[Federal Register Volume 72, Number 82 (Monday, April 30, 2007)]
[Rules and Regulations]
[Pages 21099-21103]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E7-8155]


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RAILROAD RETIREMENT BOARD

20 CFR Part 220

RIN 3220-AB50


Determining Disability

AGENCY: Railroad Retirement Board.

ACTION: Final rule.

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SUMMARY: The Board amends its regulations to index the amount of 
earnings used to determine if an individual is engaged in substantial 
gainful activity (SGA) to any increase in the Social Security national 
average wage index, to increase from $200 to $530 the minimum amount of 
monthly earnings to count during a trial work period and then index 
that amount to the Social Security national average wage index.

DATES: These rules are effective on April 30, 2007.

ADDRESSES: Beatrice Ezerski, Secretary to the Board, Railroad 
Retirement Board, 844 N. Rush Street, Chicago, Illinois 60611-2092.

FOR FURTHER INFORMATION CONTACT: Marguerite P. Dadabo, Assistant 
General Counsel, Office of General Counsel, Railroad Retirement Board, 
844 N. Rush Street, Chicago, Illinois 60611-2092, (312) 751-4945, TDD 
(312) 751-4701.

SUPPLEMENTARY INFORMATION: The Railroad Retirement Act provides for 
disability annuities for employees, widow(er)s, and children of 
deceased railroad employees who are unable to engage in any regular 
employment because of a physical or mental impairment. Regular 
employment is defined by reference to the definition of substantial 
gainful activity under the Social Security Act. Sections 220.141 and 
220.142 of the Board's regulations reflect this definition and define 
``substantial gainful activity'' (SGA) as work activity that involves 
doing significant physical or mental activities for pay or profit. Work 
activity is gainful if it is the kind of work usually done for pay or 
profit, whether or not profit is realized. Section 220.143 sets forth 
earnings levels at which the Board considers a person to be engaged in 
SGA regardless of the severity of his or her impairment. The amount of 
average monthly earnings that ordinarily demonstrates SGA was increased 
effective July 1, 1999, when the Board

[[Page 21100]]

raised from $500 to $700 the average monthly earnings guidelines used 
to determine whether work done by a person is substantial gainful 
activity.
    These regulations increase certain thresholds for disabled workers. 
Under this rule, the average monthly earnings guideline, which is used 
to determine whether work done by disabled workers is substantial 
gainful activity, is increased to $740.00 for calendar year 2001 and is 
thereafter automatically adjusted each year based on increases in the 
Social Security national average wage index. See 42 U.S.C. 409(k)(1). 
The amount that is used to determine if a disabled individual has 
performed ``services'' during a trial work period also is subject to an 
automatic annual adjustment. These changes conform to changes in the 
regulations of the Social Security Administration that became final 
effective January 29, 2001 (65 FR 82905, December 29, 2000).
    In order to be eligible for disability benefits, an applicant must 
not be performing substantial gainful activity. A beneficiary's ongoing 
eligibility for disability benefits is also subject to this rule. 
Therefore, the Board has established both upper and lower thresholds as 
guidelines for determining, respectively, what is prima facie evidence 
of engaging in SGA and what is prima facie evidence of not engaging in 
SGA. Except for those who work in sheltered workshops, disabled workers 
with earnings between the two thresholds are subject to further 
examination. Currently, the upper and lower thresholds are $700 and 
$300, respectively. For those working in sheltered workshops, earnings 
below the upper threshold are prima facie evidence that the worker is 
not performing SGA.
    Under this rule, beginning January 1, 2001, the upper threshold is 
adjusted annually, based on the Social Security national average wage 
index, to conform to the SGA level determined by the Social Security 
Administration (SSA) and published in the Federal Register each October 
as part of SSA's notice that includes new adjustments. Under this rule, 
the SGA amount will never be lower than the previous year's amount. 
However, there may be years in which there is no increase.
    As part of this rule, the Board also eliminates the lower SGA 
threshold so that earnings below the upper threshold would be prima 
facie evidence that a disabled worker is not engaging in SGA, 
regardless of whether the worker is working in competitive employment 
or in a sheltered workshop.
    The Board also increases the monthly amount that a disabled worker 
may earn within a trial work period without jeopardizing the amount of 
time remaining in the trial work period. This change is being made to 
conform the Board's regulations to the monthly earnings allowed within 
a trial work period in the regulations of the Social Security 
Administration. Currently, a disabled worker may test his or her 
ability to work and still be considered disabled by working during a 
trial work period. A disabled beneficiary will continue to be 
considered disabled until the beneficiary performs ``service'' in at 
least nine months within a rolling 60-month period. Since 1990, the 
Board has considered any month in which at least more than $200 is 
earned to be a month of service.
    Under the final rule, the threshold amount is increased to $530 for 
2001, and then is adjusted annually thereafter based on the Social 
Security national average wage index to conform to the amount 
determined by the Social Security Administration and published in the 
Federal Register every October. The Board notes that while the SGA 
amount has increased since 1990, during the same period, the trial work 
period services amount has remained unchanged. As with the change shown 
for the SGA threshold amount, the trial work period amount will never 
be lower than the previous year's amount.

Final Regulations--Background

    The Board revises Sections 220.143(b)(2) and (b)(4) to adjust 
annually the earnings guidelines that we use to determine whether an 
employee is engaged in substantial gainful activity. Beginning January 
2001, the average monthly earnings considered to be substantial gainful 
activity is increased from $700 to $740. Beginning January 2001, the 
guideline is the higher of the previous year's amount or an increased 
amount as computed and published by the Social Security Administration 
based on the Social Security national average wage index.
    The Board also amends Sec. 220.143(b)(2) and (b)(4) to clarify that 
this guideline applies to earnings from sheltered work. This standard 
also applies to the self-employed in certain circumstances by cross-
references that have been and continue to be present in Sec. 220.144 of 
this part.
    The Board revises Sec. 220.143(b)(3) and (b)(6) to provide, 
beginning January 2001, that we will ordinarily find that an employee 
whose average monthly earnings are equal to or less than the 
``substantial gainful activity amount'' set forth in Sec. 220.143(b)(2) 
has not engaged in substantial gainful activity without considering 
other information beyond the employee's earnings. The Board also makes 
conforming changes to Sec. 220.143(b)(4).
    The Board revises Sec. 220.170 to increase from $200 to $530 the 
minimum amount of monthly earnings that we consider shows that a person 
is performing or has performed ``services'' for counting trial work 
period months, effective January 1, 2001. We also will adjust the 
amount annually to the higher of the previous year's amount or an 
increased amount based on the Social Security national average wage 
index, beginning January 1, 2002. In addition, effective January 1, 
2001, for a self-employed person with net earnings from self-employment 
equal to or less than the dollar threshold for ``services'' the Board 
increases the number of hours of self-employed work in a business each 
month that the Board will consider shows services are performed from 
more than 40 hours to more than 80 hours.
    The Board published the proposed rule on June 9, 2003 (68 FR 34341) 
and invited comments by August 8, 2003. No comments were received. This 
final rule is similar to the proposed rule published on June 9, 2003 
except for the following changes that have been made to the proposed 
draft to be more consistent with similar regulations issued by the 
Social Security Administration (SSA) and to provide clarification about 
the subject matter:
     Sec.  220.143(b)(2)--A phrase has been added to provide 
clarification concerning earnings from sheltered employment.
     Sec.  220.143(b)(2)(i) and (ii)--The year 2002 in both 
sections has been changed to 2001 to be more consistent with the other 
sections being revised.
     Sec.  220.143 Table 1--The reference to calendar year 2001 
and the corresponding monthly earnings for that year have been 
eliminated for consistency with the other sections being revised.
     Sec.  220.143(b)(4)--The phrase ``Before January 1, 2002'' 
has been removed from the heading because the section deals with 
sheltered employment before and after January 1, 2002. The year 2002 in 
the first sentence has been changed to 2001 to be more consistent with 
other sections being revised. The phrase ``in paragraph (b)(2)'' has 
been changed to ``in Table 1 of this section'' wherever it appears. A 
new sentence was added at the end of this subsection to explain what 
occurs for months beginning January 1, 2001 for claimants working in 
sheltered workshops.
     Sec.  220.143(b)(6)(i) and (ii)--The year 2002 in both 
sections has been changed

[[Page 21101]]

to 2001 to be more consistent with the other sections being revised.
     Sec.  220.170(b)--The first two sentences of this 
subsection have been revised to clarify the description of what is 
meant by ``services.''
     Sec.  220.170(b)(2)(ii)--This subsection has been revised 
to state that if an individual performed more than 80 hours, instead of 
the previous limit of 40 hours, of self-employed activities in a 
business in a month beginning in calendar year 2001, the Board will 
consider services were performed.
     Sec.  220.170(b) Table 1--This table has been revised to 
show the $200 limit applies in calendar years 1990-2000, not 1990-2001 
as shown in the proposed rule. Table 2--This table has been revised to 
change the hours of work for a self-employed individual from 40 hours 
to 80 hours beginning in calendar year 2001.
    The most significant revision to the proposed rule that was 
published in June, 2003 increases the minimum monthly hours of work 
from 40 to 80 that show a self-employed individual performed services. 
This change makes the Board's regulations consistent with those of the 
Social Security Administration, which were also modified when a final 
rule was published by that agency on December 29, 2000, to show 80 
hours. This change is less restrictive and will encourage beneficiaries 
with disabilities to more realistically test their ability to work with 
respect to self-employment activities.

Collection of Information Requirements

    The amendments to this part do not impose 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

    The primary purpose of this rule is to conform the Railroad 
Retirement Board rules governing substantial gainful activity and a 
trial work period to the regulations of the Social Security 
Administration. The Board published a proposed rule to amend these 
sections on June 9, 2003 (68 FR 34341) and invited comments by August 
8, 2003. No comments were received. The draft final rule is similar to 
the proposed rule except for the changes identified in the 
Supplementary Information. The single most significant revision to the 
proposed rule that was published in June 2003 increases the minimum 
monthly hours of work from 40 to 80 that show that a self-employed 
individual performed services. This change and the other changes made 
by the final draft rule, like the changes in the published proposed 
regulation, have been made in order to make the regulations of the 
Railroad Retirement Board more consistent with similar regulations 
issued by the Social Security Administration and to provide 
clarification about the subject matter. In addition, the changes made 
by this rule will generally make the current regulatory provisions less 
restrictive in order to encourage individuals to try to return to work. 
For all of these reasons, the decision was made to have the rule take 
effect upon publication.
    Prior to publication of this final rule, the Board submitted the 
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 final rule is 
not a major rule in terms of the aggregate costs involved. 
Specifically, we have determined that this final 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 amendments made by this final rule are significant. The 
amendments to Sec. Sec.  220.143 and 220.170 will index the amount of 
earnings used to determine if an individual is engaged in substantial 
gainful activity (SGA) to any increase in the Social Security national 
average wage index, and increases from $200 to $530 the minimum amount 
of monthly earnings to count during a trial work period, and then index 
that amount to the Social Security national average wage index.
    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(l). Section 551(l)(E) excludes from the term 
``agency'' an agency that is composed of representatives of the parties 
or of representatives of organizations of the 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 
final 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 220

    Railroad Retirement.


0
For the reasons stated in the preamble, the Railroad Retirement Board 
amends part 220 of chapter II of title 20 of the Code of Federal 
Regulations as follows:

PART 220--DETERMINING DISABILITY

0
1. The authority citation for part 220 continues to read as follows:

    Authority: 45 U.S.C. 231a; 45 U.S.C. 231f.

Subpart L--Substantial Gainful Activity

0
2. Section 220.143 is amended by revising paragraphs (b)(2), (b)(3), 
(b)(4), and (b)(6) to read as follows:


Sec.  220.143  Evaluation guides for an employed claimant.

* * * * *
    (b) * * *
    (2) Earnings that will ordinarily show that the claimant has 
engaged in substantial gainful activity. The Board will consider that 
the earnings from the employed claimant (including earnings from 
sheltered work, see paragraph (b)(4) of this section) show that the 
claimant engaged in substantial gainful activity if:
    (i) Before January 1, 2001, the earnings averaged more than the 
amount(s) in Table 1 of this section for the time(s) in which the 
claimant worked.
    (ii) Beginning January 1, 2001, the earnings are more than an 
amount determined for each calendar year to be the larger of:
    (A) The amount for the previous year, or
    (B) The amount established by the Social Security Administration to 
constitute substantial gainful activity for such year.

[[Page 21102]]



   Table 1.--Amounts Indicating Substantial Gainful Activity Performed
------------------------------------------------------------------------
                                                              Monthly
                                                             earnings
                       For months                          averaged more
                                                               than
------------------------------------------------------------------------
In calendar years before 1976...........................            $200
In calendar year 1976...................................             230
In calendar year 1977...................................             240
In calendar year 1978...................................             260
In calendar year 1979...................................             280
In calendar years 1980-1989.............................             300
January 1990-June 1999..................................             500
July 1999-December 2000.................................             700
------------------------------------------------------------------------

    (3) Earnings that will ordinarily show that the claimant has not 
engaged in substantial gainful activity. Beginning January 1, 2001, if 
the claimant's earnings are equal to or less than the amount(s) 
determined under paragraph (b)(2)(ii) of this section for the year(s) 
in which the claimant works, the Board will generally consider that the 
earnings from the claimant's work as an employee will show the claimant 
has not engaged in substantial gainful activity. Before January 1, 
2001, if the claimant's earnings were less than the amount(s) in Table 
2 of this section for the year(s) in which the claimant worked, the 
Board will generally consider that the earnings from the claimant's 
work as an employee will show that the claimant has not engaged in 
substantial gainful activity.

 Table 2.--Amounts Indicating Substantial Gainful Activity Not Performed
------------------------------------------------------------------------
                                                              Monthly
                                                             earnings
                       For months                          averaged less
                                                               than
------------------------------------------------------------------------
In calendar years before 1976...........................            $130
In calendar year 1976...................................             150
In calendar year 1977...................................             160
In calendar year 1978...................................             170
In calendar year 1979...................................             180
In calendar years 1980-1989.............................             190
In calendar years 1990-2000.............................             300
------------------------------------------------------------------------

    (4) If the claimant worked in a sheltered workshop. Before January 
1, 2001 if the claimant worked in a sheltered workshop or a comparable 
facility especially set up for severely impaired persons, the Board 
will ordinarily consider that the claimant's earnings from this work 
show that the claimant has engaged in substantial gainful activity if 
the claimant's earnings average more than the amounts in Table 1 of 
this section. Average monthly earnings from a sheltered workshop or a 
comparable facility that are equal to or less than those indicated in 
Table 1 of this section will ordinarily show that the claimant has not 
engaged in substantial gainful activity without the need to consider 
the other information, as described in paragraph (b)(6) of this 
section, regardless of whether they are more or less than those 
indicated in paragraph (b)(3) of this section. When the claimant's 
earnings from a sheltered workshop or comparable facility are equal to 
or less than those amounts indicated in Table 1 of this section, the 
Board will consider the provisions of paragraph (b)(6) of this section 
only if there is evidence that the claimant may have done substantial 
gainful activity. For work performed in a sheltered workshop or 
comparable facility beginning January 1, 2001, the rules of paragraph 
(b)(2), (3), and (6) apply the same as they do to any other work done 
by an employee.
* * * * *
    (6) Earnings that are not high enough to ordinarily show that the 
claimant engaged in substantial gainful activity. (i) Before January 1, 
2001, if the claimant's average monthly earnings were between the 
amounts shown in paragraphs (b)(2) and (3) of this section, the Board 
will generally consider other information in addition to the claimant's 
earnings (see paragraph (b)(6)(iii) of this section). This rule 
generally applies to employees who did not work in a sheltered workshop 
or a comparable facility, although the Board may apply it to some 
people who work in sheltered workshops or comparable facilities (see 
paragraph (b)(4) of this section).
    (ii) Beginning January 1, 2001, if the claimant's average monthly 
earnings are equal to or less than the amounts determined under 
paragraph (b)(2) of this section, the Board will generally not consider 
other information in addition to the claimant's earnings unless there 
is evidence indicating that the claimant may be engaging in substantial 
gainful activity or that the claimant is in a position to defer or 
suppress his or her earnings.
    (iii) Examples of other information the Board may consider include, 
whether--
    (A) The claimant's work is comparable to that of unimpaired people 
in the claimant's community who are doing the same or similar 
occupations as their means of livelihood, taking into account the time, 
energy, skill, and responsibility involved in the work, and
    (B) The claimant's work, although significantly less than that done 
by unimpaired people, is clearly worth the amounts shown in paragraph 
(b)(2) of this section, according to pay scales in the claimant's 
community.

Subpart N--Trial Work Period and Reentitlement Period for 
Annuitants Disabled for any Regular Employment

0
3 . Section 220.170 is amended by revising paragraph (b) to read as 
follows:


Sec.  220.170  The trial work period.

* * * * *
    (b) What the Board means by services. When used in this section, 
services means any activity (whether legal or illegal), even though it 
is not substantial gainful activity, which is done in employment or 
self-employment for pay or profit, or is the kind normally done for pay 
or profit. We generally do not consider work done without remuneration 
to be services if it is done merely as therapy or training, or if it is 
work usually done in a daily routine around the house, or in self-care.
    (1) If the claimant is an employee. The Board will consider the 
claimant's work as an employee to be services if:
    (i) Before January 1, 2002, the claimant's earnings in a month were 
more than the amount(s) indicated in Table 1 of this section for the 
year(s) in which the claimant worked.
    (ii) Beginning January 1, 2002, the claimant's earnings in a month 
are more than an amount determined for each calendar year to be the 
larger of:
    (A) Such amount for the previous year, or
    (B) The amount established by the Social Security Administration 
for such year as constituting the amount of monthly earnings used to 
determine whether a person has performed services for counting trial 
work period months.
    (2) If the claimant is self-employed. The Board will consider the 
claimant's activities as a self-employed person to be services if:

[[Page 21103]]

    (i) Before January 1, 2002, the claimant's net earnings in a month 
were more than the amount(s) indicated in Table 2 of this section for 
the year(s) in which the claimant worked, or the hours the claimant 
worked in the business in a month are more than the number of hours per 
month indicated in Table 2 for the years in which the claimant worked.
    (ii) Beginning January 1, 2002, the claimant worked more than 80 
hours a month in the business, or the claimant's net earnings in a 
month are more than an amount determined for each calendar year to be 
the larger of:
    (A) Such amount for the previous year, or
    (B) The amount established by the Social Security Administration 
for such year as constituting the amount of monthly earnings used to 
determine whether a person has performed services for counting trial 
work period months.

                     Table 1.--For Non Self-Employed
------------------------------------------------------------------------
                                                           You earn more
                       For months                              than
------------------------------------------------------------------------
In calendar years before 1979...........................             $50
In calendar years 1979-1989.............................              75
In calendar years 1990-2000.............................             200
In calendar year 2001...................................             530
------------------------------------------------------------------------


                     Table 2.--For the Self-Employed
------------------------------------------------------------------------
                                                          Or you work in
                                             Your net      the business
               For months                  earnings are      more than
                                             more than        (hours)
------------------------------------------------------------------------
In calendar years before 1979...........             $50              15
In calendar years 1979-1989.............              75              15
In calendar years 1990-2000.............             200              40
In calendar year 2001...................             530              80
------------------------------------------------------------------------

* * * * *

    Dated: April 24, 2007.

    By Authority of the Board.
Beatrice Ezerski,
Secretary to the Board.
 [FR Doc. E7-8155 Filed 4-27-07; 8:45 am]
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