05-14228. Employers' Contributions and Contribution Reports

AGENCY:

Railroad Retirement Board.

ACTION:

Final rule.

SUMMARY:

The Railroad Retirement Board (Board) amends its regulations to explain the effective date of consolidated employer records that result in the issuance of a joint contribution rate under the experience rating provisions of section 8 of the Railroad Unemployment Insurance Act. In addition, as a result of an agency reorganization, there has been a change in the title of the Board employee to whom requests for consolidation should be addressed. The Board amends its regulations to reflect this change.

DATES:

Effective July 25, 2005.

FOR FURTHER INFORMATION CONTACT:

Marguerite P. Dadabo, Assistant General Counsel, [phone], TDD [phone].

SUPPLEMENTARY INFORMATION:

Effective January 1, 1990, the manner by which payroll taxes on railroad employers are determined moved from a universal tax rate to a tax rate based upon a formula which takes into consideration the amount of benefits that have been paid under the Railroad Unemployment Insurance Act (RUIA) to an employer's employees. This new method of computing employers' contribution rates is commonly referred to as experience rating. Part 345 of the Board's regulations deals with the manner by which experience rating contribution rates are determined and how employers report such contributions. Various business transactions throughout the year can impact employers' contribution rates. The existence of more than one rate for an employer during a calendar year creates a significant administrative burden for the Board, due to the design of the experience rating database. Therefore, the Board has adopted a policy of updating contribution rates to reflect relevant business transactions effective with the calendar year following the Board's determination related to the transaction.

In accordance with an agency reorganization, the revision to § 345.202 amends the title of the Board official to whom requests for the consolidation of employer records should be addressed from the Director of Unemployment and Sickness Insurance to the Director of Assessment and Training.

The revision to § 345.203 notifies employers of the date upon which an individual employer record will be updated to reflect a merger or combination of two or more employers. Where the entity surviving the merger is not a new employer, the individual employer record will not be updated to reflect the combined record until the calendar year following the year of the Board's determination. Where the entity surviving the merger becomes an employer under part 202 of subchapter B by virtue of the merger, the individual employer record shall consist of the combined record effective with its employer effective date.

The revision to § 345.204 notifies employers of the date upon which an individual employer record will be updated to reflect the acquisition of assets from another employer. Where the employer acquiring the assets is not a new employer under part 202 of subchapter B, the individual employer record for that employer will take into consideration the acquired assets effective with the calendar year following the year of the Board's determination. Otherwise, the individual employer record for the entity that becomes an employer by virtue of the acquisition will take the acquired assets into consideration as of the employer effective date.

In order to comply with the President's June 1, 1998 memorandum directing the use of plain language for all proposed and final rulemaking, the regulatory paragraphs introduced by the above rule changes have been written in plain language.

Collection of Information Requirements

The amendments to this part do not impose additional information collection and recordkeeping 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 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 not significant. The amendments explain the effective date when an employer's individual employer records under the Railroad Unemployment Insurance Act (RUIA) will be updated to reflect various business transactions for purposes of establishing the employer's contribution rate under the experience rating provisions of section 8 of the RUIA. The amendments also include changes in the title of the Board official to whom requests for consolidation of employer records should be addressed.

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 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.

The Board published the proposed rule on June 14, 2004 (69 FR 32927), and invited comments by August 13, 2004. No comments were received. Accordingly, the proposed rule is being published as a final rule without change.

List of Subjects in 20 CFR Part 345

• Electronic filing
• Paperwork elimination
• Railroad unemployment insurance
• Reporting and recordkeeping requirements

For the reasons set out in the preamble, the Railroad Retirement Board amends title 20, chapter II, part 345 of the Code of Federal Regulations as follows:

PART 345—EMPLOYERS' CONTRIBUTIONS AND CONTRIBUTION REPORTS

1. The authority citation for part 345 continues to read as follows:

Authority: 45 U.S.C. 362(l).

2. Section 345.202 of subpart C is revised to read as follows:

§ 345.202

Consolidated employer records.

(a) Establishing a consolidated employer record. Two or more employers that are under common ownership or control may request the Board to consolidate their individual employer records into a joint individual employer record. Such joint individual employer record shall be treated as though it were a single employer record. A request for such consolidation shall be made to the Director of Assessment and Training, and such consolidation shall be effective commencing with the calendar year following the year of the request.

(b) Discontinuance of a consolidated employer record. Two or more employers that have established and maintained a consolidated employer record will be permitted to discontinue such consolidated record only if the individual employers agree to an allocation of the consolidated employer record and such allocation is approved by the Director of Assessment and Training. The discontinuance of the consolidated record shall be effective commencing with the calendar year following the year of the Director of Assessment and Training's approval.

3. Section 345.203 of subpart C is revised to read as follows:

§ 345.203

Merger or combination of employers.

In the event of a merger or combination of two or more employers, or an employer and non-employer, the individual employer record of the employer surviving the merger (or any person that becomes an employer as the result of the merger or combination) shall consist of the combination of the individual employer records of the entities participating in the merger. Where the person surviving the merger is an existing employer under part 202 of this chapter, the individual employer record for the surviving employer will not be updated to reflect the combined record until the calendar year following the year of the Board's determination. Where the entity surviving the merger becomes an employer under part 202 of this chapter by virtue of the merger, the individual employer record shall consist of the combined record effective with its employer effective date.

4. Section 345.204(a) of subpart C is revised to read as follows:

§ 345.204

Sale or transfer of assets.

(a) In the event property of an employer is sold or transferred to another employer (or to a person that becomes an employer as the result of the sale or transfer) or is partitioned among two or more employers or persons, the individual employer record of such employer shall be prorated among the employer or employers that receive the property (including any person that becomes an employer by reason of such transaction or partition), in accordance with any agreement among the respective parties (including an agreement that there shall be no proration of the employer record). Such agreement shall be subject to the approval of the Board. Where the employer acquiring the assets is an existing employer under part 202 of this chapter, that employer's individual employer record will take into consideration the acquired assets no earlier than the calendar year following the year of the Board's determination, unless an agreement among the respective parties provides otherwise. Where the employer acquiring the assets becomes an employer under part 202 of this chapter by virtue of such acquisition, the individual employer record for such employer shall consider the acquired assets as of such person's employer effective date, subject to any agreement between the respective parties and the provisions of paragraph (b) of this section.

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Dated: July 15, 2005.

By authority of the Board.

Beatrice Ezerski,

Secretary to the Board.