Brown Bag Lunch: MSPB CY 2013 Year in Review

On April 17, 2014, the Section Government Personnel Committee will host a brown bag lunch on the latest developments at the Merit Systems Protection Board, including a review of significant cases decided in the last year.  Confirmed panelists include:

• Bryan G. Polisuk, General Counsel, MSPB
• Ronald J. Weiss, Administrative Judge, Office of Regional Operations, MSPB
• Martin J. Crane, Attorney, Office of Appeals Counsel, MSPB
• Andrew J. Perlmutter (Moderator), Attorney, Passman & Kaplan, P.C.

Download the registration form here.  Hope to see you there!

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BIS Proposes Changes To Required Support Documents Under EAR

by Shannon Allen

The Commerce Department’s (“DOC’s”) Bureau of Industry and Security (“BIS”) issued a proposed rule to amend regulations regarding support documents required for license application submissions under the Export Administration Regulations (“EAR”) and changes to BIS’s role in issuing documents for the Import Certificate and Delivery Verification system.  The Export Administration Act of 1979 (“EAA”) has been in lapse since August 21, 2001.  Effectively, however, the President has continued it under the International Emergency Economic Powers Act (“IEEPA”).  Pursuant to Executive Order 13222 as amended by Executive Order 13637, the BIS continues to carry out the provisions of the EAA.

Under Executive Order 13563, agencies are mandated to “periodically review its existing significant regulations to determine whether any such regulations should be modified, streamlined, expanded, or repealed so as to make the agency's regulatory program more effective or less burdensome in achieving the regulatory objectives.”  The purpose of this review is, among other things, to allow for public participation and an open exchange of ideas, as well as to promote predictability and reduce uncertainty.

On August 5, 2011, the BIS published a notice of inquiry on retrospective regulatory review seeking public input on parts or sections of the EAR that are not immediately affected by the Export Control Reform initiative and that improve clarity. . .  streamline requirements . . . improve efficiency and reduce burden.  This proposed rule is in direct response to public comments received.  BIS’s rule proposes to:

• remove the requirement to obtain an International Import Certificate or Delivery Verification (“IC/DV”) in connection with license applications;
• require a Statement by Ultimate Consignee and Purchaser for most license applications previously requiring an International Import Certificate;
• increase the license application value requirement for obtaining a Statement by Ultimate Consignee and Purchase from $5,000 to $50,000;
• cease issuing U.S. Import Certificates or Delivery Verifications for imports into the United States; and
• revise the rules’ structure and description of support document requirements to improve clarity.

The BIS believes that these proposals are beneficial for many reasons, including, but not limited to:

• increasing U.S. exporters competitiveness;
• furthering national security and foreign policy objectives of the United States;
• reducing unnecessary burdens imposed on license applicants;
• improving timeliness for shipping under an approved license;
• eliminating the need for BIS to request that a DV be obtained from a foreign government for a transaction;
• not requiring U.S. exporters to wait for an original Statement by Ultimate Consignee and Purchaser before shipping under an approved license so long as the exporter receives the original within 60 days from the date the document is signed by the ultimate consignee;
• only requiring the engagement of parties directly involved in the transaction;
• increasing the prevention of diversion by providing an affirmative statement on the actual end use of the item by the ultimate consignee or end user;
• increasing awareness among participating countries of potential enforcement concerns; and
• furthering the aims of Executive Order 13563.

Interested parties are invited to submit comments by June 9, 2014, through any of the following methods:

• Federal eRulemaking Portal: http://www.regulations.gov. The identification number for this rulemaking is BIS-2014-0009;
• By email: to publiccomments@bis.doc.gov. Include RIN 0694-AG00 in the subject line; OR
• By mail or delivery: to Regulatory Policy Division, Bureau of Industry and Security, U.S. Department of Commerce, Room 2099B, 14th Street and Pennsylvania Avenue NW., Washington, DC 20230. Refer to RIN 0694-AG00.

PBGC Seeks Comment on Amending Treatment of Title IV Rollovers

by Shannon Allen

The Pension Benefit Guaranty Corporation (“PBGC”) proposes to amend its regulations to offer direction on Title IV treatment of rollovers.  In expectation of greater use of rollovers and as a part of its efforts to promote retirement security, the PBGC proposes a rule to guide the treatment of rollovers from defined contribution plans to defined benefit plans and to promote lifetime income options.

Under Title IV of the Employee Retirement Income Security Act of 1974 (“ERISA”), the PBGC administers the single-employer pension plan termination insurance program.  Premiums are paid to PBGC each year to cover program private-sector, single-employer defined benefit plans.  Normally, PBGC is appointed statutory trustee of the plan when a plan terminates.  The PBGC is then responsible for paying benefits in accordance with the provisions of Title IV.   ERISA describes that when a plan terminates in a distress termination or an involuntary termination, each participant’s plan benefit is assigned to one or more of six “priority categories.”  Benefits in Priority Category 2 (“PC2”) have a higher claim on plan assets than almost all other benefits under the plan and plan assets are normally adequate to pay accrued benefits derived from mandatory employee contributions.  Thus, participants’ accrued benefits derived from mandatory employee contributions are assigned to PC2.

Occasionally, plans trusteed by PBGC, also contain contributions made by employees that fund part of the benefit under the plan.  The PBGC proposes to amend its regulations on allocation of assets and benefits payable in terminated single-employer plans in order to spell out the treatment of benefits resulting from a rollover distribution from a defined contribution plan.  401(k) retirement savings rollover availability expands opportunities for participants to choose lifetime annuity options.

The Department of the Treasury (“Treasury”) and the Internal Revenue Service (“IRS”) issued Rev. Rul. 2012-4, 2012-8 I.R.B. 386 (“Ruling”), in February 21, 2012.  The Ruling explained particular qualification requirements under 401(a) of the Code for use of rollover amounts to provide an additional benefit under a defined benefit plan.  Under the Ruling, a qualified defined benefit plan will accept a direct rollover of a distribution from a qualified defined contribution plan maintained by the same employer for an employee or former employee of the employer who departs from the company after fifty five years of age with ten plus years of service and chooses an immediate annuity of the employee’s benefit under the plan.

For purposes of section 411(c) of the Code, the Ruling recognizes the amounts rolled over as mandatory employee contributions.  This satisfies section 411(c)(2) of the Code because:

1. The benefit resulting from the direct rollover is provided as an immediate annuity determined as the actuarial equivalent of the amount rolled over; and
2. In the event payment is delayed after the rollover, interest on the rollover contribution is accumulated and the benefit derived from the rollover is not forfeitable upon death prior to the annuity starting date.

In response to the Treasury’s and IRS’s rollover clarifications in the Rule, the PBGC proposes to amend its regulations to provide guidance on Title IV treatment of rollovers. The proposal amends the PBGC’s regulations on Benefits Payable in Terminated Single-Employer Plans (29 CFR part 4022) and Allocation of Assets in Single-Employer Plans (29 CFR part 4044).  These amendments would create or explain the rules for treatment of rollovers in plans that terminate underfunded, including, but not limited to the following:

• A benefit resulting from rollover amounts would be treated as an accrued benefit derived from mandatory employee contributions in PC2.
• Unlike other PC2 benefits, PC2 benefits resulting from rollover amounts would generally not be payable in lump sum form.
• The portion of any benefit resulting from rollover amounts that exceeds the accrued benefit derived from mandatory employee contributions would be a guaranteeable benefit in PC3, PC4, or PC5, as applicable.
• The participant’s accrued benefit resulting from rollover amounts generally would not be subject to PBGC’s maximum guaranteeable benefit limitation under ERISA and thus would not be taken into account in applying that limitation.
• However, the maximum guaranteeable benefit limitation would apply to any benefit resulting from rollover amounts that exceeds the accrued benefit treated as derived from mandatory employee contributions.
• The participant’s accrued benefit resulting from rollover amounts generally would not be subject to the five-year phase-in limitation on the guarantee of benefit increases.
• However, the phase-in limitation would apply to any benefit resulting from rollover amounts that exceeds the accrued benefit treated as derived from mandatory employee contributions, with the phase-in period beginning as of the date the rollover contributions were received by the plan.

The PBGC seeks public comment of this proposed rule.  Interested parties are invited to submit comments, identified by Regulatory Information Number (RIN 1212-AB23), by June 2, 2014, by any by the following methods:

• Federal eRulemaking Portal: http://www.regulations.gov. Follow the Web site instructions for submitting comments;
• Email: reg.comments@pbgc.gov;
• Fax: 202-326-4224; OR
• Mail or Hand Delivery: Legislative and Regulatory Department, Pension Benefit Guaranty Corporation, 1200 K Street NW., Washington, DC 20005-4026.

Meet Lisa Heinzerling, Professor of Law at Georgetown University Law Center

by Nina Hart

Meet Lisa Heinzerling, Justice William J. Brennan, Jr., Professor of Law, at Georgetown University Law Center.  Below, Prof. Heinzerling shares her experiences in administrative law and her thoughts on OIRA and federal agencies.

1. What led you to a career in law?  How did you become interested in studying and teaching administrative law?

I studied philosophy in college, and I loved the close attention to language and the analytical care it required.  I thought law would require similar capacities, but with a more focused attention on concrete problems.

2. What experiences with administrative or regulatory law have you had?

After my clerkships and a stint as a Skadden Fellow at a public interest group in Chicago, I worked for three years as an assistant attorney general in Massachusetts.  I worked in the environmental protection division of the attorney general’s office, focusing on environmental law. When I came to Georgetown, I taught administrative/regulatory subjects like environmental law and natural resources law, then branched out to administrative law itself and to food and drug law.  Through most of my time at Georgetown, I have been involved in various ways in litigation involving administrative/regulatory matters. I took a two-year leave of absence from Georgetown in 2009-10 to work at the U.S. EPA. 

3. As someone who has written extensively about the federal agencies, what do you think is the greatest challenge facing agencies and advocates involved in assessing or creating regulations?  Are there any “best practices” that attorneys involved in the process should follow?

One of the greatest challenges facing agencies and advocates today is that there are simply not enough agency resources to do all of the things that agencies are legally authorized and indeed required to do.  Agencies aren’t terribly good at setting out their priorities in a way that maximizes their effectiveness, and advocates are, understandably, frustrated when agencies decline to take legally required action.

4. How would you characterize the relationships between the federal agencies and OIRA?  Are there ways in which either OIRA or the agencies should change the way in which they communicate or otherwise interact with each other?

The relationships between the federal agencies and OIRA are challenging because the agencies are the entities charged by Congress with certain responsibilities and are structured to bring maximal expertise to bear in exercising those responsibilities.  OIRA is not charged by Congress with implementing statutes (other than the Paperwork Reduction Act) and its expertise is narrower than that of the agencies. 

5. At a more general level, what do you think has been the most significant impact that OIRA has had on how regulations are created or amended?

One of the most significant yet nonobvious effects of OIRA is to create uncertainty within agencies about whether their decisions will see the light of day.  Rules can take years to develop, and yet they might not emerge from OIRA at all or might not emerge in a form anything like the one they had when they went to OIRA for review. The uncertainty created by the vagaries of the OIRA process is not great for agency staff morale and, I think, limits the creativity staff exercise even in the very first stages of developing rules.

6. For law students considering a career in administrative law, how would you suggest they learn about and explore the field?  Are there courses in addition to administrative law that you think would be particularly useful for them?

Students should understand that “administrative law” is always practiced within the context of a particular problem being addressed by a particular agency.  Beyond taking administrative law itself, students can best explore the field by taking subjects in specific regulatory areas, such as environmental law, securities regulation, food and drug law, etc. 

7. Outside of the law, what are your favorite activities or hobbies?

Spending time with my family.  I also like to run and to garden, although I don’t have any particular aptitude for either.

DOJ To Eliminate Import Control On Certain USMIL Defense Articles

by Shannon Allen

The Department of Justice (“DOJ”) requests public input on a proposed interim final rule to amend Bureau of Alcohol, Tobacco, Firearms, and Explosives (“ATF”) regulations removing certain “defense articles” currently on the “U.S. Munitions Import List (“USMIL”)” that “no longer warrant import control” under the Arms Export Control Act (“AECA”).

In August 2009, the President directed a “broad-based interagency review” of the United States “export control system” to, among other things; identify additional ways to enhance national security, better focus resources on protecting items for export that need to be protected, provide clarity to make it easier for exporters to comply with regulations, and for the United States Government to administer and enforce the regulations.  ATF was asked to identify certain defense articles that no longer warrant control on the USMIL.  The DOJ’s proposed interim final rule amends the regulations at 27 CFR 447.21 by removing defense articles currently on the USMIL that the ATF has determined no longer warrant import control under the AECA.

In “furtherance of world peace” and the “security and foreign policy of the United States,” section 38 of the AECA (22 U.S.C. 2778(a)(1)) authorizes the President to “control the import and . . . export of defense articles and defense services.”  The President, via Executive Order 13637 of March 8, 2013, delegated his “export” authority to the Secretary of State and his import authority to the Attorney General.  The Attorney General “delegated administration” of the “import provisions” of the AECA to the ATF Director. And the Attorney General’s permanent import list, or USMIL, helps to distinguish between the Attorney General’s import list from the Secretary of State’s export list.

This interim final rule includes, but is not limited to the following:

1. The removal from the USMIL Category I—Firearms, paragraph (e), “Riflescopes manufactured to military specifications . . . ;” because they are readily available through diverse domestic commercial sources and they do not present a significant concern for trafficking or diversion into illicit channels.
2. The removal in Category III—Ammunition paragraph (c), “Ammunition belting and linking machines,” and (d), “Ammunition manufacturing machines and ammunition loading machines . . . ;” because these defense articles are costly, difficult to maintain, too heavy for easy transport, and readily available from domestic vendors in the United States.
3. The removal in Category IV—Launch Vehicles, Guided Missiles, Ballistic Missiles, Rockets, Torpedoes, Bombs and Mines, paragraph (f), “Ablative materials fabricated or semi-fabricated from advanced composites (e.g., silica, graphite, carbon, carbon/carbon, and boron filaments) for the articles in this category that are derived directly from or specifically developed or modified for defense articles;” because such materials are a low threat to domestic security and are readily available in the domestic market.
4. The clarification in Category VI—Vessels of War and Special Naval Equipment, of paragraph (a) to read: “Vessels of War, if they are armed and equipped with offensive or defensive weapons systems, including but not limited to amphibious warfare vessels, landing craft, mine warfare vessels, patrol vessels, auxiliary vessels, service craft, experimental types of naval ships, and any vessels specifically designed or modified for military purposes or other surface vessels equipped with offensive or defensive military systems;” because the new text focuses precisely on defense articles that might threaten domestic security or enable terrorist activities.
5. The revision in Category VI—Vessels of War and Special Naval Equipment, of paragraph (b) to read: “Turrets and gun mounts, special weapons systems, protective systems, and other components, parts, attachments, and accessories specifically designed or modified for such articles on combatant vessels;” because the new language focuses on defense articles that might threaten domestic security or enable terrorist activities.
6. The updating of Category VII—Tanks and Military Vehicles by removing and reserving paragraph (g), “Engines specifically designed or modified for the vehicles in paragraphs (a), (b), (c), and (f) of this category.”

 The DOJ requests all interested persons to comment on this interim final rule, which is effective as of April 28, 2014.  Specifically, the DOJ seeks comments on the clarity of this interim final rule and how it may be made easier to understand.  All comments must reference the agency name and this document docket number (ATF 25I), be legible, include the commenter’s name and mailing address, and be submitted on or before June 25, 2014, by one of the following methods:

• Electronic: Federal eRulemaking Portal: http://www.regulations.gov. Follow the instructions for submitting comments;
• Fax: ATTN: ATF 25I  Fax #: (202) 648-9741; OR
• Mail: George M. Fodor, Mailstop 6N-602, Office of Regulatory Affairs, Enforcement Programs and Services, Bureau of Alcohol, Tobacco, Firearms, and Explosives, U.S. Department of Justice, 99 New York Avenue NE., Washington, DC 20226; ATTN: ATF 25I.

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Federal Judge Upholds Federal Contractor Affirmative Action Regulations

by Lynn White

 

On March 21, 2014, Judge Emmet G. Sullivan of the U.S. District Court for the District of Columbia upheld new Department of Labor, Office of Federal Contract Compliance Programs (OFCCP) regulations implementing Section 503 of the Rehabilitation Act that establish a seven percent utilization goal and data collection requirements on the hiring and employment of individuals with disabilities for federal contractors.  The rule went into effect March 24, 2013.  Associated Builders & Contractors, Inc. (ABC) challenged the rule asserting that the seven percent utilization goal and data collection requirements were arbitrary and capricious. 

 

 In upholding the rule, Judge Sullivan stated that OFCCP's interpretation of Section 503 was permissible and not an abuse of the agency's authority.  Judge Sullivan accepted the agency's reasonsing for establishing the seven percent utilization goal and data collection and analysis requirements stating clearly that the rule is not arbitrary and capricious.  Judge Sullivan rejected ABC's argument that the rule violated the Regulatory Flexibility Act.

 

ABC released the following statement in response to the courts decision: "We are disappointed in the decision and we will contemplate our options in further challenging this rule.ABC and its members support nondiscriminatory practices toward individuals with disabilities on federal projects, and we will remain committed to placing these individuals in good jobs and careers in the construction industry; however, OFCCP’s rule imposes wasteful and unnecessary data collection and reporting requirements on government contractors without any supporting evidence from the agency that contractors weren’t previously meeting the requirements. It is particularly onerous for small businesses that historically have provided services but lack the resources to comply with the burdensome and unnecessary requirements."

 

Please stay tuned for more coverage on the matter from Notice and Comment!