05-7291. Federal Benefit Payments Under Certain District of Columbia Retirement Plans

AGENCY:

Departmental Offices, Treasury.

ACTION:

Notice of proposed rulemaking.

SUMMARY:

The Department of the Treasury proposes to amend its DC Pensions rules promulgated pursuant to the Balanced Budget Act of 1997, as amended (the Act). The Act was effective on October 1, 1997. The Act assigns to the Secretary of the Treasury responsibility for payment of benefits based on service accrued as of June 30, 1997, under the retirement plans for District of Columbia teachers and police officers and firefighters, and payment of benefits under the retirement plan for District of Columbia judges regardless of when service accrued. The amended regulations will implement the Secretary's authority under the Act to ensure the accuracy of payments made to annuitants before the effective date of the Act. The amended regulations will also reflect changes made in the District of Columbia Retirement Protection Improvement Act of 2004 (the 2004 Act). In addition, the amended regulations will include several technical changes as specified below.

DATES:

Written comments must be received on or before June 13, 2005.

ADDRESSES:

Submit comments to the Office of the Assistant General Counsel for General Law and Ethics, Attention: DC Pensions Rulemaking Project, Room 2209A, Main Treasury Building, Department of the Treasury, 1500 Pennsylvania Avenue, NW., Washington, DC 20220. Because paper mail in the Washington, DC, area may be subject to delay, it is recommended that comments be submitted electronically to: [e-mail]. All comments should be captioned with “DC Pensions Rulemaking Comments.” Please include your name, affiliation, address, e-mail address, and telephone number in your comment. Comments will be available for public inspection by appointment only at the Reading Room of the Treasury Library, Room 1318, Main Treasury Building, 1500 Pennsylvania Avenue, NW., Washington, DC 20220. To make appointments, call [phone].

FOR FURTHER INFORMATION CONTACT:

Elizabeth Cuffe, Office of the General Counsel, MT Room 2209A, Department of the Treasury, 1500 Pennsylvania Avenue, NW., Washington, DC 20220 (202-622-1682, not a toll-free call).

SUPPLEMENTARY INFORMATION:

Title XI of the Balanced Budget Act of 1997, Public Law 105-33, 111 Stat. 251, 712-731, 756-759, as amended (the Act), transferred certain pension liabilities from the District of Columbia Government to the Federal Government. The Act requires that the Secretary of the Treasury (the Secretary) pay certain benefits based on service accrued on or before June 30, 1997, under the retirement plans for District of Columbia teachers (Teachers Plan) and police officers and firefighters (Police and Firefighters Plan), and for benefits under the retirement plan for District of Columbia judges (Judges Plan) regardless of when service accrued. On December 23, 2004, the District of Columbia Retirement Protection Improvement Act of 2004, Public Law 108-489, 118 Stat. 3966 (the 2004 Act) was enacted. The 2004 Act amended the Act, in part, to create a new fund from the two funds that had financed the Teachers Plan and the Police and Firefighters Plan and to provide the Judges Plan with procedures for resolving denied benefit claims.

1. Federal Government's Responsibilities

The Act provides the Secretary with authority to ensure the accuracy of Federal Benefit Payments made before October 1, 1997, under the Police and Firefighters Plan and the Teachers Plan. Section 11012 of the Act requires the Secretary to make benefit payments under the Police and Firefighters Plan and Teachers Plan based on service accrued on or before June 30, 1997. An annuitant's entitlement to the correct payment amount based on that service, but not more than that amount, does not expire. Thus, the Secretary's authority to review and ensure the accuracy of all payments based on service accrued on or before June 30, 1997, extends to all such payments whether made before or after the October 1, 1997, effective date of the Act.

In the case of the Judges Plan, section 11251(a) of the Act (codified at DC Official Code § 11-1570(c)(2)(A)) vests in the Secretary authority over Federal Benefit Payments made under the Judges Plan before the October 1, 1997, effective date of the Act. Accordingly, the Secretary has authority to ensure the accuracy of payments made before October 1, 1997, under the Judges Plan, the Police and Firefighters Plan, and the Teachers Plan.

The proposed amendments to Part 29 reflect the authority of the Secretary as provided in the sections of the Act discussed above and the manner in which that authority is being administered by the Treasury Department.

The 2004 Act amended the Act to create the District of Columbia Teachers, Police Officers, and Firefighters Federal Pension Fund with the assets transferred from the District of Columbia Federal Pension Liability Trust Fund and the Federal Supplemental District of Columbia Pension Fund, which funds were terminated. The 2004 Act also amended the Act to provide the Judges Plan with procedures for resolving denied benefit claims.

2. Proposed Regulations

The Secretary has the authority under section 11083 and paragraph 11251(b) (codified as DC Official Code § 11-1572(a)) of the Act “to issue regulations to implement, interpret, administer and carry out the purposes of this [Act], and, in the Secretary's discretion, those regulations may have retroactive effect.” The current regulations by their terms apply only to Federal Benefit Payments made on or after October 1, 1997, the effective date of the Act. See 31 CFR 29.101(c). Therefore, the Department of the Treasury proposes to amend current regulations to implement the Secretary's authority under the Act to ensure the accuracy of payments made to annuitants prior to the October 1, 1997, effective date of the Act. The Department also proposes to amend the current regulations to reflect the changes made in the 2004 Act and to make several technical changes as specified below.

The Authority paragraph supplies the reference to the provisions of the Act that provide the statutory authority for Part 29. This paragraph is amended to simplify the citation.

Section 29.101(a) provides the statutory basis of the Part 29 rules. This paragraph is amended to conform to the amended language of the Authority provision and the definition of Act in section 29.103(a).

Section 29.101(c) provides the scope of coverage of the Part 29 D.C. Pensions regulations. This paragraph is amended to delete the current limitation to payments made on or after October 1, 1997, and thereby to include payments made before October 1, 1997, under the Teachers Plan, the Police and Firefighters Plan, and the Judges Plan.

Section 29.101(e) is added to specify that the regulations do not apply to the District of Columbia replacement plan, which covers payments based on service accrued after June 30, 1997, pursuant to section 11042 of the Act.

Section 29.103(a) provides a definition for Act. This definition is amended to simplify the definition and to accurately reflect the applicable sections of the Act.

Section 29.103(a) provides a definition for Benefits Administrator. This definition is amended to include citations to the District of Columbia Retirement Protection Improvement Act of 2004, Public Law 108-489, 118 Stat. 3966 (the 2004 Act) and to clarify that the interim benefits administration period under the Judges Plan is independent of the interim District benefits administration period under the Teachers Plan and the Police and Firefighters Plan.

Section 29.103(a) provides a definition for Federal Benefit Payment. This definition is amended to include payments made before October 1, 1997, under the Teachers Plan, the Police and Firefighters Plan, and the Judges Plan and to make clear that, pursuant to section 11012(b) of the Act, service accrued after June 30, 1997, shall not be credited for purposes of determining the amount of any Federal Benefit Payment under the Teachers Plan and the Police and Firefighters Plan.

Section 29.103(a) also provides a definition for Retirement Funds. This definition is amended to include the funds used to make payments under the Teachers Plan, the Police and Firefighters Plan, and the Judges Plan before October 1, 1997, and to reflect changes to the funds made in the 2004 Act.

Section 29.201(a) is amended to use the word “Act” rather than the full name of the Act.

Section 29.401(a)(2) and (3) are amended to include citations to the portions of the 2004 Act that provide the Judges Plan with procedures for resolving denied benefit claims.

Section 29.401(c) is added to exclude from the coverage of Subpart D claims and appeals that were filed against the District of Columbia before the effective date of the Act. This limitation is based on section 11723 of the Act, which requires the District of Columbia to continue to defend civil actions and proceedings already in process and which prohibits claims against the United States for civil actions and proceedings already begun against the District of Columbia before the effective date of the Act.

Section 29.402 provides a definition for Act. This definition is deleted and the definition in § 29.103(a) will be in effect for all of Part 29.

Section 29.402 provides a definition for Benefits Administrator. This definition is deleted and the definition in § 29.103(a) will be in effect for all of Part 29.

Section 29.501(e) is added to exclude from the coverage of Subpart E debt collection claims asserted by the District of Columbia before the effective date of the Act and requests for waiver of collection filed with the District of Columbia before the effective date of the Act. This limitation is based on section 11723 of the Act, which requires the District of Columbia to continue to defend civil actions and proceedings already in process and which prohibits claims against the United States for civil actions and proceedings already begun against the District of Columbia before the effective date of the Act.

Regulatory Flexibility Act

It is hereby certified that this proposed regulation, if adopted, would not have a significant economic impact on a substantial number of small entities. The proposed regulation only affects the determination of the Federal portion of retirement benefits to certain former employees of the District of Columbia. Accordingly, a regulatory flexibility analysis is not required by the Regulatory Flexibility Act (5 U.S.C. chapter 6).

Executive Order 12866

This proposed rule is not a significant regulatory action as defined by Executive Order 12866, 58 FR 51735. Therefore, a regulatory assessment is not required.

List of Subjects in 31 CFR Part 29

• Administrative practice and procedure
• Claims
• Disability benefits
• Firefighters
• Government employees
• Intergovernmental relations
• Law enforcement officers
• Pensions
• Retirement
• Teachers

Proposed Regulatory Amendment

For the reasons discussed in the preamble, we propose to amend Title 31, Part 29, Code of Federal Regulations, as follows:

PART 29—FEDERAL BENEFIT PAYMENTS UNDER CERTAIN DISTRICT OF COLUMBIA RETIREMENT PROGRAMS

1. The authority citation for Part 29 is revised to read as follows:

Authority: Subtitle A, Subchapter B of Chapter 4 of Subtitle C, and Chapter 3 of Subtitle H, of Pub. L. 105-33, 111 Stat. 712-731, 756-759, and 786-787; as amended.

2. In § 29.101, paragraphs (a) and (c) are revised, and paragraph (e) is added, to read as follows:

§ 29.101

Purpose and scope.

(a) This part contains the Department's regulations implementing Subtitle A, Subchapter B of Chapter 4 of Subtitle C, and Chapter 3 of Subtitle H, of Title XI of the Balanced Budget Act of 1997, Pub. L. 105-33, 111 Stat. 251, 712-731, 756-759, enacted August 5, 1997, as amended.

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(c) This part applies to Federal Benefit Payments.

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(e) This part does not apply to the District of Columbia replacement plan, which covers payments based on service accrued after June 30, 1997, pursuant to section 11042 of the Act.

3. In § 29.103, definitions for Act, Benefits Administrator, Federal Benefit Payment, and Retirement Funds in paragraph (a) are revised to read as follows:

§ 29.103

Definitions.

(a) In this part—

Act means Subtitle A, Subchapter B of Chapter 4 of Subtitle C, and Chapter 3 of Subtitle H, of Title XI of the Balanced Budget Act of 1997, Pub. L. 105-33, 111 Stat. 251, 712-731, 756-759, as amended.

Benefits Administrator means:

(1) For the Teachers Plan and the Police and Firefighters Plan under section 11041(a) of the Act:

(i) During the interim benefits administration period, the District of Columbia government; or

(ii) After the end of the interim benefits administration period:

(A) The Trustee selected by the Department under sections 11035(a) or 11085(a) of the Act;

(B) The Department, if a determination is made under sections 11035(d) or 11085(d) of the Act that, in the interest of economy and efficiency, the function of the Trustee shall be performed by the Department rather than the Trustee; or

(C) Any other agent of the Department designated to make initial benefit determinations and/or to recover or recoup or waive recovery or recoupment of overpayments of Federal Benefit Payments, or to recover or recoup debts owed to the Federal Government by annuitants; or

(2) For the Judges Plan under section 11252(b) of the Act:

(i) During the interim benefits administration period, the District of Columbia government; or

(ii) After the end of the interim benefits administration period for the Judges Plan:

(A) The Trustee selected by the Department under section 11251(a) of the Act;

(B) The Department, if a determination is made under section 11251(a) of the Act that, in the interest of economy and efficiency, the function of the Trustee shall be performed by the Department rather than the Trustee; or

(C) Any other agent of the Department designated to make initial benefit determinations and/or to recover or recoup or waive recovery or recoupment of overpayments of Federal Benefit Payments, or to recover or recoup debts owed to the Federal Government by annuitants.

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Federal Benefit Payment means a payment for which the Department is responsible under the Act, to which an individual is entitled under the Judges Plan, the Police and Firefighters Plan, or the Teachers Plan, in such amount and under such terms and conditions as may apply under such plans, including payments made under these plans before, on, or after the October 1, 1997, effective date of the Act. Service after June 30, 1997, shall not be credited for purposes of determining the amount of any Federal Benefit Payment under the Teachers Plan and the Police and Firefighters Plan.

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Retirement Funds means the District of Columbia Teachers, Police Officers, and Firefighters Federal Pension Fund established under section 11081 of the Act, the District of Columbia Judicial Retirement and Survivors Annuity Fund established under section 11252 of the Act, and their predecessor funds.

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4. Section 29.201 is revised to read as follows:

§ 29.201

Purpose and scope.

This subpart contains information concerning the relationship between the Department and the District government in the administration of the Act and the functions of each in the administration of that Act.

5. In § 29.401, paragraphs (a)(2) and (3) are amended, and paragraph (c) is added, to read as follows:

§ 29.401

Purpose.

(a) * * *

(2) The procedures for determining an individual's eligibility for a Federal Benefit Payment and the amount and form of an individual's Federal Benefit Payment as required by sections 11021 and 11251(a) (codified at D.C. Official Code § 11-1570(c)(2)(a)) of the Act;

(3) The appeal rights available under section 11022(a) of the Act and section 3 of the 2004 Act (codified at D.C. Official Code § 11-1570(c)(3)) to claimants whose claim for Federal Benefit Payments is denied in whole or in part; and

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(c) This part does not apply to claims and appeals filed before October 1, 1997. Such claims must be pursued with the District of Columbia.

6. In § 29.402, the definitions for Act and Benefits Administrator are removed.

7. In § 29.501, paragraph (e) is added to read as follows:

§ 29.501

Purpose; incorporation by reference; scope.

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(e) This part does not apply to debt collection claims asserted and requests for waivers of collection initiated before October 1, 1997. Such debt collection claims must be pursued by the District of Columbia and such requests for waivers of collection must be pursued with the District of Columbia.

Dated: April 6, 2005.

Rochelle F. Granat,

Director, Office of DC Pensions.