INDEPENDENT REGULATORY REVIEW COMMISSION Notice of Comments Issued [37 Pa.B. 5348]
[Saturday, September 29, 2007]Section 5(g) of the Regulatory Review Act (71 P. S. § 745.5(g)) provides that the Independent Regulatory Review Commission (Commission) may issue comments within 30 days of the close of the public comment period. The Commission comments are based upon the criteria contained in section 5.2 of the Regulatory Review Act (71 P. S. § 745.5b).
The Commission has issued comments on the following proposed regulations. The agency must consider these comments in preparing the final-form regulation. The final-form regulation must be submitted within 2 years of the close of the public comment period or it will be deemed withdrawn.
Reg. No. Agency/Title Close of the Public Comment Period IRRC Comments Issued 54-63 Pennsylvania Liquor Control Board
License Application and Management Contracts
37 Pa.B. 3418
(July 21, 2007)8/20/07 9/19/07 3-43 Department of Banking
Proper Conduct of Lending and
Brokering in the Mortgage Loan Business
37 Pa.B. 3416
(July 21, 2007)8/20/07 9/19/07 43-10 Public School Employees' Retirement Board
Formalization and Clarification of Current Practices
37 Pa.B. 3423
(July 21, 2007)8/20/07 9/19/07 ____ Pennsylvania Liquor Control Board
Regulation #54-63 (IRRC #2613)License Application and Management Contracts September 19, 2007 We submit for your consideration the following comments on the proposed rulemaking published in the July 21, 2007 Pennsylvania Bulletin. Our comments are based on criteria in section 5.2 of the Regulatory Review Act (71 P. S. § 745.5b). Section 5.1(a) of the Regulatory Review Act (71 P. S. § 745.5a(a)) directs the Pennsylvania Liquor Control Board (Board) to respond to all comments received from us or any other source.
1. Determining whether the regulation is in the public interest.
Section 5.2 of the Regulatory Review Act (RRA) (71 P. S. § 745.5b) directs this Commission to determine whether a regulation is in the public interest. When making this determination, the Commission considers criteria such as economic or fiscal impact and reasonableness. To make that determination, the Commission must analyze the text of the proposed rulemaking and the reasons for the new or amended language. The Commission also considers the information a promulgating agency is required to provide in the regulatory analysis form (RAF) pursuant to § 745.5(a) of the RRA.
The explanation of the regulation in the Preamble and the information contained in the RAF is not sufficient to allow this Commission to determine if the regulation is in the public interest. More specifically, there is no detailed fiscal impact and cost benefit analysis in the RAF. Without this information, we cannot determine what fiscal impact this proposal will have on the regulated community and whether the regulation is in the public interest. In the Preamble and RAF submitted with the final-form rulemaking, the Board should provide more detailed information as required under § 745.5(a) of the RRA.
2. Section 1.1. Definitions.--Clarity.
Merchant
The definition of ''merchant'' includes terms that are not defined in statute or regulation. The terms include: importer; brewery; vendor and spirits. We recommend that these terms be defined. Also, a comma should be added between the terms '' limited winery'' and ''brewery.''
Pecuniary Interest
The definition of ''pecuniary interest'' includes the phrase ''the capability of a person.'' This term is vague, and clarification is necessary in the final-form regulation. The definition also states that there is a rebuttable presumption of a pecuniary interest ''when a person controls a substantial portion of the proceeds of the licensed business.'' (Emphasis added.) The Board needs to specify what constitutes a ''substantial portion.''
Applicant
The term ''applicant'' is used in Sections 3.8(a) and (b), 3.142(a) and (b), and 11.143(c) and (d); however, it is not defined. The Board should add a definition for this term to this section.
3. Section 1.5. Reputation: Use of criminal and citation history.--Implementation procedures; Clarity.
Subsection (b) states that the Board ''may'' consider the reputation of stockholders, directors, officers, managers or members when considering the reputation of a corporation, partnership, limited liability company or other business entity. The term ''may'' connotes that the Board can consider these factors ''at its discretion.'' However, the regulation does not include the circumstances under which the Board would not consider the reputation of the stockholders, directors, officers, managers or members. The Board should either specify when it would consider the reputations of the parties listed or change ''may'' to ''will.''
4. Section 3.8. Certificate of completion; letter of authority.--Clarity.
Subsection (a) describes the documentation issued and resulting operating authority when the Board approves an application for new license, transfer of a license or extension of premises. We raise two concerns.
First, with respect to the type of documentation, the phrase ''certificate of approval'' has been changed to ''letter of operating authority.'' Why was the terminology changed and what is the difference between a certificate of approval and a letter of operating authority? How will this change impact the regulated community?
Second, the subsection also states that the letter of operating authority ''may list conditions the applicant shall complete before a license is issued.'' The final-form rulemaking should specify what these ''conditions'' are.
5. Section 3.141. Management contracts.--Clarity.
The phrases ''management contract'' and ''management services'' are used throughout Subchapter M of Chapter 3. The final-form rulemaking should include definitions for these terms.
6. Section 3.142. Reporting.--Consistency with the Statute; Implementation procedures; Reasonableness; Need; Clarity.
Subsection (a)
This subsection describes the information that ''licensees or applicants for licenses that have management contracts shall file . . . .'' We have two concerns.
First, in addition to licensees or applicants for licenses that have management contracts, it is unclear from the existing language whether licensees that currently have management contracts must file the necessary information as well. The regulation should provide further clarification of the appropriate persons required to file.
Second, the regulation does not specify with whom these persons are required to file. Would this information be included on the forms to be filed? The final-for regulation should direct to whom filing is necessary.
Subsection (a)(2)
Subsection (a)(2) requires the filing of tax certification and clearance statements for the person providing management services. We have two questions. First, the subsection of the Liquor Code (Code) to which this subsection refers (47 P. S. § 4-477(g)) states that: ''[t]his section (§ 4-477) shall also be applicable to any management company utilized by the applicant.'' (Emphasis added.) Furthermore, this entire section of the Code refers only to the filing of various information by an ''applicant for the grant, renewal, or transfer of any license.'' (Emphasis added.) As mentioned above, we question whether the proposed Subsection (a) applies to existing licensees that currently have management contracts. If the section does apply, what is the Board's statutory authority for requiring a licensee to file tax certification and clearance statements on behalf of the management company, since the Code only permits applicants, and management companies utilized by the applicant to file such statements? See 47 P. S. § 4-477 (a).
Subsection (a)(2) also mentions forms ''supplied by the Departments of Revenue and Labor and Industry.'' (Emphasis added.) However, § 4-477(a) of the Code only mentions ''forms approved by the Department of Revenue.'' Furthermore, this section of the Code requires various types of information to be supplied not only from the Departments of Revenue and Labor and Industry (Departments), but also from the Office of the Attorney General. Why is the regulation inconsistent with the Code, both in the type of forms to be used and the agencies from which information is needed?
Subsection (c)
Subsection (c) requires ''licensees filing notice of the establishment or modification of a management contract to pay a fee of $350.'' We have four questions. First, what is the Board's statutory authority for prescribing such a fee? Second, what is the basis for the fee of $350? Third, to whom must the fee be paid? Fourth, what is meant by ''modification of a management contract?'' Since there are varying degrees of ''modification'' (for example, something as simple as changing an address versus a more substantive modification, such as changing the work required), the regulation should specify the type of contract modification necessary before a licensee must pay a fee.
7. Section 3.143. Board approval and licensee responsibility.--Statutory authority; Implementation procedures; Clarity.
Subsection (a)
This subsection discusses when the Board can refuse involvement of a person providing management services. However, it does not explain the review and approval process for management service providers. We have five questions. First, what is the Board's statutory authority for requiring licensees or applicants for licenses to obtain Board approval for management contracts? Second, can a licensee enter into a management contract before Board approval is granted? Third, how and when will a licensee be notified of the decision of the Board? Fourth, can the Board deny or disapprove a management contract? Finally, if a management contract is not approved, will a licensee have appeal rights?
Subsection (a)(2)
Subsection (a)(2) refers to ''facts upon which the Board could refuse a person's involvement in the license.'' The final-form regulation should include the specific criteria that the Board will consider when reviewing a management contract.
Subsection (b)
This subsection provides that ''the licensee's use of a management company will not affect the licensee's responsibility for violations of the Liquor Code or this title.'' The intent of this subsection is unclear. Do licensees act in a supervisory role and are therefore liable for violations of the Code or this title by the management company?
8. Section 5.51. Cleaning of malt or brewed beverage dispensing systems.--Clarity.
Malt or brewed beverage dispensing system
The term ''malt or brewed beverage dispensing system'' is used in Sections 5.51(a), (b), and (c), but it is not defined. This term is also used in Sections 5.52, 5.53 and 5.54. The Board should define this term in Subchapter D of Chapter 5.
Subsection (b)
Subsection (b) requires that the method of cleaning must leave the entire malt or brewed beverage dispensing system in a ''clean and sanitary condition.'' However, the regulation does not indicate when a system is determined to be in a ''clean and sanitary condition.'' The Board should define this term. Furthermore, is the Board the appropriate agency to develop this standard, or should it be created in conjunction with another agency, such as the Department of Health?
9. Section 5.53. Pressure maintenance.--Clarity.
This Section refers to the introduction of ''contaminants'' to the malt or brewed beverage dispensing system. What would be considered a ''contaminant''?
10. Section 5.54. Responsibility for condition of equipment.--Clarity.
As with the phrase ''clean and sanitary condition'' in Section 5.51 (b), the proposed regulation does not indicate what constitutes ''unsanitary conditions'' for a malt or brewed beverage dispensing system, as mentioned in Section 5.54. The Board should also define this term.
11. Section 11.143. Merchant tax responsibility.--Statutory authority; Clarity.
According to the RAF (Number (11)), the intent of this Section is to extend the Commonwealth's Contractor Responsibility Program to ''merchants that sell liquor and liquor accessories to the Board.'' However, this entire section contains language similar to that in § 4-477 of the Code, which relates to ''applicants for the grant, renewal or transfer of any license,'' not tax liability (Emphasis added.) What is the Board's statutory authority for applying these provisions to merchants? Do these provisions apply to currently licensed merchants or just ''applicants?'' How do these provisions relate to the concept of ''merchant tax responsibility?'' The term ''merchant tax responsibility'' should also be defined in the regulation.
Subsection (a)
Subsection (a) refers to information that must be filed by a ''merchant not already licensed by the Board.'' Does this mean that licensed merchants do not have to file such information? Does the Board have this information on file for all currently licensed merchants? This should be clarified in the final-form regulation.
Subsection (b)
Under this subsection, a merchant will be required to ''waive any confidentiality with respect to tax information . . . in the possession of the Department of Revenue, Office of the Attorney General, or the Department of Labor and Industry . . . .'' Can the Board require a merchant to waive confidentiality requirements of information that is controlled by and in the possession of other agencies? Does the Board have the authority to request tax information regarding merchants from other agencies?
Subsection (c)
Under this subsection, the Board will request tax information regarding the applicant from the Departments, as well as the Office of the Attorney General. What statutory authority does the Board have to require these agencies to comply with its request for information?
Subsection (e)
While subsection (c) states that the Board will ''review'' the tax status of the applicant, subsection (e) states that the Departments will notify the Board if an applicant is not in compliance ''with the provisions in this section.'' Who ultimately makes the decision regarding compliance? Also, it is unclear which ''provisions'' must specifically be complied with. These issues should both be clarified in the final-form regulation.
Consistency of Terms
The entire section uses the term ''merchant'' and ''applicant'' interchangeably. For consistency, the Board should use the same word throughout.
12. Section 13.201. Definitions.--Clarity.
Sponsor
The definition of ''sponsor'' includes terms that are not defined in statute or regulation. The terms include: importer and vendor. We recommend that these terms be defined.
13. Section 13.228. Disposal and storage of partially-used liquor and empty containers.--Reasonableness.
Subsection (a) states that partially-consumed liquor containers may not be placed in storage at a store for more than 15 days. What is the basis for the 15-day storage limit?
14. Section 17.5. Subpoenas.--Implementation procedures; Clarity.
Subsection (a)
The proposed regulation addresses the process for issuance of subpoenas ''except for subpoenas issued upon the Board's own motion.'' When would a subpoena be issued on the Board's own motion, and what is the process for such issuance?
____ Department of Banking
Regulation #3-43 (IRRC #2620)Proper Conduct of Lending and
Brokering in the Mortgage Loan BusinessSeptember 19, 2007 We submit for your consideration the following comments on the proposed rulemaking published in the July 21, 2007 Pennsylvania Bulletin. Our comments are based on criteria in section 5.2 of the Regulatory Review Act (71 P. S. § 745.5b). Section 5.1(a) of the Regulatory Review Act (71 P. S. § 745.5a(a)) directs the Department of Banking (Department) to respond to all comments received from us or any other source.
1. General.--Consistency with federal case law; Reasonableness.
Watters v. Wachovia
Commentators have questioned whether this regulation includes wholly owned operating subsidiaries of national banks under the definitions of ''Licensee.'' They cite the Watters v. Wachovia United States Supreme Court case (__U. S.__, 127 S. Ct. 1559, 167 L.Ed.2d 389 (2007)) to support the position that these entities should not be included.
The Department has acknowledged that these entities fall under the proposed definition of ''Licensee.'' However, it has also acknowledged that there are circumstances where regulation of wholly owned operating subsidiaries of national banks is preempted by federal law, as discussed in the Watters decision. Therefore, it does not intend to enforce the regulations against entities that demonstrate they are wholly owned subsidiaries of national banks.
In light of the Watters decision and to avoid any potential confusion by licensees, the Department should add a provision to the definition of ''Licensee'' that specifically exempts wholly owned operating subsidiaries of national banks.
Applicants with limited English proficiency
The Preamble of this regulation states that because of the ''complexity and competitiveness'' of the mortgage industry, ''borrowers may not understand the loan products offered to them or the process of obtaining a loan.'' However, ''complexity and competitiveness'' of the loan industry may not be the only barrier to applicants understanding loans and loan products.
Several commentators have asserted that this proposed regulation could be strengthened by adding provisions to give certain rights to applicants that have a limited proficiency in the English language. Therefore, the Department should consider adding provisions to ensure that applicants with limited English proficiency can obtain documents in a language that they can read and comprehend.
2. Section 46.1. Definitions.--Reasonableness; Clarity.
The definition of ''Application'' contains an inaccurate citation. The correct citation is 24 CFR 3500.2(b).
Also, commentators have made various suggestions about the types of loans that should be included under the definition of ''Loan.'' How did the Department determine which kinds of loans would be included under this definition in the proposed regulation? Why did it not choose to include ''covered'' loans under that definition?
3. Section 46.2. Proper conduct of lending and brokering in the mortgage loan business.--Fiscal Impact; Reasonableness; Clarity.
Subsection (b)
Under this subsection, a licensee that has contact with the applicant must disclose certain information to the applicant within 3 business days. If both the lender and the broker are licensees, which one is required to issue the disclosure? Also, the language in this subsection is not clear as to when the 3-day period begins. The final-form regulation should be amended to clarify these points.
Subsections (e) and (f)
Numerous commentators have expressed concern that certain provisions in these subsections will eliminate their ability to offer ''stated income,'' ''no-doc,'' ''low-doc,'' ''reverse,'' and ''balloon'' mortgages. These commentators claim that certain applicants, such as senior citizens or self-employed individuals who cannot provide a W-2 to prove income, could be severely restricted or even prohibited from obtaining a mortgage. One commentator further asserts that Pennsylvania licensees will be put at a distinct disadvantage because national banks could continue to offer these products to consumers because they are not covered by the Department's regulations.
The Department has indicated that it does, indeed, intend for the provisions of this regulation to eliminate any mortgage that does not verify the income and fixed expenses of the applicant.
We have several questions. How will people who do not have traditional methods for proving income obtain mortgages? How will Pennsylvania licensees be able to remain competitive with national banks that could continue to offer these products? Should a qualified consumer be prohibited from using a ''low-doc'' or ''no-doc'' loan if they choose these products based upon convenience? The Department should further explain the impact of eliminating these types of loan products.
Further, the Department has also indicated that it does not intend to prohibit ''reverse mortgages.'' Therefore, the final-form regulation should be amended to clearly state the Department's intent with regard to these types of mortgages.
Subsection (e)(1)
Commentators assert that this subsection should prohibit a licensee from offering a loan without determining that the applicant will have the ability to repay the loan, including taxes and insurance, based on the maximum possible rate and payment which could apply under the terms of the loan. We agree. The Department should consider amending this section to ensure that the maximum possible payment is considered when doing the ability to repay assessment.
Subsection (e)(2) and (3)
The term ''fixed expenses'' is found in these subsections, but it is not defined in the regulation. What constitutes a ''fixed expense''?
Subsection (e)(3)
This subsection allows a licensee to ''consider and document information in addition to verified income and fixed expenses'' when determining the applicant's ability to repay the loan. What additional information might be considered?
Subsection (e)(6)
This subsection states that the licensee must ''not ignore facts or circumstances that it knows or reasonably should know which would indicate that an applicant does not have the ability to repay the offered loan.'' After considering the applicant's income and fixed expenses, what other ''facts or circumstances'' should be considered? These should be contained in the final-form regulation.
Subsection (e)(7)
In determining whether an applicant has the ability to repay a loan, a licensee is required to give ''great weight and due consideration'' to the Department's guidance document, entitled ''Guidance on Nontraditional Mortgage Products Risks.'' This requirement is vague because it is unclear what qualifies as ''great weight and due consideration.'' Furthermore, given that guidance documents are nonbinding, what will be the ramifications if the Department determines that a licensee failed to meet the standards described in ''Guidance on Nontraditional Mortgage Products Risks''?
Subsection (f)(6)
Under this subsection, who decides whether the execution of a document is ''improper'' and when? What recourse does the licensee have if it is determined that execution of the document is ''improper''?
Subsection (g)
A commentator suggested that this subsection should be amended to permit a lender to delay or refuse to fund a loan where fraud or other misrepresentation by the applicant is discovered after the closing but prior to funding. Has the Department considered what could be done by a lender or broker if fraud is discovered in that time frame?
____ Public School Employees' Retirement Board Regulation #43-10 (IRRC #2621) Formalization and Clarification of Current Practices September 19, 2007 We submit for your consideration the following comments on the proposed rulemaking published in the July 21, 2007 Pennsylvania Bulletin. Our comments are based on criteria in section 5.2 of the Regulatory Review Act (71 P. S. § 745.5b). Section 5.1(a) of the Regulatory Review Act (71 P. S. § 745.5a(a)) directs the Public School Employees' Retirement Board (Board) to respond to all comments received from us or any other source.
CHAPTER 201. PRACTICE AND PROCEDURE. 1. Section 201.2a. Definitions.--Clarity.
The definition of ''nonadjudicatory benefit appeal'' states in part, ''[t]he action of the ESRC will be deemed final unless a claimant files a timely adjudicatory benefit appeal from that action and seeks an administrative hearing.'' This portion of the definition is substantive. Substantive provisions in definitional sections are unenforceable. Moreover, this substantive rule is also expressed in section 201.4a(c). In the final-form regulation, the Board should strike the last sentence from this definition.
2. Section 201.3a. Nonadjudicatory benefit appeal.--Reasonableness; Clarity.
Subsection (e) provides that the Executive Staff Review Committee (ESRC) will meet ''as necessary to review and decide'' appeals under this section; the claimant will be notified if the appeal is granted; and the claimant will be notified via a denial letter if the appeal is denied. The provision is vague and, consequently, fails to impart useful information to members of the regulated community or their representatives. What is the allowable time period for the ESRC to make a determination regarding an appeal and notify the claimant? If the appeal is granted, how will the claimant be notified? Also, must the claimant exercise his right to appeal within 30 days of the denial letter being written, or within 30 days of the denial letter being postmarked? We recommend that the Board amend this provision for clarity.
3. Section 201.4a. Adjudicatory benefit appeal and request for administrative hearing.--Clarity.
Subsection (a) requires that the Board must receive an appeal and request for administrative hearing under this section ''within 30 days after the date of the ESCR denial letter.'' The regulation should specify whether the 30-day time period for appeal begins on the date noted on the letter, or the date the letter is postmarked.
4. Section 201.7. Service and return of subpoenas.--Reasonableness; Clarity.
Subsection (a) requires a subpoenaing party to ''furnish the fees promptly upon the written request of the witness after service of the subpoena.'' We have three concerns. First, the term ''promptly'' is vague. In the final-form regulation, the Board should provide a specific time period for response.
Second, the final-form regulation should address how a witness will be notified of his obligation to request fees in writing. Will the subpoenaing party be required to alert the witness to the requirement?
Third, the final sentence of subsection (a) is a run-on sentence and is unclear. The Board should revise it in the final-form regulation.
5. Section 201.11. Proposed opinion and recommendation.--Clarity.
Subsection (c) stated, ''[w]hen exceptions are filed, the Board will rule on the exceptions.'' This is the sole mention of exceptions in this chapter. With which entity should exceptions be filed, and within what time limitations? What information and documentation must be included with the exceptions? How long does the Board have to rule on exceptions? The final-form regulation should provide clear guidance on the substance and procedure of the exceptions process. It should also provide a definition of ''exceptions'' in the definitional section or a cross-reference to a definition located elsewhere.
6. Section 201.12. Oral argument before the Board.--Clarity.
Subsection (a) states, ''[t]he right to oral argument will be discretionary with the Board.'' This provision is vague and therefore provides insufficient guidance to the regulated community. The final-form regulation should include criteria the Board will consider in determining whether oral argument is necessary or appropriate in a given case.
Subsection (b) requires a party requesting oral argument in a case where exceptions have been filed to file the request for oral argument ''with the exceptions.'' As noted in Comment 5 above, the Board should provide further detail concerning the exceptions process.
Subsection (e) provides that, following oral argument, the Board ''may table the case for further consideration at its next meeting.'' If the Board does choose to table a case, must it decide the case at the next meeting? In other words, may the Board table the case for multiple meetings, or does it have a finite time period during which it must act?
Subsection (f) requires that, in accordance with the Board's decision in a case, the ''Board's counsel will draft a proposed adjudication'' that ''will be presented for the Board's approval'' at the Board meeting immediately following the meeting in which the Board made its determination in the case. Must the Board vote on the proposed adjudication in the meeting when it is presented, or may it table the matter for one or more meetings? Is there a time period during which the Board is required to act?
CHAPTER 211. PRELIMINARY PROVISIONS. 7. Section 211.2. Definitions.--Clarity.
Certified members
The final sentence of the definition of this term states, ''[a]ll other members are noncertified members.'' The definition of ''nonprofessional members'' also refers to the meaning of ''noncertified members'' found in this definition. The final-form regulation should strike the final sentence from this definition and provide for a separate and distinct definition of ''noncertified members.''
Nonprofessional members
The Board should clarify the purpose and meaning of the final sentence of this definition. It is unclear whether the Board intends ''noncertified members'' to be included in the definition of ''nonprofessional members,'' or whether the Board intends the terms to have the same meaning.
Pickup contributions
The Board proposes to delete the definition of ''pickup contributions'' currently included in this section. However, this term is used in the definition of ''inactive member.'' The final-form regulation should either maintain this definition, provide a cross-reference to where an applicable definition of the term is found elsewhere, or delete the use of the term in the definition of ''inactive member.''
Professional members
The Board should clarify the purpose and meaning of the final sentence of this definition. It is unclear whether the Board intends ''certified'' member to be included in the definition of ''professional members,'' or whether the Board intends the terms to have the same meaning.
School year
The final sentence of this definition is substantive. Substantive provisions in definitional sections are unenforceable. The Board should strike this sentence from the definition and relocate it to a substantive section of the final-form regulation.
CHAPTER 213: CONTRIBUTIONS AND BENEFITS. 8. Section 213.1. Mandatory and optional membership.--Clarity.
Subparagraph (b)(2) requires that the remittance of certain contributions or the reinstatement of former credited service ''shall be made in accordance with the applicable provisions of the Retirement Code.'' The final-form regulation should specify the applicable Retirement Code provisions.
9. Section 213.3a. Waiver of adjustments.--Clarity; Protection of the public welfare.
Subsection (a) provides the standard for determining whether an adjustment meets the undue hardship test under section 8303.1(a)(1) of the Retirement Code. Under Paragraph (a)(1), the undue hardship test is met if the ''adjustment causes a reduction in excess of 5% of the monthly annuity or other relevant amount.'' How and why did the Board determine that a 5% reduction was the appropriate benchmark for ''undue hardship''? What effect, if any, will this provision have on members who have already experienced an adjustment under section 8534(b) of the Retirement Code leading to a 5% reduction in monthly benefit?
Additionally, we have a clarity concern. Paragraph (a)(1) references a reduction of the monthly annuity ''or other relevant amount.'' The final-form regulation should clarify whether ''other relevant amount'' modifies 5%, or whether it modifies ''monthly annuity.'' At a minimum, the final-form regulation should provide criteria to assist the regulated community in ascertaining what might be a ''relevant amount.''
10. Section 213.25. Incomplete payments.--Clarity; Protection of the public welfare.
Subsection (c) provides that if a member applies for the purchase of service and dies prior to certification by the Board, ''purchase of service shall be completed . . . by reducing the annuity benefit by the actuarial equivalent of the debt . . . provided, in the case of nonschool service, the purchase does not negatively impact the present value.'' We have two concerns.
First, the regulation currently states that if a member dies after applying for the purchase of service but before certification by the Board, ''the member's legally constituted representative may purchase the service by payment of a lump sum'' or by reducing the annuity benefit. (Emphasis added.) Will the change from permissive to mandatory language prevent a deceased member's legally constituted representative from opting out of the transaction?
Second, while section 213.24 allows members to purchase creditable school service as well as nonschool service, this amendment only protects against a purchase of nonschool service that would negatively impact the present value. Why does the final clause not address the purchase creditable school service that would negatively affect the present value?
The preamble does not provide a clear explanation of the reason for either of these changes. In the submittal of the final-form regulation, the Board should further explain the amendments to this section.
11. Section 213.27. Payments by employers.--Clarity; Reasonableness.
This section reduces the time period for employers to file reports with the Board and to pay the amount billed by the Board. The preamble does not provide a clear explanation of the reason for the reduction of the time period or whether the time period is reasonable. In the submittal of the final-form regulation, the Board should further explain the amendments to this section.
12. Section 213.46. Termination of annuities.--Clarity.
Subsection (d) includes a definition of ''extracurricular position.'' We recommend that the Board move this definition from this section to section 211.2. Moreover, the definition of ''extracurricular position'' references an ''established academic course structure.'' The final-form regulation should specify criteria for what the ''established academic course structure'' includes. For instance, does it include fine arts electives?
ARTHUR COCCODRILLI,
Chairperson[Pa.B. Doc. No. 07-1822. Filed for public inspection September 28, 2007, 9:00 a.m.]
