26:0063(8)NG - District No. 1, Pacific Coast District, MEBA and Panama Canal Commision -- 1987 FLRAdec NG



[ v26 p63 ]
26:0063(8)NG
The decision of the Authority follows:


 26 FLRA No. 8
 
 DISTRICT NO. 1, 
 PACIFIC COAST DISTRICT, 
 MARINE ENGINEERS 
 BENEFICIAL ASSOCIATION
 Union
 
 and
 
 PANAMA CANAL COMMISSION
 Agency
 
                                            Case No. 0-NG-749
 
              DECISION AND ORDER ON NEGOTIABILITY ISSUES /*/
 
                         I.  Statement of the Case
 
    This case is before the Authority because of a negotiability appeal
 filed under section 7105(a)(2)(D) and (E) of the Federal Service
 Labor-Management Relations Statute (the Statute) and concerns the
 negotiability of eight proposals.
 
    All eight proposals relate to negotiation of premium pay and other
 pay practices for employees of the Panama Canal Commission.  The
 question generally is whether premium pay for such employees is a
 condition of employment, and if so, whether Union Proposals 1-5, which
 require the payment of various types of bonuses and premium pay, are
 inconsistent with applicable Government-wide rules and regulations, and
 if not, whether they are inconsistent with internal Agency regulations
 for which a compelling need exists.  As to proposals 6-8, the second
 question is whether the proposals are inconsistent with Federal law, and
 thus nonnegotiable.  Footnotes are set forth in the Appendix.
 
         II.  Premium Pay for Panama Canal Commission to Employees
 
                is a Condition of Employment.
 
                       A.  Positions of the Parties
 
    The Agency states as to the subject matter of all eight proposals
 generally that the legislative history of the Panama Canal Act of 1979
 (Pub. L. 96-70, 93 Stat. 455) indicates Congress intended to preclude
 negotiation of wages by unions representing employees of Federal
 agencies subject to the Act in the same manner that such negotiations
 are precluded by the Statute.  /1/
 
                       B.  Analysis and Conclusions
 
    The relevant provision of the Statute is section 7103(a)(14)(C) which
 excludes from the duty to bargain matters specifically provided for by
 Federal statute.  /2/ That is, wages are not negotiable in the Federal
 sector because, and to the extent that, they are matters specifically
 provided for by Federal statute, for example, wage rates for General
 Schedule employees are provided for in 5 U.S.C. Section 5332 and for
 prevailing rate employees in 5 U.S.C. Sections 5341-5349;  premium pay
 for Federal employees in 5 U.S.C. Sections 5541-5551.  See National
 Treasury Employees Union and Pension Benefit Guaranty Corporation, 9
 FLRA 692 (1982) (employees subject to General Schedule and thus proposal
 for salary adjustments concerns a matter specifically provided for by
 Federal statute and excluded from duty to bargain under section
 7103(a)(14)(C);  International Brotherhood of Electrical Workers, Local
 2080, AFL-CIO-CLC and Department of the Army, U.S. Corps of Engineers,
 Nashville, Tennessee, 10 FLRA 222 (1982) (employees subject to
 prevailing rate law and thus proposals establishing overtime rates
 excluded from duty to bargain under section 7103(a)(14)(C).  However,
 the Authority has expressly held and recently reaffirmed that
 substantive proposals regarding compensation of employees are negotiable
 if they do not concern matters specifically provided for by law and are
 otherwise consistent with applicable law and regulations. American
 Federation of Government Employees, AFL-CIO, Local 1897 and Department
 of the Air Force, Eglin Air Force Base, Florida, 24 FLRA No. 41 (1986).
 
    As to this case, the establishment of the basic pay of employees of
 the Panama Canal Commission is a matter which is specifically provided
 for by Federal statute.  22 U.S.C. Section 3655.  /3/ International
 Organization of Masters, Mates and Pilots and Panama Canal Commission,
 13 FLRA 508 (1983) (Union proposals 7 and 8).  There is no similar
 provision of the Panama Canal Act of 1979 concerning premium pay for
 such employees.  As distinguished from basic pay, therefore, premium pay
 for these employees is not a matter specifically provided for by Federal
 statute and is not excluded from the duty to bargain pursuant to section
 7103(a)(14)(C) of the Statute.  /4/ Thus, if otherwise negotiable, the
 proposals at issue are within the Agency's duty to bargain.
 
                            III.  Proposals 1-5
 
                                Proposal 1
 
          Incentive pay shall be paid at a rate of ten percent ("10%") or
       $2.50 per hour to licensed watchstanding engineers when assigned
       to a watch which includes an apprentice for training.
 
                                Proposal 2
 
          A night differential of 10% is to be paid for regularly
       scheduled work between the hours of 6:00 P.M. and 6:00 A.M.
 
                                Proposal 3
 
          Employees called in to work outside of and unconnected with
       their basic work week shall be paid a minimum of four (4) hours of
       overtime pay regardless of whether the employee is required to
       work the entire four (4) hours.
 
                                Proposal 4
 
          An employee shall be paid eight (8) hours overtime where less
       than seventy-two (72) hours notice was given in any schedule
       change, etc.
 
                                Proposal 5
 
          A bonus of five (5) times the hourly wage will be paid to all
       licensed marine engineers ordered to work on non U.S. flag vessels
       or on any vessel not flying a national ensign.
 
                       A.  Positions of the Parties
 
    The Agency contends that Proposals 1-5, which require the payment of
 various types of bonuses and premium pay, are inconsistent with
 applicable Government-wide rules and regulations and, thus, are
 nonnegotiable under section 7117(a)(1) of the Statute.  /5/
 Specifically, as to Proposals 1 and 5, the Agency contends that these
 proposals are inconsistent with the Panama Canal Employment System in
 that they require the payment of bonuses which are not provided for or
 authorized by the regulations constituting that System.  /6/ As to
 Proposals 2, 3, and 4, the Agency contends that the provisions regarding
 night differential and overtime set forth therein conflict with the
 requirements of 5 U.S.C. Section 5544 as made applicable to the Panama
 Canal Commission by the regulations which constitute the Panama Canal
 Employment System.  /7/ The Agency primarily asserts that these
 regulations, constituting a portion of the Panama Canal Employment
 System, are Government-wide rules and regulations within the meaning of
 section 7117(a)(1).
 
    Further, the Agency contends, in the alternative, that the
 regulations at issue are agency regulations for which a compelling need
 exists to bar negotiation of the Union's proposals under section
 7117(a)(2) and (3) of the Statute /8/ and section 2424.11(a) of the
 Authority's Rules and Regulations.  /9/ An agency regulation can bar
 negotiation on union proposals if an agency can establish a compelling
 need for the regulation.  In this regard, the Agency argues that a
 compelling need exists for 35 CFR 251.71 and 251.73 under section
 2424.11(a) in that the restrictions on premium pay contained therein are
 essential to the accomplishment of the Agency's mission in a manner
 consistent with the requirements of an effective and efficient
 government.  Specifically, the Agency contends that such restrictions
 are necessary to preclude the additional operating costs which would
 result from implementation of the Union's proposals.
 
    The Union contends generally that these proposals do not conflict
 with law or regulation, and that the matters covered are within the
 discretion of the Agency.  As to Proposal 5, the Union simply says that
 the Agency does not allege conflict with any law or regulation and that
 to the extent the proposal is neither required nor precluded by law, it
 is negotiable.
 
                       B.  Analysis and Conclusions
 
        1.  Proposals 1-5 are not inconsistent with Government-wide
 
                rules and regulations
 
    The regulations relied on by the Agency are set forth in 35 CFR Part
 241.  They were issued pursuant to section 1212 of the Panama Canal Act,
 22 U.S.C. Section 3652.  Under the law, pay practices established by
 these regulations are mandatorily applicable only to employees of the
 Panama Canal Commission.  While other agencies may elect to be covered
 under such systems when conducting operations in Panama, they are not
 required to do so.  Thus, we find that the regulations at issue are not
 Government-wide rules or regulations in that they are not generally
 applicable throughout the Federal Government.  International
 Organization of Masters, Mates and Pilots and Panama Canal Commission,
 13 FLRA 508 (1983).  Therefore, the cited regulations do not constitute
 a bar to negotiation under section 7117(a)(1) of the Statute.
 
         2.  A compelling need has not been shown to exist to bar
 
                negotiation of the proposals.
 
    The Agency has failed to demonstrate that the cited regulations are
 essential, as distinct from merely helpful or desirable, in the
 achievement of its objectives regarding costs since it does not indicate
 why the goal of limiting operational costs could not be achieved through
 means other than the regulations pertaining to premium pay.  That is,
 the Agency has not shown that its costs are so fixed as to preclude
 adjustments in other areas of its operations or that it cannot find ways
 to avoid the situations set forth in the proposals so as to preclude the
 necessity of paying the required premium pay.  Thus, in failing to
 demonstrate that, in the absence of its regulation, the Agency would be
 unable to limit its operational costs, it must be concluded that the
 Agency has not met its burden of demonstrating that the cited
 regulations are essential to the accomplishment of that objective.
 Compare Lexington-Blue Grass Army Depot, Lexington, Kentucky and
 American Federation of Government Employees, AFL-CIO, Local 894, 24 FLRA
 No. 6 (1986) (monetary savings alone will not be a basis for a finding
 of compelling need);  American Federation of Government Employees,
 AFL-CIO, Local 2875 and Department of Commerce, National Oceanic and
 Atmospheric Administration, National Marine Fisheries Service, Southeast
 Fisheries Center, Miami Laboratory, Florida, 5 FLRA 441, 446-50 (1981)
 (agency contention as to costs of modification of comprehensive system
 of record keeping not sufficient to establish compelling need for its
 regulation).  We determine, therefore, that the Agency has not shown
 that the cited regulations are supported by a compelling need.
 Accordingly, such regulations do not bar negotiation on Proposals 1-5.
 /10/
 
            IV.  Proposal 6 is inconsistent with Federal law.
 
                                Proposal 6
 
          All licensed marine engineers shall be paid a recruitment and
       retention bonus of 25% for the duration of the treaty.
 
                       A.  Positions of the Parties
 
    The Agency contends that Proposal 6 is inconsistent with Federal law
 in that it would require a recruitment and retention bonus for certain
 employees expressly excluded by Statute.
 
    The Union asserts that as the Agency has discretion under the Panama
 Canal Employment System Regulation, 35 C.F.R. Section 251.32 to grant
 the bonus, the proposal is negotiable.
 
                       B.  Analysis and Conclusions
 
    Section 1217 of the Panama Canal Act of 1979, 22 U.S.C. Section 3657,
 authorizes the payment of a recruitment and retention bonus of up to 25%
 of an employee's basic pay if, in the discretion of the agency head, it
 is determined that recruitment or retention of that employee is
 essential.  The payment of such a bonus is limited to individuals who
 meet certain criteria as to date and place of employment for service in
 the former Canal Zone, which criteria exclude, among others, employees
 recruited within the Republic of Panama on or after October 1, 1979.
 /11/
 
    Proposal 6 provides that all licensed marine engineers shall receive
 a recruitment and retention bonus.  By its terms, therefore, the
 proposal would prescribe payment of the bonus to any unit employee who
 is a licensed marine engineer and who had been recruited in the Republic
 of Panama after October 1, 1979.  That is, the proposal would include
 individuals expressly excluded by statute.  Thus, Proposal 6 is
 inconsistent with Federal law and, under section 7117(a)(1) of the
 Statute, is outside the Agency's duty to bargain.  /12/ Compare
 International Organization of Masters, Mates and Pilots and Panama Canal
 Commission, 13 FLRA 508, 523 (1983) (proposal which required that
 certain employees be given the option to continue to choose the Union
 pension plan as their retirement system is inconsistent with Federal
 law);  National Federation of Federal Employees, Local 1745 and Veterans
 Administration, 13 FLRA 543 (1983) (proposal which required
 unconditional disclosure of information is inconsistent with
 restrictions of the Privacy Act and nonnegotiable under section
 7117(a)(1)).
 
         V.  Proposals 7 and 8 are inconsistent with Federal law.
 
                                Proposal 7
 
          For each nonwatchstanding licensed engineer rating (including
       the Chief Engineer) on each class of vessel, the monthly nonwatch
       allowance shall be increased as set forth in the wage tables.  The
       nonwatch monthly allowance shall be established in accordance with
       the following formula:  it shall be the daily wage rate times
       6.067 (monthly base divided by 21-2/3 times 6.067).  This
       allowance will be included in the monthly base pay for all
       purposes including computation of pensions or the applicable
       overtime rate.
 
          The same formula will be used to compute the nonwatch
       equivalent for the watchstanding licensed engineers, which amount
       will be added to the monthly base pay for the purposes of
       computing vacations, unearned wages and bonuses.
 
          A monthly nonwatch allowance shall be paid to the Chief
       Engineer and to each Assistant Engineer who does not stand watch
       and whose normal hours of work are forty (40) hours per week.
       This monthly nonwatch allowance shall not be lost by virtue of a
       change in duties.
 
                                Proposal 8
 
          In the event the Consumer Price Index -- United States City
       Average for Urban Wage Earners and Clerical Workers or its agreed
       upon successor published by the Bureau of Labor Statistics of the
       United States Department of Labor (1967 equals 100) increases by
       one percent or more between October 1982 and April 1983, then
       effective July 1, 1983 a cost-of-living bonus of two-thirds of
       each full one percent increase shall be added to the base wage,
       nonwatch, and overtime rates. Any remaining fraction in the
       Consumer Price Index in any period shall be carried over to the
       next period and used in computing the percentage increase in the
       Consumer Price Index for said later period.
 
          Further increases, if applicable, shall be granted under the
       same formula at six month intervals based upon cost-of-living
       increases, if any, between July 1, 1983 and December 31, 1983 to
       be effective on December 31, 1983.
 
          The cost-of-living adjustment provided herein shall not be
       included in the base wage for the purpose of computing pension
       benefits.
 
                       A.  Positions of the Parties
 
    The Agency contends that as proposal 7 would provide a special
 remuneration for not working, and as Proposal 8 provides for
 cost-of-living adjustments based on the Consumer Price Index, both
 proposals are beyond the authority of the Agency to establish.  It
 claims in this connection that while it has discretion to consult with
 other U.S. Government agencies in Panama, and can make recommendations
 to the Panama Area Personnel Board under the Panama Canal Act and 35 CFR
 251, it has no authority to establish an allowance by itself.  (Agency
 brief, pp. 7-8).  Moreover, the Agency asserts that there is a
 compelling need for the Panama Canal Employment System because it is
 essential to the effective and efficient functioning of the government.
 (Agency brief, pp. 8-9).
 
    The Union argues that it is within the Agency's discretion to pay the
 proposed allowance raised by Proposal 7, and to pay in accordance with
 practices in the maritime industry in regard to Proposal 8.
 
                       B.  Analysis and Conclusions
 
    Proposal 7 provides for a nonwatch allowance to be paid to unit
 employees, which allowance constitutes a part of the basic pay of those
 employees for all purposes relating to employee compensation.  Proposal
 8 provides for a 10% cost of living increment to be paid, effective July
 1, 1983, to unit employees, which increment, by the terms of the
 proposal, constitutes a part of the basic pay of such employees for all
 purposes other than computing pension benefits.  /13/ In thus providing
 for adjustments to the basic pay of unit employees, Proposals 7 and 8
 herein have the same effect as Proposal 13 in International Organization
 of Masters, Mates and Pilots and Panama Canal Commission, 13 FLRA 508
 1983), which provided for a 10% increase in the base pay of unit
 employees.  The Authority held that the proposal at issue in that case
 was inconsistent with Federal law, namely, section 1215 of the Panama
 Canal Act of 1979, 22 U.S.C. Section 3655.  /14/ Specifically, the
 Authority found that 22 U.S.C. Section 3655(c) required that any
 adjustments in the rates of basic pay only be made "in amounts not to
 exceed the amounts of the adjustments made from time to time by or under
 statute in the corresponding rates of basic pay for the same or similar
 work" performed in the United States or in such areas outside the United
 States as may be designated by regulation.  Since the record in that
 case contained no evidence that the proposed 10% adjustment was based
 upon, e.g., similar adjustments for the same or similar work in the
 United States, the Authority found that the proposal did not conform to
 the statutory procedures governing such matters as set forth in 22
 U.S.C. Section 3655.
 
    Similarly, there is no evidence in the record of the instant case
 that the proposed nonwatch allowance and 10% cost of living adjustment
 are based upon or are intended to be applied in accordance with the
 requisite statutory procedures.  In this regard, the cost of living
 increment provided for in Proposal 8 is clearly distinct from and
 independent of the cost of living allowance prescribed in 22 U.S.C.
 Section 3646, which took effect October 1, 1984, and was intended to
 offset the increased expenses resulting from termination of employee
 eligibility to use, e.g., military exchanges.  Thus, for the reasons set
 forth in the Panama Canal Commission decision cited above, Proposals 7
 and 8 are inconsistent with Federal law and, under section 7117(a)(1) of
 the Statute, /15/ are outside the Agency's duty to bargain.  /16/
 
                               VI.  Summary
 
    Proposals 1-5 have been found to be within the duty to bargain.  /17/
 Proposals 6-8 have been found to be inconsistent with Federal law and
 are outside the duty to bargain.
 
                                VII.  Order
 
    The Agency must upon request, or as otherwise agreed to by the
 parties, bargain concerning Proposals 1-5.  The petition for review as
 to Proposals 6-8 is dismissed.
 
    Issued, Washington, D.C., March 9, 1987.
                                       /s/ Henry B. Frazier III, Member
                                       /s/ Jean McKee, Member
                                       FEDERAL LABOR RELATIONS AUTHORITY
 
                   Separate Opinion of Chairman Calhoun
 
    In my opinion in American Federation of Government Employees,
 AFL-CIO, Local 1897 and Department of the Air Force, Eglin Air Force
 Base, Florida, 24 FLRA No. 41 (1986), petition for review filed sub nom.
 Department of the Air Force, Eglin Air Force Base, Florida v. FLRA,
 87-3073 (11th Cir. February 2, 1987), I stated that in the absence of a
 clear expression of Congressional intent to make wages and money-related
 fringe benefits negotiable, I would find that these matters are not
 within the duty to bargain under the Statute.  I find no such expression
 in the Panama Canal Act of 1979.  Therefore, I would find that the
 proposals in this case are outside the duty to bargain.
 
    In addition, the legislative history of the Panama Canal Act leads me
 to elaborate on my opinion in Eglin Air Force Base.  As originally
 proposed, Section 381 of the Act provided:
 
          Sec. 381.  The provisions of chapter 71 of title 5, United
       States Code shall not apply to the Panama Canal Commission or to
       its personnel.  In lieu thereof, the President shall establish a
       form of collective bargaining, applicable to the Commission's
       employees;  into which is incorporated the substance of sections
       7102, 7106, 7116, 7120, and 7131.  The form of collective
       bargaining so established shall contain such other necessary
       provisions, and shall be administered, so as to provide the
       Commission's employees with the right to bargain collectively
       under the same conditions and with respect to the same subject
       matter that obtains where that right is exercised generally in the
       Federal service within the continental United States.
 
    See 125 Cong. Rec. S10,587 (daily ed. July 29, 1979).  After hearings
 at which many individuals testified concerning both the then-existing
 labor relations climate in the Panama Canal Zone and the need for
 protection and stabilization of employee interests in Panama, the
 following substitute provision was adopted as section 1271(a) of the
 Act.
 
          Sec. 1271.  (a) Nothing in this Act shall be construed to
       affect the applicability of chapter 71 of title 5, United States
       Code, relating to labor-management and employee relations, with
       respect to the Panama Canal Commission or the operations of any
       other Executive agency conducted in that area of the Republic of
       Panama which, on September 30, 1979, was the Canal Zone, except
       that in applying those provisions --
 
          (1) the definition of "employee" shall be applied without
       regard to clause (i) of section 7103(a)(2) of such title 5 which
       relates to nationality and citizenship:  and
 
          (2) a unit shall be considered to be appropriate
       notwithstanding the fact that it includes any supervisor if that
       supervisor's position (or type of position) was, before October 1,
       1979, represented before the Panama Canal Company by a labor
       organization that included employees who were not supervisors.
 
    Thus, employees of the Commission and other Executive agencies
 operating in the Republic of Panama, including certain supervisors and
 Panamanian nationals, are clearly covered by the Statute in the conduct
 of their labor-relations.
 
    The majority references the remarks of Representative Schroeder cited
 by the Agency and referred to in footnote 1 of the majority opinion.
 Representative Schroeder stated:
 
          Furthermore, the committee assured that the employees of the
       United States in Panama would be covered by the same groundrules
       for labor-management relations that are applicable to Federal
       employees in the United States.  We applied the provisions of
       title VII of the Civil Service Reform Act of 1978 . . . Title VII
       lays out the rules under which labor-management relations are
       conducted;  it imposes only one obligation on the employer and the
       employees -- the obligation to talk to one another.  Title VII
       provides a very limited scope of bargaining:  Wages cannot be
       negotiated, . . . .
 
    125 Cong. Rec. H3,519 (daily ed. May 21, 1979).  This statement, in
 context, is a post-enactment reference to the Statute, and is of the
 same nature and effect as the statements of various Members of Congress
 I cited in my dissenting opinion Eglin Air Force Base.  I find it
 significant, however, that the general perception and understanding of
 the non-negotiability of these matters was specifically reiterated in
 the context of the Panama Canal Act.
 
    Moreover, there are other indications of Congressional understanding
 that Commission employees were not entitled to negotiate over wages.
 During hearings before the Committee on Post Office and Civil Service,
 House of Representatives, Ninety-Sixth Congress, on then-pending
 legislation to implement the Panama Canal Treaty of 1977 (H.R. 1716 and
 H.R. 111), Federal-sector labor leaders and others familiar with the
 Panama Canal labor relations situation testified concerning coverage of
 Commission employees under the Statute.  Following conclusion of the
 hearings, Representative James M. Hanley, then Chairman of the
 Committee, received answers to a series of questions posed by
 Representative Schroeder.
 
    H.R. Parfitt, Governor of the Canal Zone Government, was asked the
 following question:  "What would be the impact of allowing employee
 bargaining representatives to have the right to bargain collectively
 over wages with the Panama Canal Commission?" Governor Parfitt responded
 that "Wage bargaining would invariably result in substantial increases
 in wage costs.  To meet these additional costs, the Commission would
 inevitably have to revise its toll rates upward." Implementation of the
 Panama Canal Treaty of 1977:  Hearings on H.R. 1716 and H.R. 111 before
 the Committee on Post Office and Civil Service of the House of
 Representatives, 96th Cong., 1st Sess. 294-95 (1979) (statement of H.R.
 Parfitt, Governor of the Canal Zone Government) (hereinafter House
 Hearings at . . . ).
 
    Representative Schroeder also posed the following question:  "Title
 VII of the Civil Service Reform Act does not allow unions and management
 to bargain collectively over wages.  What differences are there in the
 situation in Panama which would warrant wage bargaining here and not for
 Federal employees elsewhere?" Talmadge E. Simpkins, Executive Director,
 AFL-CIO Maritime Committee responded in relevant part that:
 
          Full-scale collective bargaining is one of the goals of
       organized labor in the United States.  However, there are unusual
       circumstances existing in Panama which could make bargaining for
       wages detrimental to some of the workers.  We firmly believe that
       wage bargaining at this time in Panama could well obscure and
       endanger the wage position of non-U.S. citizen workers who have
       been historically lumped into the same economic mold as other
       overseas host countries where the United States has established
       bases.
 
          This would provide DOD management and that of the Panama Canal
       Commission the necessary ready-made machinery and leverage to
       parade its inapplicable prevailing wage philosophy before U.S.
       public opinion and thus obscure and effectively camouflage the
       stark reality of a U.S.-created cost-of-living economy in Panama
       which is significantly higher than that presently existing for
       U.S. citizens in the Canal Zone and in all of the major cities in
       the continental United States.
 
    House Hearings at 297-98.
 
    Alfred J. Graham, President, Canal Zone Central Labor Union and Metal
 Trades Council, AFL-CIO, stated, "We believe that all persons should be
 able to organize and collectively bargain on all aspects of their terms
 and conditions of employment including wages." House Hearings at 301.
 
    William H. Sinclair, on behalf of the American Federation of State,
 County and Municipal Employees, stated:
 
          It is presumed that 'Federal employees elsewhere' means federal
       employees within the Continental United States or working in areas
       under US political jurisdiction.  As indicated in AFSCME testimony
       before the House Subcommittee on Post Office and Civil Service,
       Title 7 may be tolerable in the United States where labor unions
       are able to exert considerable pressure in Congress to attain wage
       increases and other fringe benefits, which, in essence, is a form
       of "collective bargaining." However, the Panama Canal Commission
       and DOD agencies in Panama, will be playing a new ball game, under
       different rules after entry into force of the treaties of 1977.
 
          Consequently, . . . wage bargaining is a must for our unions,
       either under a special system devised by the Congress, direct
       negotiation between management and labor or in accordance with the
       general principles of the Panama Labor Code.  There are several
       successful precedents related to wage bargaining in the U.S.
       federal service, i.e., the St. Lawrence Waterway, U.S. Postal
       Corporation, Tennessee Valley Authority and probably other areas
       not known to us at this time.
 
    House Hearings at 302-03.
 
    Jules Kolodny, Vice President, American Federation of Teachers,
 AFL-CIO stated, "I believe that all employees should have the right to
 organize and bargain collectively on the terms and conditions of their
 employment . . . .  We would have problems with Title 7 with the alien
 exclusion clause deleted if bargaining on salaries was not included."
 House Hearings at 307-08.  S.V. Faulkner of the International
 Organization of Masters, Mates and Pilots of America stated:
 
          The retention incentives for employees to remain with the Canal
       enterprise after the next five years are going to be hard to come
       by with the elimination of side benefits such as APO mailings,
       commissary and exchange privileges.  These side benefits are
       shared by all U.S. Government Agency employees stationed overseas.
        It might be noted here that the State Department and other
       non-Panama Canal Federal Agency employees in Panama have and will
       continue to enjoy these side benefits.  The past practices of the
       Panama Canal organization have been cradle-to-grave care.  The
       Carter-Torrijos Treaties are mandating the employees to take care
       of themselves.  What other retention incentives are there for the
       Canal employees other than wages?
 
    House Hearings at 308.
 
    I conclude from these responses that it was generally acknowledged
 that no ability to negotiate concerning wage-related matters either
 existed in the Canal Zone before passage of the Panama Canal Act of
 1979, or under the Statute if Commission employees were included in its
 coverage.  The support expressed for such bargaining was premised on an
 understanding that Congressional action was needed to provide for it.
 Such action never occurred.  Until it does, I cannot find proposals like
 those in this case negotiable.
 
    Issued, Washington, D.C., March 9, 1987.
                                       /s/ Jerry L. Calhoun, Chairman
 
 
                ---------------  FOOTNOTES$ ---------------
 
 
 
    (*) Chairman Calhoun dissents for the reasons set forth in his
 separate opinion.
 
    (1) Agency Brief at 5-6, citing the statement of Rep. Patricia
 Schroeder at 125 CONG. REC. H3519 (daily ed. May 21, 1979).
 
    (2) Section 7103(a)(14)(C) provides:
 
          Section 7103.  Definitions;  application
 
          (a) For the purpose of this chapter --
 
                       .  .  .  .  .  .  .
 
 
          (14) 'conditions of employment' means personnel policies,
       practices , and matters, whether established by rule, regulation,
       or otherwise, affecting working conditions, except that such term
       does not include policies, practices, and matters --
 
                       .  .  .  .  .  .  .
 
 
          (C) to the extent such matters are specifically provided for by
       Federal statute(.)
 
    (3) See the disposition of Union Proposals 7 and 8, infra.  See also
 35 CFR 251.13 and 25.
 
    (4) Under 5 U.S.C. Section 5541(2)(xii) marine engineers employed by
 the Panama Canal Commission are not subject to the provisions of title
 5, chapter 55, subchapter V of the United States Code which authorize
 and establish the conditions governing the payment of premium pay to
 Federal employees generally.  Rather, those provisions apply only
 through the regulations of the Panama Canal Employment System.  See note
 7, infra.
 
    (5) Section 7117(a)(1) of Statute provides as follows:
 
          Section 7117.  Duty to bargain in good faith;  compelling need;
        duty to consult
 
          (a)(1) Subject to paragraph (2) of this subsection, the duty to
       bargain in good faith shall, to the extent not inconsistent with
       any Federal law or any Government-wide rule or regulation, extend
       to matters which are the subject of any rule or regulation only if
       the rule or regulation is not a Government-wide rule or
       regulation.
 
    (6) Agency Brief at 6-7.
 
    (7) The Agency relies specifically on 35 CFR 251.71 and 251.73 which
 provide, respectively, as follows:
 
          Section 251.71 Environmental and night shift differentials for
       manual-type positions.
 
          The head of each agency, in coordination with the heads of
       other agencies, may authorize payment of environmental
       differentials for manual-type positions to compensate for exposure
       to hazards, physical hardships, and working conditions of an
       unusually severe nature which have not been considered in
       determining the base rate of pay for the position in question.
       Differentials for night work may also be established for
       manual-type positions.  Any differential prescribed under this
       section shall conform with like differentials established under
       the Federal Wage System to the extent that it is practicable under
       local conditions.  Such differential shall be treated as part of
       the basic compensation for the position to the extent it is so
       treated in the Federal Wage System.
 
          Section 251.73 Premium pay.
 
          (a) Premium pay for Manual-type positions shall be established
       in accordance with the provisions of 5 U.S.C. 5544 and Supplement
       532-1 of the Federal Personnel Manual;  Provided, However, That
       any rule concerning premium pay established prior to the effective
       date of these regulations may be continued for the type of
       position to which the rule applied before the said effective date.
 
          (b) Premium pay and compensatory time for positions, other than
       positions subject to paragraph (a) of this section, shall be
       established in accordance with the provisions of subchapter V of
       chapter 55 of Title 5, United States Code;  Provided, however,
       That any rule concerning premium pay or compensatory time
       established prior to the effective date of these regulations may
       be continued for the type of position to which the rule applied
       before the said effective date.  (Emphasis in original.)
 
    (8) Section 7117(a)(2) and (3) provides as follows:
 
          Section 7117.  Duty to bargain in good faith;  compelling need;
        duty to consult
 
                       .  .  .  .  .  .  .
 
 
          (a)(2) The duty to bargain in good faith shall, to the extent
       not inconsistent with Federal law or any Government-wide rule or
       regulation, extend to matters which are the subject of any agency
       rule or regulation referred to in paragraph (3) of this subsection
       only if the Authority has determined under subsection (b) of this
       section that no compelling need (as determined under regulations
       prescribed by the Authority) exists for the rule or regulation.
 
          (3) Paragraph (2) of the subsection applies to any rule or
       regulation issued by any agency or issued by any primary national
       subdivision of such agency, unless an exclusive representative
       represents an appropriate unit including not less than a majority
       of the employees in the issuing agency or primary national
       subdivision, as the case may be, to whom the rule or regulation is
       applicable.
 
    (9) Section 2424.11(a) of the Authority's Rules and Regulations
 provides as follows:
 
          Section 2424.11 Illustrative criteria.
 
          A compelling need exists for an agency rule or regulation
       concerning any condition of employment when the agency
       demonstrates that the rule or regulation meets one or more of the
       following illustrative criteria:
 
          (a) The rule or regulation is essential, as distinguished from
       helpful or desirable, to the accomplishment of the mission or the
       execution of functions of the agency or primary national
       subdivision in a manner which is consistent with the requirements
       of an effective and efficient government.
 
    (10) The Agency states, in outlining the impact of the disputed
 proposals, that in the interest of equity it would need to extend the
 bonuses set forth therein to all Agency employees, thus increasing its
 costs beyond what is required for the unit alone.  However, in this
 regard, the circumstances of the instant case are distinguishable from
 National Treasury Employees Union, Chapter 207 and Federal Deposit
 Insurance Corporation, Washington, D.C., 14 FLRA No. 84 (1984), appeal
 docketed sub nom. National Treasury Employees Union v. Federal Labor
 Relations Authority, No. 84-1286 (D.C. Cir. July 6, 1984).  In that
 case, based on the record before it, the Authority held that a
 compelling need existed under section 2424.11(a) of its Rules and
 Regulations for an agency regulation establishing a wage schedule for
 employees.  The Authority found that the agency had established an
 overriding need for a uniform pay setting system in order to operate
 effectively and efficiently to accomplish its mission.  The Authority
 reaffirmed its decision upon remand of the record in the case to
 consider certain additional matters which arose during the pendency of
 the appeal before the court.  21 FLRA No. 36 (1986).
 
    In that case, however, the proposal at issue was intended to raise
 the basic wage rate of unit employees over that established by the
 agency regulation.  In this case, the proposals concern premium pay,
 that is, additional compensation, for specific work situations involving
 additional duties or difficulties confronting marine engineers alone and
 not applicable to other Agency employees, which additional compensation
 is not already provided for by regulation.  Moreover, as claimed by the
 Union and not disputed by the Agency, such bonuses are common practices
 in the maritime industry and thus are within the Agency's discretion
 under 5 U.S.C. Section 5348(b).  Thus, the law governing the wage
 policies of the Agency with respect to the employees represented by the
 Union herein expressly permits the Agency to prov ide for premium pay
 which varies from that set forth in the Federal Wage System and 5 U.S.C.
 Section 5544 and required by 35 CFR 251.71 and 251.73.  See American
 Federation of Government Employees, AFL-CIO, Local 2670 and Army and Air
 Force Exchange Service, Keesler Air Force Base Exchange, Mississippi and
 American Federation of Government Employees, AFL-CIO, Local 1504 and
 Departments of the Army and Air Force, Army and Air Force Exchange
 Service, Northwest Area Exchange Service, Ft. Lewis, Washington, 10 FLRA
 71 (1982).
 
    (11) 22 U.S.C. Section 3657 provides as follows:
 
          Section 3657.  Recruitment and retention remuneration
 
                      Determination by head of agency
 
          (a) In addition to basic pay, additional compensation may be
       paid, in such amounts as the head of the agency concerned
       determines, as an overseas recruitment or retention differential
       to any individual who --
 
          (1) before October 1, 1979, was employed by the Panama Canal
       Company, by the Canal Zone Government, or by any other agency in
       the area then known as the Canal Zone;
 
          (2) is an employee who was recruited on or after October 1,
       1979, outside of the Republic of Panama for placement in the
       Republic of Panama;  or
 
          (3) is a medical doctor employed by the Department of Defense
       in the Republic of Panama or by the Commission;  if, in the
       judgment of the head of the agency concerned, the recruitment or
       retention of the individual is essential.
 
                                Restriction
 
          (b) Any employee described in more than one paragraph of
       subsection (a) of this section may qualify for a recruitment or
       retention differential under only one of those paragraphs.
 
                           Limit on compensation
 
          (c) Additional compensation provided under this section may not
       exceed 25 percent of the rate of basic pay for the same or similar
       work performed in the United States by individuals employed by the
       Government of the United States.
 
    Applicability of subchapter III of chapter 59 of Title 5
 
          (d) Subchapter III of chapter 59 of Title 5, relating to
       overseas differentials and allowances, shall not apply with
       respect to any employee whose permanent duty station is in the
       Republic of Panama and who is employed by an agency.
 
    See also 35 CFR 251.32.
 
    (12) See note 5, supra.
 
    (13) Compare 22 U.S.C. Section 3658 which provides:
 
          Section 3658.  Benefits based on basic pay
 
          For the purpose of determining --
 
          (1) amounts of compensation for disability or death under
       chapter 81 of Title 5, relating to compensation for work injuries;
 
          (2) benefits under subchapter III of chapter 83 of Title 5,
       relating to civil service retirement;
 
          (3) amounts of insurance under chapter 87 of Title 5, relating
       to life insurance;
 
          (4) amounts of overtime pay or other premium pay;
 
          (5) annual leave benefits;  and
 
          (6) any other benefits related to basic pay;  the basic pay of
       each employee shall include the rate of basic pay established for
       his position under section 3655 of this title plus the amount of
       any additional compensation provided under section 3657 of this
       title.
 
    (14) 22 U.S.C. Section 3655 provides:
 
          Section 3655.  Basic pay
 
          Establishment and revision of rates
 
          (a) The head of each agency, in accordance with the provisions
       of this subpart, shall establish, and from time to time may
       revise, the rates of basic pay for positions and employees in the
       agency.
 
          Relationship of same or similar work performed in United States
       or certain other areas outside United States
 
          (b) The rates of basic pay may be established and revised in
       relation to the rates of basic pay for the same or similar work
       performed in the United States or in such areas outside the United
       States as may be designated in the regulations prescribed under
       section 3663 of this title.
 
          Adjustments in rates;  limits
 
          (c) The head of each agency may make adjustments in rates of
       basic pay established under subsection (b) of this section in
       amounts not to exceed the amounts of the adjustments made from
       time to time by or under statute in the corresponding rates of
       basic pay for the same or similar work referred to in such
       subsection (b) of this section.  The head of the agency may
       designate the effective date of any such adjustment, except that
       that date may not be earlier than the effective date of the
       adjustment in the corresponding rate of basic pay.
 
    (15) See note 5, supra.
 
    (16) Contrary to the Union, the fact that the bonuses provided for in
 Union Proposals 7 and 8 constitute common wage practices in the maritime
 industry within the meaning of 5 U.S.C. Section 5348(b) does not affect
 the fact that they are inconsistent with law, 22 U.S.C. Section 3655,
 and, hence, nonnegotiable under section 7117(a)(1) of the Statute.
 
    (17) In finding that Proposals 1-5 are withi