforcement Fairness Act of 1996 (SBREFA)). 
Therefore, the reporting requirement of 5 U.S.C. 801 does not apply.

List of Subjects in 5 CFR Part 724

    Administrative practice and procedure, Civil rights, Claims.

U.S. Office of Personnel Management.
Linda M. Springer,
Director.

0
Accordingly, OPM is adopting the interim rule that added part 724 to 
title 5, Code of Federal Regulations, which was published at 69 FR 2997 
on January 22, 2004, as final with the following changes. Part 724 is 
revised to read as follows:

PART 724--IMPLEMENTATION OF TITLE II OF THE NOTIFICATION AND 
FEDERAL EMPLOYEE ANTIDISCRIMINATION AND RETALIATION ACT OF 2002

Subpart A--Reimbursement of Judgment Fund
Sec.
724.101 Purpose and scope.
724.102 Definitions.
724.103 Agency obligations.
724.104 Procedures.
724.105 Compliance.
724.106 Effective date.
Subpart B--Notification of Rights and Protections and Training 
[Reserved]
Subpart C--Annual Report [Reserved]
Subpart D--Best Practices [Reserved]

    Authority: Sec. 204 of Pub. L. 107-174, 116 Stat. 566; 
Presidential Memorandum dated July 8, 2003, ``Delegation of 
Authority Under Section 204(a) of the Notification and Federal 
Employee Antidiscrimination Act of 2002.''

Subpart A--Reimbursement of Judgement Fund


Sec.  724.101  Purpose and scope.

    This subpart implements Title II of the Notification and Federal 
Employee Antidiscrimination and Retaliation Act of 2002 concerning the 
obligation of Federal agencies to reimburse the Judgment Fund for 
payments. The regulations describe agency obligations and the 
procedures for reimbursement and compliance.


Sec.  724.102  Definitions.

    In this part:
    Agency means an Executive agency as defined in 5 U.S.C. 105, the 
United States Postal Service, or the Postal Rate Commission;
    Applicant for Federal employment means an individual applying for 
employment in or under a Federal agency;
    Employee means an individual employed in or under a Federal agency;
    Former Employee means an individual formerly employed in or under a 
Federal agency;
    Judgment Fund means the Judgment Fund established by 31 U.S.C. 
1304;
    No FEAR Act means the ``Notification and Federal Employee 
Antidiscrimination and Retaliation Act of 2002;''
    Payment, subject to the following exception, means a disbursement 
from the Judgment Fund on or after October 1, 2003, to an employee, 
former employee, or applicant for Federal employment, in accordance 
with 28 U.S.C. 2414, 2517, 2672, 2677 or with 31 U.S.C. 1304, that 
involves alleged discriminatory or retaliatory conduct described in 5 
U.S.C. 2302(b)(1) and (b)(8) or (b)(9) as applied to conduct described 
in 5 U.S.C. 2302(b)(1) and/or (b)(8) or conduct described in 29 U.S.C. 
206(d), 29 U.S.C. 631, 29 U.S.C. 633a, 29 U.S.C. 791 and 42 U.S.C. 
2000e-16. For a proceeding involving more than one disbursement from 
the Judgment Fund, however, this term shall apply only if the first 
disbursement occurred on or after October 1, 2003.


Sec.  724.103  Agency obligations.

    A Federal agency (or its successor agency) must reimburse the 
Judgment Fund for payments covered by the No FEAR Act. Such 
reimbursement must be made within a reasonable time as described in 
Sec.  724.104.


Sec.  724.104  Procedures.

    (a) The procedures that agencies must use to reimburse the Judgment 
Fund are those prescribed by the Financial Management Service (FMS), 
the Department of the Treasury, in Chapter 3100 of the Treasury 
Financial Manual. All reimbursements to the Judgment Fund covered by 
the No FEAR Act are expected to be fully collectible from the agency. 
FMS will provide written notice to the agency's Chief Financial Officer 
within 15 business days after payment from the Judgment Fund.
    (b) Within 45 business days of receiving the FMS notice, agencies 
must

[[Page 27188]]

reimburse the Judgment Fund or contact FMS to make arrangements in 
writing for reimbursement.


Sec.  724.105  Compliance.

    An agency's failure to reimburse the Judgment Fund, to contact FMS 
within 45 business days after receipt of an FMS notice for 
reimbursement under Sec.  724.104 will be recorded on an annual basis 
and posted on the FMS Web site. After an agency meets the requirements 
of Sec.  724.104, the recording will be eliminated no later than the 
next annual posting process.


Sec.  724.106  Effective date.

    This subpart is effective on October 1, 2003.

Subpart B--Notification of Rights and Protections and Training 
[Reserved]

Subpart C--Annual Report [Reserved]

Subpart D--Best Practices [Reserved]

[FR Doc. 06-4319 Filed 5-9-06; 8:45 am]
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