[Federal Register Volume 73, Number 167 (Wednesday, August 27, 2008)]
[Proposed Rules]
[Pages 50575-50577]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E8-19819]


 ========================================================================
 Proposed Rules
                                                 Federal Register
 ________________________________________________________________________
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 This section of the FEDERAL REGISTER contains notices to the public of 
 the proposed issuance of rules and regulations. The purpose of these 
 notices is to give interested persons an opportunity to participate in 
 the rule making prior to the adoption of the final rules.
 
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 

  Federal Register / Vol. 73, No. 167 / Wednesday, August 27, 2008 / 
Proposed Rules  

[[Page 50575]]



OFFICE OF PERSONNEL MANAGEMENT

5 CFR Parts 531 and 550

RIN 3206-AL61


Determining Rate of Basic Pay; Collection by Offset From Indebted 
Government Employees

AGENCY: U.S. Office of Personnel Management.

ACTION: Proposed rule with request for comments.

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SUMMARY: The U.S. Office of Personnel Management is issuing proposed 
regulations to conform with provisions of the National Defense 
Authorization Act for Fiscal Year 2008. The proposed regulations revise 
the rules regarding setting pay for certain employees who move from 
nonappropriated fund instrumentality (NAFI) positions to General 
Schedule positions. Also, the proposed regulations allow certain NAFIs 
to collect debts owed to them by Federal employees via salary offset 
and allow Federal agencies to collect debts by offsetting salary 
payments of certain NAFI employees.

DATES: Comments must be received on or before October 27, 2008.

ADDRESSES: You may submit comments, identified by RIN ``3206-AL61,'' 
using any of the following methods:
    Federal eRulemaking Portal: http://www.regulations.gov. Follow the 
instructions for submitting comments.
    E-mail: [email protected].
    Fax: (202) 606-0824.
    Mail: Jerome D. Mikowicz, Deputy Associate Director for Pay and 
Leave Administration, Room 7H31, 1900 E Street, NW., Washington, DC 
20415-8200.

FOR FURTHER INFORMATION CONTACT: David Barash by telephone at (202) 
606-2858; by fax at (202) 606-0824; or by e-mail at [email protected].

SUPPLEMENTARY INFORMATION: The U.S. Office of Personnel Management 
(OPM) is issuing proposed regulations to revise the rules regarding 
setting pay for certain employees who move from nonappropriated fund 
instrumentality (NAFI) positions to General Schedule (GS) positions. 
Also, the proposed regulations allow certain NAFIs to collect debts 
owed to them by Federal employees via salary offset and allow Federal 
agencies to collect debts by offsetting salary payments of certain NAFI 
employees. The proposed regulations conform with sections 652 and 1114 
of the National Defense Authorization Act for Fiscal Year 2008 (Pub. L. 
110-181, January 28, 2008), hereafter referred to as ``the Act.'' These 
amendments became effective on January 28, 2008.

Pay Setting Upon Movement From a NAFI to a GS Position

    Section 1114 of the Act amends 5 U.S.C. 5334(f) to provide that a 
NAFI employee in the Department of Defense (DOD) or the United States 
Coast Guard (USCG) (as described in 5 U.S.C. 2105(c)) who moves 
voluntarily to a GS position in DOD or USCG, respectively, without a 
break in service of more than 3 days may (at the employing agency's 
discretion) have the GS rate of basic pay set at the lowest step rate 
of the applicable GS grade that equals or exceeds the former NAFI rate. 
Under previous law, the employee's GS rate of basic pay could not 
exceed the formerly applicable NAFI rate in such voluntary movements; 
thus, setting the rate at a GS step for these former NAFI employees 
generally resulted in a reduction in pay. The amendment permits DOD and 
USCG to set pay at the next higher step rate, avoiding a pay reduction.
    Therefore, we propose revising the regulations at 5 CFR 531.216 
governing setting pay when a NAFI employee in DOD or USCG moves to a GS 
position in DOD or USCG, respectively, without a break in service of 
more than 3 days, to conform with changes made by the Act.
    Paragraph (c)(1) in Sec.  531.216 currently states that when an 
employee covered under this section moves voluntarily, the agency may 
set the employee's initial payable rate of basic pay at any step rate 
in the highest applicable rate range currently in effect for the 
employee's GS position of record and official worksite which does not 
exceed the employee's NAFI highest previous rate of pay, except as 
provided in paragraph (c)(2) or (3) of Sec.  531.216. We propose 
revising this provision to allow DOD and USCG to set the employee's 
initial payable rate of basic pay at the lowest step of the applicable 
GS grade that equals or exceeds the NAFI highest previous rate, or at a 
lower step. We also propose clarifying that pay may not be set above 
the maximum (step 10) rate of the rate range.
    We propose similar revisions in paragraph (c)(2) of Sec.  531.216, 
which provides the rules for setting pay when a covered NAFI employee 
moves voluntarily and the highest applicable rate range would be 
different if the official worksite for the employee's GS position of 
record were located at the place where the employee was stationed while 
earning the NAFI highest previous rate.
    Paragraph (d) of Sec.  531.216 provides the rules for when a 
covered NAFI employee is moved involuntarily. Under paragraph (d)(1) of 
Sec.  531.216, a covered employee who is moved involuntarily is 
entitled to an initial payable rate of basic pay at the lowest step 
rate of the grade that is equal to or greater than the employee's rate 
of basic pay in the NAFI position immediately before the move. 
Paragraph (d)(2) of Sec.  531.216 currently states that an agency may 
set the initial payable rate of basic pay at a step rate within the 
highest applicable rate range for the employee's GS position of record 
and official worksite that does not exceed the employee's NAFI highest 
previous rate (consistent with the method prescribed in paragraphs 
(c)(1) and (2)) if that provides a higher rate of basic pay than the 
employee's entitlement under paragraph (d)(1). We propose revising 
paragraph (d)(1) of Sec.  531.216 to clarify that, if the employee's 
former NAFI rate exceeds the range maximum, the agency must identify 
the maximum step rate (step 10) as the employee's maximum payable rate. 
We also propose revising paragraph (d)(2)(i) in Sec.  531.216 so an 
agency may set the initial payable rate of basic pay at the lowest step 
rate within the highest applicable rate range for the employee's GS 
position of record and official worksite that equals or exceeds the 
employee's NAFI highest previous rate, or any lower step rate 
(consistent with the proposed revisions to paragraphs (c)(1) and (2)) 
if that provides a higher

[[Page 50576]]

rate of basic pay than the employee's entitlement under paragraph 
(d)(1).
    We are also taking this opportunity to clarify certain provisions. 
Section 531.216 uses the phrases ``without a change in employing 
agency'' and ``same agency'' to refer to movements within DOD and 
within USCG. However, these phrases are inconsistent with the 
definition of agency in 5 CFR 531.203, which means (in part) an 
executive agency. For example, USCG is a component of the U.S. 
Department of Homeland Security (DHS) and is not an executive agency 
itself. The NAFI pay setting regulations at Sec.  531.216 do not apply 
to a NAFI employee in the USCG who moves to a GS position within DHS, 
but outside of USCG. Therefore, we propose to clarify the regulations 
by replacing the phrases ``without a change in employing agency'', 
``different agency'', and ``same agency'' in paragraphs (a), (c)(1) and 
(d)(1) of Sec.  531.216 with more descriptive and accurate phrases such 
as, ``from a NAFI position in the Department of Defense or the Coast 
Guard to a GS position in the Department of Defense or the Coast Guard, 
respectively''.

Salary Offset

    Section 652 of the Act provides that employees of a NAFI of DOD or 
USCG (as described in 5 U.S.C. 2105(c)) are covered by the salary 
offset law in 5 U.S.C. 5514. Section 5514 provides authority for 
collection of debts owed the Federal Government by offset of Federal 
employee salary payments. This amendment allows DOD and USCG NAFIs to 
collect debts owed to them by Federal employees via salary offset. It 
also allows Federal agencies to collect debts by offsetting salary 
payments of DOD and USCG NAFI employees. Therefore, we are proposing to 
revise the regulations at 5 CFR 550.1103 to add ``any nonappropriated 
fund instrumentality described in 5 U.S.C. 2105(c)'' to the definition 
of agency.
    In addition, we are proposing to revise the regulations at 5 CFR 
550.1103 to change the name of the Postal Rate Commission to Postal 
Regulatory Commission in the definition of agency as a result of 
section 604 of the Postal Accountability and Enhancement Act (Pub. L. 
109-435, December 20, 2006), which amended 5 U.S.C. 5514(a)(5)(B), to 
reflect the Commission's change in name. We also propose adding ``If an 
agency under this definition is a component of an agency, the broader 
definition of agency may be used in applying the provisions of 5 U.S.C. 
5514(b) (concerning the authority to prescribe regulations).'' This 
provision makes clear, for example, that DOD may issue salary offset 
regulations that cover the military departments and DOD NAFIs (as 
described in 5 U.S.C. 2105(c)), even though each of those DOD 
components is itself an agency under the definition of agency in 
proposed Sec.  550.1103. Since DOD is an executive department, it is a 
covered agency and can issue salary offset regulations that cover 
employees in every part of DOD, including employees in any DOD 
component that has separate status as an agency.

E.O. 12866, Regulatory Review

    This rule has been reviewed by the Office of Management and Budget 
in accordance with E.O. 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 Parts 531 and 550

    Administrative practice and procedure; Claims; Government 
employees; Law enforcement officers; Wages.

Office of Personnel Management.
Michael W. Hager,
Acting Director.
    Accordingly, OPM is proposing to amend 5 CFR parts 531 and 550 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), 5305, 5333, 
5334(a) and (b), and 7701(b)(2); Subpart D also issued under 5 
U.S.C. 5335 and 7701(b)(2); Subpart E also issued under 5 U.S.C. 
5336; Subpart F also issued under 5 U.S.C. 5304 and 5305; and 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 B--Determining Rate of Basic Pay

    2. In Sec.  531.216, paragraphs (a), (c)(1), (c)(2)(i), (c)(2)(ii), 
(d)(1), and (d)(2)(i) are revised to read as follows:


Sec.  531.216  Setting pay when an employee moves from a Department of 
Defense or Coast Guard nonappropriated fund instrumentality.

    (a) General. This section governs the setting of pay for an 
employee who moves to a GS position in the Department of Defense or the 
Coast Guard from a position in a nonappropriated fund instrumentality 
(NAFI) (as described in 5 U.S.C. 2105(c)) of the Department of Defense 
or the Coast Guard, respectively, without a break in service of more 
than 3 days. If an employee moves from a NAFI position to a GS position 
with a break of more than 3 days or moves from a NAFI position in the 
Department of Defense or the Coast Guard to a GS position outside of 
the Department of Defense or the Coast Guard, respectively, the 
employee has no special conversion rights and this section does not 
apply.
* * * * *
    (c) * * * (1) For a Department of Defense or Coast Guard employee 
who moves voluntarily, without a break in service of more than 3 days, 
from a NAFI position in the Department of Defense or the Coast Guard to 
a GS position in the Department of Defense or the Coast Guard, 
respectively, the agency may set the employee's initial payable rate of 
basic pay at the lowest step rate in the highest applicable rate range 
currently in effect for the employee's GS position of record and 
official worksite which equals or exceeds the employee's NAFI highest 
previous rate of pay, or any lower step rate, except as provided in 
paragraph (c)(2) or (3) of this section. The employee's initial payable 
rate of basic pay may not exceed the maximum step rate (step 10).
    (2) * * *
    (i) Compare the NAFI highest previous rate to the highest 
applicable rate range currently in effect in the location where the 
employee was stationed while earning that rate. The highest applicable 
rate range is determined based on the pay schedules that would be 
applicable to the employee's current GS position of record if the 
employee were stationed in that location. Identify the lowest step rate 
in the highest applicable rate range that was equal to or exceeded the 
NAFI highest previous rate. If the NAFI highest previous rate is less 
than the range minimum, identify the minimum step rate (step 1). If the 
NAFI highest previous rate exceeds the range maximum, identify the 
maximum step rate (step 10).
    (ii) Identify the step rate in the highest applicable rate range 
for the employee's current official worksite and position of record 
that corresponds to the step rate derived under paragraph (c)(2)(i) of 
this section. That corresponding rate is the maximum payable rate at 
which the agency may set the employee's pay

[[Page 50577]]

under this section, except as provided by paragraph (c)(3) of this 
section. The agency may set the employee's rate of basic pay at any 
step rate that does not exceed that maximum payable rate.
* * * * *
    (d) * * * (1) For a Department of Defense or Coast Guard employee 
who is moved involuntarily (as defined in paragraph (d)(3) of this 
section), without a break in service of more than 3 days, from a NAFI 
position in the Department of Defense or the Coast Guard to a GS 
position with substantially the same duties in the Department of 
Defense or the Coast Guard, respectively, the employee is entitled to 
an initial payable rate of basic pay at the lowest step rate of the 
grade that is equal to or greater than the employee's rate of basic pay 
in the NAFI position immediately before the move. If the employee's 
former NAFI rate exceeds the range maximum, identify the maximum step 
rate (step 10).
    (2) * * *
    (i) The lowest step rate within the highest applicable rate range 
for the employee's GS position of record and official worksite that 
equals or exceeds the employee's NAFI highest previous rate, or any 
lower step rate (consistent with the method prescribed in paragraphs 
(c)(1) and (2) of this section);
* * * * *

PART 550--PAY ADMINISTRATION (GENERAL)

Subpart K--Collection by Offset From Indebted Government Employees

    3. The authority citation for subpart K of part 550 continues to 
read as follows:

    Authority: 5 U.S.C. 5514; sec. 8(1) of E.O. 11609; redesignated 
in sec. 2-1 of E.O. 12107.

    4. In Sec.  550.1103, the definition of agency is revised to read 
as follows:


Sec.  550.1103  Definitions.

* * * * *
    Agency means an executive department or agency; a military 
department; the United States Postal Service; the Postal Regulatory 
Commission; any nonappropriated fund instrumentality described in 5 
U.S.C. 2105(c); the United States Senate; the United States House of 
Representatives; any court, court administrative office, or 
instrumentality in the judicial or legislative branches of the 
Government; or a Government corporation. If an agency under this 
definition is a component of an agency, the broader definition of 
agency may be used in applying the provisions of 5 U.S.C. 5514(b) 
(concerning the authority to prescribe regulations).
* * * * *
[FR Doc. E8-19819 Filed 8-26-08; 8:45 am]
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