# Petition for Writ of Certiorari — National Treasury Employees Union v. United States Nuclear Regulatory Commission > Briefs, arguments, decisions, and more. URL: https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40385017_0920%3A1 ## Record - **Collection:** Supreme Court brief - **Document type:** Petition for Writ of Certiorari - **Published:** January 1, 1990 - **Citation:** 496 U.S. 901 ## Text | %, Supreme Court, us. | oct 6 1889 No. JOSEPH F. SPANIOL, JR. ee Oe, ent ee 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 v. : 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 Vv 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 VI 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 7 5 4 tT 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 v. 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.). a 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 i 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 5 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). 6 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 7 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 9 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). 10 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). ee 11 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. 12 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). 13 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. 14 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 15 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). 16 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 17 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. 18 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 19 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. 20 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”). 21 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- 22 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 23 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 24 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). 25 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- 26 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. ae 27 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 28 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). a 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) Za 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. I, A. 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 ee 3a 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 4a 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). B. 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 5a 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- 6a 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). 7a “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 (C) to the extent such matters are speci- 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 8a 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- 9a 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 A. 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. B. 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. I 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 be fixed in accordance with [the Classification Act of 1949, as amended] chapter 51 and subchapter III of chapter 53 of Title 5, except that, to the extent the Commission deems such action 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. II 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