To: DHS/OPM HR System Public Comments

From: Joseph N. Ingolia, Chief Administrative Law Judge

Peter A. Fitzpatrick, Administrative Law Judge

Parlen L. McKenna, Administrative Law Judge

Thomas E. McElligott, Administrative Law Judge

Walter J. Brudzinski, Administrative Law Judge

Edwin A Bladen, Administrative Law Judge

Date: November 13, 2023

# [COMMENTS ON]{.underline}

# [DEPARTMENT OF HOMELAND SECURITY HUMAN RESOURCES MANAGEMENT SYSTEMS PROPOSED RULE PUBLISHED IN 69 FR 8030-71 (FEB. 20, 2004)]{.underline}

DOCKET NUMBER: DHS-2004-001

RIN NUMBER: 3206-AK31

ISSUE - RAISING THE SALARY CAP FOR UNITED STATES COAST GUARD
ADMINISTRATIVE LAW JUDGES

This is in response to the request for public comments on the Department
of Homeland Security Human Resources Management System proposed rule
published in 69 FR 8030-71 on February 20, 2004 \[Docket Number:
DHS-2004-001, RIN Number: 3206-AK31\]. This filing is made on behalf of
the above named Administrative Law Judges currently employed by the
United States Coast Guard (Coast Guard). Administrative Law Judges
(ALJs) have consistently been paid in a similar manner as Senior
Executive Service (SES) and other senior-level employees. The proposed
rule, by not including Administrative Law Judges in its coverage,
authorizes maximum basic pay levels at Level III of the Executive
Schedule while limiting ALJ pay to Level IV. This creates pay disparity
among senior level employees. The rules permit the creation of parallel
systems to eliminate pay disparities. We request that the rules be
amended to correct this disparity.

On November 25, 2002, President Bush signed Public Law 107-296, the
Homeland Security Act. The Act created the Department of Homeland
Security (DHS), and merged more than twenty (20) agencies into DHS. The
Coast Guard was one of the merged agencies and its employees are now
employees of DHS.

DHS was created with the overriding mission of protecting the Nation
against terrorist attacks. To carry out that mission, under 5 U.S.C.
9701, Congress authorized a new Human Resource (HR) Management System
within DHS, to be established jointly by DHS and the Director of OPM.
The proposed regulation initiates the new HR system in DHS. However, in
doing so, it notes that the regulations do not apply to certain
employees. The proposed rules specifically exempt certain employees
(Sec. 9701.102(d)), such as TSA employees, Secret Service, uniformed
officers, Coast Guard military members and Academy faculty. These
employees are not subject "for coverage under any performance management
system" or to "adverse action provisions \... ." The preamble states
that ALJs are not covered. However, the rules are silent except as to
the ALJ exemption for Subpart F Adverse Actions. The interim regulations
further provide in Sec. 9701.102(e) that:

"Notwithstanding paragraph (d) of this section, nothing in this part
prevents the Secretary or other authorized DHS official from using an
independent discretionary authority to establish a parallel system that
follows some or all of the requirements in this part for a category of
employees who are not eligible for coverage under the authority provided
by 5 U.S.C. 9701."

### Relevant Regulatory Provisions

Under the new regulations the new HR system will permit basic pay up to
level III of the Executive Schedule. It states:

##  Sec 9701.312 Maximum Rates.

(a) DHS may not pay any employee an annual rate of basic pay in excess
    of the rate for level III of the Executive Schedule, except as
    provided in paragraph (b) of this section.

(b) DHS may establish the maximum annual rate of basic pay for members
    of the SES at the rate of level II of the Executive Schedule if DHS
    obtains the certification specified in 5 U.S.C. 5307(d).

As to paragraph (b) above, it evolved as a result of legislation passed
by the Congress (Section 1125 of Pub. L. 108-136, H.R. 1588 \[National
Defense Authorization Act\]) which specifically raised the ceiling for
SES personnel from Executive Schedule Level IV to Level III. This
legislation raises it further to Level II while doing away with locality
pay and creating a new performance system.

It is also well to note, that in § 9701.202(b), and in accordance with §
9701.102(e), DHS extended coverage to exempt categories as follows:

(1) Employees and positions that would otherwise be covered by the
    General Schedule classification system established under 5 U.S.C.
    chapter 51;

(2) Employees and positions that would otherwise be covered by a
    prevailing rate system established under 5 U.S.C. chapter 53,
    subchapter IV;

(3) Employees in senior-level (SL) and scientific or professional (ST)
    positions who would otherwise be covered by 5 U.S.C. 5376; and

(4) Members of the Senior Executive Service who would otherwise be
    covered by 5 U.S.C. Chapter 53, subchapter VIII, subject to §
    9701.102(b).

So, the regulations now provide that the maximum basic pay for any
covered employee is limited to Executive Level III by 5 CFR 9701.312.
This means that current SES, SL and ST members, as well as current
GS-15, and perhaps GS-14 are eligible for Level III but ALJs are not.

Despite the fact that ALJs are precisely in the same situation as SES,
SL and ST, insofar as being exempt from "section 9701 authority," the
regulations make no provision for including ALJs in the § 9701.202
coverage. We do not believe the omission arose because of a departure
from the principles of fairness, respect and trust that the rules
specifically seek to engender, but rather from a legal and conceptual
conflict that, in our view, is readily resolved.

**[The ALJ Issue]{.underline}**

ALJs have not been included in coverage because the new rules are
predicated on performance-based pay, which can be applied to SES, SL and
ST, but not to ALJs \-- at least not on the basis of the current law.
The administrative law judge was created as part of the Administrative
Procedure Act \[5 U.S.C 551-599\]. [See]{.underline} 5 U.S.C. 556, 3105.
The purpose was to create a neutral decision-maker for administrative
adjudications. [See]{.underline} 5 U.S.C. 556. To help ensure
independence and neutrality, Congress prohibited ALJs from being
responsible to or subject to the supervision or direction of any
employee or agent engaged in the performance of investigative or
prosecuting functions for an agency \[[see]{.underline} 5 U.S.C.
554(d)(2)\], and Congress statutorily exempted ALJs from performance
evaluations by their agencies. [See]{.underline} 5 U.S.C.
4301(2)(D)(excluding ALJs from the definition of "employee" with respect
to performance appraisals). Further, Congress originally provided for an
ALJ pay schedule to be set by OPM without regard to agency rating or
recommendations. [See]{.underline} 5 U.S.C. 5372 (1989). OPM initially
set ALJ pay using the General Schedule. Pay ranged from GS-15 through
GS-18. For most agencies, ALJ pay was the equivalent to SES pay, which
was set at GS-16 through GS-18.

In 1990, the ALJ pay system was created and 5 U.S.C. 5372 was amended.
This system created three pay bands for ALJs. AL-3 with six stages of
pay based on experience only. And AL-1 and AL-2 with a single pay stage
for judges with managerial or administrative duties. At the same time,
Congress eliminated all GS-16 through GS-18 grades and created other
senior level positions (including the SES, ST, and SL systems) under 5
U.S.C. 5376. As has been noted, the SL and STs are subject to the new HR
system as well as the SES.

Actually, ALJs were originally included in two bills that would have
raised the Executive Level cap for SES personnel, Senior Executive
Service Reform Act of 2003, S. 768, § 4 (Apr. 2, 2003); H.R. 1602, §
2(b) (Apr. 3, 2003). The bills were not enacted. Later, the SES pay cap
was raised to level III by Section 1125 of Pub. L. 108-136, H.R. 1588
\[National Defense Authorization Act\]. The ALJ pay cap has not been
raised and remains at level IV.

In 2004, two bills specifically relating to increasing the ALJ pay cap
was introduced. [See]{.underline} Administrative Law Judge Pay Reform
Act of 2004, H. R. 3737, § 2 (Jan. 28, 2004); Administrative Law Judge
Pay Reform Act of 2004, S. 2064, § 2 (Feb. 11, 2004). However, the bills
chance of passage is minimal because OPM opposes the pay increase since
it is not performance-based.

**[Alternative Solutions]{.underline}**

From all of the above, one can understand the nature of the conundrum.
OPM wants performance-based pay and ALJs cannot now be paid that way
because the law specifically exempts ALJs from the performance
management system. We would respectfully suggest that there is a need
for DHS to address this problem in the proposed regulations. Indeed, not
to do so would foster the disparate treatment the present regulations
have otherwise avoided. We would suggest that there is a way to satisfy
OPM, and at the same time, include ALJs with the other exempt employees.
To do so, it is necessary to recognize that lifting the pay cap from one
Executive Level to another is not, of itself, an indicia or component of
performance-based pay. The purpose of the cap is to simply place a
maximum amount that an employee can earn in a particular category of
employment. In practice, Congress almost always uses its own pay
structure as a base in applying the cap. On the other hand, performance
factors relate to different considerations such as establishing policies
regarding setting and adjusting pay ranges or bands (§ 9701.321 and
9701.322) or policies regarding employees' eligibility for pay increases
based on adjustments in rate ranges and supplements (§ 9701.323 and
9701.325), or policies regarding performance-based pay increases (§
9701.341 through 9701.345).

This comment only addresses the pay cap that is applied to ALJs. It
recommends that DHS adopt the same pay cap that is applied to its
employees generally, to SES personnel, and to ST and SL employees, by
adding to § 9701.202, (b)(5) as follows:[^1]

\(b\) The following employees and positions are eligible for coverage
under this subpart:

(1) Employees and positions that would otherwise be covered by the
    General Schedule classification system established under 5 U.S.C.
    chapter 51;

(2) Employees and positions that would otherwise be covered by a
    prevailing rate system established under 5 U.S.C. chapter 53,
    subchapter IV;

(3) Employees in senior-level (SL) and scientific or professional (ST)
    positions would otherwise be covered by 5 U.S.C. 5376;

(4) Members of the Senior Executive Service would otherwise be covered
    by 5 U.S.C. chapter 53, subchapter VIII, subject to Sec.
    9701.102(b), and

(5) ***Administrative Law Judges who would otherwise be covered by 5
    U.S.C. 5372.***

Any other provisions of the regulation that are pertinent should also be
amended.

The above change in no way affects the ability of DHS and/or OPM to seek
to question or change the procedures for ALJ pay as they relate to
performance-based pay for DHS' ALJs, either in these regulations or,
more broadly, in the Congress. It may well be that the judicial
independence of ALJs is of lesser import than it was when Congress
enacted the APA. Further, it would appear, that the fact that ALJs can
only removed for good cause is an "independence" safety net that is
significant enough to allow an agency, such as DHS, to construct a
performance rubric that applies to ALJs.

If DHS/OPM does not afford the kind of relief described above, we would
submit that the inequity will persist. It seems clear that at some point
OPM's opposition to legislation that would lift the ALJ cap, based on
its insistence for performance-based pay would run afoul not only of the
ALJs' themselves, but of Congress, the American Bar Association,
Association of Administrative Law Judges, Forum and other groups. They
recognize that if the APA remains law, it is patently unfair to oppose
legislation that denies ALJs equitable criteria (performance-based pay)
that the current law itself will not allow. So, in essence, it is
submitted that either these regulations should be amended, as suggested
above, or OPM should inform the Congressional Committee advancing the
lifting of the cap that it no longer opposes such legislation because
they do not satisfy performance based-pay imperatives.

OPM should note, that while the comments made here may have referred
generally to ALJs, the Commenters are specifically commenting on behalf
of Coast Guard/DHS ALJs. Coast Guard ALJs hear Coast Guard Suspension
and Revocation (licensing) cases and Class II (Oil pollution) penalty
cases and are geographically located throughout the United States. They
also hear by law (15 U.S.C. 1541) National Oceanographic and Atmospheric
Administration (NOAA) cases. Transportation Security Administration
(TSA) penalty cases (airport violations) are also heard by CG ALJs. In
addition, by Memorandum of Understanding, CG ALJs have handled U.S.
Equal Employment Opportunity Commission (EEOC) cases and continue to
handle Bureau of Industry and Security (BIS) cases (Commerce Department
cases involving enforcing export control of sensitive goods and
technologies and prevent the illegal export of dual-use items). Once
fully transitioned to DHS, they will be available to handle civil cases
having to do specifically with Homeland Security violations (including
MTSA cases) as well as adverse actions involving Mandatory Removal.
Finally, the CG ALJ Program has developed in a way that achieves a high
percentage of settlements while at the same time hearing cases that come
to decisions expeditiously. Care is taken to insure that the hearing
record is complete. The case records and the Judges' dockets are
maintained at a state of the art Docketing facility.

The above paragraph is not set forth to aggrandize the ALJ Program. It
is meant to convey the need to clarify the ALJ pay status now. In
hearing cases, they offer the highest, most respected and most effective
form of due process for an agency. In DHS, they will be involved in
handling sensitive safety matters, just as they now do in Coast Guard,
NOAA, and TSA cases. These cases require judges who are experienced and
competent and who will be treated fairly and equitably.

Finally, as was explained at the DHS anniversary meeting, the Human
Resource Management System is adjusting to varying needs and the
regulations are a starting point that will be fine-tuned as required.
The commenters recognize the enormity of the undertaking and should you
require further elaboration or comments, we are most anxious to help in
any way we can.

[^1]: Suggested language is in bold italics. All other text is directly
    from the proposed regulation.