Petition for Writ of Certiorari — National Treasury Employees Union v. United States Nuclear Regulatory Commission

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WG 3 1385

No. 1 nes

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SR A LL LL TET TL a

IN THE

Supreme Court of the United States

OCTOBER TERM, 1989

NATIONAL TREASURY EMPLOYEES UNION,

Petitioner

UNITED STATES NUCLEAR REGULATORY COMMISSION

AND FEDERAL LABOR RELATIONS AUTHORITY

PETITION FOR A WRIT OF CERTIORARI TO THE

UNITED STATES COURT OF APPEALS

FOR THE FOURTH CIRCUIT

GREGORY O’DUDEN *

Director of Litigation

KERRY L. ADAMS

Assistant Director of Litigation

NATIONAL TREASURY EMPLOYEES

UNION

1730 K Street, N.W., Suite 1100

Washington, D.C. 20006

(202) 785-4411

* Counsel of Record Counsel for Petitioners

WILSON - EPES PRINTING Co., INC. - 789-0096 - WASHINGTON, D.C. 20001

® cir 60

QUESTIONS PRESENTED

1. Whether pay adjustments of federal employees

whose rate of compensation is fixed by the agency-

employer rather than by statute are negotiable “condi-

tions of employment” under 5 U.S.C. 7103(a) (14).

2. Whether a bargaining proposal relating to pay in-

terferes with management’s right to “determine” its

budget under 5 U.S.C. 7106(a) (1), where the agency

failed to demonstrate either: (a) that the proposal would

prescribe an amount that had to be allocated to the

agency’s budget, or (b) that the proposal would result

in substantial and unavoidable cost increases that would

not be offset by compensating benefits.

3. Whether bargaining over pay adjustments is in-

consistent with the Nuclear Regulatory Commission’s

discretion under the Atomic Energy Act, under which

the agency had made a unilateral decision to depart from

the Classification Act and to fix the compensation of its

employees.

(i)

TABLE OF CONTENTS

Page

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STATUTORY PROVISIONS INVOLVED... ... 2

a iepdebdsiticcsitaaptialesitonppileadie 4

pt , °c 4

B. Factual background and the proceedings below.. 5

1. Proceedings before the FLRA ......0000 0. 5

2. The decision of the Fourth Circuit panel.... 8

3. The en banc decision of the Fourth Circuit.. 9

REASONS FOR GRANTING THE PETITION ......... 11

I. The ruling below conflicts with the holdings

and rationales of two other circuit court opin-

ions on the important question of pay negoti-

ON aia cidciretinskcistintete anisaatige ssteiislcasdetbelianhinetinsi 11

II. The lower court wrongly decided each of the

three questions presented ................. eee 14

cc erseenne kabeacaes ad liataliaie 18

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(iii)

TABLE OF AUTHORITIES

CASES Page

American Federation of Government Employees,

AFL-CIO, Local 32 and Office of Personnel Man-

agement, 22 F.L.R.A. (No. 29) 307 (1986),

enforced mem. sub nom. Office of Personnel

Management v. FLRA, 829 F.2d 191 (D.C. Cir.

TUITE . suicisctincshcsaniensebicsiiasdaieiigdpidaceaadeeamapenatannasseaedmunmciadieen 17

American Federation of Government Employees,

AFL-CIO, Local 1987 and Department of the

Air Force, Eglin Air Force Base, Florida, 24

F.L.R.A. (No. 41) 377 (1986) ......................... 6, 14, 16

American Federation of Government Employees,

AFL-CIO and Air Force Logistics Command,

Wright-Patterson Air Force Base, Ohio, 2

F.L.R.A. (No. 77) 604 (1980), enforced as to

other matters sub nom. Department of Defense

v. FLRA, 659 F.2d 1140 (D.C. Cir. 1981), cert.

denied sub nom. AFGE v. FLRA, 455 U.S. 945

CA i caithiscintcsenlcchne sebseinebdiiamted eniatacubsarasdeaiacwne 7, 8, 12,17

Department of Defense Dependents Schools v.

FLRA, 863 F.2d 988 (D.C. Cir. 1988), rek’g en

banc granted (Feb. 6, 1989) ................................. 11

Department of Defense v. FLRA, 659 F.2d 1140

Sa I a aa a 16

Department of the Navy, Military Sealift Com-

mand v. FLRA, 836 F.2d 1409 (3d Cir. 1988) _... 11

Fort Knor Dependent Schools v. FLRA, 875 F.2d

1179 (6th Cir. 1989) (petition for reh’g pend-

I acai aa ae ea cee ee eek glee 11

Fort Stewart Schools v. FLRA, 860 F.2d 396 (11th

Cir. 1988), petition for cert. pendin:,, No. 89-65.. 11, 12,

13, 15, 16

Inland Steel Co. v. NLRB, 170 F.2d 247 (7th Cir.

1948), cert. denied, 336 U.S. 960 (1949)... 15

Library of Congress v. FLRA, 699 F.2d 1280 (D.C.

8 REN va hr Rok Et oi et 16

National Treasury Employees Union and Internal

Revenue Service, 27 F.L.R.A. (No. 25) 132

IED iin ccsoseciecae ahcak celeb ae sebalabbanene sadadeadaiieieetaeaaes 17

TABLE OF AUTHORITIES—Continued

Page

National Treasury Employees Union and Depart-

ment of the Treasury, U.S. Customs Service, 21

A TE TE IIIITE Miceichicenneenencainceennigrnaiiniie ieee 17

National Treasury Employees Union v. FLRA, 810

F.2d 296 (D.C. Cir. 1987) ..22............ cc. eccccscecceeee 16

Overseas Education Ass’n Inc. and Dept. of De-

fense, Office of Dependent Schools, 6 FLRC 231

CEI - snlinstniepiicicemeenentienndoniielis catia ee 16

Richfield Oil Corp. v. NLRB, 231 F.2d 717 (D.C.

Cir.), cert. denied, 351 U.S. 909 (1956)... 15

United Federation of College Teachers, Local 1460

and U.S. Merchant Marine Academy, 1 FLRC

ae IED weseniionccsetingmedianiadniie al AS see & 16

West Point Elementary School Teachers Associ-

ation v. FLRA, 855 F.2d 936 (2d Cir. 1988) ..11, 12, 13

Weyerhaeuser Timber Co., 87 NLRB 672 (1949) .. 15

STATUTES AND REGULATIONS

Civil Service Reform Act of 1978

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5 U.S.C. 7106(b) ...... ies icntileemntindebiiniisilgesit aang ase

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Section 704, reprinted at 5 U.S.C. 5343 note__

Federa)] Pay Comparability Act

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National Labor Relations Act

Sie: IPOD sascecssckcscsibeenchestnbsconancseserecnanancie’ 14, i5

for)

TABLE OF AUTHORITIES—Continued

Page

The Atomic Energy Act of 1954, as amended,

Sec. 161(d), 42 U.S.C. 2201 8. 7, 8, 9, 10, 13, 17

MISCELLANEOUS

H.R. Rep. No. 95-1403, 95th Cong., 2d Sess. 44

CBDTB) .accecereccercarecesscesccsresnesstannsesssconascenssenens Scala 9

In THE

Supreme Court of the United States

OcTOBER TERM, 1989

No.

NATIONAL TREASURY EMPLOYEES UNION,

Petitioner

UNITED STATES NUCLEAR REGULATORY COMMISSION

AND FEDERAL LABOR RELATIONS AUTHORITY

PETITION FOR A WRIT OF CERTIORARI TO THE

UNITED STATES COURT OF APPEALS

FOR THE FOURTH CIRCUIT

The National Treasury Employees Union petitions for

a writ of certiorari to review the judgment of the United

States Court of Appeals for the Fourth Circuit in this

case.

OPINIONS BELOW

The en bane decision of the court of appeals (Pet.

App. la-20a) is unreported. The panel decision of the

court of appeals (Pet. App. 2la-4la) is reported at 859

F.2d 302. The decision of the Federal Labor Relations

Authority (Pet. App. 42a-5la) is reported at 29 F.L.R.A.

217.

JURISDICTION

Rehearing en bane was granted on January 6, 1989,

and the judgment of the court of appeals on rehearing en

bane (Pet. App. 19a) was entered on July 14, 1989. The

jurisdiction of this Court is invoked under 28 U.S.C.

1254(1).

—

STATUTORY PROVISIONS INVOLVED

A. The Federal Service Labor-Management Relations

Statute

Section 7102 (5 U.S.C.) provides in relevant part:

Each employee shall have the right * * *

(2) te engage in collective bargaining with re-

spect to conditions of employment through rep-

resentatives chosen by employees under this

chapter.

Section 7103 (5 U.S.C.) provides in relevant part:

(a) For the purpose of this chapter—

(14) “conditions of employment” means person-

nel policies, practices, and matters, whether es-

tablished by rule, regulation, or otherwise, af-

fecting working conditions, except that such

term does not include policies, practices, and

matters

> > >. >

cally provided for by Federal statute |. |

Section 7106(a)(1) (5 U.S.C.) provides:

(a) Subject to subsection (b) of this section, noth-

ing in this chapter shall affect the authority of any

management official of any agency—

(1) to determine the mission, budget, organiza-

tion, number of employees, and internal security

practices of the agency.

Section 7117 (5 U.S.C.) provides in relevant part:

(a) (1) Subject to paragraph (2) of this subsection,

the duty to bargain in good faith shall, to the ex-

tent not inconsistent with any Federal law or any

Government-wide rule or regulation, extend to

matters which are the subject of any rule or reg-

Cs |

ulation only if the rule or regulation is not a

Government-wide rule or regulation.

(2) The duty to bargain in good faith shall, to

the extent not inconsistent with Federal law or

any Government-wide rule or regulation, extend

to matters which are the subject of any agency

rule or regulation referred to in paragraph (3)

of this subsection only if the Authority has de-

termined under subsection (b) of this section

that no compelling need (as determined under

regulations prescribed by the Authority) exists

for the rule or regulation.

B. The Atomic Energy Act

Section 161/(d), 42 U.S.C. 2201, provides in relevant

part:

In the performance of its functions the Commis-

sion is authorized to appoint and fix the compensa-

tion of such officers and employees as may be neces-

sary to carry out the functions of the Commission.

Such officers and employees shall be appointed in

accordance with the civil-service laws and their com-

pensation fixed in accordance with the Classification

Act of 1949, as amended, except that, to the extent

the Commission deems such action necessary to the

discharge of its responsibilities, personnel may be

employed and their compensation fixed without re-

gard to such laws: Provided, however, That no officer

or employee (except such officers and employees

whose compensation is fixed by law, and scientific

and technical personnel up to a limit of the highest

rate of grade 18 of the General Schedule of the

Classification Act of 1949, as amended) whose posi-

tion would be subject to the Classification Act cf

1949, as amended, if such Act were applicable to

such position, shall be paid a salary at a rate in

excess of the rate payable under such Act for posi-

tions of equivalent difficulty or responsibility .. .

STATEMENT

A. Statutory Background

This case arises under the Federal Service Labor-

Management Relations Statute (the Statute), which is

Title VII of the Civil Service Reform Act of 1978, 5

U.S.C. 7101 et seg. The Statute grants federal employees

the right to form and join unions (5 U.S.C. 7102) and

requires federal agencies and employee unions to bargain

in good faith with respect to “conditions of employment.”

5 U.S.C. 7103(a) (12). That term is defined to include

“personnel policies, practices, and matters, whether es-

tablished by rule,. regulation, or otherwise, affecting

working conditions,” excluding only matters relating to

prohibited political activities or to the classification of

positions and matters “specifically provided for by Fed-

eral statute.” 5 U.S.C. 7103(a) (14).

All matters falling within this expansive definition of

“conditions of employment” are negotiable, except those

matters that are explicitly excluded elsewhere in the

Statute. For example, the Statute excludes from the duty

to bargain any proposals that are “inconsistent with any

Federal law.” 5 U.S.C. 7117(a) (1). Moreover, 5 U.S.C.

7106 provides that “nothing in this chapter shall affect

the authority of any management official of any agency”

with respect to certain enumerated management rights.'

Those listed management rights include the authority “to

determine the... budget .. . of the agency.” 5 U.S.C.

7106(a) (1).

Negotiability disputes, such as the one presented here,

arise when an agency declines to bargain over a union

1The authority reserved to management in 5 U.S.C. 7106(a) is

subject to section 7106(b), which specifies that the management

rights provision does not “preclude any agency and any labor

organization from negotiating” with regard to the “procedures

which management officials of the agency will observe in exercising

any authority under this section” and with regard to “appropriate

arrangements for employees adversely affected by the exercise of

any authority under this section by such management officials.”

proposal on the ground that it does not come within the

duty to bargain. A union may then appeal the agency’s

refusal to the Federal Labor Relations Authority (FLRA

or the Authority), which decides whether there is an

obligation to bargain over the matter in question. 5

U.S.C. 7117(c). If the FLRA finds a proposal negotiable,

it does not address the merits of the proposal but simply

orders the agency to bargain in good faith.

B. Factual background and the proceedings below

1. Proceedings before the FLRA

Petitioner National Treasury Employees Union (NTEU

or the Union) instituted the proceedings below by filing

a negotiability appeal with the FLRA pursuant to 5

U.S.C. 7117(c). The Nuclear Regulatory Commission

(NRC or the Agency) had refused to negotiate regard-

ing a union proposal that sought to establish a formula

for determining annual cost of living adjustments for

bargaining unit employees represented by NTEU. The

proposal provided, in pertinent part, as follows (Pet.

App. 42a-43a) :

Section 52.1

The salary structure, that is the grade and steps of

the pay schedule, being used by the NRC will be

maintained. Hereafter, all employees will have their

current salaries adjusted for the cost of living/com-

| arability factor. The adjustment will be equal to

the statistical adjustment recommended to the Pres-

ident by the [Advisory Committee on Federal Pay].

This adjustment will become effective at the begin-

ning of the first pay period following the announce-

ment of it by the [Committee] or other appropriate

sources. It will be unaffected by Presidential or Con-

gressional actions.’

2 The Union’s proposal would thus base annual adjustments on

the yearly recommendations made by the independent Advisory

Committee, which determines the difference between federal and

Section 52.2

NTEU agrees to establish with the employer a pro-

ductivity committee that will monitor the impact of

the new salary adjustment system and seek reason-

able ways to increase the productivity of the em-

ployer, e.g., decrease employee turnover, remove work

obstacles, improve upon available machines and pro-

cedures, and raise employee morale.

Upon NTEU’s petition for review, the FLRA ordered

the NRC to negotiate with the union, finding the salary

proposal to be within the agency’s duty to bargain. ( Pet.

App. 49a). Under long established FLRA precedent,

compensation is a “condition of employment” within the

general duty to bargain under the Statute, as it was

urder the Executive Order program that had previously

governed labor-management relations in the federal sec-

tor. See American Federation of Government Employees,

AFL-CIO, Local 1987 and Department of the Air Force,

Eglin Air Force Base, Florida (Eglin), 24 F.L.R.A.

(No. 41) 877, 380-82 (1986). In rejecting NRC’s argu-

ments, the Authority relied on its consistent position that

nothing in the Statute or its history precludes bargain-

ing over employee wage proposals where “(1) the mat-

ters proposed are not specifically provided for by law

and are within the discretion of the agency and (2) the

proposals are not otherwise inconsistent with law, Gov-

ernment-wide rule or regulation or an agency regulation

for which a compelling need exists” (Pet. App. 46a,

citing Eglin).

private sector salaries pursuant to the Federal Pay Comparability

Act, 5 U.S.C. 5301 et seq. In recent vears, the President has recom-

mended alternative pay plans and the actual fe‘eral increases

ultimately approved by Congress have been significantly lower

than those recommended by the Advisory Committee. Under

NTEU’s proposal, the recommendations of the Committee would be

used at NRC, regardless of the pay raise given to other federal

workers under the alternative pay plans accepted by the President

and Congress.

The FLRA rejected the NRC’s argument that the

Union’s proposal was inconsistent with the Agency’s right

to determine its budget under 5 U.S.C. 7106/a) (1). Re-

lying on its longstanding two-part test for determining

inconsistency with budget rights, the FLRA found that

the Union’s proposal did not directly interfere with the

Agency’s right to determine its budget. See American

Federation of Government Employees, AFL-CIO and Air

Force Logistics Command, Wright-Patterson Air Force

Base, Ohio (Wright-Patterson), 2 F.L.R.A. (No. 77) 604,

607-08 (1980), enforced as to other matters sub nom.

Department of Defense v. FLRA, 659 F.2d 1140 (D.C.

Cir. 1981), cert. denied sub nom. AFGE v. FLRA, 455

U.S. 945 (1982). As the FLRA explained, the Agency

failed to meet its first burden of showing that the pro-

posal prescribes the programs or operations to be in-

cluded in the Agency’s budget or the amount to be allo-

cated for them. Second, the Agency did not make a sub-

stantial demonstration that implementation of the pro-

posal “will result in a significant, unavoidable increase

in costs which is not outweighed by compensating bene-

fits” (Pet. App. 48a).

The FLRA also rejected NRC’s contention that the

Union’s proposal was inconsistent with the Atomic

Energy Act. The FLRA noted that, under that Act, the

NRC clearly has discretion with regard to its pay prac-

tices. Section 161(d) of the Atomic Energy Act gives

the NRC discretion to exempt its personnel from the pay

scheme of the Classification Act whenever such action is

deemed ‘necessary to the discharge of [the Agency’s]

responsibilities.” 42 U.S.C. 2201. “The Authority has

consistently held that where an agency has discretion

over a matter affecting conditions of employment, the

agency is obliged under the Statute to exercise that dis-

cretion by means of bargaining, unless the discretion is

specifically limited by law or regulation.” (Pet. App.

46a). The FLRA observed that the NRC had already

exercised its statutory discretion to exempt positions

from coverage under the Classification Act. The Au-

thority concluded that the language of the Atomic

Energy Act, which allows the NRC to depart from the

Classification Act to the extent such departure is “neces-

sary to the discharge of its responsibilities” does not

place “a specific limitation on the Agency’s discretion to

bargain in this matter.” ‘Pet. App. 47a).

2. The decision of the Fourth Circuit panel

The NRC petitioned for review of the Authority’s de-

cision to the Court of Appeals for the Fourth Circuit,

which had jurisdiction pursuant to 5 U.S.C. 7123. The

original panel of that court unanimously upheld the nego-

tiability of the pay proposal. The panel endorsed the

FLRA’s interpretation of the Statute and its legislative

history and deemed compensation matters to be “condi-

tions of employment” subject to collective bargaining, as

they were under the predecessor labor-management pro-

gram pursuant to the Executive Order (Pet. App. 34a).

The panel held that the “plain language” of the statute,

as well as the statutory policy, supported the negotiability

of pay issues and that the “clearly ambiguous” legislative

history relied on by the NRC was insufficient to support

a contrary reading (Pet. App. 36a).

The panel also rejected the argument that the proposal

interferes with the Agency’s management right to deter-

mine its budget. It expressly endorsed the FLRA’s two-

part Wright-Patterson test for interference. The pro-

posal here did not meet this test because, as the FLRA

concluded, it “merely suggested a procedure and _ ulti-

mately a percentage by which NTEU employee salaries

might be adjusted to allow for cost of living increases”

while “the NRC retained control of the amount of its

budget to be allocated for the salaries.” (Pet. App. 38a).

Moreover, the NRC “had not ‘made a substantial demon-

stration that implementation of the proposal will result

in a significant, unavoidable increase in costs which is

not outweighed by compensating benefits’” (Pet. App.

39a). The Agency “failed even to address the issue of

compensatory benefits” before the Authority, and the

panel refused to bar negotiability merely because the

proposal would cause increased expenditures. (Pet. App.

40a). The NRC’s construction “would likely render the

vast majority of proposals nonnegotiable,”’ and Congress

expressly stated that the management right section should

“be read to favor collective bargaining whenever there

is doubt as to the negotiability of a subject or a pro-

posal.’” (Ibid., quoting H.R. Rep. No. 95-1403, 95th

Cong., 2d Sess. 44 (1978) ). The panel concluded that the

Authority “reasonably concluded that the NRC must show

that any anticipated increase in cost was not offset by

benefits” (Pet. App. 40a).

Finally, the panel held that the proposal was fully

consistent with the NRC’s statutory authority to fix

wages outside the limits of the Classification Act, pur-

suant to section 161(d) of the Atomic Energy Act. The

Court rejected the Agency’s interpretation that the stat-

ute prohibited negotiability of pay where, as here, the

Agency had unilaterally decided that departure from the

Classification Act was necessary to the discharge of the

NRC’s responsibilities. The NRC’s position was con-

trary to the “plain language” of the Statute; the statu-

tory language “cannot be read to limit the NRC’s dis-

cretion over its employees’ pay once the decision to exempt

has been effectuated.” (Pet. App. 31a).

3. The en banc decision of the Fourth Circuit

Upon rehearing en banc, the panel’s ruling was re-

versed in a split decision. Over the dissent of four

members, who relied on the panel’s opinion, six members

of the en banc court held that negotiable “conditions of

employment” do not include compensation. The majority

reasoned that Congress would have specifically listed

wages as negotiable if it had so intended. (Pet. App. 7a).

The majority also rejected the panel’s conclusion that the

legislative history’s statements regarding the non-

negotiability of wages were ambiguous because pay is

provided by statute for most government jobs. In the

majority’s view, the statements of those legislators en-

gaged in the general debate over whether pay should |

become negotiable in all agencies controlled the specific

questions at issue here, i.e., whether pay is negotiable in

those few agencies having discretion to set their own

pay schedules (Pet. App. 9a-1lla).

Five members of the en bane court based their non-

negotiability decision on alternative grounds.* These

members rejected the conclusion of the FLRA and Fourth

Cireuit panel that the union proposal poses no interfer-

ence with the management right to determine a budget

because it sets no specific dollar amount and was not

shown to require significant cost increases without off-

setting financial advantages. Dismissing the FLRA’s

longstanding two-part test, the court summarily concluded

that “nothing in the statute requires that this showing

fof increased cost without offsetting benefits] be made

to the satisfaction of the FLRA.” (Pet. App. 16a).

Finally, the same five memberz concluded that the

salary bargaining proposal was inconsistent with section

161(d) of the Atomic Energy Act, under which the NRC

earlier had exercised its discretion to depart from the

salary schedules of the Classification Act. In their view,

“Section 161(d) and the NRC’s 1975 decision to opt out

of the Classification Act scheme do not provide the agency

with unfettered discretion to negotiate over employee

compensation.” (Pet. App. 17a). Rejecting what the

panel had determined to be the plain meaning of sec-

tion 161(d), the en bane court now adopted a “plain

reading” of its own, that vested the NRC with only

limited discretion to determine the salary of its em-

ployees. Although the NRC had long ago decided to

3 The same four members who edlissented on the main question

also repudiated the alternative grounds. A fifth judge expressed

no opinion on the alternative grounds.

depart from the Classification Act, the Agency couid now

claim insufficient discretion over its budget to a:low for

give and take at the bargaining table (Pet. App. 17a-

18a).

REASCNS FOR GRANTING THE PETITION

Review is warranted because the court below, in a

sharply divided ruling, incorrectly decided three issues of

great importance to federal employees and to the govern-

ment. Moreover, there is a direct conflict among the

courts of appeals on the main issue of pay negotiability

where compensation is not fixed by statute, as well as a

conflict in rationale on the remaining two issues.

I. The ruling below conflicts with the holdings and ra-

tionales of two other circuit court opinions on the

important question of pay negotiability

A. As the majority opinion below expressly recognized

(Pet. App. 6a, n.1), there is a direct conflict in the courts

of appeals on the question of whether compensation is a

“condition of employment” subject to collective bargain-

ing in an agency whose pay schedules are not fixed by

statute. The Eleventh and Second Circuits have answered

this question in the affirmative. Fort Stewart Schools v.

FLRA, 860 F.2d 396 (11th Cir. 1988), petition for cert.

pending, No. 89-65; West Point Elementary School

Teachers Association v. FLRA, 855 F.2d 936 (2d Cir.

1988). The en bane Fourth Circuit, in reversing the

panel decision in this case, has now joined the Sixth,

D.C. and Third Circuits, in holding that pay issues are

never negotiable under the Statute. See Fort Knox De-

pendent Schools v. FLRA, 875 F.2d 1179 (6th Cir. 1989)

(petition for reh’g pending); Department of Defense

Dependents Schools v. FLRA, 863 F.2d 988 (D.C. Cir.

1988), reh’g en bane granted (Feb. 6, 1989); Depart-

ment of the Navy, Military Sealift Command v. FLRA,

836 F.2d 1409 (3d Cir. 1988).

As the government’s petition for certiorari in Fort

Stewart attests, this issue of pay negotiability is a ques-

tion of great importance to large and diverse categories

of employees and their agencies (Pet. at 11-12). In view

of the conflicting rulings among the courts of appeals

on this important and far-reaching question, this Court’s

review is patently warranted.

B. The second issue in this case, relating to inter-

ference with an agency’s right to determine its budget,

presents another basic question on which the government

seeks review in Fort Stewart. In that case, the govern-

ment has sought review “on the question whether com-

pensation-related proposals [violate] management’s right

to control its budget,” even though “‘[t]here is no express

conflict.” (Pet. at 12). The intervening en banc ruling

in the instant case provides the missing conflict. That

is, the ruling below rejects the budget analysis employed

in Fort Stewart and West Point.

In those two cases, the Eleventh and Second Cir-

cuits endorsed and applied the FLRA’s Wright-Patterson

test for determining when a proposal is deemed to inter-

fere with an agency’s right to set its budget. West Point,

855 F.2d at 943-44; Fort Stewart, 860 F.2d at 405.

Under that test, the Second and Eleventh Circuits readily

concluded that particular pay proposals did not interfere

with the budget rights of an agency. In the instant case,

by contrast, the Fourth Circuit summarily rejected the

longstanding FLRA test. Noting the FLRA’s position

that the NRC failed to demonstrate that the anticipated

increase in costs associated with the proposal would be

significant and not offset by compensating economic

gains, the court declared, without discussion, that “noth-

ing in the statute requires that this showing be made to

the satisfaction of the FLRA” (Pet. App. 16a).

Pay proposals that would be negotiable in the Second

er Eleventh Circuits, in short, would clearly not be nego-

tiable in the Fourth Circuit. Because the Fourth Circuit

has rejected the FLRA test adopted by two other cir-

cuits, the review of this Court is necessary to determine

the standards for measuring a pay proposal’s possible

interference with an agency’s right to determine its

budget.

C. Finally, the ruling below presents a third issue,

similar to the third question presented by the government

in Fort Stewart, regarding whether statutory provisions

giving an agency discretion to set salaries are consistent

with bargaining over pay. In yet another sharply divided

ruling, the court below held that collective bargaining

would be inconsistent with the NRC’s statutory authority,

under the Atomic Energy Act, to fix pay schedules. In

the prevailing view, the NRC’s enabling statute did not

vest sufficient discretion in the agency to set pay scales,

even after the NRC unilaterally decided that it was

“necessary to the discharge of its responsibilities” to

depart from the pay schedules of the Classification Act.

Although there could be, of course, no direct conflict

on this issue in any case not involving the same enabling

statute, the approach taken by the Fourth Circuit plainly

conflicts with the rationale of the Second and Eleventh

Circuits in assessing the Army’s discretion under a dif-

ferent statute. In Fort Stewart and West Point, the

courts held that there was no inconsistency between a pay

proposal and a statutory provision requiring the Army

“to the maximum extent practicable” to provide a com-

parable education to local public schools at a cost per

pupil not exceeding the per pupil cost of free public

education in local communities. Fort Stewart, 860 F.2d

at 402-05; West Point, 855 F.2d at 942-43. Both courts

held that the statute gave the Army such broad discretion

to set wages that bargaining over pay would not inter-

fere with the statute’s standards.

In the instant case, by contrast, the court of appeals

decided that the “necessary to the discharge of its re-

sponsibilities” standard narrowed the Agency’s discre-

tion to such an extent that collective bargaining would

be inconsistent with the statute. The Fourth Circuit’s

catenin eee elle

view of an Agency’s statutory discretion over pay, there-

fore, is materially different from the view taken by the

Second and Eleventh Circuits. A relatively vague limita-

tion on an agency’s discretion would make pay non-

negotiable in the Fourth Circuit, while the same sort of

limitation on agency discretion would have no effect on

pay negotiability in the Second and Eleventh Circuits.

This case thus presents a conflict, not posed by the

government’s Fort Stewart petition, regarding the extent

to which an agency’s statutory discretion to set wages

may be deemed to bar collective bargaining. Review by

this Court is necessary to set uniform standards for

assessing the consistency between a pay proposal and an

agency’s statutory discretion to set wages.

II. The lower court wrongly decided each of the three

questions presented

A. As both the Second and Eleventh Circuits (as well

as the panel in this case) readily concluded, compensa-

tion squarely falls within the category of “conditions of

employment” expressly made negotiable by the Statute.

This conclusion is firmly supported by the FLRA’s ex-

tensive analysis of the question in Eglin, 24 F_L.R.A. 377.

The statute defines the phrase as including within its

broad sweep all “personnel policies, practices, and matters

. affecting working conditions.” 5 U.S.C. 7103(a)

(14). As the panel below concluded, the “plain language”

of the Statute includes wages (Pet. App. 36a). In

fact, a subject as central to the employment relation as

employee compensation is the key personnel policy or

“condition of employment.” The lower court’s contrary

conclusion was based on its misunderstanding of two

basic points.

First, the lower court erred in believing that the Na-

tional Labor Relations Act draws a distinction between

pay and conditions of employment. The NLRA permits

a |

bargaining over “wages, hours, and other terms and con-

ditions of employment.” 29 U.S.C. 158(d) (emphasis

supplied). The use of the word “other” in the NLRA

establishes that Congress viewed wages, among other

things, to be conditions of employment. Both the courts

and the NLRB have consistently held that “conditions of

employment” encompass employee compensation matters

under that statute. See Richfield Oil Corp. v. NLRB, 231

F.2d 717, 724 (D.C. Cir.), cert. denied, 351 U.S. 909

(1956); Inland Steel Co. v. NLRB, 170 F.2d 247, 2538

(7th Cir. 1948), cert. denied on this issue, 336 U.S. 960

(1949) ; Weyerhaeuser Timber Co., 87 NLRB 672 (1949).

The NLRA thus defeats, rather than supports, the lower

court’s decision.*

Second, the court of appeals seriously misconstrued the

statutory background and legislative history. The court’s

opinion fails even to mention the crucial fact that Con-

gress expressly adopted all prior rulings of the Federal

Labor Relations Council (FLRC) under the predecessor

labor-management program governed by Executive Order,

so long as those rulings were not specifically superseded.

5 U.S.C. 7135(b). The duty to bargain under the Execu-

tive Order extended to the same personnel policies, prac-

tices, and matters affecting working conditions that are

4 Similarly, the court erred in believing (Pet. App. 8a-9a) that |

the Statute itself draws a distinction between “conditions of em-

ployment” and “pay and pay practices” under section 704 (reprinted

at 5 U.S.C. 5343 note), which relates to prevailing rate employees.

That section by necessity used both phrases, but not in any mu-

tually exclusive fashion. As explained in Fort Stewart, 704(a)

merely clarifies that certain prevailing rate employees would con-

tinue to be able to bargain over employment benefits and other

conditions of employment. 860 F.2d at 400-01. Section 704(b)

goes on to clarify that with respect to a particular kind of condi-

tion of employment—-namely, pay matters—employees would retain

their negotiating rights notwithstanding other statutory and regu-

latory provisions that specifically address pay practices concerning

the employees in question. Nothing in this section, however, sug-

gests that conditions of employment do not generally include pay

matters.

———EEEE——————EEEI*

now negotiable under the 1978 Statute. See Eglin, 24

F.L.R.A. at 382. The FJ.RC consistently held that the |

duty to bargain extended to pay proposals where wages |

were not set by statute. See, e.g., Overseas Education |

Ass’n, Inc. and Dept. of Defense, Office of Dependent |

Schools, 6 FLRC 231 (1978); United Federation of Col- |

lege Teachers, Local 1460 and U.S. Marine Academy, 1 |

FLRC 211 (1972). In absence of evidence to the con-

trary, of course, Congress is presumed to have been

aware of, and to have adopted, administration interpre-

tations of a preexisting law. In this instance, Congress

affirmatively expressed its intent to adhere to prior rul-

ings of the FLRC.°

The legislative history cited by the Fourth Circuit is

woefully insufficient to overcome this concrete evidence

that Congress intended negotiable conditions of employ-

ment to include wage proposals where pay is not fixed by

statute. The legislative history of the Statute contains

statements that pay is non-negotiable only because there

had been a raging legislative debate over whether to make

pay proposals negotiable in all agencies; numerous legis-

lators thus stated that the system of fixing pay by statute

for the vast majority of federal employees was retained.

“A close examination of the congressional reports and

debates reveals that the [Statute’s] supporters made these

statements with the understanding that Congress gen-

erally regulates such matters .. ., not with the under-

standing that the [Act] barred all wage negotiations.”

Fort Stewart, 860 F.2d at 401.

B. The lower court also erred by summarily rejecting

the two-part test the FLRA has devised to assess inter-

ference with budget rights and by holding that the pay

5 Moreover, Congress intended to broaden, not narrow, the scope

of the duty to bargain that had existed under the Executive Order.

National Treasury Employees Union v. FLRA, 810 F.2d 295, 299

(D.C. Cir. 1977); Library of Congress v. FLRA, 699 F.2d 1280,

1283-86 (D.C. Cir. 1983); Department of Defense v. FLRA, 659

F.2d at 1154-56.

a terete

proposal is non-negotiable because it “would divest the

NRC of substantive decisionmaking authority over its

budget.” (Pet. App. 16a).

First, the FLRA is entitled to deference in determin-

ing the standards for assessing the effect a bargaining

proposal would have on an agency’s right to determine

its budget. As the Second and Eleventh Circuits recog-

nized, the Authority consistently has applied its well

reasoned Wright-Patterson standards,® and courts are

not free to jettison those standards without substantial

justification.

In any event, the “test” the lower court substituted

for the FLRA’s extensive standard is wholly unworkable,

for virtually every bargaining proposal would “divest”

the agency of “substantive decisionmaking authority

over its budget” by necessitating the expenditure of some

agency funds. The only proper inquiry, as the FLRA and

the Second and Eleventh Circuits have concluded, is to

measure 1) how directly the proposal affects the budget

and 2) to what extent the agency’s cost would be in-

creased without offsetting economic advantages. Under

this test, as the four dissenters concluded below without

contradiction, the NRC falls far short.

C. Finally, the lower court erred by concluding that the

pay proposal was inconsistent with section 161(d) of the

Atomic Energy Act, which authorizes the NRC to except

its employees from the salary strictures of the Classifica-

tion Act. The lower court reasoned that, despite the

NRC’s 1975 unilateral decision that it was “necessary to

® See, e.g., National Treasury Employees Union and Department

of the Treasury, U.S. Customs Service, 21 F.L.R.A. (No. 2) 6

(1986) ; American Federation of Government Employees, AFL-CIO,

Local 32 and Office of Personnel Management, 22 F.L.R.A. (No. 29)

307, 311 (1986), enforced mem. sub nom. Office of Personnel Man-

agement v. FLRA, 829 F.2d 191 (D.C. Cir. 1987); National Treas-

ury Employees Union and Internal Revenue Service, 27 F.i.R.A.

(No. 25) 132, 139 (1987).

the discharge of its responsibilities” to opt out of the

Classification Act, the Agency did not have sufficient stat-

utory discretion to negotiate over employee compensation.

On the contrary, as the four dissenters conciuded, the

record here demonstrates that the Agency had effected a

blanket exemption for all its employees from the Classifi-

cation Act. Having taken that step, the Agency clearly

possessed adequate discretion, under any proper test, to

bargain over the Union’s proposai for cost of living ad-

justments. To conclude otherwise is to bar negotiation

where a statute provides any guidelines at all regard-

ing an agency’s ability to fix compensation, even where

the agency itself had concluded that the statutory standard

had been met.

CONCLUSION

The petition for a writ of certiorari should be granted.

Respectfully submitted,

GREGORY O’DUDEN *

Director of Litigation

KERRY L. ADAMS

Assistant Director of Litigation

NATIONAL TREASURY EMPLOYEES

UNION

1730 K Street, N.W., Suite 1100

Washington, D.C. 20006

(202) 785-4411

* Counsel of Record Counsel for Petitioners

APPENDICES

APPENDIX A

UNITED STATES COURT OF APPEALS

FOR THE FOURTH CIRCUIT

No. 87-3182

NUCLEAR REGULATORY COMMISSION,

Petitioner,

versus

FEDERAL LABOR RELATIONS AUTHORITY,

Respondent,

NATIONAL TREASURY EMPLOYEES UNION,

Intervenor.

On Petition for Review and Cross-Application for

Enforcement of an Order of the Federal

Labor Relations Authority

Argued: April 10, 1989 Decided: July 14, 1989

Before ERVIN, Chief Judge, RUSSELL, WIDENER,

HALL, PHILLIPS, MURNAGHAN, SPROUSE, CHAP-

MAN, WILKINSON, and WILKINS, Circuit Judges, sit-

ting en banc.*

* Judge Winter did not participate in the decision in this case.

Robert Kenneth Rasmussen (William H. Briggs, Jr.,

Solicitor; E. Leo Slaggie, Deputy Solicitor, Mary K. Hem-

bree, Office of the General Counsel, U. 8S. NUCLEAR

REGULATORY COMMISSION; Dennis C. Dambly, Dep-

uty Assistant General Counsel for Administration; Mar-

vin L. Itzkowitz, Senior Counsel for Labor and Personnel

on brief) for Petitioner. William Eugene Persina, Dep-

uty Solicitor (Ruth E. Peters, Solicitor; Jill A. Griffin,

FEDERAL LABOR RELATIONS AUTHORITY on

brief) for Respondent. Gregory O’Duden, Deputy Direc-

tor of Litigation (Lois G. Williams, Director of Litiga-

tion, NATIONAL TREASURY EMPLOYEES UNION

on brief) for Intervenor.

WILKINSON, Circuit Judge:

The Nuclear Regulatory Commission (NRC) petitions

for review of an order of the Federal Labor Relations

Authority (FLRA) directing the NRC to bargain in good

faith over a salary proposal advanced during collective

bargaining by the National Treasury Employees Union.

See National Treasury Employees Union & Nuclear Reg-

ulatory Comm’n, 29 FLRA (No. 19) 217 (September 29,

1987). The FLRA cross-petitioned for enforcement of its

order and this court granted the union’s motion for leave

to intervene in these proceedings. We hold that the NRC

is not obligated to bargain over the union’s salary pro-

posal and therefore grant the NRC’s petition for review.

The FLRA’s decision is reversed and enforcement of its

bargaining order is denied.

Title VII of the Civil Service Reform Act of 1978,

5 U.S.C. §§ 7101-35, recognizes the right of federal

employees to belong to unions and establishes a col-

lective bargaining system for the federal sector. Although

Title VII provides for employee and union participation

in the public sector, it is not simply an “employees’ rights

statute.” United States Department of Health & Human

Services v. FLRA, 844 F.2d 1087, 1089 (4th Cir. 1988).

Rather, Congress expressly recognized in Title VII “the

special requirements and needs of the Government,” and

sought to balance these interests against the rights of

employees to participate in iabor organizations. See 5

U.S.C. §7101(b). Publie sector labor relations differ

therefore in important respects from those of the private

sector. See 124 Cong. Rec. $14,281 (daily ed. Aug. 24,

1978) (remarks of Sen. Sasser), reprinted in Subcommit-

tee on Postal Personnel and Modernization of the House

Committee on Post Office and Civil Service, 96th Cong.,

1st Sess., Legislative History of the Federal Service La-

bor-Management Relations Statute, Title VII of the Civil

Service Reform Act of 1978, 1014 (1979) [hereinafter

Legislative History|. While salaries and benefits are

often the central subject of private-sector collective bar-

gaining, most wages in the public sector are set by stat-

ute. Also, unlike private-sector bargaining, many matters

in the publie sector are not negotiable because agencies

and unions are not free to contravene standards which

have been enacted into law.

In general, Title VII obligates federal employers and

employee unions to engage in collective bargaining over

“conditions of employment.” See 5 U.S.C. §§ 7114(a) (4),

7103(a) (12) & 7103(a) (14). The duty to bargain does

not extend, however, to contract proposals which are “in-

consistent with any Federal law or any Government-wide

rule or regulation,” 5 U.S.C. § 7117(a) (1), or which in-

terfere with certain prerogatives reserved by statute to

agency management. See 5 U.S.C. § 7106. Federal agen-

cies and employee organizations must make good faith

efforts to reach agreement on conditions of employment

not excluded from the bargaining process. See 5 U.S.C.

§ 7114(a) (4). But, again unlike private-sector bargain-

ing, the public sector provides a mechanism that can com-

pel the adoption of a negotiable proposal. If the parties

fail to agree on a negotiable contract proposal, Title VII

provides for third-party resolution of the dispute. See

5 U.S.C. $$ 7119(b), 7119(¢e) (5) (B) & 7119(¢e) (5) (C).

Title VII’s duty to bargain over a contract proposal sub-

jects the agency to the possibility that the Federal Service

Impasses Panel will resolve the dispute by imposing a

binding proposal upon the agency. See 5 U.S.C. §§ 7119

(b), 7119(¢e) (5) (B) & 7119(e) (5) (C).

The Nuclear Regulatory Commission administers the

Atomie Energy Act of 1954, see 42 U.S.C. §§ 2011 et seq.,

and is charged with overseeing the development, utiliza-

tion, and control of nuclear technology so as to promote

the general welfare and security of the United States.

See 42 U.S.C. §§ 2011-13 & 2201. The National Treasury

Empioyees Union is the exclusive representative of a bar-

gaining unit comprising all professional, nonprofessional,

and wage-earning employees of the NRC, with the excep-

tion of managers, supervisors, or “confidential employees”

as defined in 5 U.S.C. § 7103(a) (13).

In October of 1984, during the course of collective bar-

gaining, the union submitted a proposal to the NRC

which included a periodic cost-of-living adjustment. The

proposal provided in pertinent part that:

[t]he salary stucture, that is the grade and steps

of the pay schedule, being used by the NRC will be

maintained. Hereafter, all employees will have their

current salaries adjusted for the cost of living ‘com-

parability factor. The adjustment will be equal to the

statistical adjustment recommended to the President

by the [Advisory Committee on Federal Pay, sce

5 U.S.C. § 5306]. This adjustment will become ef-

fective at the announcement of it by the [Committee]

~~ eee

or other appropriate sources. It will be unaffected

by Presidential or Congressional actions.

The NRC refused to bargain, finding the contract pro-

posal nonnegotiable. The agency objected, inter alia, to

the fact that the Advisory Committee’s recommendations

would be “unaffected by Presidential or Congressional ac-

tions,” noting that the Committee frequently recommends

increases well above those passed by Congress and signed

by the President. The agency determined that the union’s

proposal would violate Title VII’s “management rights

clause” by affecting management decisions to determine

the agency’s budget. See 5 U.S.C. §7106(a)(1). The

NRC also believed the salary proposal to be inconsistent

with the statutory requirements of the Atomic Energy

Act, see 42 U.S.C. § 2201(d), and therefore nonnegotiable

pursuant to § 7117 of Title VII.

On March 20, 1986, the union petitioned the FLRA

for review of the NRC’s nonnegotiability determination.

The FLRA ordered the NRC to negotiate with the union,

finding the salary proposa! within the agency’s duty to

bargain. National Treasury Employees Union & Nuclear

Regulatory Comm’n, 29 FLRA (No. 19) 217 (September

29, 1987). According to the FLRA. the union’s proposal

was a negotiable “condition of employment,” 5 U.S.C.

§ 7103(a) (14), did not violate the NRC’s right to deter-

mine its budget under 5 U.S.C. § 7106, and was not “in-

consistent” with any provision of the Atomic Energy

Act, 42 U.S.C. § 2201(d). See 5 U.S.C. § 7117(a) (1).

The NRC petitioned for review of the FLRA’s decision.

A panel of this court enforced the FLRA’s bargaining

order. Nuclear Regulatory Comm’n v. FLRA, 859 F.2d

302 (4th Cir. 1988). Review by the en banc court fol-

lowed.

II.

Title VII of the Civil Service Reform Act grants fed-

eral employees the right to negotiate over “conditions of

employment.” 5 U.S.C. § 7102(2). See also 5 U.S.C.

§§ 7101(a) (1) (C) & 7114(a) (4). The NRC asserts that

the statutory term “conditions of employment” does not

include compensation. We agree. Title VII does not au-

thorize labor organizations and federal agencies to ne-

gotiate over employee pay.’

“Conditions of employment” are defined in Title VII as

those:

personnel policies, practices, and matters, whether

established by rule, regulation, or otherwise, affect-

ing working conditions, except that such term does

not include policies, practices, and matters—

(A) relating to political activities prohibited un-

der subchapter III of chapter 73 of this title;

(B) relating to the classification of any position;

provided for by Federal statute... .

5 U.S.C. § 7103(a) (14). As with any case of statutory

interpretation, “our analysis must begin with the lan-

guage of the statute itself.” See Touche Ross & Co. v.

Redington, 442 U.S. 560, 568 (1979). A plain reading

of the text indicates that Congress did not include em-

1The Third, Sixth, and District of Columbia Circuits also have

concluded that Congress did not intend to subject the pay of

federal employees to collective bargaining under Title VII of the

Civil Service Reform Act. See Department of the Navy, Military

Sealift Command v. FLRA, 836 F.2d 1409 (3d Cir. 1988); Fort

Knox Dependent Schools v. FLRA, F.2d , No. 87-3395

(6th Cir. May 11, 1989); Department of the Treasury, Bureau of

Engraving & Printing v. FLRA, 838 F.2d 1341 (D.C. Cir. 1988).

See also Department of Defense Dependents Schools v. FLRA, 863

F.2d 988 (D.C. Cir. 1988) (vacated for rehearing en banc). But

see Fort Stewart Schools v. FLRA, 860 F.2d 396 (11th Cir. 1988);

West Point Elementary School Teachers Ass'n v. FLRA, 855 F.2d

936 (2d Cir. 1988).

ployee pay within the statutory definition of bargainable

matters. There is no evidence in the statutory text that

Congress intended for federal agencies and employee

unions to negotiate over employee compensation where

such compensation is not set by statute. No statutory

reference to compensation exists, nor is any language used

that would suggest compensation, such as “terms” of em-

ployment.

The FLRA argues, however, that “[t]here is no ex-

press exclusion of wages and fringe benefits’ from the

definition of bargainable matters under the statute This

view stands the inquiry on its hee. and presupposes that

wages are a bargainable item in the first place. It is for

Congress to affirmatively denominate a subject as one for

collective bargaining. Statutory text is a more reliable

guide for judicial interpretation than is statutory silence.

In the absence of an affirmative congressional expression,

we refuse to expand the scope of bargaining by implica-

tion to include employee compensation. Such an important

matter as bargaining over wages should not be left to

vague intimation or oblique reference.

No intent to permic general public-sector wage bargain-

ing is evident in the language, structure, or legislative

history of Title VII. As to language, Title VII’s defini-

tion of “conditions of employment” must be read against

the background of other collective bargaining schemes

such as the National Labor Relations Act (NLRA). See

29 U.S.C. $$ 151 et seq. Significantly, the scope of collec-

tive bargaining under the NLRA extends to “wages,

hours, and other terms and conditions cf employment.”

29 U.S.C. § 158(d). Congress was fully cognizant of the

NLRA when Title VII was enacted, see H.R. Rep. No.

95-1403, 95th Cong., 2d Sess. 41-42 & 50 (1978), reprint-

ed in Legislative History at 687-88 & 696; S. Rep. No. 95-

969, 95th Cong., 2d Sess. 97 & 106, reprinted in 1978

U.S. Code Cong. & Admin. News 2723, 2819 & 2828, and

in Legislative History at 757 & 766, and its use of the

——EIE7*~O

term “conditions of employment” rather than the NLRA’s

broader definition implies a “narrower range of bargain-

able matters” under Title VII than under the NLRA.

Department of the Navy, Military Sealift Command v.

FLRA, 836 F.2d 1409, 1416 n.14 (3d Cir. 1988). But

see Fort Stewart Schools v. FLRA, 860 F.2d 396, 400

(11th Cir. 1988). “In common parlance, the conditions of

a person’s employment are most obviously the various

physical dimensions of his working environment,” Fibre-

board Paper Products Corp. v. NLRB, 379 U.S. 203, 222

(1964) (Stewart, J., concurring) ; a definition which does

not include employee pay. Indeed, we are unaware of any

other collective bargaining statute which equates “condi-

tions of employment” with employee compensation. See,

e.g., 20 U.S.C. § 902(a) (Overseas Pay Act) (distinguish-

ing between “the payment of compensation” and “condi-

tions of employment”).

This interpretation of Title VII is supported by the

structure of the Civil Service Reform Act. Section 704

of the Act, for example, preserves the collective bargain-

ing rights of those “prevailing rate employees” who neg-

otiated over pay prior to August 19, 1972. See Pub. L.

No. 95-454, § 704, 92 Stat. 1111, 1218 (1978), reprinted

at 5 U.S.C. § 5343 note. See generally 5 U.S.C. §§ 5342

et seq. (Prevailing Rate Act of 1972). Section 704(a) of

the provision refers to “terms and conditions of employ-

ment and other employment benefits”; subsection (b) re-

fers to the “pay and pay practices” of prevailing rate

employees. See Pub. L. No. 95-454, § 704, 92 Stat. 1111,

1218 (1978), reprinted at 5 U.S.C. § 5343 note. Congress

therefore knows how to grant federal employees the ex-

press right to bargain collectively over their pay when it

wishes to do so. See also Pub. L. No. 92-392, § 9(b), 86

Stat. 564, 574 reprinted at 5 U.S.C. § 5343 note (Pre-

vailing Rate Act of 1972) (referring to “wages, the terms

and conditions of employment, and other emp'oyment

benefits”) ; Pub. L. No. 91-375, § 10(a), 84 Stat. 719, 784

(1970), reprinted at 39 U.S.C. § 1201 note (Postal Re-

organization Act) (requiring the Postmaster General and

labor organizations to bargain over “wages, hours, and

working conditions”). Congress’ distinction in § 704 be-

tween “pay and pay practices” and “terms and conditions

of employment and other employment benefits” is thus

an indication of its intent that the statutory term “con-

ditions of employment” does not include employee com-

pensation. See Sealift, 836 F.2d at 1420.

We agree with the Third Circuit that the Act’s legisla-

tive history is also “replete” with indications that Con-

gress did not intend to subject employee compensation to

collective bargaining. /d. at 1416. As originally proposed

in the House of Representatives, the public sector labor

relations program required federal agencies and employee

organizations to “bargain in a good-faith effort to reach

agreement with respect to the terms and conditions of

employment.” H.R. 9094, 95th Cong., Ist Sess. (1977)

(emphasis added), reprinted in Legislative History at

243. “Conditions of employment” expressly included “pay

practices.” Jd. at 244. During committee markup of the

bill, Representative Heftel of Hawaii introduced an

amendment which also defined the scope of bargaining

to include “pay practices.” Legislative History at 1087-

88. When the bill was reported out of committee, how-

ever, the scope of the bargaining obligation had been sig-

nificantly narrowed. As reported and enacted, the duty to

bargain extended only to “conditions of employment,” and

did not expressly include employee compensation. Pub.

L. No. 95-454, § 7103, 92 Stat. 1111, 1194 (1978), codi-

fied at 5 U.S.C. §§ 7103(a) (12) & 7103(a) (14). “Few

principles of statutory interpretation are more compelling

than the proposition that Congress does not intend sub

silentio to enact statutory language that it has earlier

disearded in favor of other language.” Immigration &

Naturalization Service v. Cardoza-Fonseca, 480 U.S. 421,

442-43 (1987) (citation omitted). We therefore refuse

10a

to imply a bargaining obligation specifically rejected by

Congress.

Moreover, the House Committee on Post Office and Civil

Service, to which the bill was referred, stated in its re-

port that the public sector labor relations program ‘does

not authorize collective bargaining on substantive issues

of pay and fringe benefits.” H.R. Rep. No. 95-1403,

95th Cong., 2d Sess. 5 (1978), reprinted in Legislative

History at 681. In supplemental views to the House Re-

port, several committee members stated that “[t]hose of

our colleagues who are concerned that this bill will signi-

ficantly expand the collective bargaining rights of Federal

employees need not worry. It does not.” H.R. Rep. No.

95-1403, 95th Cong., 2d Sess. 377 (1978), reprinted in

Legislative History at 721. The authors of these supple-

mental views were expressing their disappointment that

the scope of bargaining was narrowly defined in the com-

mittee bill and excluded “pay and major money-related

fringe benefits from the bargaining table.” H.R. Rep. No.

95-1403, 95th Cong., 2d Sess. 378 (1978), reprinted in

Legislative History at 722. Similarly, the Senate Com-

mi.tse on Governmental Affairs recognized that Title VII

excluded bargaining on “economic matters.” S. Rep. No.

95-969, 95th Cong., 2d Sess. 18, reprinted in 1978 U.S.

Code Cong. & Admin. News 2723, 2735, and in Legisla-

tive History at 750.

Furthermore, Representative Clay of Missouri, a mem-

ber of the Committee on Post Office and Civil Service, as-

sured his colleagues that there was “nothing in this bill

which allows Federal employees the right ... to negotiate

over pay and money-related fringe benefits.’’ 124 Cong.

Rec. H8,466 (daily ed. Aug. 11, 1978), reprinted in Leg-

islative History at 853. See also 124 Cong. Ree. E4,510

(daily ed. Aug. 10, 1978) (remarks of Rep. Clay) (the

committee markup bill contained ‘no provision for the

negotiation of pay and other money related fringe bene-

fits”), reprinted in Legislative History at 845; 124 Cong.

lla

Rec. E4,293 (daily ed. Aug. 3, 1978) (remarks of Rep.

Clay) (“employees still .. . cannot bargain over pay’’),

reprinted in Legislative History at 839. Representative

Derwinski of Illinois remarked that wages “would remain

beyond the scope of collective bargaining.” 124 Cong.

Rec. H9,639 (daily ed. Sept. 13, 1978), reprinted in Leg-

islative History at 935. See also 124 Cong. Rec. H$,669

(daily ed. Sept. 13, 1978) (remarks of Rep. Fisher of

Virginia) (the bill “does not contain such controversial

features as the right to... bargain for pay and bene-

fits”), reprinted in Legislative History at 964. Likewise,

Senator Sasser of Tennessee, a member of the Committee

on Governmental Affairs, recognized that under the pro-

posed legislation federal employees “may not bargain over

pay or fringe benefits.” 124 Cong. Ree. $14,281 (daily

ed. Aug. 24, 1978), reprinted in Legislative History at

1014.

Significantly, Representative Udall of Arizona, who

sponsored the amended version of Title VII which Con-

gress ultimately enacted into law, stated that “[t]here is

not really any argument in this bill or in this title about

Federal collective bargaining for wages and fringe bene-

fits and retirement. ... All these major regulations about

wages and hours and retirement and benefits will con-

tinue to be established by law through Congressional ac-

tion.” 124 Cong. Rec. H9,633 (daily ed. Sept. 18, 1978),

reprinted in Legislative History at 923. His remarks, as

those of the amendment’s sponsor, are an “authoritative

guide” to its construction, North Haven Bd. of Education

v. Bell, 456 U.S. 512, 526-27 (1982), and illustrate that

Title VII does ‘not permit bargaining over pay and

fringe benefits.” 124 Cong. Rec. H8,462 (daily ed. Aug.

11, 1978) (remarks of Rep. Udall), reprinted in Leg-

islative History at 850. See generally Sealift, 836 F.2d

at 1417-19.

While the Authority contends that the legislative his-

tory is “ambiguous,” we think it could not be more clear.

12a

The legislative history of the Act indicates that the term

“conditions of employment” does not include employee

compensation and that employee compensation therefore

falls outside Title VII’s duty to bargain.

We recognize, of course, that the FLRA is entitled to

deference when applying the provisions of the Civil Serv-

ice Reform Act, Bureau of Alcohol, Tobacco & Firearms

v. FLRA, 464 U.S. 89, 97 (1983), but we must determine

whether the agency’s interpretation of the statute com-

ports with congressional intent. See Chevron USA, Ine.

v. Natural Resources Defense Council, Inc., 467 U.S.

837, 842-43 & n.9 (1984). See-also 5 U.S.C. § 706 (“re-

viewing court shall decide all relevant questions of law

[and] interpret constitutional and statutory provisions’’).

Congress’ intent “is the law and must be given effect.”

Chevron, 467 U.S. at 843 n.9. Here, the relevant statu-

tory provisions of the Act must therefore “get their final

meaning from judicial construction.” See Federal Trade

Commission v. Colgate-Palmolive Co., 380 U.S. 374, 385

(1965), citing Federal Trade Commission v. R. F. Keppel

& Bros., Inc., 291 U.S. 304, 314 (1934). In this regard,

it would be reckless for a federal court to ‘mpute to Con-

gress an unexpressed intention to allow others to reorder

the priorities and limitations placed upon federal agencies

by Congress itself. Historically, Congress and the Chief

Executive have borne primary responsibility for the fed-

eral budgetary process. To follow the interpretation of

the FLRA in this instance is to effect a judicial with-

drawal of political accountability in public-sector com-

pensation that substitutes for the competitive pressures

constraining private-sector collective bargaining.

We believe the FLRA has misconstrued Title VII and

undermined Congress’ intent by ordering the NRC to bar-

gain over emplovee wages and salaries. Employee com-

pensation is nonnegotiable in the absence of express con-

gressional authorization to the contrary.

13a

III.

Regardless of whether employee compensation is within

the scope of Title VII’s bargaining obligation, the NRC

contends that it cannot be required to negotiate over the

union’s salary proposal. The NRC asserts that such a

duty to bargain would interfere with the agency’s right

to determine its own budget under Title VII’s manage-

ment rights clause, see 5 U.S.C. § 7106(a) (1), and would

be inconsistent with § 161(d) of the Atomic Energy Act.

See 42 U.S.C. § 2201(d). These contentions present per-

suasive alternative grounds for denying enforcement of

the FLRA order.

Our concurring brother believes that it is unnecessary

to reach these alternative grounds of decision. We, how-

ever, believe that it is proper to address them because

both the FLRA and the panel opinion relied upon them

and because they were briefed and argued at length be-

fore this court.

The undeniable aim of Congress to prescribe in Title

VI! the rights of federal employees was not meant to

come at the expense of an “effective and efficient Gov-

ernment.” 5 U.S.C. § 7101(b). Congress therefore used

broad and emphatic language in § 7106 in an attempt te

strengthen the management power of federal agencies.

See Bureau of Alcohol, Tobacco & Firearms, 464 U.S. at

92; National Treasury Employees Union v. FLRA, 691

F.2d 553, 560 (D.C. Cir. 1982). Title VII included a

“broad statement of management rights,” H.R. Rep. No.

95-1403, 95th Cong, 2d Sess. 12 (1978), reprinted in Leg-

lative History at 682, in which Congress “specifie|d|

areas for decision which are reserved to the President

and heads of agencies, which are not subject to the collec-

tive bargaining process.”’ S. Rep. No. 95-969, 95th Cong.,

2d Sess. 12-13, reprinted in 197% U.S. Code Cong. &

Admin. News 2723, 2734, and in Legislative History at

l4a

749-50. In addition to granting federal employees “great-

er rights in labor relations,” 124 Cong. Rec. H8,462 (daily

ed. Aug. 11, 1978) (remarks of Rep. Udall), reprinted

in Legislative History at 850, Title VII also gave man-

agement “the power to manage and the flexibility it

needs.”” 124 Cong. Rec. H9,633 (daily ed. Sept. 13, 1978)

(remarks of Rep. Udall), reprinted in Legislative His-

tory at 923.

With certain exceptions not relevant here, an agency

therefore “may not bargain away” its authority to make

decisions in those areas specified in § 7106(a) (1), in-

cluding its authority to determine the agency’s budget.

See H.R. Rep. No. 95-1403, 95th Cong., 2d Sess. 43

(1978), reprinted in Legislative History at 689. Although

Title VII imposes a broad duty to bargain, it also demar-

cates an area of management prerogative which Congress

protected in order ‘“‘to preserve the Federal Government’s

ability to operate in an effective and efficient manner.”

National Treasury Employees Union, 691 F.2d at 560.

Congress expressly recognized the paramount importance

of an agency’s right to determine its budget, 5 U.S.C.

§ 7106(a)(1), and designated it a matter on which an

agency and an employee organization “may not negotiate

under any circumstances.” H. Conf. Rep. No. 95-1717,

95th Cong., 2d Sess. 153, reprinted in 1978 U.S. Code

Cong. & Admin. News at 2887, and in Legislative His-

tory at 821. See also 124 Cong. Rec. 814,271 (daily ed.

Aug. 24, 1978) (remarks of Sen. Percy), reprinted in

Legislative History at 1012 (agency budgets are “spe-

cifically excluded from the scope of bargaining’). The

management rights clause provides that “nothing in this

chapter shall affect the authority of any management of-

ficial of any agency” to exercise certain management

prerogatives, including the authority to determine the

agency’s budget. 5 U.S.C. § 7106(a) (1). Because the

union’s salary proposal would interfere with this preroga-

tive, it is perforce nonnegotiable.

15a

Here, the FLRA contends that the union’s salary pro-

posal does not violate the management rights clause be-

cause the proposal does not prescribe a specific dollar

amount to be allocated in the NRC’s budget. According

to the FLRA, the union’s proposal “merely establishes a

formula for adjusting [employee] salaries’ and is there-

fore within the NRC’s duty to bargain. We reject this

argument. Although the union’s salary proposal does not

prescribe a specific dollar amount, it does provide a for-

mula which ultimately will dictate a specific dollar amount

to be allocated in the NRC’s budget each time the Ad-

visory Committee on Federal Pay recommends a cost-of-

living adjustment to Congress and the President.

Moreover, if the union’s salary proposal becomes part

of the collective bargaining agreement, it will divest the

NRC of budget-making authority and transfer that au-

thority to the Advisory Committee on Federal Pay. The

union’s salary proposal would thus clearly “affect” the

NRC’s authority to determine its own budget and is

therefore nonnegotiable. See 5 U.S.C. § 7106(a) (1).

Specifically, the NRC would be obligated to negotiate in

good faith over the union’s salary proposal if it is a

subject of mandatory bargaining. Title VII provides for

binding resolution of contract disputes and the proposal

may well become a provision of the collective bargaining

agreement over the agency’s objection. See 5 U.S.C.

§§ 7119(b), 7119(¢e) (5) (B) & 7119(e) (5) (C). As such,

the NRC would be obligated to adjust its employees’

wages and salaries each time the Advisory Committee on

Federal Pay recommends a general increase in federal

salaries. Significantly, such salary adjustments would not

be subject either to the views of the agency or the ac-

tions of Congress because, by its terms, the proposal’s

automatic salary adjustments would be “unaffected by

Presidential or Congressional actions.”

This result would significantly affect the NRC’s opera-

tions. Salaries, and benefits based upon those salaries,

l6a

constitute more than forty percent of the NRC’s annual

budget. The union’s proposal would vest a third-party

with absolute authority to determine salary increases

and would require the NRC to somehow absorb unfunded

millions of dollars in salary adjustments. While the

FLRA contends that the agency has failed to demonstrate

that the anticipated increase in costs is significant and

not offset by compensating benefits, nothing in the statute

requires that this showing be made to the satisfaction

of the FLRA. As applied to employee compensation, the

FLRA’s test makes itself, not the agency, the arbiter of

the agency’s budget. Congress, however, has vested the

NRC with the responsibility of balancing employee com-

pensation against the agency’s other goals. Congress did

not vest this authority either in the FLRA or the Ad-

visory Committee on Federal Pay. Title VII of the Act

is quite specific: “nothing in this chapter shall affect”

an agency’s authority to make budget determinations.

5 U.S.C. § 7106(a) (1) (emphasis added). The union’s

salary proposal would divest the NRC of substantive

decisionmaking authority over its budget and is therefore

nonnegotiable pursuant to Title VII’s management rights

clause.

Finally, Title VII of the Act further restricts an agen-

cy’s duty to bargain by precluding negotiations over con-

tract proposals which are “inconsistent with any Federal

law or any Government-wide rule or regulation.” 5 U.S.C.

§7117(a) (1). Here, the union’s salary proposal con-

flicts with §161(d) of the Atomic Energy Act (AEA):

it is therefore nonnegotiable.

In the performance of its functions, the NRC is au-

thorized by § 161(d) of the AEA to:

appoint and fix the compensation of such officers and

employees as may be necessary to carry out the func-

tions of the Commission. Such officers and employees

re eke Moai. a Mee:

17a

shall be appointed in accordance with the civil-serv-

ice laws and their ec. mpensation fixed in accordance

with [the Classification Act of 1949], except that, to

the extent the Commission deems such action neces-

sary to the discharge of its responsibilities, person-

nel may be employed and their compensation fixed

without regard to such laws. ...

42 U.S.C. § 2201(d). Pursuant to this statutory provi-

sion, the NRC elected in 1975 to exempt its employees

from the general requirements of the Classification Act.

The FLRA contends that this election now provides the

NRC with virtually unlimited discretion over the salaries

and wages of NRC employees. The FLA found that re-

quiring the NRC to bargain over the union’s salary pro-

posal would not be inconsistent with § 161(d).

Again we disagree. Nothing in § 161/(d) requires the

NRC to bargain over wages or renders inapplicable those

sections of the Civil Service Reform Act which define the

scope of an agency’s bargaining obligation. At most,

§$161(d) is a limited grant of authority to the NRC

designed to attract individuals whose talents and exper-

tise would assist the agency in the performance of its

mission. See 42 U.S.C. § 2201(d). Section 161/d) and

the NRC’s 1975 decision to opt out of the Classification

Act scheme do not provide the agency with unfettered dis-

cretion to negotiate over employee compensation. The

AEA specifically limits the NRC’s discretion and the

agency may deviate from the general civil service laws

viily “to the extent the Commission deems such action nec-

essary to the discherge of its responsibilities.” 42 U.S.C.

§ 2201(d). The NKkC has never made the requisite deter-

mination that it is necessary to depart significantly from

general government pay rates. To the contrary, the NRC’s

present compensation scheme closely parallels that found

in the Classification Act. Nothing in the statute supports

the Authority’s conclusion that once the NRC decides

some deviation from the Classification Act is required,

18a

that the agency thereby becomes obligated to negotiate

broadly over pay schedules.

If the union’s salary proposal becomes binding on the

NRC, see 5 U.S.C. §§ 7119(b), 7119(ce) (5) (B) & 7119

its employees at levels above which it believes are neces-

sary to the discharge of its duties. The agency’s imple-

mentation of its statutory obligations would in fact be

significantly restricted, for the salary proposal would vest

in the Advisory Committee on Federal Pay the agency’s

right to determine whether wage costs are justified by

corresponding benefits. Thus, under the FLRA’s inter-

pretation of § 161(d), what Congress intended as a provi-

sion to grant the NRC marginally greater discretion

would actually leave the agency with less discretion in

the exercise of its responsibilities. Such a result would

be contrary to a plain reading of § 161(d), see 42 U.S.C.

§ 2201(d), and Title VII of the Act expressly excludes

matters from collective bargaining which are inconsistent

with federal law. See 5 U.S.C. § 7117(a).

In reviewing the NRC’s enabling act, we are not bound

by the FLRA’s construction of the statute. See Depart-

ment of the Treasury, Bureau of Engraving & Printing

v. FLRA, 838 F.2d 1341, 1342 n.* (D.C. Cir. 1988).

We may engage in de novo review of the FLRA’s inter-

pretation of another agency’s enabling act, and, in this

case, we defer to the NRC’s “permissible construction” of

the AEA. See Chevron, 467 U.S. at 843. According to

the NRC, it may not depart from general government

pay rates until it determines that such a departure is

necessary to the discharge of its responsibilities. No such

determination has been made here and the union’s salary

proposal is therefore nonnegctiable.

IV.

In sum, we hold that employee compensation is not a

“condition of employment” as defined by Congress in 5

19a

U.S.C. § 7103(a) (14). Moreover, the union’s salary pro-

posal is “inconsistent” with federal law, see 42 U.S.C.

§ 2201(d), interferes with the NRC’s authority to de-

termine its budget, and is therefore nonnegotiable. See

5 U.S.C. $$ 7106(a) (1) & 7117(a) (1). We grant the

NRC’s petition for review, reverse the decision of the

FLRA, and deny enforcement of the FLRA’s bargaining

order.

ENFORCEMENT DENIED.

HALL, Circuit Judge, concurring:

Judge Wilkinson has demonstrated persuasively in Sec-

tions I and II of his opinion that absent an express con-

gressional mandate to the contrary, matters of employee

compensation are not, and were never intended to be,

negotiable under the Civil Service Reform Act. Accord-

ingly, I join in these portions of the opinion and concur

in the denial of enforcement of the FLRA’s bargaining

order.

However, I cannot join in Section III of the opinion

which discusses alternative grounds for reversing the

FLRA, namely the budgetary rights issue under § 7106

(a) (1) of the Civil Service Reform Act and the possible

conflict between the union’s salary proposal and § 161(d)

of the Atomic Energy Act. My decision to not join in

this portion of the opinion in no way reflects my views

on the merits of these issues. Rather, because our de-

termination that matters are nonnegotiable conclusively

resolves the dispute in this case, I see no need to reach

these other issues.

PHILLIPS, Circuit Judge, dissenting:

For reasons sufficiently given in the superseded panel

opinion, 859 F.2d 302, and in the decisions in accord of

the Second Circuit in West Point Elementary School

20a

Teachers Ass’n v. FLRA, 855 F.2d 936 (2d Cir. 1988),

and the Eleventh Circuit in Fort Stewart Schools v.

FLRA, 860 F.2d 396 (11th Cir. 1988), I respectfully

would dissent and would enforce the kK LRA’s bargaining

order.

Chief Judge Ervin, Judge Murnaghan and Judge

Sprouse have asked to be shown as joining in this dissent.

2la

APPENDIX B

UNITED STATES COURT OF APPEALS

FOURTH CIRCUIT

No. 87-3182

NUCLEAR REGULATORY COMMISSION,

Petitioner,

Vv.

FEDERAL LABOR RELATIONS AUTHORITY,

Respondent,

NATIONAL TREASURY EMPLOYEES UNION,

Intervenor.

Argued May 5, 1988

Decided Oct. 5, 1988

Dennis C. Dambly, Deputy Asst. Gen. Counsel for

Admin. (William H. Briggs, Jr., Sol., E. Leo Slaggie,

Deputy Sol., Marvin L. Itzkowitz, Sr. Counsel for Labor

and Personnel, Mary K. Hembree, Office of the Gen.

Counsel, U.S. Nuclear Regulatory Com’n, Washington,

D.C., on brief), for petitioner.

Jill A. Griffin (Ruth E. Peters, Sol., William E. Persina,

Deputy Sol., Federal Labor Relations Authority, Washing-

ton, D.C., on brief), for respondent.

Gregory O’Duden, Deputy Director of Litigation (Lois

G. Williams, Director of Litigation, National Treasury

Employees Union, Washington, D.C., on brief), for in-

tervenor.

22a

Before PHILLIPS and SPROUSE, Circuit Judges, and

KAUFMAN, Senior United States District Judge for the

District of Maryland, sitting by designation.

JAMES DICKSON PHILLIPS, Circuit Judge:

The Nuclear Regulatory Commission (NRC) is before

this court on a petition for review of a bargaining order

of the Federal Labor Relations Authority (FLRA). The

FLRA has cross-petitioned for enforcement of its order

and the National Treasury Employee’s Union (NTEU)

has been permitted to intervene. We have jurisdiction

over the NRC’s petition for review and the FLRA’s cross-

petition for enforcement under $7123 of the Federal

Service Labor-Management Relations Statute, Title V'I

of the Civil Service Reform Act of 1978 (CSRA), 5

U.S.C. § 7123 (1982). In its order, the FLRA found that

the NRC was obligated under 5 U.S.C. § 7102(2) to bar-

gain in good faith over a salary proposal advanced by the

NTEU during collective bargaining. We agree. Accord-

ingly, we deny the petition for review, affirm the decision

of the FLRA, and grant the cross-petition for enforcement

of the FLRA’s bargaining order.

The NTEU is the exclusive representative of all non-

managerial, nonsupervisory, and nonconfidential profes-

sional, nonprofessional and wage-grade employees of the

NRC. In October 1984, during collective bargaining, the

NTEU presented the following proposal to the NRC:

;

Section 52.1

The salary structure, that is the grade and steps of

the pay schedule, being used by the NRC will be

maintained. Hereafter, all employees wil! have their

current salaries adjusted for the cost of living/com-

parability factor. The adjustment will be equal to

23a

the statistical adjustment recommended to the Presi-

dent by the Pay Advisory Council.’

This adjustment will become effective at the beginning

of the first pay period following the announcement of

it by the Council or other appropriate sources. It

will be unaffected by Presidential or Congressional

actions.

Section 52.2

NTEU agrees to establish with the employer a pro-

ductivity committee that will monitor the impact of

the new salary adjustment system and seek reason-

able ways to increase the productivity of the em-

ployer, e.g., decrease employee turnover, remove work

obstacles, improve upon available machines and pro-

cedures, and raise employee morale.

The NRC refused to bargain and served the NTEU with

a written allegation of nonnegotiability, see 5 U.S.C.

§ 7117(c), on October 5, 1985. The NTEU, however, did

not until February 25, 1986, formally request a written

allegation of nonnegotiability regarding the proposal which

the NRC then again provided the NTEU on March 6,

1986. On March 20, 1986, the NTEU filed a petition for

review of the NRC’s nonnegotiability determination, pur-

suant to 5 U.S.C. § 7117.

Before the FLRA, the NRC asserted several grounds

for its refusal to bargain over the NTEU’s proposal.

First, the NRC argued that the NTEU’s petition for re-

view was untimely under 5 U.S.C. § 7117(c) because that

provision required the petition for review to be filed within

15 days of the NRC’s original written allegation of non-

negotiability.

1 The FLRA concluded and the parties agree that by “Pay Ad-

visory Council” the proposal is referring to the Advisory Com-

mittee on Federal Pay, functioning pursuant to 5 U.S.C. § 5306.

24a

On the merits, the NRC argued that the NTEU’s pro-

posal is nonnegotiable because it is “inconsistent with

Federal law,” 5 U.S.C. § 7117(a), namely with § 161(d)

of the Atomic Energy Act of 1954 (AEA), 42 U.S.C.

$ 2201(d), which, in pertinent part, provides that the

NRC’s employees’ compensation is to be

fixed in accordance with [the Classification Act of

1949, as amended} chapter 51 and subchapter III of

chapter 53 of Title 5, except that, to the extent the

Commission deems such action necessary to the dis-

charge of its responsibilities, personnel may be em-

ployed and their compensation fixed without regard

to such laws.

Id. Alternatively, the NRC contended that Congress never

intended federal employees wages to be negotiable ‘“con-

ditions of employment” under §§ 7102(2) and 7103(a)

(14) of the CSRA and that such matters are, generally,

nonnegotiable “unless a given statute clearly indicates to

the contrary.” The absence of such a statute with regard

to the NRC’s employees, it was argued, rendered their

salaries nonnegotiable under the general rule. Finally,

the NRC contended that the NTEU’s proposal conflicted

with the NRC’s “menagement right” to determine its

budget, a right protected by § 7106(a) (1) of the CSRA,

5 U.S.C. § 7106/a) (1), and was not therefore properly

the subject of collective bargaining.

The FLRA found that the NTEU’s petition for review

was timely, rejected each of the NRC’s substantive ob-

jections to the proposal’s negotiability, and ordered that

the NRC bargain over the NTEU’s proposal. This peti-

tion and cross-petition for review followed.

As a preliminary matter, it is necessary to address the

NRC’s reiterated assertion that the NTEU’s petition for

25a

review before the FLRA was untimely. Section 7117(c)

of the CSRA, 5 U.S.C. § 7117(c) (1) and (2) provides:

of this section applies, if an agency involved in col-

lective bargaining with an exclusive representative

alleges that the duty to bargain in good faith does

not extend to any matter, the exclusive representative

may appeal the allegation to the Authority in ac-

cordance with the provisions of this subsection.

(2) The exclusive representative may, on or before

the 15th day after the date on which the agency

first makes the allegation referred to in paragraph

(1) of this subsection, institute an appeal under this

subsection by—

(A) filing a petition with the Authority; and

(B) furnishing a copy of the petition to the

head of the agency.

Pursuant to its rulemaking power under § 7134 of the

CSRA, the FLRA promulgated the following regulation,

implementing the § 7117(c) time limits.

The time limit for filing a petition for review is

fifteen (15) days after the date the agency’s allega-

tion that the duty to bargain in good faith does not

extend to the matter proposed to be bargained is

served on the exclusive representative. The exclusive

representative shall request such allegation in writing

and the agency shall make the allegation in writing

and serve a copy on the exclusive representative:

Provided, however, That review of a _ negotiability

issue may be requested by an exclusive representative

under this subpart without a prior written allegation

by the agency if the agency has not served such

allegation upon the exclusive representative within

ten (10) days after the date of the receipt by any

agency bargaining representative at the negotiations

of a written request for such allegation.

26a

5 C.F.R. § 2424.3 :(1980). The FLRA has interpreted

both § 7117(c) and § 2424.3 as providing that only an

allegation of nonnegotiability tendered in response to a

written request for such allegation starts the clock run-

ning on the fifteen day period for filing a petition for

review with the FLRA. The NRC argues that this in-

terpretation directly conflicts with § 7117(c) and should

therefore be overturned. We disagree.

It is by now well established that the FLRA is “entitled

to considerable deference when it exercises its ‘special

function of applying the general provisions of the [Civil

Service Reform] Act to the complexities’ of federal labor

relations.” Bureau of Alcohol, Tobacco & Firearms v.

FLRA, 464 U.S. 89, 97, 104 S.Ct. 4389, 444, 78 L.Ed.2d

195 (1983) (BATF) (quoting NLRB v. Erie Resistor

Corp., 373 U.S. 221, 236, 83 S.Ct. 1139, 1150, 10 L.Ed.2d

308 (1963). Equally clear is the principle that ‘while

reviewing courts should uphold reasonable and defensible

constructions of an agency’s enabling act . . . they must

not ‘rubber stamp . . . administrative decisions that they

deem inconsistent with a statutory mandate or that frus-

trate the congressional policy underlying a stavute.’”’ 464

U.S. at 97, 104 S.Ct. at 444 (citations omitted). Never-

theless, this court must sustain the FLRA’s order unless

it is “arbitrary, capricious, an abuse of discretion, or

otherwise unlawful.” American Fed’n of Gov’t Employees,

AFL-CIO, Local 2303 v. FLRA, 815 F.2d 718, 719 (D.C.

Cir.1987) ; see 5 U.S.C. § 706.

Guided by the foregoing principles we find the FLRA’s

interpretation of § 7117(c) to be eminently reasonable.

Section 7117(c) merely indicates that an agency may

“allege” that a given matter is not the proper subject of

collective bargaining and that within fifteen days after

dameninnsitiniain ts ——————

27a

the “allegation” is made, an appeal may be instituted.

The FLRA’s implementing regulation, § 2424.3, and case

interpretation of the statute, see American Fed’n of Gov't

Employees, AFL-CIO, Local 3385 and Fed. Home Loar

Bank Bd., Dist. 7, 7 F.L.R.A. 398 (1981), and the regu-

lation merely flesh out the definition of “allegation” in a

manner consistent with the statutory purpose. If the

NRC’s interpretation of “allegation” were to be accepted,

mere statements regarding negotiability made during col-

lective bargaining might force a union to institute review

proceedings in order to preserve its right to review. The

FLRA persuasively argues that this would be inconsistent

with the statute’s policy of facilitating collective bargain-

ing. An exclusive representative would repeatedly be

forced to institute review proceedings prior to determin-

ing whether a given proposal was worth fighting for as

written or could be amended to meet both the union’s and

the agency’s needs. The FLRA has permissibly construed

§ 7117(c) as providing that the triggering of the formal

review process is best left in the hands of the union if

the collective bargaining process is not to be broken down

in a “fruitless cycle of agency objection and appeal.”

Local 2303, 815 F.2d at 722. We therefore decline to

overturn the FLRA’s interpretation of § 7117(c). See

Chevron, U.S.A., Inc. v. Natural Resources Defense Coun-

cil, Inc., 467 U.S. 837, 844, 104 S.Ct. 2778, 2782, 81

L.Ed.2d 694 (1984) (Chevron).

III

Turning now to the merits of the NRC’s petition for

review, we address in order, the NRC’s contentions that

the NTEU’s proposal is nonnegotiable as “inconsistent

with federal law’; as excluded from the “conditions of

employment” over which an agency is required to negoti-

ate; and as an infringement on tne NRC’s right to

determine its budget.

28a

Section 7102 of the CSRA gives federal employees the

right to unionize and engage in collective bargaining with

respect to “conditions of employment.” 5 U.S.C. § 7102.

Both federal agencies and labor organizations are re-

quired, under the CSRA, to bargain in good faith over the

“conditions of employment” unless the statute otherwise

exempts them from the obligation. See 5 U.S.C. $§ 7102,

7103(a) (14), 7114, 7116(a) (5) and (b) (5), 7117. One

such exemption is contained in § 7117 of the CSRA which

the parties agree prohibits bargaining over union pro-

posals where to do so would be “inconsistent with federal

law.” ?

The NRC argues that bargaining over the NTEU’s

proposal would be inconsistent with §161(d) of the

AEA, 42 U.S.C. § 2201(d), which in relevant part pro-

vides:

In the performance of its functions the Commis-

sion is authorized to—

d. appoint and fix the compensation of such officers

and employees as may be necessary to carry out the

2 Section 7117, in relevant part, provides:

(a) (1) Subject to paragraph (2) of this subsection, the duty

to bargain in good faith shall, to the extent not inconsistent

with any Federal law or any Government-wide rule or regula-

tion, extend to matters which are the subject of any rule or

regulation only if the rule er regulation is not a Government-

wide rule or regulation.

(2) The duty to bargain in good faith shall, to the extent

not inconsistent with Federal law or any Government-wide

rule or regulation, extend to matters which are the subject of

any agency rule or regulation referred to in paragraph (3)

of this subsection only if the Authority has determined under

subsection (b) of this section that no compelling need (as

determined under regulatiuns prescribed by the Authority)

exists for the rule or regulation.

5 U.S.C. § 7117(a) (1) and (2).

29a

functions of the Commission. Such officers and em-

ployees shall be appointed in accordance with civil-

service laws and their compensation fixed in accord-

ance with... [the Classification Act of 1949, as

amended] except that, to the extent the Commission

deems such action necessary to the discharge of its

responsibilities, personnel may be employed and their

compensation fixed without regard to such laws... .°

The NRC admits that in 1975, upon its creation as a

successor to the Atomic Energy Commission (AEC), it

informed the Civil Service Commission of its election,

pursuant to § 161(d), to continue the AEC’s practice of

exempting all positions within the agency from the re-

quirements of the civil service laws and the Classification

Act. However, the NRC argues that “by generally exempt-

ing its positions from the Classification Act of 1949, as

amended, the [NRC] did not make the finding required

by section 161(d) to enable it to deviate from the general

civil service pay schedule.” In other words, the NRC

interprets § 161(d) as providing that “no discretion to

depart from General Schedule pay rates is allowed until

the Commission makes a finding that the departure is

necessary to +t . discharge of its responsibilities and then

3 The Classification Act of 1949 is now referenced in the statute

as “chapter 51 and subchapter III of chapter 53 of Title 5.” Section

161(d) further provides:

Provided, however, That no officer or employee (except such

officers and employees whose compensation is fixed by law, and

scientific and technical personnel up to a limit of the highest

rate of grade 18 of the General Schedule) whose position would

be subject to [the Classification Act of 1949, as amended], if

such [Act] were applicable to such position, shall be paid a

salary at a rate in excess of the rate payable under such

[Act] for positions of equivalent difficulty or responsibility . .

42 U.S.C. § 2201(d). The FLRA found and the parties agree that

the legal] limits imposed on NRC employees’ salaries in this portion

of $161(d) are not relevant to the present appeal because the

proposal is to be construed as limited consistent with the statutory

constraints.

30a

such departure can only be to the extent necessary to dis-

charge its responsibilities.” Considering its discretion

over its employees’ salaries to be so limited by Con-

gressional directive, the NRC argues that the duty to

bargain over the NTEU’s salary proposal would be in-

consistent with § 161(d).

The FLRA rejected the NRC’s interpretation of § 161

(d), and found instead that the language in § 161(d)

relied upon by the NRC in finding its discretion congres-

sionally circumscribed actually places no specific limit on

the NRC’s discretion to bargain over the NTEU’s pro-

posal. The FLRA then held that the unlimited discretion

over the NRC employee’s wages and salaries vested in

the NRC as a result of its exemption election carries

with it the duty to bargain in good faith over the NTEU’s

salary proposal. In short, the FLRA interprets § 161(d)

as only placing limits on the NRC’s discretion to exempt

its positions from the civil service laws and Classification

Act. Once the election is made, as here it concededly has

been, the FLRA considers the NRC to be left with un-

bridled discretion over its employees’ wages and salaries.*

Although, in resolving this conflict over the proper in-

terpretation of § 161(d), we are mindful that consider-

able deference is due the construction which the NRC has

placed on its enabling act, the Atomic Energy Act, see

42 U.S.C. § 2201, we find the NRC’s interpretation to be

an unreasonable construction of § 161(d) and flatly con-

trary to that section’s plain language. The FLRA’s in-

terpretation on the other hand, while not entitled to equal

deference, compare Shanty Town Assoc. Ltd. v. EPA, 843

F.2d 782, 790 n. 12 (4th Cir.1988) (holding that court is

not required to defer to agency’s interpretation of enabling

acts other than its own) with United States Dept. of

4 Again, the parties agree that the NTEU’s salary proposal is to

be construed consistently with the legal limits § 161(d) places on

NRC employees’ salaries. These legal limits are not, therefore,

viewed as limits on the NRC’s discretion.

3la

Health & Human Services v. FLRA, 833 F.2d 1129, 1135

(4th Cir.1987) (holding that FLRA interpretations of

statutes other than CSRA are entitled to deference where

“interpretation bears directly on the ‘complexities’ of fed-

eral labor relations”), is in accord with the plain lan-

guage of § 161(d). Section 161(d) clearly gives the NRC

the authority to exempt its positions from the civil service

laws and the Classification Act “to the extent necessary

to the discharge of its responsibilities.” This clause can-

not be read to limit the NRC’s discretion over its em-

ployees’ pay once the decision to exempt has been effectu-

ated. The NRC offers no legislative history, and we know

of none, to the contrary. As the final arbiter of issues of

statutory construction, FTC v. Colgate-Palmolive Co., 380

U.S. 374, 385, 85 S.Ct. 1035, 1043, 13 L.Ed.2d 904 (1965),

we cannot give effect to an agency’s interpretation of a

statute that is “manifestly contrary” to that statute’s

plain language. See Chevron, 467 U.S. at 843-45, 104

S.Ct. at 2781-83.

In urging this court to find the NTEU’s proposal in-

consistent with § 161(d), the NRC relies heavily on the

Third Circuit’s recent decision in Department of the

Navy, Military Sealift Command v. FLRA, 836 F.2d

1409 (1988) (Sealift). There, the court held that pro-

posals relating to the pay of civilian mariners were non-

negotiable because the mariners’ positions were governed

by the Prevailing Rate Act, 5 U.S.C. § 5348(a) (1982),

which, in relevant part, provides that their pay “shall

be fixed and adjusted from time to time as nearly as is

consistent with the public interest in accordance with

prevailing rates and practices in the maritime industry.”

The court reasoned that bargaining over pay related pro-

posals would be inconsistent with the congressional di-

rective that the Navy assess and resolve competing public

interest concerns prior to adjusting the mariners’ pay.

836 F.2d at 1415-17. The FLRA correctly contends that

the Third Circuit’s resolution of the statutory conflict in

32a

Sealift has no bearing on the present appeal. Not only

are the NRC’s employees not governed by the Prevailing

Rate Act, but the language of §161(d), as we have

already held, places nu limit on the NRC’s bargaining

discretion similar to that before the court in Sealift.. We

therefore uphold the FLRA’s finding that the NRC is not

exempted from its duty to bargain in good faith over the

NTEU’s proposals by virtue of any inconsistency of this

duty with § 161(d) of the Atomic Energy Act.

Again relying on Sealift, the NRC offers an alterna-

tive ground for finding the FLRA’s bargaining order un-

enforceable as “arbitrary, capricious, an abuse of discre-

tion, or otherwise not in accordance with law.” Adminis-

trative Procedure Act, 5 U.S.C. § 706(2)(A) (1982) (stat-

ing standard of review of FLRA order). The Sealift

court, having already sufficientiy concluded that bargain-

ing over the relevant pay related proposal was incon-

sistent with § 5348(a) of the Prevailing Rate Act, and

therefore nonnegotiable under § 7117 of the CSRA, went

on to hold that unless a federal statute specifically pro-

vides to the contrary, the wages and salaries of federal

employees are nonnegotiable. See 836 F.2d at 1419. With

respect, we disagree.

Again, $ 7102 of the CSRA obligates the NRC to bar-

gain with the NTEU with respect to “conditions of em-

ployment,” 5 U.S.C. § 7102, that are not exempted from

the bargaining process under § 7117. Congress defined

“conditions of employment” as:

(14) ... personnel policies, practices, and matters,

whether established by rule, regulation, or otherwise,

>The D.C. Circuit’s recent decision, adopting the Third Cir-

cuit’s reasoning in Sealift, is similarly distinguishable. See De-

partment of the Treasury, Bureau of Engraving and Printing v.

FLRA, 838 F.2d 1341, 1342-43 (D.C.Cir. 1988).

rn crrmea[ith

33a

affecting working conditions, except that such term

does not include policies, practices, and matters—

(A) relating to political activities prohibited

under subchapter III of chapter 73 of this title;

(B) relating to the classification of any posi-

tion; or

provided for by Federal statute.

5 U.S.C. § 7103(a) (14). While recognizing that the

wages and fringe benefits of most federal employees are

“specifically provided for by Federal statute,” the FLRA

has held that:

[T|he definition of the scope of bargaining which

is embodied in the [CSRA] is perfectly clear. Under

that definition, and consistent with practice under the

Executive Order, substantive proposals regarding

pay and fringe benefits which are not specifically

provided for by Federal Statute, and any other con-

ditions of employment are negotiable to the extent

they are not inconsistent with applicable laws, rules

and regulations if the matters proposed are within

an agency’s discretion . . . . Ambiguous legislative

history does not compel a different conclusion.°

American Fed’n of Gov’t Employees, AFL-CIO, Local

1897 and Dept. of the Air Force, Eglin Air Force Base,

Florida, 24 F.L.R.A. 377, 383 (1986) (citations omitted)

(Eglin). The FLRA applied its holding in Eglin to the

NRC’s and NTEU’s dispute and found sufficient discre-

6 Prior to enactment of CSRA, federal employment matters were

governed by Executive Orders. See BATF v. FLRA, 464 U.S. 89,

91, 104 S.Ct. 439, 441, 78 L.Ed.2d 195 (1983). Under this regime,

the FLRA’s predecessor, the Federal Labor Relations Council found

pay matters to be negotiable unless provided for by law or in con-

flict with an agency rule or regulation. See Eglin, 24 F.L.R.A.

at 381.

34a

tion in the NRC over its employees’ salaries to mandate

bargaining.

We consider the FLRA’s interpretation of the CSRA

and its legislative history to be a wholly “reasonable ac-

commodation of conflicting policies that were committed

to its care by the [CSRA].” Shanty Town Assoc. Ltd. v.

EPA, 843 F.2d 782, 790 (4th Cir.1988). “[Wle are not

at liberty to reject it merely because we might have

reached a different conclusion if confronted with the issue

in the first instance.” Jd. (citing Chevron, 467 U.S. at

843-44 & n. 11, 104 S.Ct. at 2781-82 & n. 11). This court

has consistently recognized the special deference due the

FLRA’s exercise of its “ ‘special function of applying the

general provisions of the [CSRA] to the complexities’ of

federal labor relations.” United States Dept. of Health

and Human Services v. FLRA, 833 F.2d 1129, 1135 (4th

Cir.1987) (quoting BATF, 464 U.S. at 97, 104 & Ct. at

444),

Faced with this same issue of whether federal em-

ployee pay related proposals are negotiable under the

CSRA, a panel of this court recently unanimously held

that a federal agency has “a general duty under 5 U.S.C.

§$ 7117(a) to bargain in good faith over the wages of its

empleyees” provided that the employees’ pay is not spe-

cifically provided for by statute and the proposal is not

otherwise exempt from negotiation under § 7117. United

States Dept. of Defense Dependent Schools, Fort Bragg,

North Carolina v. FLRA, No. 87-3061, slip op. at 4 (4th

Cir. Feb. 3, 1988! (initially published at 838 F.2d 129)

‘Murnaghan, J., dissenting on other grounds). The panel

opinion, during the pendency of the present appeal was,

however, vacated as moot, see 838 F.2d 129, 130-38 (4th

Cir.1988), and we must, therefore, address this issue

anew. Although the panel opinion in Fort Bragg is not

binding on us, we find the reasoning expressed therein

persuasive. See Fort Bragg, slip op. at 13-15 (Mur-

naghan, J., dissenting on other grounds).

35a

As the FLRA held in the present case, and as was noted

in Fort Bragg, id., the argument that Congress did not

intend federal employee wages to be negotiable as condi-

tions of employment is based on a few isolated and am-

biguous statements in the CSRA’s legislative history. In

particular, the NRC points out that Congressman Udall,

one of the bill’s chief sponsors, stated that “regulations

about wages and hours . . . will continue to be established

by law through congressional action.” 124 Cong.Rec.

H9633 (daily ed. Sept. 13, 1978). Congressman Clay,

another of the CSRA’s sponsors, stated that “there is

nothing in this bill which allows Federal employees the

right to. . . negotiate over pay and money-related fringe

benefits.”” 124 Cong.Rec. H8466 (daily ed. Aug. 11, 1978).

In a similar vein, the House Report on the CSRA stated

that “Federal pay will continue to be set in accordance

with the pay provisions of title 5, and fringe benefits,

including retirement, insurance, and leave, will continue

to be set by Congress.” H.R. Rep. No. 95-1403, 95th

Cong., 2d Sess. 12 (1978). Congressman Clay also stated,

in support of the Udall version of Title VII of the CSRA

ultimately enacted into law:

Section 7103(a) (14) (D), removing from subjects of

bargaining those matters specifically provided for by

Federal statute, was adopted by the committee and

retained in the Udall substitute with the clear under-

standing that only matters “specifically” provided for

by statute would be excluded under this subsection.

Thus, where a statute merely vests authority over a

particular subject with an agency official with the

official given discretion in exercising that authority,

the particular subject is not excluded by this sub-

section from the duty to bargain over conditions of

employment.

124 Cong.Rec. H9638 (daily ed. Sept. 13, 1978).

The legislative history of Title VII of the CSRA is

clearly ambiguous, as the FLRA has concluded, on the

36a

matter of negotiability of federal employee pay-related

proposals. Faced with the ambiguous remarks of the

CSRA’s sponsors, which on the one hand suggest that pay

is generally nonnegotiable but on the other suggest that

pay is negotiable if not specifically provided for by law,

the FLRA reasonably concluded that the plain language

of the CSRA, in light of the Act’s policy of encouraging

collective bargaining, indicated a Congressional intent

that wages, as “matters . . . affecting working condi-

tions,” 5 U.S.C. § 7103(a) (14), be generally negotiable

if not otherwise exempted from negotiation under sec-

tions 7103 and 7117.7 “An ambiguous legislative history

. will not suffice to displace the FLRA’s reasonable

construction of the Act’s language.” American Fed’n of

Gov’t Employees, Locals 225, 1504, and 3723, AFL-CIO

v. FLRA, 712 F.2d 640, 649 (D.C.Cir.1983). We there-

fore affirm the FLRA’s conclusion that the NRC, vested

as it is under § 161/d) with discretion over its employees’

wages, has a genera! duty to bargain over pay-related

proposals.

The NRC finally argues that the NTEU’s proposal in-

terferes with its management right to determine its own

budget and is therefore properly considered nonnegotiable

under 5 U.S.C. § 7106(a)(1). Section 7106 in relevant

part provides:

™ The NRC argues that the use of the single phrase “conditions

of employment” in the CSRA indicates that Congress intended to

exclude wages from negotiable matter because in § 158(d) of the

National Labor Relations Act (NLRA), 29 U.S.C. § 158(d) (1982),

Congress specified that bargaining was required “with respect to

wages, hours and other terms and conditions of employment.”

Because Congress had the NLRA in mind while drafting the

CSRA, the NRC argues, the deletion of “wages” from the defined

bargaining duty is significant. Although the Third Circuit agrees

with this interpretation of the omission, see 826 F.2d at 1416 n.14,

we find the import clearly to the contrary. The use of the con-

necting word “other” in the NLRA suggests that Congress con-

siders wages, among other things, to be conditions of employment.

aaa cenaeeeenneatemnetalt nee

37a

(a) Subject to subsection (b) of this section, noth-

ing in this chapter shall affect the authority of any

management official of any agency—

(1) to determine the... budget . . . of the

agency

(b) Nothing in this section shall preclude any

agency and any labor organization from negotiating—

(2) procedures which management officials of

the agency will observe in exercising any au-

thority under this section ....

5 U.S.C. § 7106. The FLRA, in interpreting § 7106, has

held that in order to establish nonnegotiability pursuant

to § 7106, either an agency must demonstrate that a given

proposal “attempt(s) to prescribe the particular pro-

grams or operations the agency would include in its

budget or to prescribe the amount to be allocated in the

budget for them,” or, where a proposal does not so at-

tempt, the agency must “make[] a substantial demonstra-

tion that an increase in costs is significant and unavoid-

able and is not offset by compensating benefits.” Ameri-

can Fed’n of Gov’t Employees and Air Force Logistics

Command, Wright-Patterson Air Force Base, 2 F.L.R.A

604, 607-08 (1980) (Wright-Patterson) .*

* The full explanation of the FLRA’s development of the Wright-

Patterson test bears repeating as demonstrative of the reasonable-

ness of the FLRA’s interpretation of § 7106:

There is no question but that Congress intended that any

proposal which weuld directly infringe on the exercise of

management rights under section 7106 of the Statute would

be barred from negotiation. Whether a proposal directly

affects the agency’s determination of its budget depends upon

the definition of “budget” as used in the Statute. The Statute

and legislative history do not contain such a definition. In

the absence of a clearly stated legislative intent, it is appro-

beeen

38a

In the present case, the FLRA ruled that the NTEU’s

proposal did not attempt to prescribe a specific amount

to be allocated on the NRC’s budget. Rather, the FLRA

reasoned the proposal merely suggested a procedure and

ultimately a percentage by which NTEU employee salaries

might be adjusted to allow for cost of living increases.

Because the NRC retained control of the amount of its

budget to be allocated for the salaries, the proposal does

not prescribe a specific amount which the NRC must

allocate in its budget. In other words, as the FLRA has

Id.

priate to give the term its common or dictionary definition.

As defined by the dictionary, “budget’’ means a statement of

the financial position of a body for a definite period of time

based on detailed estimates of planned or expected expendi-

tures during the period and proposals for financing them. In

this sense, the agency’s authority to determine its budget

extends to the determination of the programs and operations

which will be included in the estimate of proposed expenditures

and the determination of the amounts required to fund them.

Under the Statute, therefore, an agency cannot be required to

negotiate those particular budgetary determinations. That is,

a union proposal attempting to prescribe the particular pro-

grams or operations the agency would include in its budget

or to prescribe the amount to be allocated in the budget for

them would infringe upon the agency’s right to determine its

budget under section 7106(a) (1) of the Statute.

Moreover, where a proposal which does not by its terms

prescribe the particular programs or amounts to be included

in an agency’s budget, nevertheless is alleged to violate the

agency’s right to determine its budget because of increased

cost, consideration must be given to all the factors involved.

That is, rather than basing a determination as to the negotia-

bility of the proposal on increased cost alone, that one factor

must be weighed against such factors as the potential for im-

proved employee performance, increased productivity, reduced

turnover, fewer grievances, and the like. Only where an agency

makes a substantial demonstration that an increase in costs

is significant and unavoidable and is not offset by compen-

sating benefits can an otherwise negotiable pi -posal be found

to violate the agency’s right to determine its budget under

section 7106(a) of the Statute.

(citations omitted).

39a

elsewhere stated, the proposal “establishes a percentage

of the total . . . cost to be absorbed by the Agency. What

that percentage means in terms of the amount to be

budgeted depends on factors not covered by the proposal,

but within the Agency’s control.” Eglin, 24 F.L.R.A. at

386.

While admitting that the NTEU’s proposal does not

prescribe a specific dollar amount to be allocated in its

budget, the NRC argues that the proposal allows a third

party, the Advisory Committee on Federal Pay, the au-

thority to determine the salary component of the NRC’s

budget. This argument does not address the FLRA’s con-

clusion that the proposal merely sets a procedure for ad-

justing salaries, an item already existing in the NRC’s

budget and over which the NRC has control. We consider

the FLRA’s application of § 7106 and the frst aspect of

the Wright-Patterson test to the NTEW’s proposal to

be a reasonable construction of the CSRA and therefore

decline to upset the FLRA’s finding in this regard.

The FLRA also analyzed the NTEU’s proposal under

the second aspect of the Wright-Patterson test and held

that the NRC had not “made a substantial demonstration

that implementation of the proposal will result in a sig-

nificant, unavoidable increase in costs which is not out-

weighed by compensating benefits.” The FLRA rejected

the NRC’s contention that the annual cost of living ad-

justment recommended by the Advisory Committee on

Federal Pay,’ if adopted,’® would have a substantial un-

® The parties represent that this increase hus averaged a rate

of approximately 10% since 1982, and has been more on the order

of 5% in more recent years.

10 Under the CSRA, the parties have a duty to negotiate over a

bargainable proposal until an impasse is reached. Section 7119

provides for the resolution of such impasse, including ordering

parties to agree to the specific proposal, see Council of Prison Locals

v. Brewer, 735 F.2d 1497, 1499 (D.C.Cir. 1984), by the Federal

Service Impasses Panel. 5 U.S.C. § 7119.

40a

avoidable impact on the NRC’s ability to determine its

budget. The FLRA reasoned that increased cost is only

one factor to be considered and that, standing alone, the

eost increase that might flow from the NTEU’s proposal

aid not interfere with the NRC’s § 7106 budget determi-

nation right. Because the NRC failed to even address the

issue of compensatory benefits, the FLRA found the

NTEU’s proposal to be the proper subject of collective

bargaining.

We again find the FLRA’s construction of § 7106 as

applied to the union’s proposal to be reasonable. The NRC

asks that we construe § 7106 as barring a proposal’s

negotiability upon a mere showing by an agency of what

amounts to less than a five percent increase relative to the

agency’s total budget.'' Such a construction of this provi-

sion of the CSRA would likely render the vast majority

of proposals nonnegotiable. Congress intended, however,

that § 7106 “ ‘be read to favor collective bargaining when-

ever there is doubt as to the negotiability of a subject or

a proposal.’”’ American Fed’n of Gov’t Employees, Locals

225, 1504, and 3723, AFL-CIO v. FLRA, 712 F.2d 640,

649 n. 36 (D.C.Cir.1983) (quoting H.R.Rep. No. 95-1403,

95th Cong., 2d Sess. 44 (1978)). The FLRA, therefore,

reasonably concluded that the NRC must show that any

anticipated increase in cost was not offset by benefits such

as those outlined in Wright-Patterson.’* The NRC having

made no such showing, the FLRA properly found § 7106

to present no bar to the NTEU’s proposal’s negotiability.

11 Even were a twenty percent increase recommended in a given

vear, the worst scenario presented by the NRC in its petition for

review, the NRC admits this would amount at most to approxi-

mately an eight percent increase in the agency’s roughly four

hundred million dollar budget.

12 See supra note 8. The NRC appears to argue that this require-

ment from Wr ht-Patterson is arbitrary and capricious. This issue

was not raised before the Commission in the first instance and

therefore will not be considered by this court. 5 U.S.C. § 7123(c).

4la

In enacting Title VII of the Civil Service Reform Act,

Congress expressed its finding that

“labor organizations and collective bargaining in the

civil service are in the public interest,’ 5 U.S.C.

§ 7101(a) (1982 ed.), [and] significantly strength-

ened the position of public employee unions while

carefully preserving the ability of federal managers

to maintain “an effective and efficient government,”

$ 7101(b).

BATF, 464 U.S. 89, 92, 104 S.Ct. 439, 441 (1983) (foot-

note omitted). The CSRA created the FLRA and directed

that it “ ‘provide leadership in establishing policies and

guidance relating to matters’ arising under the Act.”

Id. at 93, 104 S.Ct. at 442. We find that in applying the

CSRA to the present negotiability dispute, the FLRA has

properly carried out its function under the Act. Accord-

ingly, we deny the petition for review, affirm the decision

of the FLRA, and grant enforcement of the FLRA’s

bargaining order.

SO ORDERED.

42a

APPENDIX C

UNITED STATES OF AMERICA

BEFORE THE

FEDERAL LABOR RELATIONS AUTHORITY

Washington, D.C.

Case No. 0-NG-1250

NATIONAL TREASURY EMPLOYEES UNION,

Union

and

NUCLEAR REGULATORY COMMISSION,

Agency

DECISION AND ORDER’

I. Statement of the Case

This case is before the Authority because of a nego-

tiability appeal filed under section 7105(a) (2) (E) of

the Federal Service Labor-Management Relations Statute

(the Statute) and concerns the negotiability of a single

proposal. For the reasons which follow, we find that the

proposal is within the duty to bargain under the Statute.

II. Proposal

Section 52.1

The salary structure, that is the grade and steps of

the pay schedule, being used by the NRC will be

maintained. Hereafter, all employees will have their

current salaries adjusted for the cost of living

comparability factor. The adjustment will be equal

1 Chairman Calhoun’s dissent follows this opinion.

a Le ne

43a

to the statistical adjustment recommended to the

President by the Pay Advisory Council. This adjusi-

ment will become effective at the beginning of the

first pay period following the announcement of it by

the Council or other appropriate sources. It will be

unaffected by Presidential or Congressional actions.

Section 52.2

NTEU agrees to establish with the employer a pro-

ductivity committee that will monitor the impact of

the new salary adjustment system and seek reason-

able ways to increase the productivity of the em-

ployer, e.g., decrease employee turnover, remove work

obstacles, improve upon available machines and pro-

cedures, and raise employee morale.

III. Positions of the Parties?

The Agency argues, as a threshold matter, that the

Union’s petition for review was untimely filed under

section 7117(c) (2) of the Statute since it was filed more

than 15 days after the Agency first made its allegation

of nonnegotiability. The Agency disagrees with the posi-

tion taken by the Authority in American Federation of

Government Employees, AFL-CIO, Local 3477 and Com-

modity Futures Trading Commission, 21 FLRA No. 18

(1986) and American Federation of Government Em-

ployees, AFL-CIO, Local 3385 and Federal Home Loan

Bank Board, District 7, Chicago, Illinois, 7 FLRA 398

(1981), that an unsolicited allegation of nonnegotiability

does not serve to start the time period running for the

filing of a petition for review under section 7117. The

Agenwy urges reconsideration of this policy.

As to the merits, the Agency claims that the proposal

is inconsistent with section 161(d) of the Atomic Energy

* The parties’ arguments with respect to the negotiability of

the proposal go only to Section 52.1. Section 52.2 does not appear

to be in dispute and, therefore, is not specifically addressed in this

decision.

44a

Act of 1954, as amended, 42 U.S.C. § 2201, as well as

management’s right to determine its budget under sec-

tion 7106(a) (1) of the Statute.

In response, the Union claims that the Agency has

failed to substantiate its assertions that the petition for

review was untimely filed and that the proposal is out-

side the duty to bargain. As to the former, the Union

argues that in accordance with section 2424.3 of the

Authority’s Rules and Regulations and Authority prece-

dent, the Agency’s unsolicited allegations of nonnegotia-

bility did not serve to trigger the time period for the

filing of the petition for review. Rather, it was the

Union’s request for the allegation which started the time

period running.

As to the Agency’s arguments on the merits of the

proposal, the Union claims that the Atomic Energy Act

gives the Agency the discretion to negotiate. The Union

states that the proposal is intended to be interpreted

consistent with laws that impose limitations on pay. By

way of example, the Union cites to pay limitations that

are applicable to scientific and technical personnel.

Finally, the Union argues that the proposal is not in-

consistent with management’s right to determine its

budget.

IV. Analysis and Conclusion

The Agency has not advanced any persuasive reasons

to warrant reconsideration of long-standing Authority

policy that an unsolicited allegation of nonnegotiability

does not commence the time period for filing a petition

for review. We therefore reject the Agency’s arguments

that the Union’s petition for review be dismissed on the

basis that it was untimely filed.

We also find, for the reasons set forth below, that the

Agency has failed to demonstrate that the proposal is

either inconsistent with the cited provision of the Atomic

Energy Act or section 7106(a) (1) of the Statute.

45a

A. Alleged inconsistency with law

First, we will address the arguments made in connec-

tion with the Atomic Energy Act. The Agency cites to

the following provision of that Act in support of its

arguments:

General Provisions.—In the performance of its func-

tions the Commission is authorized to—

oa * * *

d. appoint and fix the compensation of such officers

and employees as may be necessary to carry out the

firnctions of the Commission. Such officers and em-

ployees shall be appointed in accordance with the

civil-service laws and their compensation fixed in

accordance with the Classification Act of 1949, as

amended, except that, to the extent the Commission

deems such action necessary to the discharge of its

responsibilities, personnel may be employed and their

compensation fixed without regard to such laws:

Provided, however, That no officer or employee (ex-

cept such officers and employees whose compensation

is fixed by law, and scientific and technical personnel

up to a limit of the highest rate of grade 18 of the

General Schedule of the Classification Act of 1949,

as amended) whose position would be subject to the

Classification Act of 1949, as amended, if such Act

were applicable to such position, shali be paid a

salary at a rate in excess of the rate payable under

such Act for positions of equivalent difficulty or

responsibility. Such rates of compensation may be

adopted by the Commission as may be authorized by

the Classification Act of 1949, as amended, as of the

same date such rates are authorized for positions

subject to such act. The Commission shall make

adequate provision for administrative review of any

determination to dismiss any employee.

The Agency states that it has continued the practice

of its predecessor, the Atomic Energy Commission, in

ell

46a

exempting all positions within the Agency from coverage

under civil service laws and the Classification Act of

1949, as amended. The Agency has adopted a pay system

which in many respects parallels general schedule pay

rates. The Agency further states that there are three

restrictions placed on its pay setting authority that

would preclude negotiations over the proposal.

The first restriction concerns the authority of the

Agency to deviate from pay schedules to the extent such

action is “necessary to the discharge of its responsibili-

ties.” The Agency argues that since the authority to

make this determination rests with the Agency, it is not

subject to negotiation.

The Authority has consistently held that where an

agency has discretion over a matter affecting conditions

of employment, the agency is ebliged under the Statute

to exercise that discretion by means of bargaining, unless

the discretion is specifically limited by law or regulation.

National Treasury Employees Union, Chapter 6 and In-

ternal Revenue Service, New Orleans District, 3 FLRA

748, 759-60 (1980). We recently have stated with re-

gard to proposals concerning employee compensation that

nothing in the Statute or its legislative history bars nego-

tiations over such proposals where (1) the matters pro-

posed are not specifically provided for by law and are

within the discretion of the agency and (2) the proposals

are not otherwise inconsistent with law, Govesnment-

wide rule or regulation or an agency regulation for which

a compelling need exists. American Federation of Gov-

ernment Employees, AFL-CIO, Local 1897 and Depart-

ment of the Air Force, Eglin Air Force Base, Florida,

24 FLRA no. 41 (1986).°

3 Eglin was initially appealed to the U.S. Court of Appeals for

the Eleventh Circuit. Subsequently, the appeal was withdrawn;

however, appeals of other cases which rely on Eglin are still

pending before various courts.

47a

We do not view the language of section 161(d) of the

Atomic Energy Act which allows the Agency to deviate

from pay schedules to the extent such action is “neces-

sary to the discharge of its responsibilities” as placing a

specific limitation on the Agency’s dscretion to bargain in

this matter. In fact, the Agency has already indicated

that it exempted positions from coverage under the Clas-

sification Act. Since the Agency has not identified any

other specific limitation on its discretion, we find that

the Agency’s argument cannot be sustained.

The Agency has cited two other restrictions in the

Atomic Energy Act which allegedly serve to bar nego-

tiations on the Union’s proposal. The Agency claims that

there is a pay limitation applicable to scientific and tech-

nical personnel and that adoption of a 20 percent salary

increase which is the effect of the proposal would cause

that limit to be exceeded. In addition, for positions

which are not scientific or technical, the Agency claims

that a 20 percent increase would exceed the statutory

maximum payable rate which is the step 10 rate for

the corresponding grade under the general schedule.

The Union states that the Agency’s argument that a

20 percent increase would exceed certain pay limitations

and its argument concerning the amount of the increase

itself are merely speculative. The Union concedes, how-

ever, that the proposal “must be interpreted consistent

with the law and that law does limit pay in certain

ways.” Union Reply Brief at 7. Accordingly, based upon

the Union’s stated intent, we conclude that the Agency’s

claim that the proposal would require that employees’

pay exceed certain pay limitations cannot be sustained.

B. Alleged inconsistency with section 7106(a)(1)

right to determine budget

In our view, the Agency has not demonstrated that

implementation of the proposal would directly interfere

with management’s right to determine its budget under

48a

the test set forth in American Federation of Government

Employees, AFL-CIO and Air Force Logistics Command,

Wright-Patterson Air Force Base, Ohio, 2 FLRA 604

(1980), enforced as to other matters sub nom. Depart-

ment of Defense v. FLRA, 659 F.2d 1140 (D.C. Cir.

1981), cert. denied sub nom. AFGE v. FLRA, 455 USS.

995 (1982). That is, the proposal does not prescribe a

particular program or operation which must be included

in the Agency’s budget, nor does it prescribe a particular

allocation that must be made. Rather, the proposal con-

cerns employee salaries, an already existing item in the

Agency’s budget, cnd merely establishes a formula for

adjusting such salaries. See also the decision and order

on remand in National Treasury Employees Union, Chap-

ter 207 and Federal Deposit Insurance Corporation,

Washington, D.C., 28 FLRA No. 80 (1987), in which a

majority of the Authority found that a proposal almost

identical to the one presented here was negotiable. In

that case the majority held that there was no compelling

need for the agency regulation and the proposal did not

conflict with the agency’s right to determine its budget.

We further find that the Agency has not made a sub-

stantial demonstration that implementation of the pro-

posal will result in a significant, unavoidable increase in

costs which is not outweighed by compensating benefits.

The Agency argues that in determining the costs of the

proposal, the percentage pay increase recommended by

the President’s Pay Agent rather than the Advisory

Committee on Federal Pay (two entities established by

the Pederal Pay Comparability Act of 1970, 5 U.S.C.

§ 5301), should be considered. According to the Agency,

a percentage increase, averaging about 20 percent over

the past few years, would necessitate one of the follow-

ing actions: (1) congressional approval of an increase

in the Agency’s budget; (2) elimination of various

safety-related research programs; or (3) a reduction-in-

force. The Agency also argues that even assuming a

5 percent pay increase, the figure that more closely

approximates the recommendation made by the Advisory

49a

Committee on Federal Pay, the proposal would have a

substantial, unavoidable impact on the Agency’s ability to

determine its budget.

We must reject the Agency’s arguments with respect

to the possible outcomes resulting from a 20 percent pay

increase. The Union indicated in its submission to the

Authority that the intent of the proposal is to use the

figure of the Advisory Committee on Federal Pay, tradi-

tionally a much lower figure, rather than the 20 percent

figure recommended by the President’s Pay Agent. The

Agency’s sole argument with respect to the effect of the

lower figure, that is, the Advisory Committee recom-

mendation, is that adopting such an increase would have

a substantial, unavoidable impact on the ability to deter-

mine its budget and result in a certain dollar cost. Such

an argument does not satisfy the requirement of a sub-

stantial showing that the proposal would result in sub-

stantial and unavoidable cost increases that are not offset

by compensating benefits. See Fort Stewart (Georgia)

Association of Educators and Fort Stewart Schools, 28

FLRA No. 67 (1987).

Additionally, as we noted in Fort Stewart, and pre-

viously in Fort Bragg Unit of North Carolina Associa-

tion of Educators, National Education Association and

Fort Bragg Dependents Schools, Fort Bragg, North Caro-

lina, 12 FLRA 519 (1983), where a cost concern pre-

vents parties from reaching agreement during the col-

lective bargaining process, such concerns may be pre-

sented to the Federal Service Impasses Panel in a pro-

ceeding brought under section 7119 of the Statute to

resolve a negotiation impasse.

V. Order

The Agency must upon request, or as otherwise

agreed to by the parties, negotiate over the proposal.‘

4In finding the proposal negotiable we make no judgment as

to its merits.

50a

Issued, Washington, D.C., September 29, 1987.

s/ Henry B. Frazier III

HENRY B. FRAZIER III

Member

s/ Jean McKee

JEAN MCKEE

Member

FEDERAL LABOR RELATIONS AUTHORITY

5la

Separate Opinion of Chairman Calhoun

I agree with my colleagues that the issues in this

ease are essentially the same as those in American Fed-

eration of Government Employees, AFL-CIO, Local 1897

and Department of the Air Force, Eglin Atr Force Base,

Florida, 24 FLRA No. 41 (1986); and National Treasury

Employees Union, Chapter 207 and Federal Deposit In-

surance Corporation, Washington, D.C., 28 FLRA No.

80 (1987). In my separate opinions in those cases, I

stated that in the absence of a clear expression of con-

gressional intent to the contrary, I find that wages and

monetary fringe benefits of Federal employees are not a

proper subject of collective bargaining under the Statute.

I found no such statements of intent in those cases, and

I find none here. Accordingly, I dissent.

Issued, Washington, D.C., September 29, 1987.

s/ Jerry L. Calhoun

JERRY L. CALHOUN

Chairman

This is a copy of a public record, reproduced as it was published. It is not legal advice, and it may not be the version a court would rely on. Check the official source before you cite it.