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

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| %, Supreme Court, us. |

oct 6 1889

No. JOSEPH F. SPANIOL, JR.

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In the Supreme Court of the United States

OCTOBER TERM, 1989

FEDERAL LABOR RELATIONS AUTHORITY, PETITIONER

NATIONAL TREASURY EMPLOYEES UNION AND

UNITED STATES NUCLEAR REGULATORY COMMISSION

PETITION FOR A WRIT OF CERTIORARI TO THE

UNITED STATES COURT OF APPEALS

FOR THE FOURTH CIRCUIT

WILLIAM E. PERSINA *

Acting Solicitor

JILL A. GRIFFIN

Aitorney

Federal Labor Relations Authority

500 C Street, S.W.

Washington, D.C. 20424

(202) 382-0781

* Counsel of Record

QUESTIONS PRESENTED

1. Whether compensation of Federal employees

whose rates of compensation are not specifically pro-

vided for by law is a negotiable “condition of em-

ployment” under 5 U.S.C. 7103(a) (14), which de-

fines the terms in relevant part as “personnel policies,

practices, and matters * * * affecting working condi-

tions.”

2. Whether a bargaining proposal concerning em-

ployee pay adjustments interferes with a Federal

agency’s management right to determine its budget

under 5 U.S.C. 7106(a)(1) where the proposal does

not prescribe a specific amount of money to fund an

agency program, and the agency made no showing

that the proposal’s cost is not offset by compensating

benefits.

3. Whether a bargaining proposal concerning rates

of compensation for Nuclear Regulatory Commission

employees is inconsistent with section 161(d) of the

Atomic Energy Act when the agency, having fully

exempted itself under section 161(d) from coverage

of the Federal pay-setting laws, has full discretion

over the establishment of compensation.

(1)

TABLE OF CONTENTS

Page

EE Se cen 1

a sc cenenneniniditliiionstiine 2

EE TE ee ae er 2

REE RE ce 2

Reasons for granting the petition... 14

I. The decision of the court below directly con-

flicts with those of other circuits which have

considered the negotiability of pay and fringe

I se eeametniate 14

II. The court below erroneously decided the three

questions in this case ....... ‘ 17

Conclusion 29

en a a coe la

EE EE ES ae ee eR 23a

eC sceetpnmmnneanmeniadnpeaianes 47a

Nc 48a

EET AS a ee 59a

TABLE OF AUTHORITIES

Cases:

American Fed’n of Gov’t Employees and Air

Force Logistics Command, Wright-Patterson

Air Force Base, Ohio, 2 F.L.R.A. 604 (1980),

enf’d as to other matters, sub nom. Dep’t of De-

fense Vv. FLRA, 659 F.2d 1140 (D.C. Cir. 1981),

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

ets 9, 11, 25

American Fed’n of Gov’t Employees, Local 1897

and Dep’t of the Air Force, Eglin Air Force

Base, Florida, 24 F.L.R.A. 377 (1986)... 9,14

Beron Vv. Kramer-Trenton Company, 402 F. Supp.

EL RTE 17

Bureau of Alcohol, Tobacco and Firearms Vv.

Us MU I, MY ID oicccicscenseesestnestinetzentcnes 3

(111)

Cases—Continued : Page

Charleston Naval Shipyard, Charleston, South

Carolina v. FLRA, No. 88-2181 (4th Cir. Sept.

14, 1989) 17

Chevron, U.S.A., Inc. v. Natural Resources De-

fense Council, Inc., 467 U.S. 837 (1984) _.......27, 28, 29

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

(D.C. Cir. 1981), cert. denied, 455 U.S. 945

(1982) 5

Department of Defense Dependents Schools v.

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

bane granted (Feb. 6, 1989) 15

Department of the Navy, Military Sealift Com-

mand V. FLRA, 836 F.2d 1409 (3d Cir. 1988) .... 15}

Fibreboard Paper Products Corp. v. NLRB, 379

U.S. 203 (1964) 22

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

1179 (6th Cir. 1989) 15

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

(11th Cir. 1988), cert. granted, ——- U.S.L.W.

(U.S. Oct. 2, 1989) (No. 89-65) ............. passim

Hertz v. Woodman, 218 U.S. 205 (1910) ............... 16

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

1948), cert. denied on this issue, 336 U.S. 960

TTS ERAS SAA Ne aS ETL RD A 22

NFFE, Local 1167 v. FLRA, 681 F.2d 886 (D.C.

pt ANGIE a ech a ies arsed nih ae ee 5

NLRB vy. ARA Services, Inc., 717 F.2d 57 (3d Cir.

1983) . 16,17

NLRB vy. J-Wood/A Tappan Division, 720 F.2d

309 (3d Cir. 1983) 16

Overseas Education Ass’n, Inc. and Dep’t of De-

fense, Office of Dependents Schools, 6 F.L.R.C.

i i 23

People v. Jackson, 212 NW. 2d 918 (Mich. S. Ct.

a ada aac aelbrtrtoc Tena ntl hoy ti 17

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

Cir.), cert. denied, 351 U.S. 909 (1956)... 22

United Fed’n of College Teachers, Local 1460 and

U.S. Merchant Marine Academy, 1 F.L.R.C. 211

Cases—Continued : Page

West Point Elementary School Teachers Ass’n V.

FLRA, 855 F.2d 936 (2d Cir. 1988) 0... 13, 14, 24

Weyerhaeuser Timber Co., 87 N.L.R.B. 672

(1949) , il 22

Statutes, rules, and regulations:

The Federal Service Labor-Management Rela-

tions Statute, as amended, 5 U.S.C. 7101-7135

(1988). ail 2

Cf RL eee TET 8, 5, 26

5 U.S.C. 71038 (a) (14) ; passim

5 U.S.C. 7108 (a) (14(C) 8, 19, 20, 21

TS A et oma A 3

5 U.S.C. 7105 (a) (2) TERT RL 9 a 3

yh EE , een 5, 27

a 3

UE a ab a 4

5 U.S.C. 7106 (a) (1) .................. enaidneesenaaimeaiaiaiall passim

A a 4

et A NE a aS Rae 4

So 4

IE ER ATA ALS 3

aE RA aca 3

CE TEES AD LA LLL 4

jj Ul) c 19

I RAE Rr 4

ed 5, 8, 27

pe FY | | eae 4

ge NT) | eee 4

fa EE ee ae ae as 3

fA RETEST 3

kN Bie 3

OS iia a 3 a Sa BN 22, 23

a a 2

Atomic Energy Act of 1946, Pub. L. No. 79-585,

sec. 2(a), 60 Stat. 724 (1946), as amended by

the Atomic Energy Act of 1954, Pub. L. No.

83-703, 68 Stat. 919 (1954) 5, 6

§ 161(d), 42 U.S.C. 2201 (d) eee. passim

Civil Service Reform Act of 1978, Pub. L. No.

95-454, § 701, 92 Stat. 1111 (1978) 2... 2

§ 704 21

Statutes, rules, and regulations—Continued : Page

Energy Reorganization Act of 1974, sec. 201, 42

U.S.C. 5841 (1982) 5

Executive Order No. 10988, 3 C.F.R. 521 (1959-

1963 comp.) ......... 2

Executive Order No. 11491, 3 C.F.R. 861 (1966-

1970 comp.) 2, 22, 23

Executive Order Nos. 11616, 11636, and 11838,

8 C.F.R. 605, 634, 957 (1971-1975 comp.)............ 2

National Labor Relations Act, 29 U.S.C. 151 et

[a ea a 21

29 U.S.C. 158(d). ee OU 10, 12, 21

Prevailing Rate Systems Act of 1972, 5 U.S.C.

GE GI Soichectcncccntcbebasccttecesnesnsccrecemnseteneetecsmne 21

The Federal Pay Comparability Act of 1970, 5

es ee GD ccccceensetectececnensinteectinviemenies 7

ER RN 6, 25

STII. cna denedesnenignaisinabenvesineatnienmubinie 7

Tek kh 8

5 C.F.R. 2471.1 to 2471.12 ....................

Miscellaneous :

Annual Report of the Advisory Committee on Fed-

eral Pay (1982, 1983, 1984, 1985, 1986, 1987) .... 7

Office of Personnel Management, Federal White-

Collar Pay System, Report on a Market-Sensitive

} ee ee ee 26

H.R. 9094, 95th Cong., Ist Sess. § 7193(a) (16)

(1977), reprinted in Subcomm. on Postal Per-

sonnel and Modernization of the House Comm.

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

lst Sess., Legislative History of the Federal

Service Labor-Management Relations Statute,

Title VII of the Civil Service Reform Act of

; x) SD Ee 19

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

UIE cccndsnscesesmusidnigeentnaaaiionmaeaiaanan 20

124 Cong. Rec. H8468 (daily ed. Aug. 11, 1978) 20

i, jy

In the Supreme Court of the United States

OCTOBER TERM, 1989

No.

FEDERAL LABOR RELATIONS AUTHORITY, PETITIONER

NATIONAL TREASURY EMPLOYEES UNION AND

UNITED STATES NUCLEAR REGULATORY COMMISSION

PETITION FOR A WRIT OF CERTIORARI TO THE

UNITED STATES COURT OF APPEALS

FOR THE FOURTH CIRCUIT

The Federal Labor Relations Authority petitions

for a writ of certiorari to review the judgment of the

United States Court of Appeals for the Fourth Cir-

cuit.’

OPINIONS BELOW

The judgment of the court of appeals sitting en

bane (App. la-22a) is reported at 879 F.2d 1225.

1The National Treasury Employees Union (NTEU), a

party intervenor on behalf of the Authority in the proceed-

ings below, has previously petitioned the Court for a writ of

certiorari to the lower court’s judgment here at issue. Na-

tional Treasury Employees Union v. FLRA, et al., No. 89-198

(S. Ct., petit. for cert. filed Aug. 3, 1989). The Authority

has moved the Court in No. 89-198 to postpone consideration

of NTEU’s certiorari petition until such time as the instant

Authority certiorari petition and any responses thereto are

filed with the Court.

(1)

The three judge panel decision of the court of appeals

(App. 23a-46a) that was vacated by the full court

is reported at 859 F.2d 302. The decision and order

of the Federal Labor Relations Authority (App. 48a-

58a) is reported at 29 F.L.R.A. 217.

JURISDICTION

The judgment of the court of appeals sitting en

bane was entered on July 14, 1989. The jurisdiction

of this Court is invoked under 28 U.S.C. 1254(1).

STATUTES INVOLVED

The relevant portions of the Federal Service Labor-

Management Relations Statute, 5 U.S.C. 7101-7135

(1988), and the Atomic Energy Act, 42 U.S.C. 2201

(1982 & Supp. V 1987), are reproduced in the ap-

pendix (App. 59a-80a).

STATEMENT

1. The Federal Service Labor-Management Re-

lations Statute (“the Statute”) governs labor-

management relations in the federal service.* Under

the Statute, the responsibilities of the Federal Labor

Relations Authority (“the Authority”) include ad-

judicating unfair labor practice complaints, negoti-

2 The Statute was enacted as Section 701 of the Civil Serv-

ice Reform Act of 1978, Pub. L. No. 95-454, 92 Stat. 1111

(1978). Prior to the enactment of the Statute, labor-

management relations in the federal service were governed

by a program established in 1962 by Executive Order No.

10988, 3 C.F.R. 521 (1959-1963 comp.). The Executive Or-

der program was revised and continued by Exec. Order No.

11491, 3 C.F.R. 861 (1966-1970 comp.), as amended by Exec.

Orders Nos. 11616, 11636, and 11838, 3 C.F.R. 605, 634, 957

(1971-1975 comp.).

ability disputes, bargaining unit and representa-

tional election matters, and resolving exceptions to

arbitration awards. See 5 U.S.C. 7105(a)(1), (2);

see also Bureau of Alcohol, Tobacco and Firearms v.

FLRA, 464 U.S. 89, 93 (1983). The Authority may

also “take such other actions as are necessary and

appropriate to effectively administer the provisions of

[the Statute].” 5 U.S.C. 7105(a)(2)(I). The Au-

thority is also empowered to engage in formal rule-

making pursuant to 5 U.S.C. 7134, and to “provide

leadership in establishing policies and guidance” re-

lating to federal sector labor relations matters, pur-

suant to 5 U.S.C. 7105(a)(1). BATF v. FLRA,

supra, 464 U.S. at 93. The Authority may petition

for enforcement of its orders in appropriate United

States courts of appeals. 5 U.S.C. 7123(b). Persons,

including federal agencies, who are aggrieved by cer-

tain types of Authority orders may seek judicial re-

view in the courts of appeals. 5 U.S.C. 7123(a).

a. Under the Statute, a federal agency must bar-

gain in good faith with the exclusive representative

of an appropriate bargaining unit about unit em-

ployees’ conditions of employment and, upon the re-

quest of either party, execute a document embodying

the agreed upon terms. 5 U.S.C. 7103(a) (12),

7114(b) (2), 7114(b) (5). The Statute defines “con-

ditions of employment” as “personnel policies, prac-

tices, and matters, whether established by rule, regu-

lation, or otherwise, affecting working conditions

** *.” 5 U.S.C. 7103(a) (14). An exception to this

statutory definition of the phrase “conditions of em-

ployment” is “matters * * * specifically provided for

by Federal statute.” 5 U.S.C. 7103(a)(14)(C). The

Statute also expressly excludes certain matters from

the general obligation to bargain. There is no duty

f£

to bargain over the rights the Statute reserves to

management as nonnegotiable. 5 U.S.C. 7106. One

such management right is the right “to determine the

* * * budget * * * of the agency.” Further, there is

no duty to bargain over proposed contract language

which is inconsistent with a federal law, or with a

government-wide rule or regulation. 5 U.S.C. 7117

(a) (1). Subsection (b) of Section 7106 provides in

relevant part that nothing in Section 7106 shall pre-

clude an agency and an exclusive representative from

negotiating procedures which management officials of

the agency will observe in, and appropriate arrange-

ments for employees adversely affected by, the exer-

cise of any authority by management officials under

Section 7106. 5 U.S.C. 7106(b) (2) and (8).

Additionally, although strikes in the federal sector

are forbidden under 5 U.S.C. 7116(b) (7), Congress

established a Federal Service Impasses Panel (FSIP

or Panel). The Panel is made up of at least seven

presidential appointees, and is charged with the re-

sponsibility of settling bargaining impasses. Either

party may request the Panel to conduct an inquiry

into a bargaining impasse. If, after the Panel makes

initial recommendations to the parties they still can-

not reach a settlement, the Panel may hold hearings

and take whatever action is necessary and not incon-

sistent with this chapter to resolve the impasse. 5

U.S.C. 7119(c)(5)(B). See generally 5 C.F.R.

2471.1 to 2471.12 (1988). When the Panel imposes

a term on the parties it is “binding on such parties

during the term of the agreement, unless the parties

agree otherwise.” 5 U.S.C. 7119(c)(5)(C). The

Panel does not have authority to pass judgments on

assertions of nonnegotiability. The resolution of ne-

gotiability issues are made by the Authority.

Ae Seer

In the instant case, the Authority adjudicated a

dispute over whether a collective bargaining proposal

was within the duty to bargain established by the

Statute. 5 U.S.C. 7105 (a) (2) (EB), 7117(c). Under

the Statute, if a federal agency alleges that a bar-

gaining proposal is outside the duty to bargain, the

exclusive representative may appeal the agency’s al-

legation of nonnegotiability to the Authority. 5

U.S.C. 7117(c). The Authority examines the dis-

puted proposal based on the record presented to it by

the parties. NFFE, Local 1167 y. FLRA, 681 F.2d

agreed to by the parties, bargain over the proposal.

5 C.F.R. 2424.10 ( 1988). The bargaining obligation

imposed by the Statute does not require the agency

to agree to the proposal or to make a concession. 5

FLRA, 659 F.2d 1140, 1147 (D.C. Gir. 1981), cert.

denied, 455 U.S. 945 (1982).

b. The Nuclear Regulatory Commission (“NRC”

or “Commission”) was established as an independent

regulatory agency by the Energy Reorganization Act

of 1974, sec. 201, 42 U.S.C. 5841 (1982). The Com-

miss.on licenses persons to build and operate nuclear

reactors and use nuclear materials; and inspects the

activities of licensees. The Commission received the

licensing and related regulatory functions concerning

the civilian uses of atomic energy previously assigned

to the Atomic Energy Commission under the Atomic

Erergy Act of 1946, Pub. L. No. 79-585, sec. 2(a),

60 Stat. 724 ( 1946), as amended by the Atomic

Energy Act of 1954, Pub. L. No. 83-703, 68 Stat.

919 (1954).

One of the amendments to the Atomic Energy Act

of 1946 effected by the 1954 Act was the addition of

Section 161(d) (App. 79a-80a), 42 U.S.C. 2201(d),

concerning employment and compensation of person-

nel by NRC. Section 161(d) provides in relevant

part that personnel may be employed and their com-

pensation fixed by NRC without regard to the laws

establishing the General Schedule pay system, which

specifically provides pay rates for most Federal

white-collar employees. See, e.g., 5 U.S.C. 5331 et

seq. The Commission exercised its discretion in this

regard in 1975 by exempting all positions within the

agency from coverage under Federal pay-setting

laws, as had its predecessor, the Atomic Energy

Commission (App. 32a-38a). However, NRC chooses

to pay most of its employees the equivalent of the pay

rates established by these pay-setting laws. Brief for

NRC at 20 n.9, NRC v. FLRA, 859 F.2d 302 (4th -

Cir. 1988) (No. 87-3182).

2. During collective bargaining negotiations be-

tween the National Treasury Employees Union

(“NTEU” or “union”) and NRC, the union sub-

mitted the following proposal for collective bargain-

ing: «

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 to the statistical adjustment recom-

mended to the President 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

productivity committee that will monitor the im-

pact of the new salary adjustment system and

seek reasonable ways to increase the productivity

3’ While the proposal refers to the “Pay Advisory Council,”

the union clarified before the Authority, as it had previously

with the agency, that it meant the Advisory Committee on

Federal Pay. The Federal Pay Comparability Act of 1970,

5 U.S.C. 5301 et seq., assigned responsibility for setting pay

to the President. Additionally, the Act provided that the

President appoint a Pay Agent who prepares an annual re-

port comparing salaries of federal! employees with salaries

of private sector employees and recommending appropriate

adjustments in federal salaries necessary to reach parity

with private sector salaries. The Act also created the inde-

pendent, three-member Advisory Committee on Federal Pay

(ACFP) which reviews the Pay Agent’s report and makes

additional recommendations to the President. The Pay Agent

recommendation is generally an accurate reflection of the pay

adjustment necessary to achieve comparability in pay be-

tween federal and private sector employees. See 5 U.S.C.

5305. The ACFP, on the other hand, is charged with provid-

ing the President with a recommendation on pay adjustments

after considering the annual report of the President’s Pay

Agent, as well as other sources. 5 U.S.C. 5306. Thus, in 1982,

the Pay Agent and the ACFP agreed on an 18.5% pay ad-

justment; in 1988 the Pay Agent and ACFP again agreed on

a 21.5% increase; in 1984, the Pay Agent recommended

18.3% and the ACFP recommended 5.5%; in 1985, the Pay

Agent recommended 19.15% while the ACFP recommended

4.7% ; in 1986 the Pay Agent recommended 23.79% while the

ACFP recommended 4%; and in 1987 the Pay Agent rec-

ommended 24% while the ACFP recommended 8%. See

Annual Report of the Advisory Committee on Federal Pay

(1982, 1983, 1984, 1985, 1986, 1987).

of the employer, e.g., decrease employee turn-

over, remove work obstacles, improve upon avail-

able machines and procedures, and raise em-

ployee morale.

(App. 48a-49a). The Commission declared the pro-

posal nonnegotiable and refused to bargain on it

(App. 49a-50a). The union then sought review by

the Authority of NRC’s declaration of nonnegotiabil-

ity under Section 7117(c) of the Statute, 5 U.S.C.

7117(c).

3. Before the Authority NRC argued that the pro-

posal was nonnegotiable because it is inconsistent

with Section 161(d) of the Atomic Energy Act of

1954, as amended, 42 U.S.C. 2201(d); and because

the proposal interferes with management’s right to

determine its budget under Section 7106(a)(1) of

the Statute (App. 50a). The union responded be-

fore the Authority that Section 161(d) of the Atomic

Energy Act gave NRC the discretion to negotiate

pay; and that the proposal did not interfere with

NRC’s management right to determine its budget

(App. 50a).

The Authority (Chairman Calhoun, dissenting) re-

jected NRC’s arguments and found the proposal ne-

gotiable (App. 48a-57a). The Authority first held

that the proposal was not inconsistent with Section

161(d) of the Atomic Energy Act (App. 51la-54a).

The Authority observed (App. 52a) that NRC had

pursuant to Section 161(d) previously exempted

NRC employees from coverage of Federal pay-setting

laws. Thus, the Authority ruled (App. 53a), the

agency has unbridled discretion to negotiate on the

union’s pay proposal.

In holding that NRC has discretion to negotiate

on pay matters under Section 161(d), the Authority

relied on its lead decision concerning the negotiability

of employee pay, American Fed’n ef Gov’t Employees,

Local 1897 and Dep’t of the Air Force, Eglin Air

Force Base, Florida, 24 F.L.R.A. 377 (1986) (Kg9-

lin) (App. 58a). In Eglin the Authority held that pay

matters are negotiable conditions of employment un-

der the Statute, to the extent that the mater pro-

posed is not specifically provided for by law and is

within agency discretion; and the bargaining pro-

posal is not otherwise inconsistent with law or ap-

propriate regulation.

Finally, the Authority found (App. 54a-56a) that

the propesal did not interfere with NRC’s right to

determine its budget under Section 7106(a)(1) of

the Statute. Applying its long-established two prong

test for determining when a bargaining proposal in-

terferes with the budget right,* the Authority ruled

that the proposal does not prescribe a particular

agency program, or sum of money to be applied to a

particular program; and that NRC had made no

demonstration that implementation of the proposal

would result in a significant, unavoidable increase in

costs which is not outweighed by compensating bene-

fits (App. 54a-56a). For the foregoing reasons the

Authority found the union’s proposal to be within

the agency’s duty to bargain, and ordered NRC to

bargain on the proposal (App. 57a).

* The Authority first set forth its two part test for imple-

menting the budget right in American Fed’n of Gov’t Em-

ployees and Air Force Logistics Command, Wright-Patterson

Air Force Base, Ohio, 2 F.L.R.A. 604 (1980), enf’d as to

other matters, sub nom. Dep’t of Defense v. FLRA, 659 F.2d

1140 (D.C. Cir. 1981), cert. denied sub nom. AFGE v. FLRA,

455 U.S. 945 (1982) (Wright-Patterson).

4. A panel of the Fourth Circuit unanimously af-

firmed. The panel first agreed with the Authority

that the bargaining proposal at issue was not incon-

sistent with Section 161(d) of the Atomic Energy

Act (App. 3la-36a). The panel noted that after

NRC removed itself from coverage under Federal

pay-setting laws based on its determination under

Section 161(d) that such removal was “necessary to

the discharge of its responsibilities,” Section 161 (d)

places no fetters whatsoever on NRC’s discretion to

‘establish employee pay rates. Thus, the panel held

there is no basis for concluding Section 161(d) bars

negotiation (App. 34a-36a).

The panel next rejected NRC’s claim that pay mat-

ters are not negotiable “‘conditions of employment”

as defined in Section 7108(a)(14) of the Statute

(App. 86a-4la). The panel viewed the legislative

history of the Statute, ambiguous though it is, as

supporting the Authority’s conclusion that Congress

intended to bar negotiations on pay matters only to

the extent that pay was specifically provided for in a

Federal statute (App. 39a-41a). The panel also re-

jected NRC’s claim that Congress’ omission of a ref-

erence to wages in its definition of “conditions of em-

ployment” in the Statute, in contrast to the National

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

supports the conclusion that wages are not an appro-

priate bargaining subject under the Statute (App.

40a n.7). The panel observed that the NLRA refers

to “wages, hours and other terms and conditions of

employment.” Use of the connecting word “other” in

this portion of the NLRA, the panel stated, suggests

that Congress in the NLRA considered wages to be

a condition of employment (App. 40a n.7).

Finally, the panel found the Authority’s two-part

Wright-Patterson budget test to be reasonable, and

affirmed the Authority’s holding that under that test

the subject proposal did not interfere with the

agency’s budget right under Section 7106(a)(1) of

the Statute (App. 41a-46a). The panel first held that

the union’s 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 (App.

44a). Thus, the panel concluded, the proposal does

not prescribe a particular program or amount of

money to fund a program under the first prong of

the Wright-Patterson test (App. 44a).

The panel next observed (App. 45a) that NRC’s

assertion of the budget right was premised solely on

the claim that the proposal would result in a cost to

the agency of less than 5% of its entire budget. Un-

der NRC’s view, the panel held, many bargaining

proposals would be nonnegotiable purely because of

their cost impact. This result would run counter to

Congress’ intent in the Statute to favor collective

bargaining if there is doubt as to a proposal’s nego-

tiability, the panel noted (App. 45a). The panel also

said that NRC’s complete failure to make any show-

ing under the second prong of the Wright-Patterson

test, that the cost was not offset by compensating

benefits, further justified the Authority’s conclusion

that the proposal did not interefere with NRC’s

budget right (App. 45a-46a).

5. A sharply divided court of appeals, sitting en

banc, voted six to four to reverse the Authority (App.

la-22a). The six judge majority first held that em-

ployee pay is not a “condition of employment” as

defined in Section 7103(a) (14) of the Statute (App.

6a-14a). In this connection, the majority noted that

compensation is not expressly referenced in the Stat-

ute as a bargainable subject (App. 7a). This was

compared to the NLRA, 29 U.S.C. 158(d), which

does expressly reference wages as a mandatorily bar-

gainable matter (App. 8a-9a). The majority also

referenced other laws, which make separate reference

to compensation and employment conditions; and pas-

sages from the Statute’s legislative history indicating

a congressional intent to bar negotiations on pay

(App. 9a-14a).

Five of the six judges voting to reverse the Au-

thority next held that the union’s proposal interfered

with NRC’s budget right under Section 7106(a) (1)

of the Statute (App. 14a-18a).° This plurality stated

that although the proposal did not specify a particu-

lar amount for employee pay, the proposal provided

for a formula that would ultimately dictate an

amount for pay (App. 16a-17a). Moreover, the plu-

rality held that the proposal would divest NRC of

budget making authority and transfer that function

to the Advisory Committee on Federal Pay, thus af-

fecting NRC’s right to determine its budget under

Section 7106(a)(1) of the Statute (App. 17a). The

plurality also ruled that Congress in the Statute did

not intend the Authority to assess a bargaining pro-

posal’s cost against its compensating benefits in de-

termining whether a proposal interferes with man-

5 Judge Hall, one of the six judges of the court voting for

a judgment of reversal, indicated in a concurring opinion

(App. 21a-22a) that he did not join in the parts of the ma-

jority opinion concerning the budget right and Section 161 (d)

issues. Judge Hall found the “conditions of employment”

issue dispositive of the case (App. 21a-22a).

agement’s budget right under Section 7106(a) (1)

(App. 18a).

Finally, the court plurality held that the Authority

erred in finding that the proposal was not inconsistent

with Section 161(d) of the Atomic Energy Act (App.

18a-21a). The plurality said that Section 161(d)

does not confer total discretion in NRC to set pay

after that agency decided to exempt itself from Fed-

eral pay-setting laws (App. 19a). Rather, the plural-

ity held (App. 19a), Section 161(d) requires NRC

to make a separate determination, after exemption

from the coverage of pay laws, that deviation from

the pay rates set by the pay laws is “necessary to

the discharge of its responsibilities.” The plurality

noted that NRC had never made this second deter-

mination, but continued to pay most of its employees

consistent with the rates set in Federal pay laws

(App. 19a-20a).

The four dissenting judges relied on the reasons

set forth in the superseded panel decision to support

their view that the Authority’s decision should be

affirmed and enforced (App. 22a). The dissenters

also relied on the decisions of the Second and Elev-

enth Circuits in West Point Elementary School Teach-

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

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

(11th Cir. 1988), cert. granted, —— U.S.L.W.

(U.S. Oct. 2, 1989) (No. 89-65) (Fort Stewart

Schools) (App. 22a). These Second and Eleventh

Circuit decisions accord with the panel decision of

the court below.

REASONS FOR GRANTING THE PETITION

Review is warranted because the court below in-

correctly decided issues of great importance to Fed-

eral employees and the Federal government. More-

over, there is a direct conflict in the courts of ap-

peals on the issue of the negotiability of pay and

money related fringe benefits for the few groups of

federal employees whose compensation is not spe-

cifically provided for in Federal law.

I. The decision of the court below directly conflicts with

those of other circuits which have considered the

negotiability of pay and fringe benefits

There is a direct conflict in the courts of appeals

on the question of whether compensation is a “con-

dition[] of employment” under the Statute subject

to collective bargaining in an agency whose pay rates

are not fixed by law. The Second Circuit*® and the

Eleventh Circuit’ have found that pay is a nego-

tiable “condition of employment” under Section

7103(a) (14) of the Statute for certain employees,

in the absence of a law that specifically provided for

those employees’ pay.* The court below, in a sharply

®* West Point Elementary School Teachers Ass'n V. FLRA,

supra, 855 F.2d at 989-940.

7 Fort Stewart Schools, supra, 860 F.2d at 399-402.

8 The pay and fringe benefits of most Federal employees

are explicitly established by law. Therefore, the Authority

has noted, pay is not negotiable for the overwhelming ma-

jority of Federal employees. Eglin, supra, 24 F.L.R.A. at 378.

It is only a few specific groups of federal employees, e.g., the

employees of the Nuclear Regulatory Commission, whose pay

is not specifically provided for by law, and who can therefore

negotiate pay matters under the Authority's ruling.

bnseeeeeeeeiemmmmammeunaunndaaiamaaasatd

divided en bane decision, joined the Third,’ Sixth ”

and D.C." Circuits in finding that compensation is

not a negotiable “condition of employment.”

Moreover, this conflict among the courts of ap-

peals is express. The court below noted (App. 6a

n.1) that the Third, Sixth, and District of Columbia

Circuits had also concluded that pay for Federal

employees was nonnegotiable and cited the contrary

decisions of the Eleventh and Second Circuits. Like-

wise, the Eleventh Circuit acknowledged the Third

Circuit’s contrary decision but agreed with the Sec-

ond Circuit’s decision. Fort Stewart Schools, supra,

860 F.2d at 401. In finding pay to be a nonnego-

tiable condition of employment, the Sixth Circuit

cited the decisions finding pay matters negotiable as

well as those finding the matters nonnegotiable. Fort

Knox Dependent Schools v. FLRA, 875 F.2d 1179,

1181-1183 (6th Cir. 1989). The D.C. Circuit noted,

in finding pay matters are not negotiable “conditions

of employment,” that it was fully aware of contrary

decisions on this issue by the Second and Eleventh

Circuits. Department of Defense Dependents Schools

v. FLRA, 863 F.2d 988, 991 n.3 (D.C. Cir. 1988)

reh’g en bane granted (Feb. 6, 1989). While each of

these cases involves a variety of different groups

of Federal employees, including the Nuclear Reg-

ulatory Commission employees in the instant case,

® Department of the Navy, Military Sealift Command v.

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

1% Fort Knox Dependent Schools v. FLRA, 875 F.2d 1179

(6th Cir. 1989).

11 Department of Defense Dependents Schools v. FLRA,

863 F.2d 988, 991 n.3 (D.C. Cir. 1988), reh’g en bane granted

(Feb. 6, 1989).

overseas dependents schools teachers, Department of

Defense Dependents Schools (DODDS) domestic

teachers and civilian mariners, the courts all dealt

with the overriding issue of the negotiability of pay

matters as a “condition of employment”.

This split in the circuits is on an issue of consid-

erable importance. Clearly the negotiability of pay

involves a matter of great significance to the em-

ployees involved. The split in circuit law on this

issue means that employees whose pay is not set by

statute will have different rights to bargain through

their exclusive representatives on pay matters than

will similarly situated employees in other parts of

the country. Moreover, and equally important, the

resolution of the question of what constitutes a “con-

dition of employment” under the Statute is of great

importance in determining the scope of public sector

bargaining under the Statute.” Review by this Court

It is unclear whether, as a result of the instant case,

there is a direct conflict among the circuits on the question of

whether compensation-related proposals conflict with man-

agement’s right to determine its budget under Section 7106

(a)(1). The absence of a majority of the participating

judges joining in the resoluiton of the budget issue in the

en bane court below means that the court of appeals’ en banc

ruling on the budget right issue is not the law of the circuit.

See, e.g., Hertz v. Woodman, 218 U.S. 205, 213-214 (1910)

(“but the principles of law involved not having been agreed

upon by a majority of the court sitting prevents the case

from becoming an authority for the determination of other

cases, either in this or in inferior courts”) ; NLRB v. J-Wood/

A Tappan Division, 720 F.2d 309, 319 n.1 (3d Cir. 1983)

(Gibbons, J., noting the absence of an opinion of the ten-

member court on an issue where the vote was 5-4, with one

judge concurring in the result but not the reasoning of the

five-judge opinion in NLRB v. ARA Services, Inc., 717 F.2d

is plainly warranted.”

Il. The court below erroneously decided the three ques-

tions in this case

A. The court below misconstrued the statutory

scheme and the Statute’s legislative history, thereby

erroneously concluding that the statutory term “con-

ditions of employment” does not include compensa-

57 (3d Cir. 1983) (en banc)); Beron v. Kramer-Trenton

Company, 402 F. Supp. 1268, 1277 (E.D. Pa. 1975) (“only

those holdings which muster majority approval may be ac-

corded precedential value”) ; People v. Jackson, 212 N.W. 2d

918, 921 (Mich. S. Ct. 1978) (in a decision with 7 judges

participating, “[s]ince neither opinion obtained four signa-

tures, neither is binding under the doctrine of stare decisis”

(emphasis in original)). However, a three judge panel of

the court below in another case recently adopted the plurality

ruling of the en bane court on the budget right issue in the

instant case. Charleston Naval Shipyard, Charleston, South

Carolina Vv. FLRA, No. 88-2131 (4th Cir. Sept. 14, 1989)

(slip op. at 5-7). As indicated at p. 24, infra, the Second and

Eleventh Circuits have adopted the Authority’s budget test

as applied in pay negotiability cases.

This Court’s granting of a certiorari petition in Fort

Stewart Schools v. FLRA, et al., No. 89-65 (S. Ct., cert.

granted, Oct. 2, 1989) which also involves the “conditions of

employment” and budget right issues presented in the instant

case, is not a reason to defer consideration of the instant peti-

tion. The instant case involves a third issue, concerning Sec-

tion 161(d) of the Atomic Energy Act (see pp. 27 to 29, infra)

which is not present in Fort Stewart Schools. Thus, disposi-

tion of Fort Stewart Schools will not fully dispose of the

instant case. Accordingly, the Authority respectfully submits

that its certiorari petition, along with that of NTEU in No.

89-198, be simultaneously considered in due course. In the

event the certiorari petitions in the instant case and No. 89-

198 are granted, consolidation of these cases wi.n Fort

Stewart Schools for oral argument before the Court may then

be appropriate.

tion (App. 6a-14a). The Statute defines “conditions

of employment” as “personnel policies, practices, and

matters, whether established by rule, regulation, or

otherwise, affecting working conditions * * * .” 5

U.S.C. 7103(a) (14). As the Eleventh Circuit stated

in Fort Stewart Schools, supra, 860 F.2d at 400,

this definition alone does not exclude compensation

and fringe benefits. Indeed, an employee’s compen-

sation is an integral part of the conditions on which

the employment relationship is based.

1. The court below based its determination that

pay was not a negotiable condition of employment

on the erroneous presumption that Congress had to

affirmatively denominate specific subjects of collec-

tive bargaining. The court of appeals stated (App.

7a) that there was no “evidence” in the statutory

text that Congress intended bargaining over com-

pensation when it is not set by statute. Such a read-

ing of the statutory language displays a fundamental

error in determining how Congress established the

scope of collective bargaining under the Statute. Con-

trary to the court’s view, the Statute does not spe-

cifically list all conditions of employment subject to

the bargaining obligation. Rather, the Statute estab-

lishes the broad, generic definition for conditions of

employment, referenced above, which on its face

clearly encompasses employee compensation matters.

Indeed, many indisputably negotiable matters, such

as employee health and safety measures, are not ex-

pressly referenced in the Statute as “conditions of

employment” either. Thus, the Statute’s omission of

an express reference to compensation as a “condi-

tion[] of employment” should have been of no sig-

nificance to the court of appeals. What is truly sig-

fa Maha ne Oe eet be As

nificant is that the Statute nowhere expressly pro-

hibits pay bargaining per se.”

The legislative history of the Statute further sup-

ports the Authority’s position over that of the lower

court. The court below incorrectly analyzed (App.

10a) congressional rejection of enumeration of spe-

cific bargaining subjects as a narrowing of the scope

of conditions of employment. In fact, the definition

of “conditions of employment” set out in Federal

sector labor bills preceding the Statute is the same

as the broad definition included in the Statute, except

for omission of the listing of specific items included

within that definition. Compare H.R. 9094, 95th

Cong., 1st Sess. § 7103(a) (16) (1977), reprinted in

Subcomm. on Postal Personnel and Modernization of

the House Comm. on Post Office and Civil Service,

96th Cong., 1st Sess., Legislative History of the Fed-

eral Service Labor-Management Relations Statute,

Title VII of the Civil Service Reform Act of 1978 at

244 (Comm. Print No. 96-7) (Legis. Hist.) and 5

U.S.C. 7103(a)(14). As the Eleventh and Second

Circuits and the panel below recognized, Congress’

omission of express references to specific bargainable

matters in no way indicates congressional intent to

‘* Of course, for those employees whose pay is “specifically

provided for” by law, the matter is outside the definition of

“conditions of employment” under Section 7103 (a) (14) (C)

of the Statute. Moreover, any pay proposal that is incon-

sistent with law, rule, or appropriate regulation is also non-

negotiable under Section 7117(a) of the Statute. Thus, con-

trary to the approach of the court below, the scope of bar-

gainable matters that would otherwise fit within the broad

definition of conditions of employment is narrowed through

other provisions of the Statute which focus on whether the

matter is specifically provided for by law or inconsistent with

law, rule or regulation or a relevant management right.

make proposals dealing with those matters non-

negotiable.

The court below erroneously relied (App. 11a-138a)

on comments in the Statute’s legislative history, to

the effect that Federal pay which is set by statute is

nonnegotiable, for its conclusion that Congress in-

tended pay matters per se to be outside the Statute’s

definition of conditions of employment.” Congress in

the text of the statute itself ultimately made pay

matters nonnegotiable for most Federal employees,

not by excluding pay as a condition of employment,

but rather by making matters that are “‘specifically

provided for by Federal statute” outside the scope

of bargainable subjects. 5 U.S.C. 7103(a) (14) (C).

The Eleventh Circuit correctly recognized that the

legislative comments regarding the negotiability of

pay “indicate that the legislators merely were assur-

ing their peers that the [Statute] would not supplant

specific laws which set wages and benefits.” Fort

Stewart Schools, supra, 860 F.2d at 402. Thus, in

contrast to the Authority, the court of appeals’ view

15 For example, the House Report on the bill reported out

of committee stated that “Federal pay will continue [under

the bill] 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. 95-1408, 95th Cong., 2d Sess. 12 (1978), Legis. Hist. at

682. This Report also stated, concerning negotiation on over-

time pay, that “rates of overtime pay are not bargainable,

because they are specifically provided for by statute.” H.R.

Rep. No. 95-1403, 95th Cong., 2d Sess. 44 (1978), Legis.

Hist. at 690. See also, 124 Cong. Rec. H8468 (daily ed. Aug.

11, 1978) (Cong. Ford), Legis. Hist. at 855-56 (“no matters

that are governed by statute (such as pay, money-related

fringe benefits, retirement and so forth) could be altered by

a negotiated agreement”).

of the Statute’s legislative history finds no manifesta-

tion in the Statwte’s language. Its erroneous con-

struction of that legislative history further under-

mines its holding.

2. The court below also erred in finding that labor

laws other than the Statute warrant a conclusion that

employee compensation is not a condition of employ-

ment under the Statute’s definition of that phrase.

For example, Section 704 of the Civil Service Reform

Act, Pub. L. No. 95-454, 92 Stat. at 1218 (1978),

reprinted in 5 U.S.C. 5348 note (1988), relied on by

the court of appeals (App. 9a-10a), expressly au-

thorizes pay bargaining for certain groups of Federal

blue-collar employees who historically bargained such

matters. However, this provision does not support

the view that pay must be expressly referenced in

Section 7103(a) (14) of the Statute to be negotiable.

The employees covered under Section 704 would, in

the absence of that Section, have their pay rates “spe-

cifically provided for” by the Prevailing Rate Sys-

tems Act of 1972, 5 U.S.C. 5841 et seg. Thus, Sec-

tion 704 is required to save these employees from

having their pay rendered nonnegotiable by opera-

tion of Section 7103(a) (14) (C) of the Statute. The

NRC employees in this case are not in that situation.

The court below also erred in relying on the lan-

guage of the National Labor Relations Act (NLRA),

29 U.S.C. 151 et seg. The NLRA permits bargaining

over “wages, hours, and other terms and conditions

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

As the Eleventh Circuit (860 F.2d at 400) and the

panel below (App. 40a n.7) correctly concluded, the

use of the connecting word “other” indicates that

Congress in the NLRA intended wages and hours to

be conditions of employment. As the Eleventh Cir-

cuit stated, Congress likely specified “wages” and

“hours” in the NLRA to illustrate the meaning of the

then-new term “conditions of employment.” Fort

Stewart Schools, supra, 860 F.2d at 400.

The lower court’s reliance on Justice Stewart’s

concurrence in Fibreboard Paper Products Cory. v.

NLRB, 379 U.S. 208, 222 (1964), for the pronssition

that “conditions of employment” under the NLRA

is the “various physical dimensions of [an employ-

ee’s] working environment” is clearly inapposite. As

discussed at pp. 18 to 19, swpra, the Statute expressly

includes personnel policies, practices, and matters af-

fecting working conditions as “conditions of employ-

ment,” and does not limit the term to the mere phys-

ical work environment. Indeed, even under the

NLRA conditions of employment have been held to

encompass matters involving employee compensation.

See Richfield Oil Corp. v. NLRB, 231 F.2d 717, 724

(D.C. Cir.), cert. denied, 351 U.S. 909 (1956) (stock

purchase plans) ; Inland Steel Co. v. NLRB, 170 F.2d

247, 253 (7th Cir. 1948), cert. denied on this issue,

336 U.S. 960 (1949) (pension and retirement

plans) ; Weyerhaeuser Timber Co., 87 N.L.R.B. 672

(1949) (price of meals at company facility).

3. Finally, the court below also failed to give full

consideration to Section 7135 of the Statute, 5 U.S.C.

7135. This Section provides that all prior rulings es-

tablished under previous Executive Orders remain in

full force and effect unless superseded by Congress

or subsequent Authority decisions. The Statute con-

tinued the principle established under Executive Or-

der 11491, as amended, that matters affecting work-

ing conditions are negotiable to the extent they are

not specifically provided for by statute, or are in-

consistent with applicable law, Government-wide rule

or agency regulation for which a compelling need

exists. The Authority’s predecessor, the Federal

Labor Relations Council (FLRC), which prior to

enactment of the Statute administered Executive

Order 11491, as amended, found that Federal em-

ployees whose wages and fringe benefits were not

established by law could bargain over those wages

and benefits. See Overseas Education Ass’n, Inc. and

Dep’t of Defense, Office of Dependents Schools, 6

F.L.R.C. 231, 232-34 (1978) (proposals prescribing

procedures and formulas to be used in determining

teacher compensation were within the bargaining ob-

ligation); United Fed’n of College Teachers, Local

1460 and U.S. Merchant Marine Academy, 1 F.L.R.C.

211, 212 (1972) (proposals concerning compensation

for college faculty were negotiable). The court be-

low failed to address the existence of these cases and

their continued validity under Section 7135, and

Congress’ presumed awareness from these cases that

such matters were negotiable under the prior Execu-

tive Order scheme.

B. The court of appeals also erred in rejecting the

Authority’s holding that the union’s proposal does

not interfere with the agency’s right to determine its

budget under Section 7106(a)(1) of the Statute.

The Authority’s long-established two part test for

determining whether a bargaining proposal inter-

feres with management’s budget right is whether

the proposal prescribes agency programs or specific

amounts of money to fund programs; or whether

agency management has shown that the proposal

causes a substantial increase in costs that are not

offset by compensating benefits (App. 54a-56a).

Thus, the Authority’s budget test guards against both

direct union efforts to participate in the agency’s

budget formulation process, and indirect efforts to

do so through proposals whose net or real costs are

so high as to compel agency budget decisions. The

Second and Eleventh Circuits have endorsed the Au-

thority’s budget test and its application in pay nego-

tiability cases. West Point Elementary School Teach-

ers Ass’n, supra, 855 F.2d at 943-944; Fort Stewart

Schools, supra, 860 F.2d at 405-406.

The court of appeals erroneously concluded (App.

16a-17a) that by establishing a formula which could

eventually be translated into a specific dollar amount

for employee pay increases, the proposal effectively

prescribes a specific dollar amount for an agency pro-

gram under the first prong of the Authority’s test.’

The court below also erred in holding that the union’s

pay proposal is nonnegotiable because it divests NRC

of its budget making authority; and that the Author-

ity improperly decides whether a proposal’s benefits

sufficiently offset its costs so as not to interfere with

an agency’s budget right (App. 17a-18a).

First, as the Fourth Circuit panel and the en banc

dissenters noted (App. 22a, 48a-44a), a bargaining

proposal that establishes a procedure for setting em-

ployee pay, which procedure may translate into a spe-

cific dollar amount for a pay increase, is not the same

as a proposal that prescribes a dollar amount to be

applied by an agency to a particular program. Many

16 In so holding, the court of appeals adopted over the Au-

thority’s objections an argument advanced by NRC for the

first time in en banc proceedings before the court of appeals.

Prior to that time NRC had not argued to the Authority or

the court below that the proposal was infirm as prescribing

a specific dollar amount to fund a particular agency program.

Indeed, NRC had previously conceded to a panel of the court

that the proposal did not run afoul of the first prong of the

Authority’s budget test (App. 44a).

proposals, like thhe instant one, can be converted into

a specific cost figure.'’ However, the nature of for-

mulating a budget is establishing specific dollar

amounts to be applied to particular programs.

Wright-Patterson, supra, 2 F.L.R.A. at 607-08. Pro-

posals which simply have cost ramifications cannot

be said to inject a union directly into the budget

formulation process protected from bargaining under

the first prong of the Authority’s budget test. If

this were the case, as the court of appeals pane! and

en bane dissenters noted (App. 22a, 45a), the scope

of bargaining under the Statute would be unduly re-

stricted because numerous proposals with initial cost

consequences would be nonnegotiable as violative of

the budget right."

17 For example, a proposal that employees be provided with

safety shoes could be converted into a specific dollar amount

by multiplying the number of employees times the cost of a

pair of safety shoes. Under the court of appeals’ holding,

because that proposal would “ultimately * * * dictate a specific

dollar amount to be allocated” in an agency program (App.

17a), the proposal would be nonnegotiable.

18 The Authority has recognized, in the second prong of its

budget test, that proposals which result in a substantial net

or real cost can indirectly compel agency budget decisions in

violation of the budget right. Wright-Patterson, supra, 2

F.L.R.A. at 608. In the instant case the agency made no

effort before the Authority or the court below to show that

compensating benefits of a pay increase do not reduce the

real cost of the proposal. Yet the Office of Personnel Manage-

ment (OPM) has itself recognized the relationship between

employee pay and turnover. OPM has recently stated that

the inflexibility of the General Schedule (which sets pay for

most white-collar Federal employees under 5 U.S.C. 5331,

et seq.) and the lower pay rates for many Federal job occu-

pations compared to private sector rates, have resulted in

“significant recruitment and retention problems in some oc-

Second, contrary to the reasoning of the court below

(App. 16a-18a), a bargaining proposal is not prop-

erly held to interfere with a management right sim-

ply because it devises a method or procedure for set-

ting a condition of employment which involves a third

party. Indeed, the collective bargaining process es-

tablished in the Statute contemplates that negotia-

tions may result in establishing employment condi-

tions different from what an employer agency may

have established in the absence of a bargaining obli-

gation. 5 U.S.C. 7103(a)(12) (“collective bargain-

ing” defined in relevant part as the mutual obligation

of employer agency and union to “bargain in a good

faith effort to reach agreement with respect to the

conditions of employment” of bargaining unit em-

ployees and commit that agreement to writing).

Thus, in the instant case the union’s proposal is no

more appropriately held nonnegotiable because the

ACFP-recommended pay increase would set employee

pay than if the proposal referenced only the percent-

age recommended by ACFP, without explicitly refer-

encing ACFP at all. In either case the proposal

would presumably compel the agency to take action

concerning employee pay it otherwise may not have

chosen to take in the absence of the bargaining obliga-

tion. This fact alone, however, is insufficient to sup-

port a holding of nonnegotiability, contrary to the

court of appeals’ conclusion.

cupations and some geographic areas.” Office of Personnel

Management, Federal White-Collar Pay System, Report on a

Market-Sensitive Study, at 4-5, 15 (1989). Thus, NRC’s

failure even to address the net cost of the proposal here at

issue, after cost savings from reduced turnover, reduced new

employee training costs, etc., are factored in, warrants the

Authority’s rejection of NRC’s budget right assertions under

the second prong of the Authority’s budget test.

Third, the court below erroneously ruled (App.

17a-18a) that it is not for the Authority to assess

whether a proposal’s compensating benefits suffi-

ciently offset its costs under the second prong of the

Authority’s budget test. Congress gave the Authority

the power to review and rule on agency assertions

that a management right bars bargaining on a par-

ticular proposal. 5 U.S.C. 7105(a)(2)(E), 7117

(c). Under the court of appeals’ view, the Authority

would simply “rubber stamp” agency employer con-

clusions about what the employer should negotiate.

This view is clearly untenable.

Moreover, the second prong of the Authority’s

budget test concerning offsetting benefits in no way

mandates how an agency should maximize competing

goals of an agency’s operations, as the court below

mistakenly ruled (App. 18a). The agency remains

free to engage in this analysis. The Authority’s

budget test, in its second prong, explicitly provides a

means for management to protect against concerns

such as balancing the need to attract new employees

against other priorities. However, the agency must

support its conclusions concerning increased costs by

demonstrating that the significant, unavoidable cost

of the proposal does not have the requisite compensat-

ing benefits. The test seeks to preserve management’s

right to make such determinations without unduly

constricting the scope of bargaining. The agency

here failed to provide any evidence other than a gen-

eralized statement of increased cost, and its claim

was therefore properly rejected by the Authority and

the court of appeals panel.

C. The court below also incorrectly ruled (App.

18a-2la) that the union’s proposal was inconsistent

with Section 161(d) of the Atomic Energy Act. In

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

Council, Inc., 467 U.S. 857, 842-43 (1984), this Court

held that if congressional intent is clear from the

face of a statute, the agency administering the statute

as well as the courts must effectuate that intent. As

the court of appeals panel and en bane dissenters cor-

rectly stated (App. 22a, 34a), Section 161(d) plainly

places no limits whatsoever on NRC’s discretion to

set pay rates after that agency has decided it is nec-

essary to exempt itself from coverage of Federal pay-

setting laws, as NRC did in 1975. The lower court

plurality therefore erroneously adopted NRC’s con-

trary view of Section 161(d), that a subsequent NRC

determination to vary from the pay rates set by Fed-

eral pay-setting laws, after removal from coverage

under those laws, must also be supported by an NRC

determination of necessity.

By its relevant terms, Section 161(d) requires

NRC to pay its employees in accordance with the pay-

setting General Schedule system covering most Fed-

eral employees, “except that, to the extent the Com-

mission deems such action necessary to the discharge

of its responsibilities, personnel may be employed and

their compensation fixed without regard to such

laws.” This language clearly addresses a single event,

i.e., exemption of NRC from the coverage of pay-

setting laws, which is governed by a statutory stand-

ard of necessity. This event occurred in 1975, when

pursuant to Section 161(d) NRC advised the Civil

Service Commission that in NRC’s view it was nec-

essary for NRC to remove itself from coverage of

those pay-setting laws. Thus, NRC’s decision that is

tethered to the statutory standard of necessity was

fully consummated in 1975. Any further NRC deci-

sions concerning employee pay, such as agreement to

the union’s proposal in this case, are simply unad-

dressed by Section 161(d).

NRC’s claim, accepted by the lower court plurality,

that the standard of necessity in Section 161(d) also

extends after exemption to NRC decisions to vary

from pay rates established under Federal pay-setting

laws, is “manifestly contrary” to the plain language

of Section 161(d) and should have been rejected by

the court below. Chevron, 467 U.S. at 843-45. Sec-

tion 161(d) focuses exclusively on NRC’s exemption

from pay-setting laws themselves, not the rates set

in those laws. Accordingly, as\the panel and en banc

dissenters correctly held (App. 22a, 34a), NRC’s de-

cision after exemption as tc whether to continue pay

rates established in pay-setting laws is purely one of

NRC’s unbridled discretion. Section 161(d) there-

fore interposes no obstacle to NRC’s bargaining on

the proposal here at issue, contrary to the lower

court’s holding.

CONCLUSION

The petition for a writ of certiorari should be

granted.”

Respectfully submitted.

WILLIAM E. PERSINA *

Acting Solicitor

JILL A. GRIFFIN

Attorney

OCTOBER 1989 * Counsel of Record

' The Acting Solicitor General authorizes the filing of this

petition.

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, CHAPMAN,

WILKINSON, and WILKINS, Circuit Judges, sitting en

banc.*

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

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

= Judge Winter did not participate in the decision in this

case.

(la)

Hembree, Office of the General Counsel, U.S. NU-

CLEAR REGULATORY COMMISSION; Dennis C.

Dambly, Deputy Assistant General Counsel for Ad-

ministration; Marvin L. Itzkowitz, Senior Counsel

for Labor and Personnel on brief) for Petitioner.

William Eugene Persina, Deputy Solicitor (Ruth E.

Peters, Solicitor; Jill A. Griffin, FEDERAL LABOR

RELATIONS AUTHORITY on brief) for Respond-

ent. Gregory O’Duden, Deputy Director of Litigation

(Lois G. Williams, Director of Litigation, NA-

TIONAL TREASURY EMPLOYEES UNION on

brief) for Intervenor.

WILKINSON, Circuit Judge:

The Nuclear Regulatory Commission (NRC) peti-

tions 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 Treas-

ury Employees Union. See National Treasury Em-

ployees Union & Nuclear Regulatory Comm’n, 29

cLRA (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 proposal and therefore grant the NRC’s peti-

tion 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

Nek ee Te ee

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 Depart-

ment of Health & Human Services v. FLRA, 844

F.2d 1087, 1089 (4th Cir. 1988). Rather, Congress

expressly recognized in Title VII “the special require-

ments and needs of the Government,” and sought to

balance these interests against the rights of em-

ployees to participate in labor organizations. See 5

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

therefore in important respects from those of the pri-

vate sector. See 124 Cong. Rec. 814,281 (daily ed.

Aug. 24, 1978) (remarks of Sen. Sasser), reprinted

in Subcommittee on Postal Personnel and Moderniza-

tion of the House Committee on Post Office and Civil

Service, 96th Cong., 1st Sess., Legislative History of

the Federal Service Labor-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 sub-

ject of private-sector collective bargaining, most

wages in the public sector are set by statute. Also,

unlike private-sector bargaining, many matters in the

public 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 bargain-

ing 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 “inconsistent with any Federal

law or any Government-wide rule or regulation,” 5

U.S.C. § 7117(a) (1), or which interfere with certain

prerogatives reserved by statute to agency manage-

ment. See 5 U.S.C. § 7106. Federal agencies 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 bar-

gaining, the public sector provides a mechanism that

can compel the adoption of a negotiable proposal. If

the parties fail to agree on a negotiable contract pro-

posal, Title VII provides for third-party resolution of

the dispute. See 5 U.S.C. §§ 7119(b), 7119(c) (5)

(B) & 7119(c)(5)(C). Title VII’s duty to bargain

over a contract proposal subjects the agency to the

possibility that the Federal Service Impasses Panel

will resolve the dispute by imposing a binding pro-

posal upon the agency. See 5 U.S.C. §§ 7119(b),

7119(c) (5) (B) & 7119(c¢) (5) (C).

The Nuclear Regulatory Commission administers

the Atomic Energy Act of 1954, see 42 U.S.C. §§ 2011

et seq., and is charged with overseeing the develop-

ment, utilization, 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 Employees Union is the ex-

clusive representative of a bargaining unit compris-

ing all professional, nonprofessional, and wage-

earning employees of the NRC, with the exception of

managers, supervisors, or “confidential employees” as

defined in 5 U.S.C. § 7103(a) (18).

In October of 1984, during the course of collective

bargaining, the union submitted a proposal to the

NRC which included a periodic cost-of-living adjust-

ment. The proposal provided in pertinent part that:

[t]he 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 to the statistical adjustment recom-

mended to the President by the [Advisory Com-

mittee on Federal Pay, see 5 U.S.C. § 5806].

This adjustment will become effective at the an-

nouncement of it by the [Committee] or other

appropriate sources. It will be unaffected by

Presidential or Congressional actions.

The NRC refused to bargain, finding the contract

proposal nonnegotiable. The agency objected, inter

alia, to the fact that the Advisory Committee’s rec-

ommendations would be “unaffected by Presidential

or Congressional actions,” 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 incon-

sistent 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 determina-

tion. The FLRA ordered the NRC to negotiate with

the union, finding the salary proposal within the

agency’s duty to bargain. National Treasury Em-

ployees Union & Nuclear Regulatory Comm’n, 29

FLRA (No. 19) 217 (September 29, 1987). Ac-

cording 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

determine its budget under 5 U.S.C. § 7106, and

was not “inconsistent” 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 en-

forced the FLRA’s bargaining order. Nuclear Reg-

ulatory Comm’n v. FLRA, 859 F.2d 302 (4th Cir.

1988). Review by the en banc court followed.

Il.

Title VII of the Civil Reform Act grants federal

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 authorize labor organizations and federal

agencies to negotiate over employee pay.’

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

(8d 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 De-

fense 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).

“Conditions of employment” are defined in Title

VII as those:

personnel policies, practices, and matters,

whether established by rule, regulation, or

otherwise, affecting working conditions, except

that such term does not include policies, prac-

tices, and matters—

A) relating to political activities prohibited

under subchapter III of chapter 738 of this

title;

(B) relating to the classification of any po-

sition; or

fically provided for by Federal statute. ...

5 U.S.C. § 7108(a) (14). As with any case of stat-

utory interpretation, “our analysis must begin with

the language 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 employee pay within the statutory defini-

tion of bargainable matters. There is no evidence in

the statutory text that Congress intended for federal

agencies and employee unions to negotiate over em-

ployee compensation where such compensation is not

set by statute. No statutory reference to compensa-

tion exists, nor is any language used that would sug-

gest compensation, such as “terms” of employment.

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

express exclusion of wages and fringe benefits” from

the definition of bargainable matters under the stat-

ute. This view stands the inquiry on its head and

presupposes that wages are a hargainable 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 ab-

sence of an affirmative congressional expression, we

refuse to expand the scope of bargaining by implica-

tion to include employee compensation. Such an im-

portant matter as bargaining over wages should not

be left to vague intimation or oblique reference.

No intent to permit general public-sector wage

bargaining is evident in the language, structure, or

legislative history of Title VII. As to language,

Title VII’s definition of “conditions of employment”

must be read against the background of other collec-

tive bargaining schemes such as the National Labor

Relations Act (NLRA). See 29 U.S.C. §§ 151 et seq.

Significantly, the scope of collective bargaining under

the NLRA extends to “wages, hours, and other terms

and conditions of 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), reprinted 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 27238, 2819

& 2828, and in Legislative History at 757 & 766, and

its use of the term “conditions of employment” rather

than the NLRA’s broader definition implies a “nar-

rower range of bargainable matters” under Title VII

than under the NLRA. Department of the Navy,

Military Sealift Command v. FLRA, 836 F.2d 1409,

1416 n.14 (8d 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,”

Fibreboard Paper Products Corp. v. NLRB, 379 U.S.

203, 222 (1964) (Stewart, J., concurring) ; a defini-

tion which does not include employee pay. Indeed,

we are unaware oi any other collective bargaining

statute which equates “conditions of employment”

with employee compensation. See, e.g., 20 U.S.C.

§902(a) (Overseas Pay Act) (distinguishing be-

tween “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. Sec-

tion 704 of the Act, for example, preserves the

collective bargaining rights of those “prevailing rate

employees” who negotiated 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. § 5348

note. See generally 5 U.S.C. §§ 5342 et seq. (Pre-

vailing Rate Act of 1972). Section 704(a) of the

provision refers to “terms and conditions of employ-

ment and other employment benefits”; subsection (b)

refers 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 express right to bargain col-

lectively 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 (Prevailing Rate

Act of 1972) referring to “wages, the terms and

conditions of employment, and other employment

benefits”) ; Pub. L. No. 91-875, § 10(a), 84 Stat. 719,

784 (1970), reprinted at 39 U.S.C. § 1201 note

(Postal Reorganization Act) (requiring the Post-

master General and labor organizations to bargain

over “wages, hours and working conditions’). Con-

gress’ distinction in § 704 between “pay and pay prac-

tices” and “terms and conditions of employment and

10a

other employment benefits” is thus an indication of

its intent that the statutory term “conditions of em-

ployment” does not include employee compensation.

See Sealift, 836 F.2d at 1420.

We agree with the Third Circuit that the Act’s

legislative history is also “replete” with indications

that Congress did not intend to subject employee

compensation to collective bargaining. Jd. at 1416.

As originally proposed in the House of Representa-

tives, the public sector labor relations program re-

quired federal agencies and employee organizations

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

with respect to the terms and conditions of employ-

ment.” H.R. 9094, 95th Cong., 1st Sess. (1977)

(emphasis added), reprinted in Legislative History

at 243. “Conditions of employment” expressly in-

cluded “pay practices.” Jd. at 244. During commit-

tee 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, however, the scope of the

bargaining obligation had been significantly nar-

rowed. 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), codified at 5 U.S.C. §$§ 7103(a)(12) & 7103

(a) (14). “Few principles of statutory interpretation

are more compelling than the propesition that Con-

gress does not intend sub silentio to enact statutory

language that it has earlier discarded in favor of

other language.” Immigration & Naturalization

Service v. Cardoza-Fonseca, 480 U.S. 421, 442-43

(1987) (citation omitted). We therefore refuse to

lla

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 report that the public sector labor relations pro-

gram “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 supple-

mental views to the House Report, several committee

members stated that “[t]hose of our colleagues who

are concerned that this bill will significantly 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 Legis-

lative History at 721. The authors of these supple-

mental views were expressing their disappointment

that the scope of bargaining was narrowly defined in

the committee 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 Committee 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 Legislative His-

tory at 750.

Furthermore, Representative Clay of Missouri, a

member of the Committee on Post Office and Civil

Service, assured his colleagues that there was “noth-

ing 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 Legislative History at

12a

853. See also 124 Cong. Kec. E4,510 (daily ed. Aug.

10, 1978) (remarks of Rep. Clay) the committee

markup bill contained “no provision for the negotia-

tion of pay and other money related fringe benefits’),

reprinted in Legislative History at 845; 124 Cong.

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

Rep. Clay (“employees still . . . cannot bargain over

pay”), reprinted in Legislative History at 839. Rep-

resentative 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 Legislative History at 935.

See also 124 Cong. Rec. H9,669 (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 benefits’), 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. Rec. $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

Congress 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 benefits and retirement... . All

these major regulations about wages and hours and

retirement and benefits will continue to be established

by law through Congressional action.” 124 Cong.

Rec. H9,633 (daily ed. Sept. 13, 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 Edu-

2 ES Se a Om

13a

cation v. Bell, 456 U.S. 512, 526-27 (1982), and il-

lustrate 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 Legislative History at 850. See generally

Sealift, 836 F.2d at 1417-19.

While the Authority contends that the legislative

history is “ambiguous,” we think it could not be more

clear. 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 Service Reform Act, Bureau of Alcohol, Tobacco

& Firearms v. FLRA, 464 U.S. 89, 97 (1983), but

we must determine whether the agency’s interpre-

tation of the statute comports with congressional

intent. See Chevron WSA, Inc. v. Natural Resources

Defense Council, Inc., 467 U.S. 837, 842-43 & n.9

(1984). See also 5 U.S.C. § 706 (“reviewing court

shall decide all relevant questions of law [and] inter-

pret constitutional and statutory provisions”). Con-

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

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

statutory 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 Com-

mission v. R. F. Keppel & Bros., Inc., 291 U.S. 304,

314 (1934). In this regard, it would be reckless for

a federal court to impute to Congress an unexpressed

intention to allow others to reorder the priorities and

l4a

limitations placed upon federal agencies by Congress

itself. Historically, Congress and the Chief Execu-

tive have borne primary responsibility for the federal

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

compensation that substitutes for the competitive

pressures constraining private-sector collective bar-

gaining.

We believe the FLRA has misconstrued Title VII

and undermined Congress’ intent by ordering the

NRC to bargain over employee wages and salaries.

Employee compensation is nonnegotiable in the ab-

sence of express congressional authorization to the

contrary.

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 nego-

tiate 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 management 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 persuasive al-

ternative grounds for denying enforcement of the

FLRA order.

Our concurring brother believes that it is unneces-

sary to reach these alternative grounds of decision.

We, however, 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 before this court.

15a

The undeniable aim of Congress to prescribe in

Title VII the rights of federal employees was not

meant to come at the expense of an “effective and

efficient Government.” 5 U.S.C. § 7101(b). Congress

therefore used broad and emphatic language in § 7106

in an attempt to strengthen the management power

of federal agencies. See Bureau of Alcohol, Tobacco

& Firearms, 464 U.S. at 92; National Treasury Em-

ployees 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 Legislative

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

collective bargaining process.” S. Rep. No. 95-969,

95th Cong., 2d Sess. 12-13, reprinted in 1978 U.S.

Code Cong. & Admin. News 27238, 2734, and in Leg-

islative History at 749-50. In addition to granting

federal employees “greater 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 management

“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

History at 923.

With certain exceptions not relevant here, an

agency therefore “may not bargain away” its au-

thority to make decisions in those areas specified in

§ 7106(a)(1), including its authority to determine

the agency’s budget. See H.R. Rep. No. 95-1403,

95th Cong., 2d Sess. 43 (1978), reprinted in Legis-

lative History at 689. Although Title VII imposes a

16a

broad duty to bargain, it also demarcates 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.” Na-

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

Congress expressly recognized the paramount impor-

tance 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. 158,

reprinted in 1978 U.S. Code Cong. & Admin. News

at 2887, and in Legislative History at 821. See also

124 Cong. Rec. $14,271 (daily ed. Aug. 24, 1978)

(remarks of Sen. Percy), reprinted in Legislative

History at 1012 (agency budgets are “specifically

excluded from the scope of bargaining”). The man-

agement rights clause provides that “nothing in this

chapter shall affect the authority of any management

official of any agency” to exercise certain manage-

ment prerogatives, including the authority to deter-

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

Because the union’s salary proposal would interfere

with this prerogative, it is perforce nonnegotiable.

Here, the FLRA contends that the union’s salary

proposal does not violate the management rights

clause because the proposal does not prescribe a spe-

cific dollar amount to be allocated in the NRC’s

budget. According to the FLRA, the union’s proposal

“merely establishes a formula for adjusting [em-

ployee] salaries” and is therefore within the NRC’s

duty to bargain. We reject this argument. Although

the union’s salary proposal does not prescribe a spe-

cific dollar amount, it does provide a formula which

ultimately will dictate a specific dollar amount to be

ake vette TE

17a

allocated in the NRC’s budget each time the Advisory

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 authority to the Advisory Committee

on Federal Pay. The union’s salary proposal would

thus clearly “affect” the NRC’s authority to deter-

mine 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 man-

datory 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(c) (5) (B) & 7119(c)(5)(C). As

such, the NRC would be obligated to adjust its em-

ployees’ wages and salaries each time the Advisory

Committee on Federal pay recommends a general

increase in federal salaries. Significantly, such sal-

ary adjustments would not be subject either to the

views of the agency or the actions of Congress be-

cause, 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

operations. Salaries, and benefits based upon those

salaries, constitute more than forty percent of the

NRC’s annual budget. The union’s proposal would

vest a third-party with absolute authority to deter-

mine salary increases and would require the NRC to

somehow absorb unfunded millions of dollars in sal-

ary adjustments. While the FLRA contends that the

18a

agency has failed to demonstrate that the anticipated

increase in costs is significant and not offset by com-

pensating 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 em-

ployee compensation against the agency’s other goals.

Congress did not vest this authority either in the

FLRA or the Advisory 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) (em-

phasis added). The union’s salary proposal would

divest the NRC of substantive decisionmaking au-

thority over its budget and is therefore nonnegotiable

pursuant to Title VII’s management rights clause.

Finally, Title VII of the Act further restricts an

agency’s duty to bargain by precluding negotiations

over contract proposals which are “inconsistent with

any Federal law or any Government-wide rule or reg-

ulation.” 5 U.S.C. § 7117(a) (i). Here, the union’s

salary proposal conflicts with § 161(d) of the Atomic

Energy Act (AEA); it is therefore nonnegotiable.

. In the performance of its functions, the NRC is

authorized by §161(d) of the AEA to:

appoint and fix the compensation of such offi-

cers and employees as may be necessary to

carry Jut the functions of the Commission.

Such officers and employees shall be appointed

in accordance with the civil-service laws and

19a

their compensation fixed in accordance with

[the Classification Act of 1949], except that,

to the extent the Commission deems such action

necessary to the discharge of its responsibii-

ties, personnel may be employed and their com-

pensation fixed without regard to such laws....

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

provision, 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 un-

limited discretion over the salaries and wages of

NRC employees. The FLRA found that requiring

the NRC to bargain over the union’s salary proposal

would not be inconsistent with § 161(d).

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

the NRC to bargain over wages or renders inapplica-

ble those sections of the Civil Service Reform Act

which define the scope of an agency’s bargaining ob-

ligation. At most, §161(d) is a limited grant of

authority to the NRC designed to attract individuals

| whose talents and expertise 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 de-

cision to opt out of the Classification Act scheme do

not provide the agency with unfettered discretion to

negotiate over employee compensation. The AEA

specifically limits the NRC’s discretion and the

agency may deviate from the general civil service

laws only “to the extent the Commission deems such

action necessary to the discharge of its responsibili-

ties.” 42 U.S.C. § 2201(d). The NRC has never made

the requisite determination that it is necessary to

depart significantly from general government pay

rates. To the contrary, the NRC’s present compensa-

eee a

20a

tion scheme closely parallels that found in the Classi-

fication Act. Nothing in the statute supports the

Authority’s conclusion that once the NRC decides

some deviation from the Classification Act is re-

quired, 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(c) (5) (B)

& 7119(c)(5)(C), the agency may be required to

compensate its employees at levels above which it

believes are necessary to the discharge of its duties.

The agency’s implementation of its statutory obliga-

tions would in fact be significantly restricted, for

the salary proposal would vest in the Advisory Com-

mittee on Federal Pay the agency’s right to deter-

mine whether wage costs are justified by correspond-

ing benefits. Thus, under the FLRA’s interpretation

of §161(d), what Congress intended as a provision

to grant the NRC marginally greater discretion

would actually leave the agency with less discre*ion

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 Department of the Treasury, Bureau of Engrav-

ing & Printing v. FLRA, 838 F.2d 1341, 1342, n.*

(D.C. Cir. 1988). We may engage in de novo review

of the FLRA’s interpretation 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

21a

depart from general government pay rates until it

determines that such a departure is necessary to the

discharge of its responsibilities. No such determina-

tion has been made here and the union’s salary

proposal is therefore nonnegotiable.

IV.

In sum, we hold that employee compensation is not

a “condition of employment” as defined by Congress

in 5 U.S.C. § 7103(a) (14). Moreover, the union’s

salary proposal is “inconsistent” with federal law, see

42 U.S.C. § 2201(d), interferes with the NRC’s au-

thority to determine its budget, and is therefore non-

negotiable. 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, Cir-uit Judge, concurring:

Judge Wilkinson has demonstrated persuasively in

Sections I and II of his opinion that absent an ex-

press congressional mandate to the contrary, matters

of employee compensation are not, and were never

intended to be, negotiable under the Civil Service

Reform Act. Accordingly, 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 pro-

22a

posal 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 determination 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 opinio:u, 859 F.2d 302, and in the decisions in

accord of the Second Circuit in West Point Elemen-

tary School 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 dissent and would enforce the

FLRA’s bargaining order.

Chief Judge Ervin, Judge Murnaghan and Judge

Sprouse have asked to be shown as joining in this

dissent.

23a

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

On Petition for Review and Cross-Application

for Enforcement of an Order of the

Federal Labor Relations Authority

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, Wash-

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

24a

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

Persina, Deputy Sol., Federal Labor Relations Au-

thority, Washington, 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 intervenor.

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 bar-

gaining order of the Federal Labor Relations Author-

ity (FLRA). The FLRA has cross-petitioned for en-

forcement of its order and the National Treasury

Employee’s Union (NTEU) has been permitted to

intervene. We have jurisdiction over the NRC’s peti-

tion for review and the FLRA’s cross-petition for en-

forcement under § 7123 of the Federal Service Labor-

Management Relations Statute, Title VII 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 bargain

in good faith over a salary proposal advanced by the

NTEU during collective bargaining. We agree. Ac-

cordingly, 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

nonmanagerial, nonsupervisory, and nonconfidential

professional, nonprofessional and wage-grade employ-

25a

ees of the NRC. In October 1984, during collective

bargaining, the NTEU presented the following pro-

posal 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 will

have their current salaries adjusted for the cost

of living/comparability factor. The adjustment

will be equal to the statistical adjustment recom-

mended to the President by the Pay Advisory

Council.’

This adjustment will become effective at the be-

ginning of the first pay period following the an-

nouncement of it by the Council or other appro-

priate sources. It will be unaffected by Presiden-

tial or Congressional actions.

Section 52.2

NTEU agrees to establish with the employer a

productivity committee that will monitor the

impact of the new salary adjustment system and

seek reasonable ways to increase the productivity

of the employer, e.g., decrease employee turn-

over, remove work obstacles, improve upon avail-

able machines and procedures, and raise em-

ployee morale.

The NRC refused to bargain and served the NTEU

with a written allegation of non-negotiability, see 5

U.S.C. § 7117(c), on October 5, 1985. The NTEU,

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

Advisory Council” the proposal is referring to the Advisory

Committee on Federal Pay, functioning pursuant to 5 U.S.C.

§ 5306.

26a

however, did not until February 25, 1986, formally

request a written allegation of nonnegotiability re-

garding the proposal which the NRC then again pro-

vided the NTEU on March 6, 1986. On March 20,

1986, the NTEU filed a petition for review of the

NRC’s nonnegotiability determination, pursuant 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 review was untimely under 5 U.S.C.

§ 7117(c) because that provision required the peti-

tion for review to be filed within 15 days of the

NRC’s original written allegation of nonnegotiability.

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

proposal 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, pro-

vides that the NRC’s employees’ compensation is to

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 neces-

sary to the discharge of its responsibilities, per-

sonnel may be employed and their compensation

fixed without regard to such laws.

Id. Alternatively, the NRC contended that Congress

never intended federal employees wages to be ne-

gotiable “conditions 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 ab-

sence of such a statute with regard to the NRC’s em-

27a

ployees, it was argued, rendered their salaries non-

negotiable under the general rule. Finally, the NRC

contended that the NTEU’s proposal conflicted with

the NRC’s “management right” to determine its bud-

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

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

erly the subject of collective bargaining.

The FLRA found that the NTEU’s petition for re-

view was timely, rejected each of the NRC’s sub-

stantive objections to the proposal’s negotiability, and

ordered that the NRC bargain over the NTEU’s pro-

posal. This petition and cross-petition for review fol-

lowed.

As a preliminary matter, it is necessary to address

the NRC’s reiterated assertion that the NTEU’s pe-

tition for review before the FLRA was untimely.

Section 7117(c) of the CSRA, 5 U.S.C. § 7117(c) (1)

and (2) provides:

(c)(1) Except in any case to which subsec-

tion (b) of this section applies, if an agency in-

volved in collective 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 allega-

tion to the Authority in accordance 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

28a

(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 reg-

ulation, 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

allegation that the duty to bargain in good faith

does not extend to the matter proposed to be bar-

gained 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 re-

quested by an exclusive representative under this

subpart without a prior written allegation by

the agency if the agency has not served such al-

legation upon the exclusive representative within

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

any agency bargaining representative at the ne-

gotiations of a written request for such allega-

tion.

5 C.F.R. § 2424.3 (1980). The FLRA has inter-

preted both § 7117(c) and § 24243 as providing that

only an allegation of nonnegotiability tendered in re-

sponse to a written request for such allegation starts

the clock running on the fifteen day period for filing

a petition for review with the FLRA. The NRC ar-

gues that this interpretation directly conflicts with

§ 7117(c) and should therefore be overturned. We

disagree.

Rewate: ents 2 ee <a eee =

29a

It is by now well established that the FLRA is

“entitled to considerable deference when it exercises

its ‘special function of applying the general pro-

visions of the [Civil Service Reform] Act to the com-

plexities’ of federal labor relations.” Bureau of Al-

cohol, Tobacco & Firearms v. FLRA, 464 U.S. 89,

97, 104 S.Ct. 489, 444, 78 L.Ed.2d 195 (1983)

(BATF) (quoting NLRB v. Erie Resistor Corp., 373

U.S. 221, 236, 83 S.Ct. 1189, 1150, 10 L.Ed.2d 308

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

viewing courts should uphold reasonable and defens-

ible constructions of an agency’s enabling act...

they must not ‘rubber stamp . . . administrative deci-

sions that they deem inconsistent with a statutory

mandate or that frustrate the congressional policy

underlying a statute.’” 464 U.S. at 97, 104 S.Ct. at

444 (citations omitted). Nevertheless, this court

must sustain the FLRA’s order unless it is “arbi-

trary, 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 with-

in fifteen days after the “allegation” is made, an ap-

peal may be instituted. The FLRA’s implementing

regulation, § 2424.3, and case interpretation of the

statute, see American Fed’n of Gov’t Employees,

30a

AFL-CIO, Local 3385 and Fed. Home Loan Bank

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

tion 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 collective bargaining might force a

union to institute review proceedings in order to pre-

serve its right to review. The FLRA persuasively

argues that this would be inconsistent with the stat-

ute’s policy of facilitating collective bargaining. An

exclusive representative would repeatedly be forced

to institute review proceedings prior to determining

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 inter-

pretation of § 7117(c). See Chevron, U.S.A., Inc. v.

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

837, 844, 104 S.Ct. 2778, 2782, 81 L.Ed.2d 694

(1984) (Chevron).

IIT

Turning now to the merits of the NRC’s petition

for review, we address in order, the NRC’s conten-

tions 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 negotiate; and as an infringement on

the NRC’s right to determine its budget.

Ts SOTA ie CS.

3la

Section 7102 of the CSRA gives federal employees

the right to unionize and engage in collective bar-

gaining with respect to “conditions of employment.”

5 U.S.C. § 7102. Both federal agencies and labor

organizations are required, under the CSRA, to bar-

gain in good faith over the “conditions of employ-

ment” 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

proposals 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

provides:

2 Section 7117, in relevant part, provides:

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

the duty to bergain in good faith shall, to the extent not

inconsistent with any Federal law or any Government-

wide rule or regulation, extend to matters which are the

subject of any rule or regulation only if the rule or regu-

lation is not a Government-wide rule or regulation.

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

exter 5 not inconsistent with Federal law or any Govern-

ment-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 Au-

thority has determined under subsection (b) of this sec-

tion that no compelling need (as determined under regu-

lations prescribed by the Authority) exists for the rule

or regulation.

5 U.S.C. § 7117 (a) (1) and (2).

82a

In the performance of its functions the Com-

mission is authorized to—

d. appoint and fix the compensation of such

officers and employees as may be necessary to

carry out the functions of the Commission. Such

officers and employees shall be appointed in ac-

cordance 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 respon-

sibilities, personnel may be employed and their

compensation fixed without regard to such

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

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 Clas-

sification 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 ap-

peal because the proposal is to be construed as limited con-

sistent with the ‘tatutory constraints.

33a

its election, pursuant to § 161(d), to continue the

AEC’s practice of exempting all positions within the

agency from the requirements of the civil service

laws and the Classification Act. However, the NRC

argues that “by generally exempting its positions

from the Classification Act of 1949, as amended, the

[NRC] did not make the finding required by sec-

tion 161(d) to enable it to deviate from the general

civil service pay schedules.” In other words, the

NRC interprets § 161(d) as providing that “no dis-

cretion to depart from General Schedule pay rates is

allowed until the Comission makes a finding that

the departure is necessary to the discharge of its re-

sponsibilities and then such departure can only be to

the extent necessary to discharge its responsibilities.”

Considering its discretion over its employees’ salaries

to be so limited by Congressional directive, the NRC

argues that the duty to bargain over the NTEU’s

salary proposal would be inconsistent 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 dis-

cretion congressionally circumscribed actually places

no specific limit on the NRC’s discretion to bargain

over the NTEU’s proposal. 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 bar-

gzin in good faith over the NTEU’s salary proposal.

In short, the FLRA interprets § 161(d) as only plac-

ing limits on the NRC’s discretion to exempt its po-

sitions 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 he left

iain anaicieiamnaaes

34a

with unbridled discretion over its employees’ wages

and salaries.*

Although, in resolving this conflict over the proper

interpretation of § 161(d), we are mindful that con-

siderable deference is due the construction which the

NRC has placed on its enabling act, the Atomic En-

ergy Act, see 42 U.S.C. § 2201, we find the NRC’s

interpretation to be an unresonable construction of

§ 161(d) and flatly contrary to that section’s plain

language. The FLRA’s interpretation 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 enabl-

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

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

1129, 1135 (4th Cir. 1987) (holding that FLRA in-

terpretations of statutes other than CSRA are en-

titled to deference where “interpretation bears di-

rectly on the ‘complexities’ of federal labor rela-

tions”), is in accord with the plain language of

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

authority to exempt its positions from the civil serv-

ice laws and the Classification Act ‘“‘to the extent

necessary to the discharge of its responsibilities.”

This clause cannot be read to limit the NRC’s dis-

cretion over its employees’ pay once the decision to

exempt has been effectuated. The NRC offers no

legislative history, and we know of none, to the con-

trary. As the final arbiter of issues of statutory con-

struction, FTC v. Colgate-Palmolive Co., 380 U.S.

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.

35a

374, 385, 85 S. Ct. 1035, 1048, 13 L.Ed.2d 904

(1965), we cannot give effect to an agency’s inter-

pretation 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

inconsistent 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 proposals relating to the pay of civilian

mariners were nonnegotiable 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 proposals

would be inconsistent with the congressional direc-

tive that the Navy assess and resolve competing pub-

lic interest concerns prior to adjusting the mariners’

| pay. 836 F.2d at 1415-17. The FLRA correctly con-

) tends that the Third Circuit’s resolution of the statu-

tory conflict in Sealift has no bearing on the present

appeal. Not only are the NRC’s employees not gov-

erned by the Prevailing Rate Act, but the language

of § 161(d), as we have already held, places no 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

ee ae

5The D.C. Circuit’s recent decision, adopting the Third

Circuit’s reasoning in Sealift, is similarly distinguishable.

: See Department of the Treasury, Bureau of Engraving and

: Printing v. FLRA, 838 F.2d 1341, 1842-43 (D.C. Cir. 1988).

- TARR A ice to aan

Fi iataiaeinta tie eel

36a

its duty to bargain in good faith over the NTEFU’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 alter-

native ground for finding the FLRA’s bargaining

order unenforceable as “arbitrary, capricious, an

abuse of discretion, or otherwise not in accordance

with law.”” Administrative Procedure Act, 5 U.S.C.

§ 706(2)(A) (1982) (stating standard of review of

FLRA order). The Sealift court, having already

sufficiently concluded that bargaining over the rele-

vant pay related proposal was inconsistent 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 fed-

eral employees are nonnegotiable. See 836 F.2d at

1419. With respect, we disagree.

Again, § 7102 of the CSRA obligates the NRC to

bargain with the NTEU with respect to “conditions

of employment,” 5 U.S.C. § 7102, that are not ex-

empted 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, affecting working conditions, ex-

cept 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

37a

cally 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 benests

which are not specifically provided for by Fed-

eral Statute, and any other conditions of em-

ployment 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 legisla-

tive history does not compel a different conclu-

sion.°

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 discretion in the NRC over its

employees’ salaries to mandate bargaining.

°’ 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. 489, 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 conflict with an agency

rule or regulation. See Eglin, 24 F.L.R.A. at 381.

38a

We consider the FLRA’s interpretation of the

CSRA and its legislative history to be a wholly “rea-

sonable accommodation of conflicting policies that

were committed to its care by the [CSRA].” Shanty

Town Assoc. Ltd. v. EPA, 848 F.2d 782, 790 (4th

Cir. 1988). “[W]le 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.” Id. (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 com-

plexities’ of federal labor relations.” United States

Dept. of Health and Human Services v. FLRA, 823

F.2d 1129, 1135 (4th Cir. 1987) (quoting BATF, 464

U.S. at 97, 104 S.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 employees” provided that the employees’

pay is not specifically provided for by statute and the

proposal is not otherwise exempt from negotiation

under § 7117. United States Dept. of Defense De-

pendent 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) (Mur-

naghan, 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, ad-

dress this issue anew. Although the panel opinion

in Fort Bragg is not binding on us, we find the rea-

39a

soning expressed therein persuasive. See Fort

Bragg, slip op. at 13-15 (Murnaghan, J., dissenting

on other grounds).

As the FLRA held in the present case, and as

was noted in Fort Bragg, id., the argument that Con-

gress did not intend federal employee wages to be

negotiable as conditions of employment is based on

a few isolated and ambiguous 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. 18, 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, in-

surance, and leave, will continue to be set by Con-

gress.” 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 ulti-

mately enacted into law:

Section 7103(a)(14)(D), removing from sub-

jects of bargaining those matters specifically

provided for by Federal statute, was adopted by

the committee and retained in the Udall substi-

tute with the clear understanding that only mat-

ters “specifically” provided for by statute would

be excluded under this subsection. Thus, where

a statute merely vests authority over a particu-

40a

lar subject with an agency official with the offi-

cial given discretion in exercising that authority,

the particular subject is not excluded by this

subsection from the duty to bargain over condi-

tions 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 matter of negotiability of federal employee pay-

related proposals. Faced with the ambiguous re-

marks 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 reason-

ably 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 conditions,”

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

not otherwise exempted from negotiation under sec-

tions 7103 and 7117.’ “An ambiguous legislative his-

™The NRC argues that the use of the single phrase “condi-

tions 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

es 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 in-

terpretation of the omission, see 836 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

considers wages, among other things, to be conditions of

employment.

4la

tory . .. will not suffice to displace the FLRA’s rea-

sonable construction of the Act’s language.” Ameri-

can 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 therefore affirm the FLRA’s conclu-

sion that the NRC, vested as it is under § 161(d)

with discretion over its employees’ wages, has a gen-

eral duty to bargain over pay-related proposals.

The NRC finally argues that the NTEU’s proposal

interferes 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:

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

nothing 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 negoti-

ating—

(2) procedures which management offi-

cials of the agency will observe in exercising

any authority 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 demon-

strate that a given proposal “attempt(s) to prescribe

the particular programs or operations the agency

cetera

422

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 attempt, the agency must

“make[] a substantial demonstration that an increase

in costs is significant and unavoidable and is not off-

set by compensating benefits.” American 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 reasonableness of the FLRA’s interpretation of § 7106:

There is no question but that Congress intended that

any proposal which would directly infringe on the exer-

cise 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 appropriate 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

basea on detailed estimates of planned or expected ex-

penditures 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 proposel 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

programs 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

43a

In the present case, the FLRA ruled that the

NTEU’s proposal did not attempt to prescribe a spe-

cific 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 al-

locate in its budget. In other words, as the FLRA

has elsewhere stated, the proposal “establishes a per-

centage 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.

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 ai: agency’s budget, nevertheless is alleged

to violate the agency’s right to determine its budget be-

cause of increased cost, consideration must be given to

all the factors involved. That is, rather than basing a

determination as to the negotiability of the proposal on

increased cost alone, that one factor must be weighed

against such factors as the potential for improved em-

ployee performance, increased productivity, reduced turn-

over, fewer grievances, and the like. Only where an

agency makes a substantial demonstration that an in-

crease in costs is significant and unavoidable and is not

offset by compensating benefits can an otherwise nego-

tiable proposal be found to violate the agency’s right to

determine its budget under section 7106(a) of the

Statute.

Id. (citations omitted).

44a

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 al-

lows a third party, the Advisory Committee on Fed-

eral Pay, the authority to determine the salary com-

ponent of the NRC’s budget. This argument does not

address the FLRA’s conclusion that the proposal

merely sets a procedure for adjusting 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 first aspect of the

Wright-Patterson test to the NTEU’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 un-

der 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 significant, unavoidable increase in

costs which is not outweighed by compensating bene-

fits.” The FLRA rejected the NRC’s contention that

the annual cost of living adjustment recommended by

the Advisory Committee on Federal Pay,’ if adopted,”

would have a substantial unavoidable impact on the

® The parties represent that this increase has 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, in-

cluding 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.

45a

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 cost increase

that might flow from the NTEU’s proposal did not

interfere with the NRC’s § 7106 budget determina-

tion 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 col-

lective 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 provision of the CSRA would

likely render the vast majority of proposals non-

negotiable. Congress intended, however, that § 7106

“he read to favor collective bargaining whenever

there is doubt as to the negotiability of a subject or

a proposal.’” American Fed’n of Gov’t Employees,

Local 225, 1504, and 3723, AFL-CIO v. FLRA, 712

F.2d 640, 649 n.86 (D.C. Cir. 1983) (quoting H.R.

Rep. No. 95-1408, 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

11 Even were a twenty percent increase recommended in

a given year, the worst scenario presented by the NRC in its

petition for review, the NRC admits this would amount at

most to approximately 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

requirement from Wright-’ vtterson is arbitrary and capri-

46a

showing, the FLRA properly found § 7106 to present

no bar to the NTEU’s proposal’s negotiability.

— IV

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] signifi-

cantly strengthened the position of public em-

ployee unions while carefully preserving the abil-

ity of federal managers to maintain “an effective

and efficient government,” § 7101(b).

BATF, 464 U.S. 89, 92, 104 S.Ct. 439, 441 (1983)

(footnote omitted). The CSRA created the FLRA

and directed that it “ ‘provide leadership in estab-

lishing policies and guidance relating to matters’

arising under the Act.” Jd. 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. Accordingly, we deny

the petition for review, affirm the decision of the

FLRA, and grant enforcement of the FLRA’s bar-

gaining order.

SO ORDERED.

cious. 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).

wt eat sane Ae ll tat

47a

APPENDIX C

UNITED STATES COURT OF APPEALS

FOR THE FOURTH CIRCUIT

No. 87-3182

NUCLEAR REGULATORY COMMISSION, PETITIONER

¥e

FEDERAL LABOR RELATIONS AUTHORITY, RESPONDENT

NATIONAL TREASURY EMPLOYEES UNION, INTERVENOR

On Petition for Rehearing and Suggestion

for Rehearing In Banc

The petitioner’s petition for rehearing and sugges-

tion for rehearing in banc was submitted to the

Court. A majority of judges having voted in a re-

quested poll of the Court to grant rehearing in banc,

IT IS ORDERED that rehearing in banc is

granted.

IT IS FURTHER ORDERED that this case shall

be calendared for argument at the April Term of

Court. Within ten days of the date of this order 4

additional copies of appellant’s briefs, 3 additional

copies of appellee’s brief, and 4 additional copies of

intervenor’s brief shall be filed. Petitioner will file 9

additional copies of the joint appendix.

For the Court

JOHN M. GREACEN

Clerk

48a

APPENDIX D

29 FLRA No. 19

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 ne-

gotiability 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 bar-

gain 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

1 Chairman Calhoun’s dissent follows this opinion.

49a

be maintained. Hereafter, all employees will

have their current salaries adjusted for the cost

of living/comparability factor. The adjustment

will be equal to the statistical adjustment recom-

mended to the President by the Pay Advisory

Council. This adjustment will become effective

at the beginning of the first pay period follow-

ing 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 wi ith the employer a

productivity committee that will monitor the im-

pact of the new salary adjustment system and

seek reasonable ways to increase the productivity

of the employer, e.g., decrease employee turn-

over, remove work obstacles, improve upon avail-

able machines and procedures, and raise em-

ployee 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 non-negotiability. The Agency disagrees

with the position taken by the Authority in American

Federation of Government Employees, AFL-CIO, Lo-

cal 3477 and Commodity Futures Trading Commis-

2 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.

50a

sion, 21 FLRA No. 18 (1986) and American Federa-

tion of Government Employees, AFL-CIO, Local 3385

and Federal Home Loan Bank Board, District 7, Chi-

cago, Illinois, 7 FLRA 398 (1981), that an unsoli-

cited allegation of nonnegotiability does not serve to

start the time period running for the filing of a peti-

tion for review under section 7117. The Agency

urges reconsideration of this policy.

As to the merits, the Agency claims that the pro-

posal is inconsistent with section 161(d) of the

Atomic Energy Act of 1954, as amended, 42 U.S.C.

§ 2201, as well as management’s right to determine

its budget under section 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 outside 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 Au-

thority precedent, the Agency’s unsolicited allegations

of nonnegotiability 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 limita-

tions 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 inconsistent with management’s

right to determine its budget.

5la

IV. Analysis and Conclusion

The Agency has not advanced any persuasive rea-

sons to warrant reconsideration of long-standing Au-

thority policy that an unsolicited allegation of non-

negotiability 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 re-

view 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 pro-

posal is either inconsistent with the cited provision

of the Atomic Energy Act or section 7106(a) (1) of

the Statute.

A. Alleged inconsistency with law

First, we will address the arguments made in con-

nection 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

functions the Commission is authorized to—

* * * ™ 7

d. appoint and fix the compensation of such of-

ficers and employees as may be necessary to

carry out the functions of the Commission. Such

officers and employees shall be appointed in ac-

cordance with the civil-service laws and t’ ir

compensation fixed in accordance with the wias-

sification 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 compensa-

tion fixed without regard to such laws: Pro-

52a

vided, however, That no officer or employee (ex-

cept such officers and employees whose compen-

sation 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 Classifi-

cation 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, shall be paid a salary at a rate

in excess of the rate payable under such Act for

positions of equivalent difficulty or responsibil-

ity. 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 prac-

tice of its predecessor, the Atomic Energy Commis-

sion, in exempting all positions within the Agency

from coverage under civil service laws and the Clas-

sification Act of 1949, as amended. The Agency has

adopted a pay system which in many respects paral-

lels general schedule pay rates. The Agency further

states that there are three restrictions placed on its

pay setting authority that would preclude negotia-

tions 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 re-

sponsibilities.” The Agency argues that since the au-

thority to make this determination rests with the

Agency, it is not subject to negotiation.

53a

The Authority has consistently held that where an

agency has discretion over a matter affecting condi-

tions of employment, the agency is obliged under the

Statute to exercise that discretion by means of bar-

gaining, unless the discretion is specifically limited

by law or regulation. National Treasury Employees

Jnion, Chapter 6 and Internal Revenue Service, New

Orleans District, 3 FLRA 748, 759-60 (1980). We

recently have stated with regard to proposals con-

cerning employee compensation that nothing in the

Statute or its legislative history bars negotiations

over such proposals where (1) the matters 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,

Government-wide rule or regulation or an agency

regulation for which a compelling need exists. Amer-

ican Federation of Government Employees, AFL-CIO,

Local 1897 and Department of the Air Force, Eglin

Air Force Base, Florida, 24 FLRA No. 41 (1986).°

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 “necessary to the discharge of its responsibilities”

as placing a specific limitation on the Agency’s dis-

cretion to bargain in this matter. In fact, the Agency

has already indicated that it exempted positions from

coverage under the Classification Act. Since the

Agency has not identified any other specific limita-

tion on its discretion, we find that the Agency’s argu-

ment cannot be sustained.

3’ Eglin was initially appealed to the U.S. Court of Appeals

for the Eleventh Circuit. Subsequently, the appeal was with-

drawn; however, appeals of other cases which rely on Eglin

are still pending before various courts.

54a

The Agency has cited two other restrictions in the

Atomic Energy Act which allegedly serve to bar ne-

gotiations on the Union’s proposal. The Agency

claims that there is a pay limitation applicable to

scientific and technical 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 in-

crease 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 limi-

tations and its argument concerning the amount of

the increase itself are merely speculative. The Union

concedes, however, that the proposal “must be inter-

preted consistent with law and that law does limit

pay in certain ways.” Union Reply Brief at 7. Ac-

cordingly, 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 inter-

fere with management’s right to determine its budget

under 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. Department of Defense v. FLRA,

55a

659 F.2d 1140 (D.C. Cir. 1981), cert. denied sub

nom. AFGE v. FLRA, 455 U.S. 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 concerns

employee salaries, an already existing item in the

Agency’s budget, and merely establishes a formula

for adjusting such salaries. See also the decision and

order on remand in National Treasury Employees

Union, Chapter 207 and Federal Deposit Insurance

Corporation, Washington, D.C., 28 FLRA No. 80

(1987), in which a »najority 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

substantial demonstration that implementation of the

proposal will result in a significant, unavoidable in-

crease in costs which is not outweighted by compen-

sating benefits. The Agency argues that in determin-

ing the costs of the proposal, the percentage pay in-

crease recommended by the President’s Pay Agent

rather than the Advisory Committee on Federal Pay

(two entities established by the Federal Pay Com-

parability 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 following ac-

tions: (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

56a

a 5 percent pay increase, the figure that more closely

approximates the recommendation made by the Ad-

visory Committee on Federal Pay, the proposal would

have a substantial, unavoidable impact on the Agen-

cy’s ability to determine its budget.

We must reject the Agency’s arguments with re-

spect 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 Commit-

tee on Federal Pay, traditionally a much lower figure,

rather than the 20 percent figure recommended by

the President’s Pay Agent. The Agency’s sole argu-

ment with respect to the effect of the lower figure,

that is, the Advisory Committee recommendation, is

that adopting such an increase would have a substan-

tial, unavoidable impact on the ability to determine

its budget and result in a certain dollar cost. Such

an argument does not satisfy the requirement of a

substantial showing that the proposal would result in

substantial and unavoidable cost increases that are

not offset by compensating benefits. See Fort Stewart

(Georgia) Association of Educators und Fort Stewart

Schools, 28 FLRA No. 67 (1987).

Additionally, as we noted in Fort Stewart, and

previously in Fort Bragg Unit of North Carolina

Association of Educators, Nationai Education Asso-

ciation and Fort Bragg Dependents Schools, Fort

Bragg, North Carolina, 12 FLRA 519 (1983), where

a cost concern prevents parties from reaching agree-

ment during the collective bargaining process, such

concerns may be presented to the Federal Service

Impasses Panel in a proceeding brought under section

7119 of the Statute to resolve a negotiation impasse.

57a

V. Order

The Agency must upon request, or as otherwise

agreed to by the parties, negotiate over the proposal.*

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

‘In finding the proposal negotiable we make no judgment

as to its merits.

58a

Separate Opinion of Chairman Calhoun

I agree with my colleagues that the issues in this

case are essentially the same as those in American

Federation of Government Employees, AFL-CIO, Lo-

cal 1897 and Department of the Air Force, Eglin Air

Force Base, Florida, 24 FLRA No. 41 (1986); and

National Treasury Employees Union, Chapter 207

and Federal Deposit Insurance Corporation, Wash-

ington, D.C., 28 FLRA No 80 (1987). In my sepa-

rate opinions in those cases, I stated that in the ab-

sence of a clear expression of congressional intent to

the contrary, I find that wages and monetary fringe

benefits of Federal employes 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

= —_— —_ - ain -_—

oY = ee ee eee

a eee eee SES ee

59a

APPENDIX E

RELEVANT PORTIONS OF THE FEDERAL

SERVICE LABOR-MANAGEMENT RELATIONS

| STATUTE AS AMENDED, 5 U.S.C. §§ 7101-7135

| (1988); AND §161(d) OF THE ATOMIC EN-

| ERGY ACT OF 1954, AS AMENDED, 42 U.S.C.

| § 2201(d) (1982)

2 alte

§ 7103. Definitions; application

(a) For the purpose of this chapter—

(1) “person” means an individual, labor or-

ganization, or agency;

(2) “employee” means an individual—

(A) employed in an agency; or

(B) whose employment in an agency has

ceased because of any unfair labor practice

under section 7116 of this title and who has

not obtained any other regular and substan-

tially equivalent employment, as determined

under regulations prescribed by the Federal

Labor Relations Authority;

but does not include—

(i) an alien or noncitizen of the United States

who occupies a position outside the United

States;

(ii) a member of the uniformed services;

(iii) a supervisor or a management official;

(iv) an officer or employee in the Foreign

Service of the United States employed in the

| Department of State, the Interiational Com-

| munication Agency, the United States Interna-

| tional Development Cooperation Agency, the

Department of Agriculture, or the Department

of Commerce; or

60a

(v) any person who participates in a strike in

violation of section 7311 of this title;

(3) “agency” means an Executive agency (includ-

ing a nonappropriated fund instrumentality described

in section 2105(c) of this title and the Veterans’

Canteen Service, Veterans’ Administration), the Li-

brary of Congress, and the Government Printing

Office, but does not include—

(A) the General Accounting Office;

(B) the Federal Bureau of Investigation;

(D) the National Security Agency;

(E) the Tennessee Valley Authority;

(F) the Federal Labor Relations Authority; or

(G) the Federal Service Impasses Panel;

(4) “labor organization” means an organization

composed in whole or in part of employees, in which

employees participate and pay dues, and which has

as a purpose the dealing with an agency concerning

grievances and conditions of employment, but does

not include—

(A) an organization which, by its constitu-

tion, bylaws, tacit agreement among its members,

or otherwise, denies membership because of race,

color, creed, national origin, sex, age, preferen-

tial or nonpreferential civil service status, poli-

tical affiliation, marital status, or handicapping

condition;

(B) an organization which advocates the over-

throw of the constitutional form of government

of the United States;

6la

(D) an organization which participates in the

conduct of a strike against the Government or

any agency thereof or imposes a duty or obliga-

tion to conduct, assist, or participate in such a

strike;

: (5) “dues” means dues, fees, and assessments:

i (6) “Authority” means the Federal Labor Rela-

tions Authority described in section 7104(a) of this

title;

(7) “Panel” means the Federal Service Impasses

Panel described in section 7119(c) of this title;

(8) “collective bargaining agreement” means an

agreement entered into as a result of collective bar-

gaining pursuant to the provisions of this chapter;

(9) “grievance” means any complaint—

(A) by any employee concerning any matter

relating to the employment of the employee;

(B) by any labor organization concerning any

matter relating to the employment of any em-

ployee; or

agency concerning—

(i) the effect or interpretation, or a claim

of breach, of a collective bargaining agree-

ment; or

(ii) any claimed violation, misinterpreta-

tion, or misapplication of any law, rule, or

regulation affecting conditions of employ-

ment;

(10) “supervisor” means an individual employed

by an agency having authority in the interest of the

agency to hire, direct, assign, promote, reward, trans-

fer, furlough, layoff, recall, suspend, discipline, or

remove employees, to adjust their grievances, or to ef-

fectively recommend such action, if the exercise of

the authority is not merely routine or clerical in na-

ture but requires the consistent exercise of indepen-

dent judgment, except that, with respect to any unit

which includes firefighters or nurses, the term “su-

pervisor” includes only those individuals who devote

a preponderance of their employment time to exer-

cising such authority;

(11) “management official” means an individual

employed by an agency in a position the duties and

responsibilities of which require or authorize the

individual to formulate, determine, or influence the

policies of the agency;

(12) “collective bargaining” means the perform-

ance of the mutual obligation of the representative

of an agency and the exclusive representative of em-

ployees in an appropriate unit in the agency to meet

at reasonable times and to consult and bargain in a

good-faith effort to reach agreement with respect to

the conditions of employment affecting such em-

ployees and to execute, if requested by either party,

a written document incorporating any collective bar-

gaining agreement reached, but the obligation re-

ferred to in this paragraph does not compel either

party to agree to a proposal or to make a concession;

(13) “confidential employee” means an employee

who acts in a confidential capacity with respect to an

individual who formulates or effectuates manage-

ment policies in the field of labor-management rela-

tions;

(14) “conditions of employment” means personnel

policies, practices, and matters, whether established

by rule, regulation, or otherwise, affecting working

conditions, except that such term does not include

policies, practices, and matters—

ONL G Com mare

63a

(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;

(15) “professional employee” means—

(A) an employee engaged in the performance

of work—

(i) requiring knowledge of an advanced

type in a field of science or learning cus-

tomarily acquired by a prolonged course of

specialized intellectual instruction and study

in an institution of higher learning or a

hospital (as distinguished from knowledge

acquired by a general academic education,

or from an apprenticeship, or from training

in the performance of routine mental, man-

ual, mechanical, or physical activities) ;

(ii) requiring the consistent exercise of

discretion and judgment in its perform-

ance;

(iii) which is predominantly intellectual

and varied in character (as distinguished

from routine mental, manual, mechanical,

or physical work) ; and

(iv) which is of such character thet the

output produced or the result accomplished

by such work cannot be standardized in re-

lation to a given period of time; or

(B) an employee who has completed the courses

of specialized intellectual instruction and study

described in subparagraph (A) (i) of this para-

graph and is performing related work under

appropriate direction or guidance to qualify the

employee as a professional employee described

in subparagraph (A) of this paragraph;

(16) “exclusive representative” means any labor

organization which—

(A) is certified as the exclusive representa-

tive of employees in an appropriate unit pursu-

ant to section 7111 of this title; or

(B) was recognized by an agency immediately

before the effective date of this chapter as the

exclusive representative of employees in an ap-

propriate unit—

(i) on the basis of an election, or

(ii) on any basis other than an election,

and continues to be so recognized in accordance

with the provisions of this chapter;

(17) “firefighter” means any employee engaged

in the performance of work directly connected with

the control and extinguishment of fires or the main-

tenance and use of firefighting apparatus and equip-

ment; and

(18) “United States” means the 50 States, the

District of Columbia, the Commonwealth of Puerto

Rico, Guam, the Virgin Islands, the Trust Territory

of the Pacific Islands, and any territory or possession

of the United States.

(b)(1) The President may issue an order exclud-

ing any agency or subdivision thereof from coverage

under this chapter if the President determines that—

(A) the agency or subdivision has as a pri-

mary function intelligence, counterintelligence,

investigative, or national security work, and

65a

(B) the provisions of this chapter cannot be

applied to that agency or subdivision in a man-

ner consistent with national security require-

ments and considerations.

(2) The President may issue an order suspending

any provision of this chapter with respect to any

agency, installation, or activity located outside the

50 States and the District of Columbia, if the Pr

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