Document ID: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-caDC-93-01488/USCOURTS-caDC-93-01488-0/pdf.json

Parties Involved:
American Federation of Government Employees, Local 3295
Petitioner
Federal Labor Relations Authority
Respondent
Office of Thrift Supervision
Intervenor

Document Text:

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United States Court of Appeals

FOR THE DISTRICT OF COLUMBIA CIRCUIT

Argued November 15, 1994 Decided January 27, 1995

No. 93-1488

AMERICAN FEDERATION OF GOVERNMENT

EMPLOYEES, LOCAL 3295,

PETITIONER

v.

FEDERAL LABOR RELATIONS AUTHORITY,

RESPONDENT

OFFICE OF THRIFT SUPERVISION,

INTERVENOR

Petition for Review of an Order of the

Federal Labor Relations Authority and a

Cross-Application for Enforcement

-

Judith D. Galat argued the cause for petitioner. With her on the briefs was Mark D. Roth.

William R. Tobey, Deputy Solicitor, argued the cause for respondent. With him on the brief were

David M. Smith, Solicitor, and Wendy B. Bader, Attorney. William E. Persina entered an

appearance for respondent.

Richard L. Rennert, Attorney, Office of Thrift Supervision, argued the cause for intervenor. With

him on the brief were Thomas J. Segal, Deputy Chief Counsel, and Elizabeth R. Moore, Assistant

Chief Counsel, Office of Thrift Supervision.

Before: WALD, SILBERMAN, and RANDOLPH, Circuit Judges.

Opinion for the Court filed by Circuit Judge SILBERMAN.

Dissenting opinion filed by Circuit Judge WALD.

SILBERMAN, Circuit Judge: In this case, we affirm a decision of the Federal Labor Relations

Authority sustaining the Director of the Office of Thrift Supervision's refusal to bargain over the

compensation and benefits of OTS employees with their union, the American Federation of

Government Employees, Local 3295.

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1The legislation also founded the Resolution Trust Corporation to sell off the assets of failed

thrifts, FIRREA § 501, 103 Stat. 369, abolished the FSLIC and in its stead created the Savings

Association Insurance Fund, operated by the Federal Deposit Insurance Corporation, id. §§ 211,

401(a), 103 Stat. 219, 354, and established the Federal Housing Finance Board to replace the

Federal Home Loan Bank Board as supervisory authority of the Federal Home Loan Banks, id. §

702, 103 Stat. 413. 

I.

Petitioner is the collective-bargaining representative of employees of the Office of Thrift

Supervision (OTS), the federal agency charged with oversight of the nation's savings and loan

industry under the Financial Institutions Reform, Recovery and Enforcement Act of 1989, Pub. L.

No. 101-73, 103 Stat. 183 (FIRREA). Prior to FIRREA's enactment, savings and loan institutions,

also called thrifts, were primarily regulated by the Federal Home Loan Bank Board, an independent

federal agencythat operated the Federal Savings and Loan Insurance Corporation and supervised the

12 private regional Federal Home Loan Banks that were the immediate custodians of the nation's

thrifts. FIRREA responded to a crisis in the thrift industry thought to be caused at least in part by

ineffective and irregular oversight by the Board and the regional Home Loan Banks.

The statute overhauled the existing regulatory framework. It abolished the Board, id. § 401,

103 Stat. 354-55, and entrusted the regulation of the savings and loan industry to the newly created

OTS, a government agency placed within the Treasury Department, id. § 301, 103 Stat. 278-80, 12

U.S.C. §§ 1462a, 1463 (Supp. V 1993).1 All Federal Home Loan Bank staff as well as various Bank

Board and FSLIC personnel engaged in thrift supervisiona body of workers that includes

examiners, lawyers, and accountantsautomatically became employees of OTS. Recognizing that

these organizations had compensated their employees at amounts commensurate with prevailing

private-sector salaries, Congress directed that the transferred personnelthree-quarters of OTS'

initialstaffwere to be compensated at their previous pay levelsfor one year. Id. §§ 403, 404, 722,

103 Stat. 360-63, 426-27. At the Director's discretion, this period of higher payment could be

extended for any employee for an additional two years "[w]here necessary or appropriate to further

the safety and soundness of the thrift industry." Id. § 722(d), 103 Stat. 427.

The question in this case is whether the Director of OTS must negotiate over certain AFGE

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proposalsrelating to the compensation and health benefits of OTS employees, including a request for

three successive 7.5% annual pay increases for every employee over and above whatever salary

increases, bonuses, and awards would otherwise be due. Generally, labor relations in the federal

sector are governed by Chapter 71 of the Civil Service Reform Act of 1978, also referred to as the

Federal Service Labor-Management Relations Statute (FSLMRS), 5 U.S.C. §§ 7101 et seq. (1988),

which authorizes covered federalworkersto engage in collective bargaining, directsfederal agencies

to negotiate with employee representatives in good faith, and provides for mediation procedures to

resolve intractable disputes over negotiable matters, id. §§ 7102(2), 7114(a)(4), 7119. The scope

of the agency's duty to negotiate extends to all "conditions of employment," id. § 7103(a)(14)a

term that the Supreme Court has interpreted to include wages and compensation, see Fort Stewart

Schools v. FLRA, 495 U.S. 641, 645-650 (1990)unless these matters are otherwise expressly

provided for by law, 5 U.S.C. § 7117(a)(1). The salaries of the vast majority of federal workers are

set according to statutory schedules. OTS refused to negotiate over the union's compensation and

benefits proposals on the grounds that FIRREA was such a law, not because pay rates are set by

FIRREA, but because the Act entrusts the Director with unrestricted discretion in setting employee

compensation. The union, following the procedures set forth in § 7117(c)(1), referred the dispute

to theFederalLaborRelationsAuthority, which is charged with resolving negotiabilitydisputes under

§ 7105(a)(2)(E).

II.

The presumption that an agencyis obliged to negotiate mostsubjects of concern to employees

can be overcome by indications that Congress intended the agency in question to enjoy complete

discretion over the particular matter at issue. See, e.g., Illinois Nat'l Guard v. FLRA, 854 F.2d 1396,

1402-03 (D.C. Cir. 1988); Colorado Nurses Ass'n v. FLRA, 851 F.2d 1486, 1489-92 (D.C. Cir.

1988). The part of FIRREA that addresses the OTS Director's discretion with respect to employee

compensation provides:

(1) Appointment and compensation

The Director shall fix the compensation and number of, and appoint and direct, all

employees of the Office of Thrift Supervision notwithstanding section 310(f)(1) of

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Title 31. Such compensation shall be paid without regard to the provisions of other

laws applicable to officers or employees of the United States.

(2) Rates of basic pay

Rates of basic pay for employees ofthe Office may be set and adjusted by the Director

without regard to the provisions of chapter 51 orsubchapter III of chapter 53 of Title

5.

(3) Additional compensation and benefits

The Director may provide additional compensation and benefits to employees of the

Office if the same type of compensation or benefits are then being provided by any

Federal banking agency or, if not then being provided, could be provided by such an

agencyunder applicable provisions oflaw, rule, or regulation. In setting and adjusting

the total amount of compensation and benefits for employees of the Office, the

Director shall consult, and seek to maintain comparability with, the Federal banking

agencies.

12 U.S.C. § 1462a(g).

The Authority thought that the statutory language was ambiguous. It read the broad

statement in subsection (1) that compensation would be paid "without regard to the provisions of

other laws" as "a strong indication that Congress intended the Director of OTS to have unfettered

discretion." That language is similar to "the wording in other statutes which has been held to exempt

agencies from the obligation to bargain over matters otherwise affecting conditions of employment

of bargaining unit employees." American Fed'n of Gov't Employees, Local 3295 and U.S. Dept. of

the Treasury, 47 F.L.R.A. 884, 895 (1993) (citing Colorado Nurses, 851 F.2d at 1490; New Jersey

Air Nat'l Guard v. FLRA, 677 F.2d 276, 283 (3d Cir. 1982)). Accordingly, the FLRA concluded

that, "[s]tanding alone, § 1462a(g)(1) would indicate to us that the Director was granted exclusive

authority." Id. The Authority recognized, however, that other provisions of the section muddled

somewhat this reading of the statute. The specific reference in § 1462a(g)(2) to two particular

aspects of Title 5 was, the FLRA conceded, puzzling in light of the apparently broad scope of §

1462a(g)(1). The Authority thought that matters were further confused by subsection (3), which

authorizes the Director to augment compensation and benefits in a manner consistent with the

practices of other federal banking agencies but "contains no wording expressly superseding,

overriding or otherwise modifying the application of any other statute." Id.

In light of these ambiguities, the Authority turned to the legislative history, which it thought

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supplied clear indications that Congress intended to furnish the Director of OTS with "exclusive,

unfettered authority" in setting compensation and benefits. Id. The House report accompanying the

bill stated that "[t]he Director shall perform the duties of the office and exercise the powers of the

office with the degree of autonomy equal to that of the Comptroller of the Currency." Id. at 896

(quoting H.R.REP.NO. 101-54(I), 101st Cong., 1st Sess. 340 (1989), reprinted in 1989 U.S. CONG.

CODE & ADMIN. NEWS 86, 136) (emphasis added). The same report said that the Comptroller was

expected to "determine[]"employee compensation"withoutregard to the provisions of anyother law,

including any provision of Title 5 of the United States Code." Id. (quoting H.R.REP. NO. 101-54(I),

101st Cong., 1st Sess. 409 (1989), reprinted in 1989 U.S. CONG. CODE & ADMIN. NEWS 86, 205)

(emphasis added). Taken together, the two statements convinced the FLRA that the ambiguity in §

1462a(g) had to be resolved in favor of OTS' interpretation. Id. at 898-99.

The Authority believed that legislative history also explained the troubling redundancy of §

1462a(g)(2), again byanalogy to a statement regarding the Office oftheComptroller oftheCurrency.

Language identical to § 1462a(g)(2) appears in the part of FIRREA directed at the OCC. See 12

U.S.C. § 482 (Supp. V 1993). According to the congressional conference report, the specific

exemption served in that context to "confirm[ ] OCC's current exclusion from these provisions [of

Title 5 United States Code] based on [OCC's] nonappropriated status." Id. at 897 (quoting H.R.

CONF. REP. NO. 101-222, 101st Cong., 1st Sess. 457 (1989), reprinted in 1989 U.S. CONG. CODE

& ADMIN. NEWS 86, 496). The Authority observed that since OTS too was a nonappropriated

agency "funded by assessments levied on the industry it regulates," it appeared that § 1462a(g)(2)

"was not intended to limit the broad preemptive wording ofsection 1462a(g)(1) but, consistent with

legislative intent regarding [the OCC provision's equivalent language], merely was intended to

confirm OTS' status as a nonappropriated fund agency." Id. at 897-98. Accordingly, the Authority

sustained OTS' refusal to negotiate the union's wage and benefit proposals. Id. at 899. In a part of

its decision not under review today, the Authority also decided that OTS was required to negotiate

some disputed AFGE proposals that were not related to wages and benefits (and therefore not

exempted under § 1462a(g)(1)).

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2

In addition to the arguments discussed here, the Director had also maintained before the

FLRA that the proposals were nonnegotiable because they would interfere with the agency's

statutory management prerogative to determine its budget under 5 U.S.C. § 7106(a)(1). The

FLRA did not address this argument, and thus it plays no role in our decision today. 

3The FLRA asserts that this claim was not raised below and therefore is not properly before

the court. But in the decision under review, the Authority itself reasoned along the same lines

III.

We, of course, owe no deference to the FLRA's interpretation of a statute that it is not

charged with administering,see, e.g., Colorado Nurses, 851 F.2d at 1488; Professional Airways Sys.

Specialists v. FLRA, 809 F.2d 855, 857 n.6 (D.C. Cir. 1987); consequently, we consider de novo the

effect of § 1462a(g) on the OTS Director's obligation to bargain over proposalsrelating to wages and

benefits.2 And we concede that the wording is rather perplexing. Section 1462a(g)(1) confers on the

Director the authority to pay compensation "without regard to the provisions of other laws"a

sweeping dispensation from all legal constraints. As the Authority rightly observed, see 47 F.L.R.A.

at 895, we have interpreted similar language in other statutes to indicate that Congress intended

agencies to enjoy "unfettered discretion" loosed from the bargaining requirement of § 7114(a)(4).

See IllinoisNat'l Guard, 854 F.2d at 1402-03 (statutory phrase "notwithstanding anyother provision

of law" "override[s] any conflicting provision of law") (citing New Jersey Air Nat'l Guard v. FLRA,

677 F.2d 276, 279 (3d Cir. 1982)); Colorado Nurses, 851 F.2d at 1489 (statutory phrase

"notwithstanding any law" indicates that Veterans Administration chief "is to be unhampered by ...

federal [laws] that might otherwise constrain his authority" and therefore need not bargain under the

FSLMRS).

We agree with the Authority, however, that the inclusion of § 1462a(g)(2), which specifically

exempts OTS from those chapters of Title 5 that pertain to job classifications and related wage

schedulesanexceptionthat apparentlywould be entirelyunnecessaryinlight ofthe broad preclusive

language that immediately precedes it in § 1462a(g)(1)confuses what would otherwise be rather

clear legislative language.

The union argues that the express exemption from two particular aspects of Title 5 in §

1462a(g)(2) indicatesthat other aspects ofTitle 5 applywith fullforce, including the FSLMRS.3 The

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that it insists the union is belatedly introducing here, see Treasury, 47 F.L.R.A. at 895 ("[I]n

contrast to the broad wording of section 1462a(g)(1) ... section 1462a(g)(2) provides that rates of

basic pay of employees may be set and adjusted by the OTS Director without regard only to two

specific provisions of title 5 of the United States Code."), and the problem presented by §

1462a(g)(2) was considered at length, see id. at 897-98. The Authority's own opinion, then,

makes clear that the argument it objects to our treating here was squarely presented below. 

Director, however, has not argued that Title 5 is wholly inapplicable or that OTS need not observe

the generalstrictures of the FSLMRS; the Director has conceded from the start of this litigation that

matters not related to compensation are negotiable. The sole contested issue is whether FIRREA

excuses the Director from negotiating wages and compensation, not negotiation tout court. The

union's core argument based on § 1462a(g)(2)that Title 5 is, in the main, applicable to OTS

employment relationsbegsthe key question in this case, which is whether the Director's obligation

to follow the collective bargaining procedures ofthe FSLMRS appliesto the specific action ofsetting

of wages and compensation. Only this particular subset of management decisions, after all, is covered

by the exemption of § 1462a(g)(1).

Still, the union asserts that § 1462a(g)(1) has to be read in light of the provision that follows

it and that § 1462a(g)(2) "clarifies and limits" its immediate predecessor. Petitioner urges us to

accept that the broad preclusive language ofsubsection (a) ("such compensation shall be paid without

regard to the provisions of other laws ...") applies only to the specific exemptions contained in

subsection (2). In essence, the claim is that subsection (1) is without independent effect. Normally

we would reject such a suggestion, see, e.g., Pennsylvania Dep't of Pub. Welfare v. Davenport, 495

U.S. 552, 562 (1990) (expressing "deep reluctance to interpret a statutory provision as to render

superfluous other provisions in the same enactment"), but we recognize that the alternative view

advanced by OTSthat § 1462a(g)(1) must be read broadly, freeing the Director from the

constraints of all other lawsin setting compensationsuffersfromthe same defect, in mirrored form.

Under OTS' reading, the specific exemptions in subsection (2) become unnecessary, even

meaningless. In fact, no construction of § 1462a can avoid rendering either subsection (1) or

subsection (2) redundant. There is simply no satisfactory interpretation that avoids the problem of

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4The FLRA thought that the legislative history supported a view of § 1462a(g)(2) as a

"confirmatory" provision intended to underscore OTS' "nonappropriated status." This

construction strikes us as so far removed from the plain import of the statutory language,

however, that the relevant statement in the legislative historywhatever it might meancannot

control our interpretation.

The dissent too proposes that the ambiguity can be resolved, but it suggests that this can

be accomplished by distinguishing between the first and second sentences of § 1462a(g)(1) and

the words "fix" and "pay." According to the dissent, the provision's broad exemption applies only

to payment; the Director's authority to fix compensation remains subject to other laws, with the

single exception of the classification and wage scale provisions of Title 5. We think it unlikely,

however, that Congress intended to make a distinction between "fixing" and "paying."

It could be thought that § 1462a(g) excuses the director from negotiating wages but

leaves "benefits" subject to the FSLMRS. Section 1462a(g)(1) provides that "compensation" of

employees "shall be paid without regard to the provisions of other laws," whereas § 1462a(g)(3)

speaks to "additional compensation and benefits," possibly suggesting a distinction under which

"compensation" as used in § 1462a(g)(1) only includes an employee's base salary. We think,

however, that compensation means anything of value an employee receives in connection with

employment, particularly as the word has expressly been so used in other federal statutes. See 12

U.S.C. § 2279bb(1) ("The term "compensation' means any payment of money or any thing of

current or potential value in connection with employment."); id. § 4502(3) (same). Section

1462a(g)(3)'s reference to "additional compensation and benefits" could also plausibly be read as

distinguishing between benefits and the "basic rate[ ] of pay" mentioned in § 1462a(g)(2) rather

than between "compensation" and "benefits." 

5The union asserts that § 1462a(g)(3) also supports its claim that the Director does not enjoy

"unfettered discretion" over wagesbut that provision merely directs OTS to "seek to maintain

comparability" of additional compensation and benefits with other federal banking agencies. If

anything, the hortatory nature of the language bolsters the impression that Congress intended the

Director, "in setting and adjusting the total amount of compensation," to have plenary

discretionto the extent that self-restraint might be necessary to maintain parity among federal

banking authorities (parity that Congress was certainly aware would be all but guaranteed if these

agencies were expected to negotiate compensation with AFGE). 

6Despite encouraging comparability, Congress has granted varying degrees of discretion to the

various federal banking agencies. Thus, the FDIC, unlike the other federal banking agencies

enjoined to maintain comparability under 12 U.S.C. § 1833b, is not even expressly excused from

the federal classification and wage schedules of Title 5. See 12 U.S.C. 1819(a). Other banking

agencies are exempted from these provisions alone. See id. § 1441a(a)(5) (Resolution Trust

Corp.); id. § 1766(j)(1) (National Credit Union Administration Board); id. § 2445(c)(2)(A)

reading one of the two provisions out of the statute entirely.4

This is one of those cases, however, where legislative history indicates how to resolve

ambiguitiesin the statutory language. Congress apparently intended bank regulatory agencies, which

compete for the same pool of skilled professionals, to attempt to maintain rough equivalence in

additional compensation and benefits, in keeping with § 1462a(g)(3).5 Those most likely to compete

with one another were evidently given equal degrees of discretion in setting wages.6 Congress also

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(Farm Credit Administration). Only the OTS, the OCC, and the Federal Housing Finance Board

are authorized to compensate employees "without regard to any other provision of law." See id.

§ 1462a(g)(1) (OTS); id. § 481 (OCC); id. § 1422b(b)(1) (FHFB). 

expressly contemplated that the Comptroller would be free to fix employee compensation "without

regard to ... any provision of Title 5." H.R. REP. NO. 101-54(I), 101st Cong., 1st Sess. 409 (1989),

reprinted in 1989 U.S. CONG. CODE & ADMIN. NEWS 86, 205. Since the FSLMRS is contained in

Title 5, thislatter point can only reasonably be taken to mean that Congressintended the Comptroller

to be unconstrained by the negotiation provisions ofthe FSLMRS in setting employee compensation.

And, as we know that the Director was to enjoy the same measure of discretion in setting wages as

was the Comptroller, see id. at 340 (reprinted in 1989 U.S. CONG. CODE & ADMIN. NEWS 136), we

can infer that Congress intended the Director not to have to bargain over compensation. In light of

this history, we think that § 1462a(g)(1) should be interpreted as having excused the Director from

the responsibility to bargain over wages and benefits. Admittedly, no construction of § 1462a(g) can

avoid that provision's linguistic difficulties; but we think that this reading is, on balance, the better

one.

Petitioner argues that Congress was primarily concerned with OTS' independence from the

Secretary of the Treasurynot from other constraints, such as the negotiation obligation of the

FSLMRS. To be sure, Congress was especially anxious that the Director of OTS be independent of

the Treasury, but that does not mean that administrative autonomy was Congress' only concern (it

is surely not inconsistent with an intent to give the Director absolute discretion over wages). And

wariness of Treasury's influence cannot explain Congress' intention to have the Director set wages

"without regard to the provisions of any other laws, including any provision of Title 5."

Recognizing that legislative history supports the OTS' reading of § 1462a(g)(1), the union

ultimately relies upon the unorthodox argument that FIRREA was passed by a "confused" Congress

that "labored under the misconception that wages and other benefits could never be negotiable under

the FSLMRS" and that, in light of this backdrop of legislative misintelligence, the Act cannot

reasonably be construed to have excused the Director from bargaining. It would be nonsensical,

petitioner maintains, to assume that FIRREA intended to secure an exemption that Congressthought

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was already in place. Petitioner suggests that we pay heed to the Supreme Court in Fort Stewart

Schools, which attributed certain statements in the legislative history to the effect that wages would

not be subject to bargaining under the FSLMRS to "the speakers' incomplete understanding of the

world upon which the statute will operate." 495 U.S. at 649-50. But the statements at issue in Fort

Stewart were merely overbroad: the vast majority of federal employees' salaries are set by statute and

are, therefore, non-negotiable. The disputed statements quite understandably failed to account for

the very rare circumstance (such as we have in this case) when wages are not fixed by schedules, but

they were basically accurate. Id. at 649.

Here, by contrast, we are presented with no inconsistent statements. Petitioner asks us to

assume that Congress was confused but offers no support for that dicey proposition. Petitioner's

hypothesis, moreover, is flatly inconsistent with the familiar principle that Congress legislates with

a full understanding of existing law. See, e.g., Miles v. Apex Marine Corp., 498 U.S. 19, 32 (1990);

Cannon v. University of Chicago, 441 U.S. 677, 696-97 (1979). Finally, even if we were to accept,

arguendo, the union's premise, the answer to the central question before uswhether Congress

intended for the Director to have exclusive discretion in fixing employee compensationwould

remain the same, for nothing in our decision today hinges on Congress' understanding of the

FSLMRS. It is, rather, Congress' intention in FIRREA and thatstatute's granting the Director ofOTS

exclusive authority over compensation that dictates our answer to the negotiability question and our

affirmance of the FLRA's decision below. Whatever Congress may have thought about the agency's

bargaining obligation, it follows from our construction of § 1462a(g) that the degree of discretion

entrusted to the Director issufficient to overcome the after-established Fort Stewart rule that wages

and benefits are "conditions of employment" subject to representative bargaining. Whether Congress

understood the FSLMRS when it assigned the Director this measure of discretion is beside the point;

Congress need not even have contemplated its applicability. Compare Colorado Nurses, 851 F.2d

at 1491 ("It is irrelevant that Congress did not affirmatively intend to foreclose collective bargaining

so long as Congress did intend to grant sole authority to the Administrator."). The legislative record

reveals that the Director's statutory authority to compensate employees "without regard to the

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7The Authority had filed a cross-application for enforcement but that request has apparently

been abandoned. 

provisions of other laws" was specifically intended to exempt him from the application of "any

provision of Title 5 of the United States Code." We thus conclude that the FSLMRSwhich, after

all, is a component of Title 5is inapplicable to the Director's setting of employee compensation.

* * *

We therefore affirm the FLRA's decision that FIRREA endows the Director with exclusive

discretion over the compensation and benefits of OTS employees and that he is under no obligation

to negotiate over these matters with representatives of AFGE.7

So ordered.

WALD, Circuit Judge, dissenting. I agree that the statute as written is ambiguous, but, unlike

my colleagues, I do not believe that the legislative history definitively resolvesthe ambiguity in favor

of the agency. Because the collective bargaining provisions of the Federal Service LaborManagement Relations Statute ("FSLMRS"), 5 U.S.C. §§ 7101 et seq. (1988), apply unlessthey are

affirmatively disavowed, I conclude that the statutory language, even when supplemented by the

legislative history cited, does not clearly grant the Director of the Office of Thrift Supervision

("Director of OTS") complete and unfettered discretion to set compensation, and, thus, that the

wage-setting process remains subject to the collective bargaining mandate of §§ 7101 et seq.

The FSLMRS requires that a federal agency negotiate in good faith with the union

representing its employees over those conditions of employment not otherwise expressly provided

for by law. See 5 U.S.C. §§ 7102, 7114. For the vast majority of federal employees, wages and

compensation are set by statute, and are thus non-bargainable. See 5 U.S.C. § 7117. Where wages

and compensation are not set by statute, however, the Supreme Court has upheld the Federal Labor

Relations Authority's("FLRA" or "agency") determination that they are "conditions of employment"

and thus within the scope of the agency's duty to bargain. See Fort Stewart Schools v. FLRA, 495

U.S. 641, 645-50 (1990). Congress, of course, has the power to exempt an agency from this duty

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1

See Tataranowicz v. Sullivan, 959 F.2d 268 (D.C. Cir. 1992) (Buckley, J., dissenting) ("[W]e

are not bound, when interpreting a statute, to rely on the arguments put before us by the

parties."). 

2The FLRA has consistently held that authority to "set" or "fix" working conditions, absent a

"notwithstanding" clause, does not render those working conditions nonnegotiable, and no party

has challenged that rule. See, e.g., Dept. of Veterans Affairs, 44 F.L.R.A. 162 (1992) (statute

to bargain, and this court hasfound such an intent where Congress granted the agency head authority

to "prescribe" certain conditions of employment "notwithstanding" any other law. See Illinois Nat'l

Guard v. FLRA, 854 F.2d 1396, 1401-03 (D.C. Cir. 1988); Colorado Nurses Ass'n v. FLRA, 851

F.2d 1486, 1489-92 (D.C. Cir. 1988).

The majority concludes that here, as in those cases, Congress granted the Director of OTS

complete discretion to set compensation, thus exempting him from the duty to bargain. Examination

of the statutes previously found to contain such exemptions, however, instructs that the "language,

structure, and history" of the Financial Institutions Reform, Recovery and Enforcement Act of 1989

("FIRREA") fails to "demonstrate that Congress intended that the [Director] have exclusive

authority" to determine compensation. Colorado Nurses, 851 F.2d at 1489.

Our first duty isto look to the language of the statute itself, see Hughey v. United States, 495

U.S. 411, 415 (1990), and I note initially an ambiguity that neither my colleaguesin the majority, nor,

admittedly, the partiesthemselves, discuss.1 Section 1462a(g)(1) has two distinct clauses, providing

(a) that the Director shall "fix " compensation notwithstanding § 301(f)(1) of Title 31, and (b) that

"such compensation shall be paid" without regard to laws otherwise applicable to federal employees.

The "without regard" clause refers to the payment of compensation, and not to the Director's

authority to fix that compensation. Thus, while the statute authorizes the Director to "fix " the

compensation of OTS employees, the exemption from other laws does not clearly extend to this

fixing of compensation. Rather, the exemption provides that "[s]uch compensation shall be paid

without regard to the provisions of other laws applicable to officers or employees of the United

States." 12 U.S.C. § 1462a(g)(1) (emphasis added).

No party contends that a mere grant of power to "fix" compensation, by itself, constitutes a

grant of unfettered discretion.2 Rather, it is the "without regard to the provisions of other laws"

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providing that "the Secretary shall ... fix the prices of merchandise ... in canteens" does not

"prohibit[ ] the [Secretary] from setting those prices through negotiation with the Union"; "[T]he

statute simply grants the Secretary ... the discretion to fix the prices. Under established Authority

law, that discretion may be exercised through negotiations."). 

3Colorado Nurses interpreted a section of a statute since repealed, then codified at 38 U.S.C. §

4108(a). The full text of that section is cited in the FLRA's decision on review in that case. See

Colorado Nurses Ass'n, 25 F.L.R.A. 803, 805 (1987). 

language that is necessary to establish unfettered discretion, and it is not at all clear from the statute

that the "without regard" language applies to the fixing of compensation, rather than to the payment

of such compensation once it is set via the prior fixing process. Unlike the statutes in Colorado

Nurses, 851 F.2d at 1489 ("notwithstanding anylaw,Executive order or regulation, the Administrator

shall prescribe by regulation the hours and conditions of employment [of VA medical personnel]"3)

and Illinois National Guard, 854 F.2d at 1401 ("Notwithstanding sections 5544(a) and 6101(a) of

title 5 or any other provision of law, the Secretary concerned may ... prescribe the hours of duty for

technicians."), the language in § 1462a(g)(1) provides no clear statement that the Director has

authority to fix compensation notwithstanding any other provision of law.

The majority noted that the interpretations pressed by both the FLRA and by AFGE posed

a redundancy problem by rendering either § 1462a(g)(1) or (g)(2) superfluous. See ante at 9. A

plausible reading, which avoids statutory redundancy by giving an independent meaning to both

subsections, is that the "without regard" clause of § 1462a(g)(1) is designed to exempt OTS

employee compensation from payment regulations other than those expressly disclaimed in §

1462a(g)(2). This would include a range of provisions in chapter 55 of Title 5, Pay Administration,

see, e.g., 5 U.S.C. § 5504 (establishing biweekly pay periods for Executive agency employees); 5

U.S.C. § 5542 (establishing eligibility for and rates of overtime payment); 5 U.S.C. § 5545

(mandating specific rates of premium pay for nightwork); 5 U.S.C. § 5546 (same for Sunday or

holiday work), and in chapter 45 ofTitle 5, establishing criteria for and caps on incentive awards, see

5 U.S.C. §§ 4502, 4503, as well as any restrictions on employing and paying non-U.S. citizens as

federal employees, restrictions which Congress expressed a clear intent to avoid with respect to

transferred employees elsewhere in the statute, see FIRREA § 722(a), Pub. L. No. 101-73, 103 Stat.

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426 (providing for the transfer of employees of the abolished Federal Home Loan Banks to the new

agencies "including employees who otherwise would be ineligible for employment by the United

States because of their citizenship").

On its own terms, then, § 1462a(g)(1) is not clear as to whether it grants the OTS authority

to set compensation notwithstanding any other law, or simply authorizes the payment of

compensation levelshowever setwithout regard to other laws. Nor, in my view, does the

legislative history establish a clear intent to grant the Director of OTS complete discretion to fix pay.

The majority relies on passages from the House Report on the bill stating that the Director of OTS

is to have the same degree of autonomy as the Comptroller of the Currency, who, in turn, has the

authority to determine compensation notwithstanding any other provision of law. These passages,

however, are from the report on the House bill, which unequivocally granted both the Director of

OTS and the Comptroller ofthe Currency complete discretion to set compensation. As the language

in the Act itself has changed materially since then, the accompanying House Report commands far

less authority than it otherwise would.

As the majority notes, the House Report states that the "Director shall perform the duties of

the office and exercise the powers of the office with the degree of autonomy equal to that of the

Comptroller of the Currency." H.R. REP. NO. 54(I), 101st Cong., 1st Sess. 340. With regard to the

authority ofthe Comptroller ofthe Currency to set compensation, the HouseReportstatesthat "such

compensation shall be determined by the Comptroller without regard to the provisions of any other

law, including any provision of Title 5 of the United States Code." Id. at 409.

In the bill on which the House reported, however, there was no syntactical doubt that the

"without regard" clause modified the Director's power to determine compensation. Nor was there

any doubt that the Comptroller of the Currency had a similar grant of authority in that bill. After

giving the Director the power to "fix" compensation, the bill continued:

The compensation of employees, attorneys, and agents of the Office shall be

determined without regard to the provisions of any laworregulation (including title

5, United States Code) relating to Federal employee and officer compensation.

H.R. 1278, 101st Cong., 1st Sess. § 301 (1989), reprinted in H.R. REP. NO. 54(I) at 83 (emphasis

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4The FIRREA also preserves, with some modification not relevant here, a separate and earlier

enacted provision on "Appointment of examiners" to the Office of the Comptroller of the

Currency. See 12 U.S.C. § 481. This section provides that "the employment and compensation

of examiners ... and of the other employees of the office of the Comptroller of the Currency

whose compensation is and shall be paid from assessments on banks or affiliates thereof or from

other fees or charges imposed pursuant to this section shall be without regard to the provisions of

other laws applicable to officers or employees of the United States." 12 U.S.C. § 481 (emphasis

added). If this provision does suffice to place "employment and compensation" matters within the

complete discretion of the Comptroller, then the majority's assumption that the Comptroller and

Director have equal degrees of discretion must fail. There is simply no statutory basis to conclude

that employment and compensation, rather than compensation alone, are within the complete

discretion of the Director, as the majority has recognized. See ante at 8-9. ("The Director ... has

not argued that Title 5 is wholly inapplicable.... [T]he key question in this case ... is whether the

Director's obligation to follow the collective bargaining procedures of the FSLMRS applies to the

specific action of setting of wages and compensation. Only this particular subset of management

decisions, after all, is covered by the exemption of § 1462a(g)(1)."). 

5The Senate version of the bill also clearly granted complete discretion to the Director of OTS

to fix compensation. See S.774, 101st Cong., 1st Sess. § 301 (1989), reprinted in S. REP. NO.

added). With respect to the Comptroller of the Currency, the bill provided that "[s]uch compensation

shall be determined by the Comptroller without regard to the provisions of any law or regulation

(including title 5, United States Code) relating to Federal employee and officer compensation." Id.

at § 1203, reprinted in H.R. REP. NO. 54(I) at 279. Thus, the parallel the majority draws from the

legislative history was, in fact, explicit in the text of the bill: both the Director and the Comptroller

were expressly exempted from "provision of any law or regulation ... relating to Federal employee

and officer compensation."

The parallel remains in the enacted versions of these provisions, but in this case, neither the

Director nor the Comptroller is clearly exempted from all other laws in setting compensation. The

enacted versionofthe provision establishing theComptroller's authorityto set compensation exempts

the Comptroller not from"anylaw," but onlyfromenumerated laws. Like § 1462a(g)(2), the enacted

language regarding the Office of the Comptroller of Currency provides that, "[r]ates of basic pay for

all employees of the Office may be set and adjusted by the Comptroller without regard to the

provisions of chapter 51 or subchapter III of chapter 53 of title 5, United States Code." 12 U.S.C.

§ 482.4

There is no explanation in the Conference Report for the change in language. See H.R.CONF.

REP. 222, 101st Cong., 1st Sess.5 But it could as easily suggest a change in the intended scope of

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19, 101st Cong., 1st Sess. 133 ("Such compensation shall be determined solely by the Chairman

and without regard to the provisions of any law or regulation, including the provisions of title 5,

United States Code, relating to the compensation of Federal officers and employees."). The

change, then, cannot be explained as the mere adoption of Senate language. 

wage-setting authority as inadvertence.

Finally, the more general purposes articulated by Congress with respect to the Director's

authority do not suggest a clear resolution to the ambiguity of the statute. As the majority notes, the

statute and legislative history reveal two concerns in this regard(1) that the Director of OTS be

independent of the Treasury, see 12 U.S.C. § 1462a(b)(3) ("The Secretary of the Treasury may not

intervene in any matter or proceeding before the Director unless otherwise provided by law."), and

(2) that compensation at OTS be competitive with the other financial agencies and unconstrained by

compensation caps in order to attract highly-qualified financial officers, see H.R. CONF. REP. 222,

101st Cong., 1st Sess. 434 (explaining that provisions regarding maintenance of previous salary for

employees transferred from the private sector reflect legislative concern that FIRREA's goals "not

be compromised by the loss of necessary staff, especially the most senior and experienced

employees"). These concerns do not point clearly in one direction as to whether the Director has

exclusive authority to set the compensation levels of all employees, particularly the nonsupervisory,

union-eligible employees. Absent a clearer sign that the statute provides for this exclusive authority,

I must conclude that it does not, and that the collective bargaining mandate of §§ 7102 and 7114 of

Title 5 applies.

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