[ v24 p377 ]
The decision of the Authority follows:
24 FLRA No. 41 AMERICAN FEDERATION OF GOVERNMENT EMPLOYEES, AFL-CIO, LOCAL 1897 Union and DEPARTMENT OF THE AIR FORCE EGLIN AIR FORCE BASE, FLORIDA Agency Case No. 0-NG-757 DECISION AND ORDER ON NEGOTIABILITY ISSUE I. Statement of the Case This case comes 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 presents issues as to the negotiability of a single Union proposal. We find that the proposal is negotiable. II. Union Proposal . . . that the Eglin and Hurlbut Nonappropriated Fund Instrumentality (NAFI) absorb up to 75 percent of the cost of health insurance prior to proposing to prorate any portion of the additional increase in cost to unit employees. Further, no increase will be imposed until all obligations under 5 USC 7117 have been fully satisfied. III. Positions of the Parties The proposal would require the Agency to pay up to 75 percent of the premium cost of employee health insurance prior to increasing the amount currently paid by bargaining unit employees and to fulfill its duty to bargain with the Union prior to implementing any change in cost of health insurance premiums for bargaining unit employees. The Agency contends the proposal is outside the duty to bargain because it does not concern conditions of employment of bargaining unit employees, affects employees outside the bargaining unit, interferes with its right under section 7106(a)(1) of the Statute to determine its budget, and is inconsistent with an Agency "regulation" for which there is a compelling need under section 7117(a)(2). The Union disputes the Agency's contentions. IV. Analysis and Conclusions (Footnotes appear in the Appendix to this Decision) A. Background 1. Establishment of Wages and Fringe Benefits for Federal Employees In the Federal sector, the wages and fringe benefits of most employees are established by law. For example, 5 U.S.C. Chapter 53 controls many matters relating to various pay rates and systems. Among other things, it establishes the General Schedule and Prevailing Rate pay systems. Chapter 55 of title 5 contains provisions which govern pay administration including overtime and other premium pay. Chapters 83, 87 and 89 establish programs covering retirement, life insurance and health insurance, respectively. These laws, however, do not apply uniformly to all Federal employees. Some Federal agencies and some types of employees who are covered by the Statute for purposes of collective bargaining are not covered by one or another of these laws. For example, the Federal Deposit Insurance Corporation is not subject to the statutes governing pay rates. Nonappropriated Fund Instrumentality (NAFI) employees as are involved in this case are not covered by laws relating to health insurance or retirement. Teachers employed by the Department of Defense Dependents Schools, whether overseas or at schools on military installations in the United States, are not subject to statutes establishing pay rates for most Federal employees but to laws creating different salary systems. Thus, while wages and fringe benefits of most Federal employees are established and controlled by law, there are some exceptions where matters concerning the nature or amount of the wages and fringe benefits are left to the discretion of the employing agencies. 2. The Scope of Bargaining under the Statute a. The Language of the Statute The Statute provides that the scope of the duty of an agency to bargain with an exclusive representative of its employees extends to "conditions of employment," which term is further defined as "personnel policies, practices and matters affecting working conditions." Section 7103(a)(12) and (14). Excluded from the definition of conditions of employment are matters: (1) relating to political activities prohibited under subchapter III of chapter 73 of title 5; (2) relating to the classification of any position; or (3) to the extent such matters are specifically provided for by Federal statute. Section 7114(a)(14). The Statute also excludes from the scope of the duty to bargain proposals which concern conditions of employment but which are inconsistent with law and regulation. Section 7117(a). Thus, under the Statute a proposed matter which is a condition of employment and is not inconsistent with applicable law or regulation is within the duty to bargain. b. Legislative History and Congressional Intent The legislative history of the Statute supports the conclusion that Congress intended that matters relating to wages and fringe benefits were to be treated in the same manner as other conditions of employment. That is, proposals concerning them were to be within the duty to bargain under section 7117(a) "to the extent not inconsistent with any (applicable law, rule or regulation)" and they were to be excepted from the definition of conditions of employment under section 7103(14)(c) if they involved matters which were "specifically provided for by Federal statute." The Report accompanying the House Committee bill (H.R. 11280) states that ". . . Federal pay will continue to be set in accordance with the pay provisions of title 5, and fringe benefits, including retirement, insurance, and leave, will continue to be set by Congress." 1/ In discussing the negotiation of matters relating to overtime, the House Report states that "(r)ates of overtime pay are not barganinable, because they are specifically provided for by statute." 2/ When the House Committee bill was debated on the House floor, Members who supported the bill reaffirmed this interpretation. Congressman Ford, discussing the scope of the duty to bargain under the bill, asserted that "no matters that are governed by statute (such as pay, money-related fringe benefits, retirement, and so forth) could be altered by negotiated agreement." 3/ Even opponents of the House Committee bill agreed that the duty to bargain under that bill excluded wages and fringe benefits because they were established by law. law. Congressman Collins, in support of his proposed substitute for the House Committee bill, described the duty to bargain under the Committee bill as too broach because it only excluded "matter(s) relating to discrimination, political activities, and those few specifically prescribed by law -- for example, pay and benefits." 4/ And finally, Congressman Udall, whose compromise version of H. R. 11280 formed the basis of the legislation enacted by Congress and signed into law by the President, stressed that under the "Udall substitute" matters concerning "wages and hours and retirement and benefits will continue to be established by law through congressional action." 5/ There are also a number of statements to the effect that bargaining is not intended with respect to pay and fringe benefits. While these statements are not explicitly tied to the existence of other legal provisions governing those matters, they were made in the context of the general debate on the bill. 6/ Moreover, these statements must be read within the context of the specific provision of the Statute itself. The Statute as enacted established an explicit scope of bargaining along with explicit exceptions. Nowhere in the Statute is there any language either excluding the general subject of wages and fringe benefits from the definition of conditions of employment or otherwise prohibiting negotiations on such matters in particular. The only explicit statement regarding the obligation to negotiate over wages appears at section 704 of the Civil Service Reform Act of 1978 7/ (CSRA). This section authorizes bargaining on wages and "employment benefits" for certain prevailing rate employees whose wage rates would otherwise be controlled by the procedures established under the Prevailing Rate Act of 1972, Pub. L. No. 92-392. Section 704 is simply an extension and clarification of section 9(b) of the Prevailing Rate Act, which exempted prevailing rate employees who had previously negotiated wages and other conditions of employment from the coverage of that Act. 8/ See Columbia Power Trades Council and United States Department of Energy, Bonneville Power Administration, 22 FLRA No. 100 (1986). In the absence of that exemption, the wages of those employees would have been established pursuant to law. Consequently, section 704 by authorizing such bargaining, acts as an exception to the limitation on bargaining over matters which are specifically provided for by Federal statute or which are inconsistent with law. The Statute and its legislative history should be read in light of the Executive Orders which preceded it. In this regard the Report accompanying Executive Order 10988 stated that "(t)he employer in most parts of the Federal government cannot negotiate on pay, hours of work or most fringe benefits. These are established by law." 9/ This statement accurately reflected the legal context of Federal employment as outlined above: most Federal agencies and employees were, as they continue to be, subject to the laws establishing pay and fringe benefits, but some are not. 10/ Likewise under Executive Order 11491, the duty to bargain similarly extended to personnel policies, practices and matters affecting working conditions "so far as may be appropriate under applicable laws and regulations." Section 11(a). Consistent with this principle, only those Federal employees whose wages and fringe benefits were not established by law could bargain over them under the Executive Order. For example, in United Federation of College Teachers, Local 1460 and U.S. Merchant Marine Academy, 1 FLRC 211 (1972), the Federal Labor Relations Council (the Council) ruled in essence that the pay of the faculty at the Merchant Marine Academy, 1 FLRC 211 (1972), the Federal Labor Relations Council (the Council) ruled in essence that the pay of the faculty at the Merchant Marine Academy was not specifically established by law. Rather, the Merchant Marine Act gave the Secretary of Commerce discretion to set faculty salaries. The Council held that proposals relating to teacher salary schedules did not violate those laws and, since they were otherwise negotiable, were within the agency's duty to bargain. In Overseas Education Association, Inc. and Department of Defense, Office of Dependents Schools, 6 FLRC 231 (1978), the Council held that proposals prescribing procedures and formulas to be used in determining teacher compensation were within the duty to bargain. The Council determined that the Department of Defense Overseas Teachers Pay and Personnel Practices Act, 73 Stat. 213 (1959), did not bar negotiation on the proposal. In other cases the Council held proposals concerning wages and fringe benefits nonnegotiable not because they were not matters affecting conditions of employment but, rather, because they were inconsistent with applicable laws and regulations. For example, in American Federation of Government Employees, Local 1778 and McGuire Air Force Base, New Jersey, 6 FLRC 136 (1978), the Council held proposals relating to wage rates and retirement plans nonnegotiable because the agency established that they conflicted with an agency regulation for which a compelling need existed. Although this decision is relied upon by the Agency and the dissenting opinion in this case, we believe such reliance is inapposite. See section B.4. of this decision. Also, in International Association of Siderographers, AFL-CIO, Washington Association and Department of the Treasury, Bureau of Engraving and Printing, 6 FLRC 1157 (1978), the Council held that a proposal, which established a standard for setting the pay of certain employees of the Bureau of Engraving and Printing, was nonnegotiable because it was inconsistent with law. c. Summary Congress intended the basic scope of the duty to bargain to be at least the same under the Statute as it was under the Executive Order. 11/ Under both, the duty to bargain explicitly extends to personnel policies, practices, and matters affecting the working conditions of bargaining unit employees. Bargaining over proposals inconsistent with applicable controlling law or regulation, however, is not permitted. Under the Executive Order the Council held pay and fringe benefits proposals to be bargainable to the extent that they concerned matters which were (1) within the discretion of agencies and (2) not inconsistent with applicable laws and regulations. These decisions were a part of the record before the Congress when it enacted the Statute. Usually when Congress adopts a new law which incorporates provision of prior law, it is presumed to be aware of administrative interpretation of that law and to adopt those interpretations. See Lorillard v. Pons, 434 U.S. 575 (1978), see also New York Council, Association of Civilian Technicians v. FLRA, 757 F.2d 502, 509 (2nd Cir. 1985); Florida National Guard v. FLRA, 699 F.2d 1082 (11th Cir. 1983). Had Congress intended that a different approach as to the negotiability of pay and fringe benefits be applied under the Statute, it could very easily have incorporated specific language in the Statute to accomplish that effect. It should be noted that Congress used specific language to except from the obligation to bargain matters relating to political activities prohibited under subchapter III of chapter 73 of title 5 and the classification of positions. Section 7103(a)(14)(A) and (B). However, it has not incorporated such an exclusion regarding pay, fringe benefits or any related matters. We are of the view that the legislative history of the Statute, read as a whole regarding bargaining over pay and fringe benefits, does not compel a conclusion that Congress sought to deviate from either Executive Order practice or from the overall definition of the scope of the duty to bargain embodied in the Statute. Usually legislative history is used to clear up ambiguities in statutory language. However, the fact that a statute has relatively plain meaning should not serve to thwart or distort the intent of Congress by excluding from consideration enlightening material from legislative history. Nonetheless the clearer the statutory language, the more compelling the legislative history must be to overcome that language. 2A N. Singer, Sutherland Stat. Const. Section 48.01 (4th Ed. 1984). The more precise statements in the legislative history, as noted above, specifically tie the prohibition on bargaining over pay and fringe benefits to the existence of other laws which govern those subjects. Other more general statements are couched in terms of assurances that the legislation under consideration does not represent a radical change or significant expansion in the scope of Federal section collective bargaining. See, for example, the Clay and Ford statements quoted at note 6, infra, which appeared at H.R. Rep. No. 95-1403, 95th Cong., 2nd Sess. 377 (1978); Legislative History at 721 and 124 Cong. Rec. H8467 (daily ed. Aug. 11, 1978); Legislative History at 854-6. Still others, simply state that pay and fringe benefits are not negotiable. See, note 6, infra, at 2 app. Even taking the legislative history in a light most favorable to the Agency's position that pay and fringe benefits are not negotiable, that history is at best ambiguous. However, the definition of the scope of bargaining which is embodied in the Statute is perfectly clear. Under that definition, and consistent with practice under the Executive Order, substantive proposals regarding pay and fringe benefits which are not specifically provided for by Federal statute, and any other conditions of employment are negotiable to the extent they are not inconsistent with applicable laws, rules and regulations if the matters proposed are within an agency's discretion. To the extent that Chairman Calhoun's dissenting opinion implies otherwise, we respectfully disagree. Ambiguous legislative history does not compel a different conclusion. See American Federation of Government Employees, Locals 225, 1504, and 3723, AFL-CIO v. FLRA, 712 F.2d 640, 649 (D.C. Cir. 1983); Citizens to Preserve Overton Park, Inc. v. Volpe, 401 U.S. 402, 412 n.29 (1971). While not of controlling significance, of course, as to determining what is the scope of the duty to bargain under the Statute, we note that where Congress expressly establishes pay and fringe benefits for Federal employees, that legislative process is not without its elements of "negotiation." The setting of wages is accomplished by the same process as any other piece of legislation. Typically, the President submits a pay proposal, both the Senate and House of Representatives consider the proposal, unions and other interested parties lobby, they along with representatives of the Administration may testify, and a compromise may have to be reached. Finally, a bill passes, which the President must act on before the process is completed. So, where Congress does not expressly establish pay and fringe benefits, some balancing of forces and interests through negotiations is consistent with that process. 3. Decisions under the Statute Consistent with this statutory definition of the scope of bargaining, the Authority has held substantive proposals regarding pay nonnegotiable if they relate to a matter specifically provided for by Federal law. For example, American Federation of Government Employees, AFL-CIO, Council of Federal Grain Inspection Locals and United States Department of Agriculture, Federal Grain Inspection Service, Washington, D.C., 3 FLRA 530 (1980), aff'd sub nom. American Federation of Government Employees, AFL-CIO v. Federal Labor Relations Authority, 653 F.2d 669 (D.C. Cir. 1981); National Treasury Employees Union and Pension Benefit Guaranty Corporation, 9 FLRA 692 (1982), aff'd sub nom. National Treasury Employees Union v. Federal Labor Relations Authority, 711 F.2d 420 (D.C. Cir. 1983). In other cases, the Authority has held proposals on wage-related matters negotiable if they do not concern matters specially provided for by law and are otherwise consistent with applicable law and regulations. Fort Bragg Unit of North Carolina Association of Educators, National Education Association and Fort Bragg Dependents Schools, Fort Bragg, North Carolina, 12 FLRA 519, 521 (1983). B. Negotiability of the Proposal in This Case 1. The Proposal Does Not Concern Matters Provided for by Law The Agency states that "premiums for 'health insurance benefits' for the employees (nonappropriated fund employees) concerned in the instant case have never been paid pursuant to a Federal statute." Agency Statement of Position at 9. Nonappropriated fund employees are excluded from the coverage of Chapter 89 of title 5 of the United States Code, which governs health insurance plans administered by the Office of Personnel Management. 12/ Health insurance matters with respect to these employees are governed by agency regulations. Since the proration of the cost of premiums for health insurance benefits is not a matter specifically provided for by Federal statute, this matter is not excepted from the definition of conditions of employment under section 7103(a)(14)(C) of the Statute. 2. The Proposal Does Not Determine the Conditions of Employment of Nonunit Employees The Agency claims that, since Nonappropriated Fund Instrumentalities (NAFIs) with finite amounts of money are involved herein, the proposal could affect employees outside the bargaining unit. Thus, according to the Agency, the proposal would concern matters beyond the conditions of employment of bargaining unit employees and would be outside its duty to bargain. The Agency, in essence, is claiming that, if it pays more toward the cost of health insurance premiums for bargaining unit employees than it pays for nonbargaining unit employees, the latter employees will be affected thereby either because they will receive less toward their health insurance premiums or less towards the cost of some other employer-provided benefit than they had previously received. It is well settled that matters which are conditions of employment of employees in a bargaining unit and are within the discretion of the agency involved are within the duty to bargain. For example, National Treasury Employees Union, Chapter 6 and Internal Revenue Service, New Orleans District, 3 FLRA 748, 759-60 (1980). Proposals which directly determine, that is prescribe, the conditions of employment of nonunit employees are outside the duty to bargain. However, otherwise negotiable proposals which directly determine conditions of employment of bargaining unit employees are not rendered nonnegotiable simply because they also affect conditions of employment outside of the bargaining unit to a limited degree or in an indirect way. American Federation of Government Employees, Local 32, AFL-CIO and Office of Personnel Management, 22 FLRA No. 49 (1986), petition for review filed sub nom. American Federation of Government Employees, Local 32 v. Federal Labor Relations Authority, No. 86-1447 (D.C. Cir. Aug. 11, 1986). The Union claims that the proposal does not concern employees outside of the bargaining units involved and states that it "merely requires the agency to do something with respect to bargaining unit employees while allowing the agency to maintain the status quo for employees outside the unit (.)" Union Reply Brief at 8. The proposal does not prescribe what the Agency would pay towards the cost of nonbargaining unit employee benefits or even that it make lesser contributions as opposed to using other means to finance its increased costs with respect to bargaining unit employee benefits. Consequently, we cannot conclude that the proposal directly determines the conditions of employment of nonunit employees. Based on the principles set forth above, the Agency's argument does not present a basis for finding the proposal nonnegotiable. Moreover, we believe the argument is basically flawed. Much of collective bargaining entails the distribution of finite resources. The Agency's argument seems to presume that Congress intended to establish a system in which the duty to bargain arises only where infinite resources are available to it. Compare American Federation of Government Employees v. Federal Labor Relations Authority, 785 F.2d 333, 337-8, (D.C. Cir. 1986) in which the Court noted that under the Statute an agency was not released from its duty to bargain whenever it had suffered economic hardship. 3. The Proposal Does Not Directly Interfere With Management's Right To Determine Its Budget Under Section 7106(a)(1) The Agency also contends that since it has decided to pay 46% of the cost of health insurance premiums for all covered employees, any increase in the employer's share of bargaining unit employee premium payments would require adjustments to other budgetary allocations considering the funding process of NAFIs. Thus, according to the Agency, the proposal has a direct impact on budgetary items and interferes with management's right to determine its budget. We find that the Union's proposal would not directly interfere with the Agency's right to determine its budget. Under the test set forth in American Federation of Government Employees, AFL-CIO and Air Force Logistics Command, Wright-Patterson Air Force Base, Ohio, 2 FLRA 604 (1980), enforced as to other matters sub nom. Department of Defense v. Federal Labor Relations Authority, 659 F.2d 1140 (D.C. Cir. 1981), cert. denied sub nom. AFGE v. FLRA, 455 U.S. 945 (1982), we find that the proposal does not require the Agency to include a particular program or operation in its budget. Employer contributions to the cost of employee health insurance premiums are already included in budgets of the NAFIs at Eglin and Hurlbut Air Force Bases. Agency Statement of Position at 10-14. The proposal does not directly determine the specific amount which the Agency must allocate to that program. It establishes a percentage of the total premium cost to be absorbed by the Agency. What that percentage means in terms of the amount to be budgeted depends on factors not covered by the proposal, but within the Agency's control, such as total premium cost and number of employees subject to the health insurance program. Furthermore, the Agency has not made a substantial demonstration that the proposal would result in significant and unavoidable costs which are not offset by compensating benefits. The Agency claims that implementation of the Union's proposal would potentially increase the costs of the employer's share of health insurance premiums. Agency Statement of Position at 11-13. The Agency does not show, however, that such an increase would be unavoidable or that it would not be offset by compensating benefits. 4. The Agency Has Not Demonstrated a Conflict Between the Proposal and Agency Regulations The Agency argues that a compelling need exists for a uniform, centrally managed health insurance program. It contends that its program, including its policy determinations as to the employer contributions to the premium cost, meets the Authority's criteria for determining compelling need set forth at 5 CFR Section 2424.11(a). In its statement of position it provides no specific citation to its rules and regulations but relies generally on Department of the Air Force and Department of Defense regulations which set forth personnel policies and procedures pertaining to NAF instrumentalities and employees. It has submitted "relevant excerpts" of Air Force Regulations 34-3 and 40-7 as well as Department of Defense Regulation 1401.1-M. To establish a compelling need for an agency-wide regulation, an agency must: (1) identify a specific agency-wide regulation; (2) show that there is a conflict between its regulation and the proposal; and (3) demonstrate that its regulation is supported by a compelling need with reference to the Authority's standards set forth in section 2424.11 of its regulations. Generalized and conclusionary reasoning is not enough to support a finding of compelling need. American Federation of Government Employees, AFL-CIO, Local 3804 and Federal Deposit Insurance Corporation, Madison Region, 21 FLRA No. 104 (1986) (Proposal 7). Here, the Agency has not even demonstrated that the proposal actually conflicts with a specific agency-wide regulation. The excerpts of regulations which it has submitted generally set forth policies, organization, and practices for the administration and management of NAFIs and their employees. Among other things, the regulations place responsibility for policy direction of all Air Force NAFIs with the Air Force Welfare Board (AFWB) and provide for an Agency-sponsored group health insurance plan. However, nowhere do the excerpted portions of the regulations submitted prescribe what percentage of the premium will be paid by the employer or even that the percentage should be uniform throughout the Agency NAFI system. Moreover, we do not view local negotiations over the level of employer contribution to the premium as inherently inconsistent with the general concept of providing central management and policy direction in the NAFI system or a uniform program of health insurance benefits. See American Federation of Government Employees, AFL-CIO, Local 2670 and Army and Air Force Exchange Service, Keesler Air Force Base Exchange, Mississippi, 10 FLRA 71, 73-75 (1982). Therefore, the Agency's assertion that the proposal conflicts with an agency rule or regulation for which a compelling need exists cannot be sustained. The reliance placed by the Agency on the decision of the Federal Labor Relations Council in American Federation of Government Employees Local 1778 and McGuire Air Force Base, New Jersey, 6 FLRC 136 (1978) is inapposite. First of all, in McGuire Air Force Base the Council found that the agency had established a conflict between the proposals which were in dispute and the agency's regulations. The Agency has not established such a conflict in the present case. Moreover, the proposals which were involved in McGuire Air Force Base are materially different from the proposal in the present case for the following reasons. Proposals I and III in McGuire Air Force Base would have rendered negotiable the pay of certain categories of NAFI employees. The Council held that the agency had established that its regulations concerning employee pay with which the proposal conflicted were essential to effectuate the "public interest" which, the Council stated, was "expressly set forth by Congress in Public Law 92-392" which covered some NAFI employees and had been extended administratively to cover other NAFI employees, including those to whom the proposals would apply, "'consistent with (an agency) commitment to Congress' during the legislative process." In the present case no such public interest, either Congressionally or otherwise defined, has been established by the Agency. Proposal IV in McGuire Air Force Base sought to establish a separate retirement plan for employees in the bargaining unit in place of the single plan which existed to cover all NAFI employees in the Air Force. The agency established that the public interest in a financially solvent, secure and completely dependable plan for retiring NAFI employees would not be effectuated by the separate plan which was proposed. In sharp contrast, the proposal at issue in the present case does not seek to except the NAFI employees at Eglin Air Force Base from the central health insurance program which the Agency has established. Moreover, it has not been shown that the proposal would prevent the effectuation of the public interest in assuring a dependable health insurance program for any NAFI employees. Finally, while not of controlling significance as to determining whether a matter is within the duty to bargain under the Statute, we note that for most Federal employees, there is a wide selection of health plans from which to choose. The choices range from different benefits to different levels of contribution by both the individual and the Federal government. These plans have been negotiated with the providers of the health plans. Through this procedure, these employees have been given the capability to select the plan which meets their needs and, most importantly, is within their financial ability to pay. It would seem that this same capability should be available to other employees. V. Summary and Conclusion The subject of wages and fringe benefits is not in and of itself excluded from the scope of the duty to bargain as defined by the Statute. The proposal in this case does not relate to a matter which is specifically provided for by Federal statute and, therefore, does not come within the exceptions to the definition of conditions of employment under section 7103(a)(14)(C) of the Statute. Moreover, the proposal does not determine the conditions of employment of nonunit employees or interfere with the Agency's right to determine its budget. Lastly, the Agency has not established that the proposal conflicts with an agency rule or regulation for which a compelling need exist. Consequently, we find that the proposal is within the duty to bargain. VI. Order The Agency shall upon request or as otherwise agreed to by the parties, negotiate over the Union's proposal. 13/ Issued, Washington, D.C., December 9, 1986. Henry B. Frazier III, Member Jean McKee, Member FEDERAL LABOR RELATIONS AUTHORITY DISSENTING OPINION OF CHAIRMAN CALHOUN I respectfully disagree with my colleagues. I conclude that the proposal in this case is not a proper subject of bargaining. I also disagree with my colleagues in their analysis of the extent to which wages and money-related fringe benefits (including the determination of health insurance benefits) are appropriate subjects of collective bargaining for certain Federal employees beyond this case. Non-appropriated Fund Instrumentality (NAFI) employees are a unique group of Federal employees. Although they enjoy the right to organize and bargain collectively under the Federal Service Labor-Management Relations Statute (the Statute), they do not serve in the competitive service and are not subject to a wide range of the statutorily created benefits (and strictures) shared by most Federal employees. See 5 U.S.C. Section 2105. In lieu of the statutory and regulatory scheme applied to most Federal employees, NAFI employment within the Department of Defense is generally governed by a comprehensive regulatory scheme emanating from the Secretary of Defense and further implemented world-wide by various components of the military departments. In my view, this regulatory scheme equates to the statutory provisions affecting the wages and monetary fringe benefits of most Federal employees. As such, I conclude that a compelling need exists for the regulatory scheme, and matters provided for by those regulations are therefore not a proper subject of collective bargaining. Eight years ago the Authority's predecessor organization, the Federal Labor Relations Council, addressed the efficacy of these very same regulations. In American Federation of Government Employees, Local 1778 and McGuire Air Force Base, New Jersy, 6 FLRC 136 (1978), the Union sought to negotiate proposals concerning both the pay and retirement systems for NAFI employees. The Council found both proposals to be nonnegotiable because a compelling need existed for the Department of Defense and Department of the Air Force Regulations setting forth comprehensive compensation schemes concerning the subject matter of the proposals. Specifically with respect to the matter of contributions to the retirement plan, the Council found that the centrally administered retirement program which provided benefits generally comparable to those provided Federal Civil Service employees, "effectuates the public interest" and that "uniformity is essential to the assurance of a financially solvent and fully reliable retirement program for the NAF employees here involved." 6 FLRC at 148. While I recognize that the criteria used to determine compelling need questions have been modified under Authority regulations, those modifications do not prevent reaching the same conclusion in the instant case. It is my view that the regulatory scheme remains "essential, as distinguished from helpful or desirable, to the accomplishment of the mission or execution of functions of the agency . . . in a manner which is consistent with the requirements of an effective and efficient government." 5 C.F.R. Section 2424.11(a). I find no reason to depart from the holding and precedent of the Council in McGuire Air Force Base. See 5 U.S.C. Section 7135. I share the same concerns expressed by the Council about the need for uniformity of treatment of NAFI employees. To have such matters negotiable at Eglin Air Force Base and nonnegotiable at McGuire Air Force Base makes no sense whatsoever. These concerns lead me to conclude that absent evidence of express Congressional intent to make wages and monetary fringe benefits a subject of collective bargaining in the Federal sector the Authority should not, as a general proposition, find such proposals negotiable. Although I believe this case can, and should be, resolved on the basis of compelling need, it is my opinion that extremely important public policy considerations attach to the Authority's adjudication of a number of pending cases now before us which involve the negotiability of bargaining proposals relating to matters of compensation or monetary-related fringe benefits. These cases require uniform resolution of issues similar to the one in this case. Therefore I turn to the question my colleagues raise as to what issues relating to wages and money-related fringe benefits are in their view appropriate subjects of collective bargaining. As described in the majority opinion, the wages and fringe benefits of most Federal employees are established by law. However, there are in excess of 40 Federal pay systems which are not subject to statutorily determined salary and wage schedules. Agency heads have the authority under these systems to determine the pay of Federal service employees working within their respective agencies. Many of these compensation systems have evolved without any apparent recognition, endorsement, or legislative attention by the Congress. My colleagues conclude that in every case where there is discretion involved or when Congress is silent, the matters at issue are appropriate for collective bargaining. The hypothesis has superficial appeal. I would, however, go further to recognize that as Members of the Authority we have an affirmative obligation to look behind such pronouncements and weigh the interests of the parties, and all related policy considerations. Sometimes examination of these factors will indicate a necessity for judicial restraint in the face of Congressional silence, and a finding to withhold a matter from bargaining. I believe that is the case here. In the absence of a clear expression of Congressional intent to make these matters negotiable, the Authority should not imply such an intent. The legislative history discussed in the majority opinion is not conclusive of the matter but does, I believe, lend support to the general proposition that Congress in enacting the Statute did not intend wage and monetary fringe benefits to be included in the basic scope of Federal sector collective bargaining. For example, Congressmen Clay and Ford, the primary sponsors of the labor management relations bill, stated in Supplementary comments to the staff report accompanying their bill: Those 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. Enactment of the committee approved labor-management title will continue to deny to Federal employees most of the collective bargaining rights which their counterparts in the private sector have enjoyed for over 40 years. Among the collective bargaining rights not included in the bill are: . . . . . . . (2) The right to bargaining collectively over pay and money-related fringe benefits such as retirement benefits and life and health insurance(.) H.R. REP. NO. 95-1403, 95th Cong., Sess. 377 (1978); Legislative History, at 721. Congressman Udall, whose substituted version of the Ford-Clay bill formed the basis for the legislation enacted by Congress, stated: There is not really any argument in this bill or in this title about Federal collective bargaining for wages and fringe benefits and retirement -- the kinds of things that are givin us difficulty in the Postal Service today. All these major regulations about wages and hours and retirement and benefits will continue to be established by law through congressional action. (emphasis supplied) 124 Cong. Rec. H 9633 (daily ed. Sept. 13, 1978); Legislative History, at 923. Congress did not provide specific authorization for negotiation of pay and fringe benefit matters affecting the wide variety of administratively determined pay systems which are not a part of the statutory Federal pay structure. Thus, it is my view that the question of the negotiability of such matters is not definitively resolved by resort to the legislative history of the Statute. Absent specific indication of a Congressional intent to make pay and monetary fringe benefits a subject of labor-management negotiations, I believe that strong public policy considerations exist for permitting agencies to establish unified, consistent systems for determining such matters. To find such matters generally negotiable would likely result in the internal balkanization of salaries and benefits within the various pay systems. This would destroy the uniformity sought by the Congress in providing specific methodologies for pay setting in administratively determined systems. I find support for this determination in certain actions taken by Congress in the past. When Congress passed the Postal Reorganization Act (PRA), 39 U.S.C. Sections 101-5605 (1976 & Supp. V 1981), it gave postal employees the right to bargain over all compensation, benefits and other conditions of employment. Congress in effect "created a new kind of Federal employee." /1/ "Postal workers would henceforth be hybrid employees, with some of the rights and benefits of federal employees and some of the rights and benefits of private employees, most importantly, the right to bargain collectively (on compensation issues)." American Postal Workers Union v. U.S. Postal Service, 707 F.2d 548, 556 (D.C. Cir. 1983). Thus where Congress chose to introduce unrestricted wage and benefit bargaining into the federal labor relations scheme, it manifested such an intent by statutory expression which serves to define the parameters within which such activity would be conducted. /2/ Other variations to the normal Federal pay setting structure are also evidenced by affirmative Congressional action. When Congress established the "prevailing rate system," 5 U.S.C. Sections 531-5349, /3/ and allowed collective bargaining by certain skilled trade and craft employees on monetary issues, it did not leave the parties to determine the scope of such negotiations but instead provided clear procedures for the determination of such matters. Previous Congressional expressions that collective bargaining by such employees was in the public interest were specifically carried forward in section 704 of the Civil Service Reform Act. See, for example, Columbia Power Trades Council and United States Department of Energy, Bonneville Power Administration, 22 FLRA No. 100 (1986). In International Organization of Masters, Mates, and Pilots v. Brown, 698 F.2d 536 (D.C. Cir. 1983), the court, in finding that high ranking civilian mariners were subject to the "pay cap" provisions of 5 U.S.C. Section 5373, stated that "Congress wanted the pay cap to cut a wide swath . . . Congress deliberately and expressly carved out certain exceptions . . . but did not exempt the mariners." Id. at 542. Absent indications to the contrary I can only conclude that Congress intended by its expressions of intent that wages and money-related fringe benefits be excluded from collective bargaining, to cut the same "wide swath" when it enacted the Statute. With the notable exception of prevailing rate employees and postal workers, I conclude that Congress envisioned that the pay and monetary benefits of Federal employees covered by the Statute be set in a uniform manner, whether by statute or administrative action. Congressional recognition of the need for stability and uniformity among prevailing rate employees is found in 5 U.S.C. Section 5341, and the Authority has previously accepted such a finding in determing the existence of a "compelling need" for agency regulations setting uniform pay systems for employees not covered by, but serving in positions analogous to, those covered by the General Schedule. National Treasury Employees Union, Chapter 207 and Federal Deposit Insurance Corporation, Washington, D.C., 14 FLRA 598 (1984), decision on remand, 21 FLRA No. 36 (1986). Jerry L. Calhoun, Chairman --------------- FOOTNOTES$ --------------- (1) 116 Cong.Rec. 20,229 (1970) (remarks of Congressman Udall.) (2) Postal Service labor-management relations are conducted under the National Labor Relations Act (NLRA), 29 U.S.C. Section 151, et seq. In enacting the Federal Service Labor-Management Relations Statute, Congress did not include employees of the Postal Service, or the Tennessee Valley Authority (an analogous labor relations situation) within the coverage of the basic Federal section program. (3) The prevailing rate system provides method by which the pay of certain craft and skilled employees may be adjusted from time to time so that their compensation is consistent with that of employees in the private sector. Such adjustment must be accomplished "consistent with the public interest." See National Maritime Union of America v. United States, 682 F.2d 944 (Ct. Cl. 1982). APPENDIX 1/ H.R. REP. NO. 95-1403, 95th Cong., 2nd Sess. 12 (1978); Legislative History of the Federal Service Labor-Management Relations Statute, Title VII of the Civil Service Reform Act of 1978 at 682. (Herein after referred to as "Legislative History.") 2/ H.R. REP. NO. 95-1403, 95th Cong., 2nd Sess. 44 (1978); Legislative History at 690. 3/ See the remarks of Congressman Ford, 124 Cong. Rec. H8468 (daily ed. Aug. 11, 1987); Legislative History at 855-56. 4/ See the statement of Congressman Collins in support of his substitute for the House Committee bill: The House committee bill, on the other hand, broadly defines scope of bargaining by saying that "conditions of employment" excludes only matter relating to discrimination, political activities, and those few specifically prescribed by law -- for example, pay and benefits. 124 Cong. Rec. H9624 (daily ed. Sept. 13, 1978); Legislative History at 906. 5/ See the remarks of Congressman Udall, 124 Cong. Rec. H9633 (daily ed. Sept. 13, 1978); Legislative History at 923: "All these major regulations about wages and hours and retirement and benefits will continue to be established by law through congressional action." 6/ See, for example, H.R. REP. No. 95-1403, 95th Cong., 2nd Sess. 5 (1978); Legislative History at 681 which states as follows: Title VII establishes a new program and provides for greater employee and employee organization participation. However, title VII does not authorize collective bargaining on substantive issues of pay and fringe benefits, as is currently permitted in some agencies, such as the Postal Service, the Tennessee Valley Authority, and the Bonneville Power Administration. Congressmen Clay and Ford, the primary sponsors of the labor-management relations bills previously introduced in Congress, stated in supplementary comments to the Committee Report as follows: Those 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. Enactment of the committee approved labor-management title will continue to deny to Federal employees most of the collective bargaining rights which their counterparts in private sector have enjoyed for over 40 years. Among the collective bargaining rights not included in the bill are: . . . . . . . (2) The right to bargain collectively over pay and money-related fring benefits such as retirement benefits and life and health insurance(.) H.R. REP. NO. 95-1403, 95th Cong., 2nd Sess. 377 (1978); Legislative History at 721. Congressman Clay and Ford reiterated this position in their comments supporting H.R. 11280 in the House debate on the bill. In particular, Congressman Clay states as follows: I also want to assure my colleagues that there is nothing in this bill which allows Federal employees . . . to negotiate over pay and money-related fringe benefits. 124 Cong. Rec. H8466 (daily ed. Aug. 11, 1978); Legislative History at 853. See also the remarks of Congressman Clay at 124 Cong. Rec. E429 (daily ed. Aug. 3, 1978); Legislative History at 839-40. Congressman Ford stated as follows: A committee print of title VII was used for markup purposes. That print was similar to H.R. 9094 (a bill sponsored by Congressmen Clay and Ford) except that . . . there was no provision for the negotiation of pay and other major money related fringe benefits. I have been quite frankly surprised with the rhetoric and hysteria that has accompanied consideration of title VII. It is not a radical departure from the present system, but is a small, incremental step forward. As the sponsor of H.R. 1589, the Federal Employees Labor Relation Act of 1977, the predecessor to H.R. 9094, which provided for the negotiation of pay and fringe benefits; the negotiation of all agency regulations; and automatic agency shop; and a limited right to strike (based on Canadian law) -- all of which, I might emphasize, have been deleted from title VII -- I can assure Members that expansion in the scope of bargaining in title VII has been a very modest, incremental step that comes nowhere near the scope of bargaining that most (s)tates permit for public employees or that we permit for postal workers. 124 Cong. Rec. H8467 (daily ed. Aug. 11, 1978); Legislative History at 854-6. For other statements on this subject in the legislative history, see statement of Congressman Clay, 124 Cong. Rec. E4509 (daily ed. Aug. 10, 1978), Legislative History at 844-845; statement of Congressman Udall, 124 Cong. Rec. H8462-3 (daily ed. Aug. 11, 1978), Legislative History at 850-51; statement of Congressman Derwinski, 124 Cong. Rec. H9639 (daily ed. Sept. 13, 1978), Legislative Hisotry at 935; statement of Congressman Ford, 124 Cong. Rec. H9648-51 (daily ed. Sept. 13, 1978), Legislative History at 952-958; statement of Congressman Rousselot, 124 Cong. Rec. H9651-52 (daily ed. Sept. 13, 1978), Legislative History at 958-959; statement of Congressman Fisher, 124 Cong. Rec. H9668-69 (daily ed. Sept. 13, 1978), Legislative History at 964; Statement of Senator Sasser, 124 Cong. Rec. S14280-82 (daily ed. Aug. 24, 1978), Legislative History at 1014-1015. See also S. REP. NO. 95-969, 95th Cong., 2nd Sess. 12-13 (1978), Legislative History at 749-750. 7/ Section 704 of the Civil Service Reform Act of 1978 provides as follows: Sec. 704. (a) Those terms and conditions of employment and other employment benefits with respect to Government prevailing rate employees to whom section 9(b) of Public Law 92-392 applies which were the subject of negotiation in accordance with prevailing rates and practices prior to August 19, 1972, shall be negotiated on and after the date of the enactment of this Act in accordance with the provisions of section 9(b) of Public Law 92-392 without regard to any provision of chapter 71 of title 5, United States Code (as amended by this title), to the extent that any such provision is inconsistent with this paragraph. (b) The pay and pay practices relating to employees referred to in paragraph (1) of this subsection shall be negotiated in accordance with prevailing rates and pay practices without regard to any provision of -- (A) chapter 71 of title 5, United States Code (as amended by this title), to the extent that any such provision is inconsistent with this paragraph; (B) subchapter IV of chapter 53 and subchapter V of chapter 55 of title 5, United States Code; or (C) any rule, regulation, decision, or order relating to rates of pay or pay practices under subchapter IV of chapter 53 or subchapter V of chapter 55 of title 5, United States Code. 8/ Pub. L. No. 92-392, Section 9(b), provides as follows: Sec. 9. (b) The amendments made by this Act shall not be construed to -- (1) abrogate, modify, or otherwise affect in any way the provisions of any contract in effect on the date of enactment of this Act pertaining to the wages, the terms and conditions of employment, and other employment benefits, or any of the foregoing matters, for Government prevailing rate employees and resulting from negotiations between Government agencies and organizations of Government employees; (2) nullify, curtail, or otherwise impair in any way the right of any party to such contract to enter into negotiations after the date of enactment of this Act for the renewal, extension, modification, or improvement of the provisions of such contract or for the replacement of such contract with a new contract; or (3) nullify, change, or otherwise affect in any way after such date of enactment any agreement, arrangement, or understanding in effect on such date with respect to the various items of subject matter of the negotiations on which any such contract in effect on such date is based or prevent the inclusion of such items of subject matter in connection with the renegotiation of any such contract with a new contract, after such date. 9/ See A Policy for Employee-Management Cooperation in the Federal Service, Report of the President's Task Force on Employee-Management Relations in the Federal Service (November 30, 1961, Legislative History at 1177, 1200-01. The Report stated as follows: It must be recognized that a major and perhaps controlling distinction between the type of employee-management relations that have developed in private industry and those which are possible in the Federal service is that in the latter neither the employer nor his employees are free to bargain in the ordinary sense. The employees cannot strike, nor be represented by an organization affiliated with a group which asserts the right to strike against the Government. The employer in most parts of the Federal Government cannot negotiate on pay, hours of work or most fringe benefits. These are established by law. Generally, negotiations may take place on policies in such areas of employee concern as working conditions, promotion standards, grievance procedures, safety, transfers, demotions, reductions in force, and other matters, consistent with merit system principles. It may be noted that in the public hearings held by the Task Force the representatives of the major employee organizations in the Federal Government made it clear that they are aware of these limitations and are quite content to negotiate within them. In this matter as in most others, the Task Force is of the opinion that each department and agency of the Government should be left to determine its own practice. As a general rule, however, it may be said that a negotiable matter must be within administrative discretion, that is, it must be within the authority of the manager who is negotiating, and permissible by applicable laws, executive orders, and Administration and agency policy. In general, it will be in the area of working conditions and personnel policies and practices. It should not include matters concerning an agency's mission, its budget, its organization and assignment of personnel, or the technology of performing its work. Major reorganizations or changes in work methods, while not negotiable themselves, will involve implementation problems that may be negotiable such as promotion, demotion and training procedurs. Specific areas that might be included among subjects for consultation and collective negotiations include the work environment, supervisor-employee relations, work shifts and tours of duty, grievance procedures, career development policies, and where permitted by law the implementation of policies relative to rates of pay and job classification. This list is not, of course, all-inclusive, nor should it be expected that every agency will feel free to negotiate in all such areas. 10/ To the extent that a matter affecting conditions of employment is not specifically provided for by law and is not otherwise inconsistent with law and regulation it is within the agency's discretion. As the portion of the Report accompanying E.O. 10988 quoted above at note 9, indicates, such discretion has been subject to bargaining since the outset of the labor relations program in the Federal Government. The Federal Labor Relations Council consistently held that otherwise negotiable matters which were within an agency's discretion were subject to collective bargaining. See, for example, National Treasury Employees Union and Department of the Treasury, U.S. Customs Service, Region VII, 5 FLRC 250, 252 (1977). The Authority has similarly interpreted the Statute. See, for example, National Treasury Employees Union, Chapter 6 and Internal Revenue Service, New Orleans District, 3 FLRA 748, 759-62 (1980). Consistent with this long-standing precedent in the Federal sector, the Authority has held that where matters relating to wages and fringe benefits are within an agency's discretion under law and regulation they are within the duty to bargain. See Section IV.A.3 of this decision; For Bragg Unit of North Carolina Association of Educators, National Education Association and Fort Bragg Dependents Schools, Fort Bragg, North Carolina, 12 FLRA 519 (1983). 11/ See Library of Congress v. Federal Labor Relations Authority, 699 F.2d 1280, 1285-6 (1983), in which the Court in analyzing the legislative history of the Statute noted that Congress intended the bargaining obligation to be construed broadly. 12/ 5 U.S.C. Section 2105(c) provides: Section 2105. Employee . . . . . . . (c) An employee paid from nonappropriated funds of the Army and Air Force Exchange Service, Army and Air Force Motion Picture Service, Navy Ship's Stores Ashore, Navy exchanges, Marine Corps exchanges, Coast Guard exchanges, and other instrumentalities of the United States under the jurisdiction of the armed forces conducted for the comfort, pleasure, contentment, and mental and physical improvement of personnel of the armed forces is deemed not an employee for the purpose of -- (1) laws (other than subchapter IV of chapter 53 and sections 5550 and 7204 of this title) administered by the Office of Personnel Management; or (2) subchapter I of chapter 81 and section 7902 of this title. This subsection does not affect the status of these nonappropriated funds activities as Federal instrumentalities. 13/ In finding that this proposal is within the duty to bargain, we make no judgment as to its merits.