b'Service Credit for Retirement Annuities of\nUSPS Employees When USPS Has Not\nMade Required Contributions\nThe Office of Personnel Management may not address the United States Postal Service\xe2\x80\x99s\nfailure to make statutorily required retirement contributions by denying its employees\naccrued service credit under the Federal Employees\xe2\x80\x99 Retirement System during their\nperiods of qualifying federal employment.\nNovember 1, 2011\n\nMEMORANDUM OPINION FOR THE GENERAL COUNSEL\nOFFICE OF PERSONNEL MANAGEMENT\nAND\n\nTHE GENERAL COUNSEL AND EXECUTIVE VICE PRESIDENT\n\nUNITED STATES POSTAL SERVICE\n\nOn June 22, 2011, the United States Postal Service (\xe2\x80\x9cUSPS\xe2\x80\x9d or \xe2\x80\x9cPostal\nService\xe2\x80\x9d) notified the Office of Personnel Management (\xe2\x80\x9cOPM\xe2\x80\x9d) that,\nbecause of its financial difficulties, the Postal Service, as a cash conservation measure, was suspending its employer contributions to the Civil\nService Retirement and Disability Fund (\xe2\x80\x9cthe Fund\xe2\x80\x9d) on behalf of those\npostal employees covered by the Federal Employees\xe2\x80\x99 Retirement System\nAct (\xe2\x80\x9cFERS\xe2\x80\x9d), 5 U.S.C. \xc2\xa7\xc2\xa7 8401\xe2\x80\x938479 (2006 & Supp. IV 2010). In light\nof that suspension, OPM requested an opinion from our Office regarding\n(1) whether, and to what extent, OPM has discretion to offset the Postal\nService\xe2\x80\x99s obligation to make employer retirement contributions against a\n\xe2\x80\x9csurplus\xe2\x80\x9d the Postal Service asserts that it has accumulated in the Fund;\nand (2) whether postal employees are entitled to receive service credit, for\npurposes of determining their eligibility for retirement and calculating the\namount of their retirement annuity, for periods of employment during\nwhich the Postal Service has not made its required employer contributions. 1 The Postal Service, an independent agency, joined OPM in the\nrequest for an opinion and agreed to be bound by our decision. 2\nSee Memorandum for Virginia Seitz, Assistant Attorney General, Office of Legal\nCounsel, from Elaine Kaplan, General Counsel, Office of Personnel Management (July\n14, 2011) (\xe2\x80\x9cOPM Memo\xe2\x80\x9d). OPM enclosed with its submission an undated paper it had\nreceived from USPS, with the heading \xe2\x80\x9cEffect of Suspension of Agency Contribution to\n1\n\n181\n\n\x0c35 Op. O.L.C. 181 (2011)\n\nIn its submission to the Office of Legal Counsel (\xe2\x80\x9cOLC\xe2\x80\x9d), the Postal\nService indicated that, despite earlier disagreement, it now \xe2\x80\x9cdoes not\ncontest OPM\xe2\x80\x99s position that the Postal Service is still obligated by the\nstatute to make its employer contribution, despite the existence of the\nsurplus.\xe2\x80\x9d USPS Memo at 14; see also id. at 4. The Postal Service, however, also specifically stated that it considers the question \xe2\x80\x9cwhether the\n[Postal Service\xe2\x80\x99s] Board [of Governors] was justified in its decision to\nsuspend the employer contribution in order to conserve cash so as to avoid\na shutdown in mail service\xe2\x80\x9d to be outside \xe2\x80\x9cthe scope of [OLC\xe2\x80\x99s] review.\xe2\x80\x9d\nId. at 3 n.2. Thus, we do not address (i) whether OPM could offset the\nPostal Service\xe2\x80\x99s required contributions against any surplus it may have in\nthe Fund; (ii) whether the Postal Service\xe2\x80\x99s apparent statutory violation\nmay be excused; or (iii) what other avenues of recourse OPM may have\nagainst the Postal Service for its failure to make the statutorily required\ncontributions. Instead, this opinion addresses only the question whether,\nunder the relevant provisions of the FERS statute, postal employees are\nentitled to receive service credit for periods during which the Postal\nService has not made the required employer contributions to the Fund.\nThe Postal Service argues that its employees should receive such credit.\nId. at 2\xe2\x80\x9314. OPM disagrees, maintaining that employees cannot be credited with service for periods in which no employer contributions have been\nmade into the Fund. OPM Memo at 5\xe2\x80\x939. For the reasons that follow, we\nagree with the Postal Service that OPM may not address the Postal Service\xe2\x80\x99s failure to make statutorily required contributions by denying its\nemployees accrued service credit under FERS during their periods of\nqualifying federal employment.\nI.\nIn 1986, Congress enacted the Federal Employees\xe2\x80\x99 Retirement System\nAct of 1986, Pub. L. No. 99-335, 100 Stat. 514 (codified as amended at\nFERS on Employees\xe2\x80\x9d (\xe2\x80\x9cUSPS Paper\xe2\x80\x9d). OPM has agreed provisionally to provide service\ncredit to postal employees who may retire while the issue is pending before our Office.\nOPM Memo at 2.\n2 See Memorandum for Virginia Seitz, Assistant Attorney General, Office of Legal\nCounsel, from Mary Anne Gibbons, General Counsel and Executive Vice President,\nUnited States Postal Service (Aug. 12, 2011) (\xe2\x80\x9cUSPS Memo\xe2\x80\x9d).\n\n182\n\n\x0cService Credit for Retirement Annuities of USPS Employees\n\n5 U.S.C. \xc2\xa7\xc2\xa7 8401\xe2\x80\x938479 and scattered U.S.C. sections), a system of retirement and other benefits for federal employees that will gradually\nsupersede the Civil Service Retirement System (\xe2\x80\x9cCSRS\xe2\x80\x9d), which has\nbeen in effect since 1920. See Pub. L. No. 66-215, 41 Stat. 614 (1920)\n(codified as amended at 5 U.S.C. \xc2\xa7\xc2\xa7 8331\xe2\x80\x938351 (2006 & Supp. 2010)).\nIn enacting FERS, Congress set out, among other things, \xe2\x80\x9cto establish a\nFederal employees\xe2\x80\x99 retirement plan which is coordinated with title II of\nthe Social Security Act\xe2\x80\x9d; \xe2\x80\x9cto ensure a fully funded and financially sound\nretirement benefits plan for Federal employees\xe2\x80\x9d; and \xe2\x80\x9cto assist in building a quality career work force in the Federal Government.\xe2\x80\x9d Pub. L. No.\n99-335, \xc2\xa7 100A(1), (2), & (5), 100 Stat. at 516 (codified at 5 U.S.C.\n\xc2\xa7 8401 note (2006)). 3 With certain exceptions, the Act became effective\non January 1, 1987. Id. \xc2\xa7 702, 100 Stat. at 631 (codified at 5 U.S.C.\n\xc2\xa7 8401 note). Since then, most newly hired federal employees who are\ncovered by Social Security have also been covered by FERS.\nFERS is a three-tiered retirement system that consists of Social Security, a basic annuity, and a Thrift Savings Plan (\xe2\x80\x9cTSP\xe2\x80\x9d). See 5 U.S.C.\n\xc2\xa7 8403 (2006) (except as otherwise provided, benefits payable under\nFERS are in addition to benefits payable under the Social Security Act);\nid. \xc2\xa7\xc2\xa7 8410\xe2\x80\x938425 (2006 & Supp. IV 2010) (basic annuity); id. \xc2\xa7\xc2\xa7 8431\xe2\x80\x93\n8440f (2006 & Supp. IV 2010) (TSP). 4 The Postal Service and its employees fall within FERS coverage. 39 U.S.C. \xc2\xa7 1005(d) (2006 & Supp.\nIII 2009). The dispute between OPM and the Postal Service concerns the\nbasic annuity.\nUnder FERS, an \xe2\x80\x9cemployee,\xe2\x80\x9d as defined in 5 U.S.C. \xc2\xa7 8401(11)\n(2006), must complete at least five years of creditable civilian service\nunder 5 U.S.C. \xc2\xa7 8411 to be eligible for the annuity. 5 U.S.C. \xc2\xa7 8410\nFrom Congress\xe2\x80\x99s enactment of the Social Security Act in 1935, Pub. L. No. 74-271,\n49 Stat. 620 (1935), until 1983, federal employees were excluded from Social Security\ncoverage. In 1983, the Social Security Act was amended to cover newly hired federal\nemployees. Pub. L. No. 98-21, \xc2\xa7 101, 97 Stat. 65, 67\xe2\x80\x9370 (1983) (codified at 42 U.S.C.\n\xc2\xa7 410). That expansion of Social Security was a major impetus behind the adoption of\nFERS, the new retirement system for federal employees, in 1986. See generally S. Rep.\nNo. 99-166, at 1\xe2\x80\x932 (1985) (providing background on the CSRS and amendment of the\nSocial Security Act to cover federal employees).\n4 The TSP is a tax-deferred savings plan for federal employees in which employee contributions are matched in part by employer agency contributions.\n3\n\n183\n\n\x0c35 Op. O.L.C. 181 (2011)\n\n(2006). As a general matter, creditable service includes \xe2\x80\x9cemployment as\nan employee . . . after December 31, 1986.\xe2\x80\x9d Id. \xc2\xa7 8411(b)(1). With certain exceptions, the annuity of a retiring employee is 1 percent of that\nindividual\xe2\x80\x99s average pay (the highest average pay in effect over any three\nconsecutive years of service) multiplied by that individual\xe2\x80\x99s \xe2\x80\x9ctotal [years\nof] service.\xe2\x80\x9d Id. \xc2\xa7\xc2\xa7 8415(a), 8401(3) (defining \xe2\x80\x9caverage pay\xe2\x80\x9d). The\nstatute establishes different potential retirement ages for employees\ndepending on the number of years of service completed. Id. \xc2\xa7 8412 (2006\n& Supp. IV 2010). For example, an employee who is separated from\nservice after becoming 62 years old and completing five years of service\nis entitled to an annuity. Id. \xc2\xa7 8412(c). \xe2\x80\x9c[S]ervice,\xe2\x80\x9d in turn, \xe2\x80\x9cmeans\nservice which is creditable under section 8411.\xe2\x80\x9d Id. \xc2\xa7 8401(26). As\nthese provisions make clear, the determination whether service is creditable under the statute has important ramifications for an employee\xe2\x80\x99s\neligibility to receive a basic annuity, the applicable retirement age, and\nthe calculation of the amount of the annuity. 5\nThe FERS basic annuity is funded through a combination of employee\ndeductions and employer agency contributions to the Civil Service Retirement and Disability Fund. Id. \xc2\xa7\xc2\xa7 8422, 8423, 8401(6) (2006 & Supp.\nIV 2010). Under FERS, the employing agency is required to deduct and\nwithhold from each employee\xe2\x80\x99s basic pay a percentage that is equal to 7\npercent of basic pay (with a different percentage applicable to Members\nof Congress and certain categories of employees) less the Old Age,\nSurvivors, and Disability Insurance (\xe2\x80\x9cOASDI\xe2\x80\x9d) tax rate in effect, which\nis now 6.2 percent. Id. \xc2\xa7 8422(a), (c) (2006 & Supp. IV 2010); 26 U.S.C.\n\xc2\xa7 3101(a) (2006). Accordingly, the employer is required by the statute to\ndeduct 0.8 percent of most employees\xe2\x80\x99 basic pay for contribution to the\nFund.\nThe employing agency\xe2\x80\x99s own contribution to the Fund is much larger\nand is based on the \xe2\x80\x9cnormal-cost percentage,\xe2\x80\x9d which is \xe2\x80\x9cthe entry-age\nnormal cost of the provisions of [FERS] which relate to the Fund,\xe2\x80\x9d as\ncomputed by OPM \xe2\x80\x9cin accordance with generally accepted actuarial\nCreditable service is also important to other facets of the retirement system. For example, an employee is not entitled to retain the employer\xe2\x80\x99s contributions to the TSP and\nearnings attributable to such contributions before completing specific periods of service.\nSee 5 U.S.C. \xc2\xa7 8432(g)(2) (2006).\n5\n\n184\n\n\x0cService Credit for Retirement Annuities of USPS Employees\n\npractice and standards\xe2\x80\x9d and \xe2\x80\x9cexpressed as a level percentage of aggregate\nbasic pay.\xe2\x80\x9d 5 U.S.C. \xc2\xa7 8401(23) (defining \xe2\x80\x9cnormal-cost percentage\xe2\x80\x9d); see\nid. \xc2\xa7 8423(a) (2006 & Supp. IV 2010). 6 Under the statute, \xe2\x80\x9ceach employing agency having any employees or Members subject to section 8422(a)\nshall contribute to the Fund an amount\xe2\x80\x9d that is the product of the applicable normal-cost percentage and the aggregate amount of basic pay payable\nby the agency for the period involved. Id. \xc2\xa7 8423(a)(1). In determining the\nnormal-cost percentage to be applied, the employee deductions required\nby section 8422 must be taken into account. Id. \xc2\xa7 8423(a)(2). 7 Thus, for\n6\n\n\xe2\x80\x9cEntry age normal cost\xe2\x80\x9d is\ngenerally understood as the percentage of every paycheck that should be invested, over\nthe total career of each employee in a group of new entrants, to pay fully for all benefits received by that group, including all eligible survivors. Normal cost is formally defined as the present value of future benefits divided by the present value of future compensation. These values are expressed as a percentage of payroll, and provide a\nconsistent measure of relative pension costs over time.\n\nS. Rep. No. 99-166, at 35 (1985). OPM publishes the \xe2\x80\x9cnormal cost percentages\xe2\x80\x9d for\nparticular categories of employees in the Federal Register. At the time the Postal Service\nsuspended its employer contributions to the Fund, the government-wide normal cost\npercentage for most employees was 12.5 percent. Federal Employees\xe2\x80\x99 Retirement System;\nNormal Cost Percentages, 75 Fed. Reg. 35,098 (June 21, 2010). For the first pay period\ncommencing on or after October 1, 2011, the normal cost percentage for most employees\nrose to 12.7 percent. Federal Employees\xe2\x80\x99 Retirement System; Normal Cost Percentages,\n76 Fed. Reg. 32,242, 32,243 (June 3, 2011).\n7 Section 8422(a) requires that \xe2\x80\x9c[t]he employing agency shall deduct and withhold\nfrom basic pay of each employee . . . a percentage of basic pay.\xe2\x80\x9d 5 U.S.C. \xc2\xa7 8422(a)(1).\nThus, so long as the individual is an \xe2\x80\x9cemployee,\xe2\x80\x9d see id. \xc2\xa7 8401(11), and is not otherwise\nexcluded from coverage under the statute, see id. \xc2\xa7 8402 (2006), the individual is \xe2\x80\x9csubject\nto section 8422(a),\xe2\x80\x9d and the employing agency is required to make contributions to the\nFund under section 8423. There is no dispute here that the Postal Service\xe2\x80\x99s employees for\nwhom the employer contributions have been withheld are \xe2\x80\x9cemployees\xe2\x80\x9d for purposes of\nFERS. As a general matter, the FERS definition of \xe2\x80\x9cemployee\xe2\x80\x9d refers to the definition of\n\xe2\x80\x9cemployee\xe2\x80\x9d for CSRS benefits under chapter 83, in 5 U.S.C. \xc2\xa7 8331(1) (2006). Section\n8331(1), in turn, defines the term by reference to 5 U.S.C. \xc2\xa7 2105. Under section 2105(a),\nan \xe2\x80\x9cemployee\xe2\x80\x9d is an individual who is \xe2\x80\x9cappointed in the civil service\xe2\x80\x9d by a federal\nofficial; \xe2\x80\x9cengaged in the performance of a Federal function\xe2\x80\x9d; and \xe2\x80\x9csubject to the supervision\xe2\x80\x9d of a federal official. 5 U.S.C. \xc2\xa7 2105(a) (2006); see Taylor v. OPM, 82 M.S.P.R.\n237, 241 (M.S.P.B. 1999). Employees of the Postal Service, who are generally covered by\nthe retirement statutes by virtue of 39 U.S.C. \xc2\xa7 1005(d), must still meet the definition of\n\xe2\x80\x9cemployee\xe2\x80\x9d to be covered by FERS. See Taylor, 82 M.S.P.R. at 241. An \xe2\x80\x9cemployee\xe2\x80\x9d for\npurposes of FERS must also be covered by title II of the Social Security Act. 5 U.S.C.\n\xc2\xa7 8401(11).\n\n185\n\n\x0c35 Op. O.L.C. 181 (2011)\n\nmost employees, employing agencies contribute to the Fund an amount\nequal to 11.9 percent of basic pay\xe2\x80\x94the aggregate normal cost of 12.7\npercent minus the 0.8 percent employee deduction\xe2\x80\x94which is more than\n93 percent of the normal cost. OPM, which has authority to prescribe\nregulations under the statute, id. \xc2\xa7 8461(g) (2006), has construed FERS to\nrequire the employing agency to \xe2\x80\x9cremit in full the total amount of normal\ncost (which includes both employee deductions and Government contributions), so that payment is received by the Fund on the day of payment to\nthe employee of the basic pay from which the employee deductions were\nmade.\xe2\x80\x9d 5 C.F.R. \xc2\xa7 841.504(h) (2011); see also id. \xc2\xa7 841.413 (2011). 8\nII.\nThe dispute between OPM and the Postal Service was precipitated by\nthe Postal Service\xe2\x80\x99s decision, in light of its current financial crisis, to\nconserve cash by suspending its employer contributions for the basic\nannuity, effective June 24, 2011, for those postal employees covered by\nFERS. OPM Memo at 1; USPS Memo at 2. The Postal Service is continuing to withhold employee deductions from basic pay; it also continues to\nmake its automatic and matching contributions to the TSP accounts of\nFERS employees and to remit those contributions, along with employee\nTSP contributions. USPS Memo at 2. OPM does not dispute that the\nPostal Service and its employees continue to satisfy all the requirements\nof the statute except the agency\xe2\x80\x99s obligation to make employer contributions to the Fund for the basic annuity. The question we must address is\n8 FERS further requires OPM to compute the amount of the \xe2\x80\x9csupplemental liability\xe2\x80\x9d of\nthe Fund as of the close of each fiscal year, both with respect to current or former employees of the Postal Service and other individuals. 5 U.S.C. \xc2\xa7 8423(b)(1). The \xe2\x80\x9csupplemental liability\xe2\x80\x9d is the estimated excess of the actuarial present value of all future benefits\npayable from the Fund based on the service of current or former employees or Members\nof Congress over the sum of the actuarial present value of employee deductions, employer\ncontributions, and the Fund balance. Id. \xc2\xa7 8401(27). The amount of any supplemental\nliability must be amortized in 30 equal annual installments, with interest. Id. \xc2\xa7 8423(b)(2).\nAt the end of each fiscal year, OPM must notify the Postmaster General of the amount of\nthe required installment computed with respect to current or former postal employees and\nthe Secretary of the Treasury of the amount computed with respect to other individuals.\nId. \xc2\xa7 8423(b)(3). Upon receiving such notifications, the Postal Service is required to pay,\nand the Secretary of the Treasury is required to credit, to the Fund the amounts specified.\nId. \xc2\xa7 8423(b)(4).\n\n186\n\n\x0cService Credit for Retirement Annuities of USPS Employees\n\nthus narrow: whether postal employees are entitled to service credit for\nretirement purposes for the periods in which the Postal Service has suspended its employer contributions under 5 U.S.C. \xc2\xa7 8423, but in all other\nrespects has complied with the FERS statute.\nOPM states that its \xe2\x80\x9clongstanding interpretation of the statute,\xe2\x80\x9d as codified in its regulations, provides that \xe2\x80\x9cin order for an employee to be covered under FERS, an agency must make the periodic contributions to the\nRetirement Fund that are required by law.\xe2\x80\x9d OPM Memo at 2. OPM does\nnot claim that FERS expressly provides that employer contributions are a\nnecessary precondition for employee coverage or that employees shall not\nreceive service credit for periods in which their employing agencies fail to\nmake employer contributions. Instead, OPM points out that section 8423\nof FERS mandates that USPS must make contributions to the Fund on\nbehalf of employees covered by FERS. See 5 U.S.C. \xc2\xa7 8423(a)(1) (\xe2\x80\x9c[e]ach\nemploying agency having any employees . . . subject to section 8422(a)\nshall contribute to the Fund\xe2\x80\x9d an amount that is based on the normal-cost\npercentage set by OPM) (emphasis added)). And while section 8423 does\nnot expressly make the mandatory employer contributions a precondition\nto employee eligibility, in OPM\xe2\x80\x99s view, the relevant OPM regulation\ndoes:\nTo be covered under FERS, an individual must:\n(a) Be an employee, Member, or specifically covered by another\nprovision of law;\n(b) Be covered by social security;\n(c) Have retirement deductions withheld from pay and have agency contributions made; and\n(d) Be paid based on units of time.\nExcept as provided in \xc2\xa7 842.104 and as excluded by \xc2\xa7 842.105, an\nemployee or Member is covered by FERS.\n5 C.F.R. \xc2\xa7 842.103 (2011) (emphasis added); see also id. \xc2\xa7 842.304(a)\n(2011) (providing, with exceptions not relevant here, that \xe2\x80\x9can employee\n. . . is entitled to credit for all purposes under FERS for a period of civilian service with the Government or the U.S. Postal Service\xe2\x80\x94[p]erformed\nafter December 31, 1986, which is covered service under subpart A of this\npart,\xe2\x80\x9d a reference back to section 842.103) (emphasis added).\n187\n\n\x0c35 Op. O.L.C. 181 (2011)\n\nAs OPM explains, section 842.103 \xe2\x80\x9cmerges the various statutory requirements applicable to FERS into one regulatory provision that determines whether an individual is covered by FERS.\xe2\x80\x9d OPM Memo at 5.\nOPM\xe2\x80\x99s basic claim is thus that, \xe2\x80\x9cwhile there is no single provision in the\nstatute which states that each of these requirements is essential to \xe2\x80\x98coverage,\xe2\x80\x99 when read as a whole, it was clearly reasonable for OPM to make\ncoverage dependent upon compliance with all of the statutory requirements.\xe2\x80\x9d Id. at 6. In OPM\xe2\x80\x99s view, section 842.103 makes \xe2\x80\x9cclear\xe2\x80\x9d that \xe2\x80\x9cto\nbe \xe2\x80\x98covered by FERS\xe2\x80\x99 an individual must not only have deductions withheld from their pay\xe2\x80\x94their employing agency must make the necessary\ncontributions\xe2\x80\x9d as well. Id. at 5\xe2\x80\x936.\nOn its face, section 842.103 is not as free from ambiguity as OPM suggests. In particular, the last sentence in the provision states that \xe2\x80\x9c[e]xcept\nas provided in \xc2\xa7 842.104 and as excluded by \xc2\xa7 842.105, an employee or\nMember is covered by FERS,\xe2\x80\x9d 5 C.F.R. \xc2\xa7 842.103, language that appears\nto define coverage under FERS without making employer contributions a\nprerequisite. We do not think that the ambiguity in this language can be\nresolved by examining OPM\xe2\x80\x99s practice because there does not appear to\nbe any relevant practice: OPM has pointed us to no instance of an agency\nrefusing to remit the contributions it is statutorily required to pay under\nCSRS or FERS. Cf. OPM Memo at 9 (stating that no agency has failed to\nmake employer contributions under CSRS). Nonetheless, we assume that\nOPM\xe2\x80\x99s interpretation of its own regulation is entitled to deference, and\nthus that section 842.103 has the meaning OPM suggests. See Talk Am.,\nInc. v. Mich. Bell Tel. Co., 131 S. Ct. 2254, 2261 (2011).\nIn addition to relying on the statutory text and its regulation, OPM also\nfinds support for its view in Congress\xe2\x80\x99s purpose. OPM notes that \xe2\x80\x9cCongress created FERS as a fully funded pension system,\xe2\x80\x9d intending that \xe2\x80\x9cthe\nFund would be placed on a firm financial footing by requiring agencies to\npay the full \xe2\x80\x98normal costs\xe2\x80\x99 for FERS employees.\xe2\x80\x9d OPM Memo at 6. In\nlight of Congress\xe2\x80\x99s \xe2\x80\x9c\xe2\x80\x98interest in sound fiscal and accounting management,\xe2\x80\x99\xe2\x80\x9d id. at 7 (quoting S. Rep. No. 99-166, at 29 (1985)), OPM contends\nthat it is \xe2\x80\x9chighly unlikely that Congress would have provided that employees would be considered \xe2\x80\x98covered\xe2\x80\x99 by FERS and credited for their\nservice if their employing agencies did not make the requisite contribution\nto the Fund.\xe2\x80\x9d Id.\n188\n\n\x0cService Credit for Retirement Annuities of USPS Employees\n\nThe Postal Service, for its part, does not deny that FERS requires it to\nmake its employer contributions, USPS Memo at 4, 14, or that Congress\nintended that FERS be placed on a sound financial footing, id. But it\npoints out that Congress chose to further this goal by requiring all employers to contribute to the Fund, not by depriving employees of service\ncredit in the highly unusual situation in which an agency fails to make its\nrequired payments. Id. at 2\xe2\x80\x933. The Postal Service contends that under the\nstatute, \xe2\x80\x9ccreditable service is generated so long as employees are performing the required service for the Federal government and are contributing\nthe required amounts to their pension, without regard to whether the\nemploying agency cannot or does not make its employer contribution.\xe2\x80\x9d Id.\nat 2. None of the key statutory provisions, in the Postal Service\xe2\x80\x99s view,\n\xe2\x80\x9cindicate[s] that creditable service under FERS is dependent on the employer contribution.\xe2\x80\x9d Id. at 6. The Postal Service emphasizes that in\nenacting the basic annuity, Congress \xe2\x80\x9cintended to provide clearly defined\nand reliable benefits to employees\xe2\x80\x9d\xe2\x80\x94a purpose that would be \xe2\x80\x9cvitiated by\nOPM\xe2\x80\x99s interpretation, which would predicate the level of employee benefits on the funding decisions of agency officials.\xe2\x80\x9d Id. at 3; see also id. at\n12. Accordingly, the Postal Service argues that OPM\xe2\x80\x99s interpretation of\nFERS, as embodied in its regulations, is at odds with the statute or, at\nleast, unreasonable, id. at 5, and that OPM cannot enforce the Postal\nService\xe2\x80\x99s statutory obligation to contribute by denying service credit to its\nemployees.\nWe assume that OPM\xe2\x80\x99s authority to implement FERS by regulation,\n5 U.S.C. \xc2\xa7 8461(g), would entitle it, in appropriate circumstances, to\ndeference in its construction of FERS pursuant to Chevron, U.S.A., Inc. v.\nNatural Res. Defense Council, Inc., 467 U.S. 837 (1984). However,\nOPM\xe2\x80\x99s construction of the statute is entitled to deference only \xe2\x80\x9cif the\nstatute is silent or ambiguous with respect to the specific issue\xe2\x80\x9d at hand.\nId. at 843. If, on the other hand, \xe2\x80\x9cCongress has directly spoken to the\nprecise question at issue,\xe2\x80\x9d and in so doing made its intent clear, \xe2\x80\x9cthat is\nthe end of the matter.\xe2\x80\x9d Id. at 842. And here, for the reasons set forth\nbelow, we conclude that FERS makes clear that postal employees who\notherwise qualify for retirement benefits under FERS are both covered by\nand accrue service credit under the statute notwithstanding the Postal\nService\xe2\x80\x99s failure to make its employer contributions pursuant to 5 U.S.C.\n\xc2\xa7 8423. Thus, OPM\xe2\x80\x99s interpretation of FERS\xe2\x80\x94that OPM can address the\n189\n\n\x0c35 Op. O.L.C. 181 (2011)\n\nPostal Service\xe2\x80\x99s failure to remit the required contributions by depriving\nemployees of accrued service credit\xe2\x80\x94is foreclosed by the statute.\nIII.\nA.\n\xe2\x80\x9cWe begin with the text of the statute.\xe2\x80\x9d Kasten v. Saint-Gobain Performance Plastics Corp., 131 S. Ct. 1325, 1331 (2011). Section 8410 of\nFERS, which governs eligibility, provides: \xe2\x80\x9cNotwithstanding any other\nprovision of this chapter, an employee or Member must complete at least\n5 years of civilian service creditable under section 8411 in order to be\neligible for an annuity under this subchapter.\xe2\x80\x9d 5 U.S.C. \xc2\xa7 8410. Central to\nresolving this controversy is section 8411, which governs creditable\nservice. It provides that \xe2\x80\x9c[t]he total service of an employee . . . is the full\nyears and twelfth parts thereof, excluding from the aggregate the fractional part of a month, if any.\xe2\x80\x9d Id. \xc2\xa7 8411(a)(1). Section 8411 further specifies, in relevant part, that for purposes of FERS, \xe2\x80\x9ccreditable service of an\nemployee . . . includes . . . employment as an employee . . . after December 31, 1986.\xe2\x80\x9d Id. \xc2\xa7 8411(b), (b)(1). These provisions are not vague or\nunclear. They indicate plainly the category of employees who are eligible\nfor FERS benefits, and Congress\xe2\x80\x99s broad, but not unbounded, definition\nof \xe2\x80\x9ccreditable service\xe2\x80\x9d for FERS purposes.\nSection 8401(11) excludes certain categories of individuals from the\ndefinition of \xe2\x80\x9cemployee,\xe2\x80\x9d and section 8402 excludes certain categories of\nindividuals from coverage under FERS. Id. \xc2\xa7\xc2\xa7 8401(11), 8402. But these\nexclusions are irrelevant to the present dispute. As USPS points out, OPM\ndoes not argue that \xe2\x80\x9cthe non-payment of the employer contribution means\nthat Postal Service employees are no longer \xe2\x80\x98employees\xe2\x80\x99 under the FERS\nstatute or that they now fall within one of the exceptions in 5 U.S.C.\n\xc2\xa7 8402 by virtue of such non-payment.\xe2\x80\x9d USPS Memo at 6. And the postal\nemployees potentially affected by their employer\xe2\x80\x99s non-payment of its\ncontributions are still engaged in \xe2\x80\x9cemployment.\xe2\x80\x9d The plain language of\nFERS, then, supports the view that employees earn creditable service so\nlong as they are employed as \xe2\x80\x9cemployee[s]\xe2\x80\x9d after December 31, 1986,\n5 U.S.C. \xc2\xa7 8411(b)(1), regardless of whether their employer has suspended its contributions to the Fund.\n190\n\n\x0cService Credit for Retirement Annuities of USPS Employees\n\nTo be sure, as noted earlier, OPM acknowledges that FERS\xe2\x80\x99s definition\nof \xe2\x80\x9ccreditable service\xe2\x80\x9d does not mention employer contributions. Its\nargument is that a correct determination of what counts as \xe2\x80\x9ccreditable\nservice\xe2\x80\x9d under FERS does not depend on the wording of section\n8411(b)(1) alone, but also on the overall statutory plan\xe2\x80\x94in particular, on\nthe fact that another provision of FERS clearly requires employer contributions as part of the overall FERS scheme.\nWe agree that section 8423 of FERS requires employers to make contributions to the Fund. We further agree that \xe2\x80\x9c[i]nterpretation of a word or\nphrase depends upon reading the whole statutory text, considering the\npurpose and context of the statute.\xe2\x80\x9d Dolan v. U.S. Postal Serv., 546 U.S.\n481, 486 (2006). However, the mere fact that employer contributions are a\nmandatory part of the overall FERS scheme does not indicate that OPM is\nauthorized to suspend or eliminate the accrual of employees\xe2\x80\x99 service\ncredit as a remedy for an employer\xe2\x80\x99s failure to make such contributions.\nCf. Harris Trust & Sav. Bank v. Salomon Smith Barney Inc., 530 U.S.\n238, 247 (2000) (ERISA\xe2\x80\x99s \xe2\x80\x9c\xe2\x80\x98comprehensive and reticulated\xe2\x80\x99 scheme\nwarrants a cautious approach to inferring remedies not expressly authorized by the text\xe2\x80\x9d (citations and internal quotation marks omitted)). As\nnoted above, the specific statutory provision that addresses creditable\nservice says nothing that suggests that an employee\xe2\x80\x99s accrual of credit\ndepends on the fact or extent of employer contributions. Section 8423 of\nFERS likewise fails to mandate, or even suggest, that a lapse in an employing agency\xe2\x80\x99s contributions should result in a denial of service credit\nto that agency\xe2\x80\x99s employees.\nCertainly, as OPM states, section 8423 reflects Congress\xe2\x80\x99s goal that\n\xe2\x80\x9cthe Fund . . . be placed on a firm financial footing by requiring agencies\nto pay the full \xe2\x80\x98normal costs\xe2\x80\x99 for FERS employees.\xe2\x80\x9d OPM Memo at 6. But\nit does so not by stipulating that employees will earn service credit (and\ntherefore future benefits) only if their employers make all required contributions, but rather by imposing on agency employers a legal obligation to\nmake the required contributions. OPM itself has suggested no reason to\nthink that in practice this statutory mechanism has proven ineffective in\nserving Congress\xe2\x80\x99s goal. Cf. OPM Memo at 9 (\xe2\x80\x9cno agency has ever defaulted on its obligation to make the required contributions\xe2\x80\x9d under CSRS).\n\n191\n\n\x0c35 Op. O.L.C. 181 (2011)\n\nMoreover, the text of the FERS statute suggests that Congress considered the question of statutory mechanisms to address funding shortfalls\nand enacted a mechanism to deal with one kind of shortfall, without\nindicating that the suspension of employee service credit might be used as\na solution to that or any other funding deficiency. Specifically, the statute\nprovides that, in the event that OPM determines, on an annual review, that\nan agency\xe2\x80\x99s employer contributions do not in fact satisfy the statute\xe2\x80\x99s\nfunding goals, OPM must notify the Postmaster General (or the Secretary\nof the Treasury, as applicable) of any \xe2\x80\x9csupplemental liability\xe2\x80\x9d and the\namount of the required installment payments, amortized over 30 years.\n5 U.S.C. \xc2\xa7 8423(b); see supra note 8. The Postal Service must then pay\nthe amount specified in the notification to address the funding shortfall.\n5 U.S.C. \xc2\xa7 8423(b)(4)(B). The existence of this supplemental liability\nprocess does not affirmatively authorize the Postal Service to avoid making its employer contributions as they come due in favor of amortizing\nsuch payments over 30 years. But the existence of a supplemental liability\nremedy for at least one type of funding shortfall shows that Congress was\naware of the possibility that the employer contributions remitted under\nsection 8423 might in some circumstances fail to result in agency funding\nof the full costs of employee benefits. Congress chose nonetheless to\nprovide expressly for only one response to such a possibility. In light of\nthat awareness, the omission of any other mechanism for addressing this\nor other kinds of shortfalls, such as denying service credit to employees\nwhen their employer defaults on its contributions, suggests that \xe2\x80\x9cthe\nstatute fails to mention [other responses] \xe2\x80\x98by deliberate choice, not inadvertence.\xe2\x80\x99\xe2\x80\x9d Bruesewitz v. Wyeth LLC, 131 S. Ct. 1068, 1076 (2011) (citation omitted).\nIn sum, none of the most clearly relevant provisions of the statute suggests that either employee eligibility or creditable service under FERS\ndepends upon the extent of the employer\xe2\x80\x99s contributions to the Fund. As\nOPM insists, and the Postal Service effectively concedes, the plain language of FERS\xe2\x80\x99s key provisions specifies that agency employers must\ncontribute to the Fund the normal cost of their covered employees\xe2\x80\x99 basic\npay. At the same time, these provisions fail to link an agency\xe2\x80\x99s failure to\ncomply with this requirement to the affected employees\xe2\x80\x99 eligibility for an\nannuity or accrual of creditable service. Instead, they appear on their face\nto provide that an employee is entitled to service credit so long as he or\n192\n\n\x0cService Credit for Retirement Annuities of USPS Employees\n\nshe is employed as an \xe2\x80\x9cemployee\xe2\x80\x9d after December 31, 1986. See 5 U.S.C.\n\xc2\xa7 8411(a) & (b). Given the harsh penalty federal employees would suffer\nif they were denied FERS coverage or service credit for periods of employment during which their agency employers failed to make the required contributions to the Fund\xe2\x80\x94an action over which the employees\nhave no control\xe2\x80\x94the absence of any reference in FERS\xe2\x80\x99s key provisions\nto OPM\xe2\x80\x99s authority to impose that particular remedy for an agency\xe2\x80\x99s\nnoncompliance strongly suggests that Congress did not intend such authority to exist. As we discuss next, we do not think any of OPM\xe2\x80\x99s additional arguments in support of this authority are persuasive.\nB.\nOPM offers several other arguments that, in its view, show that the\nFERS statute requires employer contributions as a condition of employees\xe2\x80\x99 coverage and accrual of creditable service under FERS. First, OPM\nrelies heavily on the Postal Service\xe2\x80\x99s concession that, to receive service\ncredit under FERS, an employee must have deductions withheld from his\nor her wages, even though, in the Postal Service\xe2\x80\x99s view, the employing\nagency\xe2\x80\x99s contributions are not required for that purpose. OPM Memo at 7;\nsee USPS Memo at 5\xe2\x80\x9310. OPM insists that these two propositions cannot\nbe reconciled because it is illogical to distinguish between the employee\xe2\x80\x99s\ndeduction and the employer\xe2\x80\x99s contribution\xe2\x80\x94both of which are statutorily\nrequired and neither of which is expressly linked by the statutory text to\naccrual of service credit\xe2\x80\x94for purposes of determining whether an employee accrues creditable service for periods when employee deductions\nor employer contributions have not been made. OPM Memo at 7.\nWe need not resolve this issue. As a practical matter, the Postal Service\nhas continued to withhold from its employees\xe2\x80\x99 basic pay the deductions\nrequired under 5 U.S.C. \xc2\xa7 8422\xe2\x80\x94including the employee deductions\xe2\x80\x94\nand to deposit the deductions into the Fund. USPS Memo at 2. If fulfillment of the Postal Service\xe2\x80\x99s obligations under section 8422 is a necessary\ncondition to postal employees receiving credit under FERS, that condition\nis being met. Furthermore, although OPM and the Postal Service agree\nthat a failure to make these employee deductions would affect employees\xe2\x80\x99\nability to earn creditable service, we are unsure that they are correct. In\nour view, this issue is difficult, particularly in the context of a scheme in\n193\n\n\x0c35 Op. O.L.C. 181 (2011)\n\nwhich it is the agency\xe2\x80\x99s legal obligation to effectuate the employee deduction. See 5 U.S.C. \xc2\xa7 8422(a). In fact, the answer to the question may well\ndepend on the reason that employee deductions have not been made. 9 In\nany event, even if employee deductions constitute a prerequisite to the\naccrual of service credit under FERS\xe2\x80\x94one that does not appear in the\nFERS eligibility or accrual provisions themselves\xe2\x80\x94that would not necessarily mean that employer contributions likewise would be a prerequisite\nfor the accrual of such credit, because the significance and treatment of\nemployee deductions and employer contributions within the statutory\nscheme are different. Each argument for linking employee service credit\nto separate requirements in the statute would have to be considered on its\nown terms.\nBoth OPM and the Postal Service cite different subsections of section\n8411\xe2\x80\x94some requiring employee deductions as a condition of receiving\ncreditable service and a couple requiring employee deductions and em-\n\nFor example, if the employer failed to make the employee deduction because the affected employee was not subject to deductions under 5 U.S.C. \xc2\xa7 8422, the employee\xe2\x80\x99s\neligibility for coverage and ability to accrue creditable service under FERS might be\nimplicated. Cf. Tomboc v. OPM, 355 Fed. Appx. 422, 424 (Fed. Cir. 2009) (noting that\n\xe2\x80\x9c[w]hile the absence of deductions\xe2\x80\x9d under the CSRA \xe2\x80\x9cis an indication\xe2\x80\x9d regarding whether\na position is covered, \xe2\x80\x9cit is not necessarily dispositive\xe2\x80\x9d). Alternatively, if the employer\nfailed to make the employee deductions because of an agency error, the error may be\ncorrected, see 5 C.F.R. \xc2\xa7 841.505 (2011); and, in any event, an agency error would not\nnecessarily affect the employee\xe2\x80\x99s entitlement to coverage. Cf. Noveloso v. OPM, 45\nM.S.P.R. 321, 324 n.2 (M.S.P.B. 1990) (noting, in addressing CSRS coverage, that \xe2\x80\x9c[i]f\nno deductions were withheld because of agency error, or because it was not determined\nuntil after the fact that such service should have been covered, the employment will still\nconstitute covered service\xe2\x80\x9d); accord Staffney v. OPM, 54 M.S.P.R. 99, 102\xe2\x80\x9303 (M.S.P.B.\n1992) (same, under CSRS coverage); In re Kaltakji, 1 M.S.P.R. 63, 64 (M.S.P.B. 1978)\n(same). But see 5 U.S.C. \xc2\xa7 8339(i) (2006) (providing, for purposes of computing a CSRS\nannuity, that the total service of an employee \xe2\x80\x9cshall not include any period of civilian\nservice . . . for which retirement deductions or deposits [under section 8334] have not\nbeen made\xe2\x80\x9d unless the employee makes a deposit under section 8334(c) or (d)(1) or no\ndeposit is required for such service as specified under section 8334(g) or another statute).\nAnd, for the same reasons that an agency error may not affect the employee\xe2\x80\x99s entitlement\nto coverage, a willful agency refusal to make the required employee deductions likewise\nmay not affect that entitlement. For the reasons stated in the text, however, we need not\ndecide the circumstances, if any, in which an employing agency\xe2\x80\x99s failure to make the\nemployee deductions and deposit them into the Fund would affect an employee\xe2\x80\x99s coverage and accrual of service under FERS.\n9\n\n194\n\n\x0cService Credit for Retirement Annuities of USPS Employees\n\nployer contributions\xe2\x80\x94to support their respective positions. On the one\nhand, OPM contends that, where Congress intended to permit service\ncredit to be afforded even if no contributions were made by the agency, it\ndid so explicitly. It cites as an example section 8411(b)(3), which permits\nemployees to receive service credit for periods of employment during\nwhich no employing agency contributions or employee deductions were\npaid into the Fund for certain service performed prior to January 1, 1989.\nOPM Memo at 8 n.5. In such instances, the employee must make a deposit\ninto the Fund of 1.3 percent of his or her basic pay, with interest, for that\nperiod of service. Id. (citing 5 U.S.C. \xc2\xa7 8411(f)(2)). 10 However, no employing agency contribution is required for that period. Id. 11 The Postal\n10\n\nSection 8411(b)(3), with the introductory language in section 8411(b), provides:\nFor the purpose of this chapter, creditable service of an employee or Member includes[,] except as provided in subsection (f) or (h), any civilian service (performed before January 1, 1989, other than any service under paragraph (1) or (2))\nwhich, but for the amendments made by subsections (a)(4) and (b) of section 202\nof the Federal Employees\xe2\x80\x99 Retirement System Act of 1986, would be creditable\nunder subchapter III of chapter 83 of this title (determined without regard to any\ndeposit or redeposit requirement under such subchapter, any requirement that the\nindividual become subject to such subchapter after performing the service involved, or any requirement that the individual give notice in writing to the official by whom such individual is paid of such individual\xe2\x80\x99s desire to become subject to such subchapter)[.]\n\n5 U.S.C. \xc2\xa7 8411(b), (b)(3). Section 8411(f)(2) prohibits an employee from receiving\n\xe2\x80\x9ccredit under this chapter for any service described in subsection (b)(3) for which retirement deductions under subchapter III of chapter 83 have not been made, unless such\nemployee or Member deposits an amount equal to 1.3 percent of basic pay for such\nservice, with interest.\xe2\x80\x9d Id. \xc2\xa7 8411(f)(2). Section 8411(f)(1) requires an employee who has\nreceived a refund of CSRS retirement deductions for service described in subsections\n(b)(2) or (b)(3) to \xe2\x80\x9cdeposit[] an amount equal to 1.3 percent of basic pay for such service,\nwith interest,\xe2\x80\x9d as a condition of receiving credit for such service. Id. \xc2\xa7 8411(f)(1).\nThe Senate Committee on Governmental Affairs released a Committee Print in October 1986, four months after the enactment of FERS, that set out a detailed section-bysection analysis of the statute. The committee print explains that section 8411(b)(3)\n\xe2\x80\x9cprovides that creditable service includes . . . service before January 1, 1989, which was\neither non-covered or was not vested under CSRS in which case a contribution must be\nmade under subsection (f).\xe2\x80\x9d S. Comm. on Governmental Affairs, 99th Cong., Supplemental Information Regarding the Federal Employees\xe2\x80\x99 Retirement System Act of 1986,\nat 7 (Comm. Print 1986) (\xe2\x80\x9cFERS Comm. Print\xe2\x80\x9d).\n11 Section 8411(b)(3) is not unique in requiring employees who had not contributed to\nthe Fund (sometimes because they had been covered by other retirement systems) but who\n\n195\n\n\x0c35 Op. O.L.C. 181 (2011)\n\nService, on the other hand, cites two instances in which the statute expressly requires the payment of an employer contribution to render certain\nservice creditable, arguing that there would have been no reason for\nCongress to have explicitly required an employer contribution if accrual\nof service credit is invariably conditioned on an agency\xe2\x80\x99s having made\nemployer contributions to the Fund. USPS Memo at 8 (citing 5 U.S.C.\n\xc2\xa7 8411(e), (g) (the latter of these added in subsequent amendments to\nFERS)). 12\n\nseek service credit within the FERS system, to make payments to the Fund equal to the\namounts that would have been deducted as FERS employee contributions for that period\nof service\xe2\x80\x94without any mention of the necessity of an employer contribution. See, e.g.,\n5 U.S.C. \xc2\xa7 8411(b)(4) & (5) (the latter of these added in subsequent amendments to\nFERS); USPS Paper at 6. In still other instances, Congress treated service for which\ndeductions were not paid to the Fund as creditable with no requirement of any kind of\nemployee or employer deposit. See 5 U.S.C. \xc2\xa7 8411(c)(1)(A) (military service performed\nbefore January 1, 1957); id. \xc2\xa7 8411(d) (certain periods of leave without pay); USPS Paper\nat 7.\n12 Section 8411(e) provides:\nCredit shall be allowed for periods of approved leave without pay granted an employee\nto serve as a full-time officer or employee of an organization composed primarily of\nemployees . . . , subject to the employee arranging to pay, through the employee\xe2\x80\x99s employing agency, within 60 days after commencement of such leave without pay,\namounts equal to the retirement deductions and agency contributions which would be\napplicable under sections 8422(a) and 8423(a), respectively, if the employee were in\npay status. If the election and all payments provided by this subsection are not made,\nthe employee may not receive credit for the periods of leave without pay, notwithstanding the third sentence of subsection (d).\n5 U.S.C. \xc2\xa7 8411(e) (emphasis added). Section 8411(g), in turn, provides that \xe2\x80\x9c[a]ny\nemployee who\xe2\x80\x94\n\xe2\x80\x9c(1) served in a position in which the employee was excluded from coverage under this subchapter because the employee was covered under a retirement system\nestablished under section 10 of the Federal Reserve Act; and\n\xe2\x80\x9c(2) transferred without a break in service to a position to which the employee\nwas appointed by the President, with the advice and consent of the Senate, and in\nwhich position the employee is subject to this subchapter,\n\xe2\x80\x9cshall be treated for all purposes of this subchapter as if any service that would have been\ncreditable under the retirement system established under section 10 of the Federal Reserve\nAct was service performed while subject to this subchapter if any employee and employer\ndeductions, contributions or rights with respect to the employee\xe2\x80\x99s service are transferred\nfrom such retirement system to the Fund.\xe2\x80\x9d Id. \xc2\xa7 8411(g) (emphasis added).\n\n196\n\n\x0cService Credit for Retirement Annuities of USPS Employees\n\nNone of these examples, in our view, supports either inference. As the\nPostal Service observes, section 8411 sets forth a variety of rules regarding when certain types of service that fall outside the scope of section\n8411(b)(1) (the service at issue here) nonetheless may be credited for\nFERS purposes. Id. Congress\xe2\x80\x99s varying responses to divergent coverage\nand employee deduction scenarios do not shed light on what it intended as\na general matter for employees otherwise covered by FERS. With respect\nto section 8411(b)(3), for example, Congress\xe2\x80\x99s decision to allow the\naccrual of service credit for employees in a transitional period during the\nearly implementation of FERS and to address the absence of retirement\ndeductions by requiring that the employee deposit an amount compensating for those missing employee deductions, 5 U.S.C. \xc2\xa7 8411(f)(2), suggests, at most, that Congress viewed employee deductions as more significant to coverage requirements than employer contributions. By the same\ntoken, that Congress required employer contributions to be made as a\ncondition of receiving service credit in the examples cited by the Postal\nService, id. \xc2\xa7 8411(e), (g), shows little more than that Congress chose to\nimpose that additional requirement in those instances and explicitly provided for employer contributions to make the requirement clear. 13\n\nFor similar reasons, we do not find Congress\xe2\x80\x99s treatment of reemployed annuitants\nin 5 U.S.C. \xc2\xa7 8468, on which the Postal Service relies, see USPS Memo at 6\xe2\x80\x937, particularly illuminating. In language added to that section after the enactment of FERS, the statute\nprovides that, with certain exceptions, if the annuitant becomes reemployed, \xe2\x80\x9cdeductions\nfor the Fund shall be withheld from the annuitant\xe2\x80\x99s pay under section 8422(a) and contributions under section 8423 shall be made.\xe2\x80\x9d 5 U.S.C. \xc2\xa7 8468(a) (2006). The Postal Service\nmakes much of the fact that a subsequent subsection provides that if an annuitant \xe2\x80\x9csubject\nto deductions under the second sentence of subsection (a)\xe2\x80\x9d serves for at least 5 years, the\nannuitant may elect to have his or her rights redetermined under FERS. Id.\n\xc2\xa7 8468(b)(2)(A) (emphasis added). The Postal Service finds it significant that this subsection mentions \xe2\x80\x9cdeductions\xe2\x80\x9d and not employer \xe2\x80\x9ccontributions.\xe2\x80\x9d But an employee subject to\n\xe2\x80\x9cdeductions\xe2\x80\x9d under the second sentence of section 8468(a) would also be subject to\n\xe2\x80\x9ccontributions,\xe2\x80\x9d and so there was no need for Congress to repeat the full phrase in section\n8468(b)(2)(A) to indicate the employees to whom it was referring. Moreover, contrary to\nthe Postal Service\xe2\x80\x99s assertion that Congress made clear that reemployed annuitants earn\nservice credit \xe2\x80\x9cso long as \xe2\x80\x98deductions\xe2\x80\x99 are being made from their basic pay,\xe2\x80\x9d USPS Memo\nat 7, Congress merely referred to reemployed annuitants who were \xe2\x80\x9csubject to deductions,\xe2\x80\x9d without regard to whether the deductions were actually \xe2\x80\x9cbeing made.\xe2\x80\x9d See\n5 U.S.C. \xc2\xa7 8468(b)(2)(A). More importantly, however, we believe again that Congress\xe2\x80\x99s\npolicy determination about the coverage of reemployed annuitants tells us little about\n13\n\n197\n\n\x0c35 Op. O.L.C. 181 (2011)\n\nWhat these examples reveal is that, even where there was no other statutory commitment to treat service as creditable under FERS or where\nemployees were covered under other federal retirement systems, Congress\nsometimes extended FERS service credit in exchange for the payment of\nspecified employee deductions\xe2\x80\x94or the payment of employer contributions, or the relinquishment of service credit under other retirement systems, or without imposing any conditions\xe2\x80\x94to serve some other policy\ngoal, such as increased portability of retirement benefits. See Pub. L. No.\n99-335, \xc2\xa7 100A(3), 100 Stat. at 516 (codified at 5 U.S.C. \xc2\xa7 8401 note)\n(one purpose of FERS was \xe2\x80\x9cto enhance portability of retirement assets\nearned as an employee of the Federal Government\xe2\x80\x9d). In our view, the\ndiscrete scenarios addressed in section 8411 provide little assistance, one\nway or another, in the assessment whether Congress intended to authorize\nOPM to deny service credit to employees otherwise subject to the FERS\nretirement plan for periods of employment under that plan if agencies\nviolated the statutory requirement that they make employer contributions\nto the Fund.\nFinally, as noted above, OPM argues that, in light of Congress\xe2\x80\x99s creation of FERS as a \xe2\x80\x9cfully funded pension system,\xe2\x80\x9d OPM Memo at 6, and\nits purpose to ensure \xe2\x80\x9csound fiscal and accounting management,\xe2\x80\x9d id. at 7\n(citing S. Rep. No. 99-166, at 29), \xe2\x80\x9cit is highly unlikely that Congress\nwould have provided that employees be considered \xe2\x80\x98covered\xe2\x80\x99 by FERS\nand credited for their service if their employing agencies did not make the\nrequisite contribution[s] to the Fund.\xe2\x80\x9d Id. But, of course, Congress did\nrequire employing agencies to make specified contributions to the Fund,\nand the Postal Service is legally obligated to do so. See supra pp. 184\xe2\x80\x93\n186, 191. The question here is only whether Congress intended that the\nremedy for the Postal Service\xe2\x80\x99s failure to meet its obligations would be to\ndeny employees the service credit that the statute contemplates they will\nearn.\nWe agree with OPM that Congress was concerned with the fiscal management of the Fund. But \xe2\x80\x9censur[ing] a fully funded and financially sound\nretirement benefits plan for Federal employees,\xe2\x80\x9d Pub. L. No. 99-335,\n\xc2\xa7 100A(2), 100 Stat. at 516 (codified at 5 U.S.C. \xc2\xa7 8401 note), was only\nwhether Congress intended generally to condition coverage and accrual of service credit\nfor FERS employees on the agency\xe2\x80\x99s deposit of its employer contributions into the Fund.\n\n198\n\n\x0cService Credit for Retirement Annuities of USPS Employees\n\none of several congressional purposes in enacting FERS. Among other\nthings, Congress also enacted FERS to establish a new retirement plan \xe2\x80\x9cto\nassist in building a quality career work force in the Federal Government.\xe2\x80\x9d\nId. \xc2\xa7 100A(5). That goal could well be subverted if Congress were to\ncreate a retirement system in which employees\xe2\x80\x99 retirement benefits could\nbe diminished or stripped away by their agencies\xe2\x80\x99 failure to pay the statutorily required contributions into the Fund. Even recognizing that a fully\nfunded pension system was an important congressional objective, \xe2\x80\x9cno\nlegislation pursues its purposes at all costs. Deciding what competing\nvalues will or will not be sacrificed to the achievement of a particular\nobject is the very essence of legislative choice\xe2\x80\x94and it frustrates rather\nthan effectuates legislative intent simplistically to assume that whatever\nfurthers the statute\xe2\x80\x99s primary objective must be the law.\xe2\x80\x9d Rodriguez v.\nUnited States, 480 U.S. 522, 525\xe2\x80\x9326 (1987).\nFurther, although we do not \xe2\x80\x9cresort to legislative history to cloud a\nstatutory text that is clear,\xe2\x80\x9d Ratzlaf v. United States, 510 U.S. 135, 147\xe2\x80\x9348\n(1994), we believe that, to the extent that the legislative history of FERS\nis illuminating, it undermines, rather than supports, the view that Congress intended to deny employees eligibility and creditable service under\nFERS for periods of employment in which their employing agencies fail\nto make their required employer contributions to the Fund.\nThe legislative history makes clear that Congress intended the basic\nannuity in FERS to operate as a defined benefit plan. See, e.g., S. Rep.\nNo. 99-166, at 6, 9, 30, 42; FERS Comm. Print at 7. Such a plan consists\nof \xe2\x80\x9ca general pool of assets\xe2\x80\x9d out of which an employee, \xe2\x80\x9cupon retirement,\nis entitled to a fixed periodic payment.\xe2\x80\x9d Hughes Aircraft Co. v. Jacobson,\n525 U.S. 432, 439 (1999) (citation omitted). \xe2\x80\x9cA defined benefit plan\npromises a participant a specific amount of pension benefits at retirement\ndetermined under a formula based on years of participation in the plan,\nand in most nonbargained plans, based on an average of compensation.\xe2\x80\x9d\nStephen R. Bruce, Pension Claims: Rights and Obligations 17\xe2\x80\x9318 (1988)\n(\xe2\x80\x9cBruce\xe2\x80\x9d); see also James E. Burk, Pension Plan Management Manual:\nAdministration and Investment \xc2\xb6 1.01[8], at 1-8 (1987) (\xe2\x80\x9cBurk\xe2\x80\x9d) (benefits\nin a defined benefits plan determined \xe2\x80\x9cby a formula that is generally\nrelated to service and compensation\xe2\x80\x9d); H.R. Comm. on Post Office and\nCivil Serv., 98th Cong., Designating a Retirement System for Federal\nWorkers Covered by Social Security 6 (Comm. Print 1984) (prepared by\n199\n\n\x0c35 Op. O.L.C. 181 (2011)\n\nthe Congressional Research Service) (\xe2\x80\x9cCRS Comm. Print\xe2\x80\x9d) (\xe2\x80\x9cA defined\nbenefit plan determines benefit amount by a formula. Upon reaching the\nterms specified in the definition of eligibility (usually a combination of\nage and years of service), the worker receives the benefit computed from\nthe application of the formula to the employee\xe2\x80\x99s years of service and\nsalary.\xe2\x80\x9d). 14\nThe FERS basic annuity follows this model. FERS promises participants a specific level of benefits by application of a formula that is generally dependent on the employee\xe2\x80\x99s average pay and total service,\n5 U.S.C. \xc2\xa7 8415(a), and that bases the employing agencies\xe2\x80\x99 contributions\non the \xe2\x80\x9cnormal-cost percentage\xe2\x80\x9d of benefits, id. \xc2\xa7 8423(a), which is\nactuarially computed by OPM. Id. \xc2\xa7 8401(23); cf. Burk \xc2\xb6 2.01, at 2-4\n(employer\xe2\x80\x99s contribution in a defined benefit plan is actuarially computed). The benefit formula in a defined benefit plan \xe2\x80\x9cis geared to providing\na specific retirement benefit rather than based on the rate of contributions\nmade by the employer to the pension fund.\xe2\x80\x9d Burk \xc2\xb6 2.01, at 2-5. A pension plan covered by the Employee Retirement Income Security Act of\n1974 (\xe2\x80\x9cERISA\xe2\x80\x9d), 29 U.S.C. \xc2\xa7\xc2\xa7 1001\xe2\x80\x931461 (2006 & Supp. III 2009), for\nexample, \xe2\x80\x9cis liable for benefits without regard to whether the employer\nhas made required contributions.\xe2\x80\x9d ABA Section of Labor and Employment Law, Employment Benefits Law 279 (1991). Thus, it was well\nestablished by the time Congress enacted FERS, see USPS Memo at 9,\nthat a multiemployer pension plan covered by ERISA, which is analogous in many respects to the multi-agency approach of FERS, must\naward credit based on the service performed for a participating employer\nregardless of whether the employer made the required contributions for\nsuch service. As the Supreme Court recognized a year before the enactment of FERS:\nBy contrast, under a \xe2\x80\x9cdefined contribution plan,\xe2\x80\x9d the promise is that \xe2\x80\x9ccertain contributions will be made and credited to an employee\xe2\x80\x99s individual account. Contribution rates\nare fixed, usually as a percentage of the employee\xe2\x80\x99s earnings. Such plans do not guarantee\nan employee any fixed level of benefits at retirement. An employee\xe2\x80\x99s benefit will vary,\ndepending on the amount of the contributions and the interest and capital appreciation\naccumulated on them.\xe2\x80\x9d Burk \xc2\xb6 1.02[8], at 1-8 \xe2\x80\x931-9; see also Hughes, 525 U.S. at 439;\nBruce at 18. \xe2\x80\x9cUnder defined contribution plans, employers know exactly what the pension\nobligation is and the benefits are fully funded at the time of the contribution. Employees\nbear the risk of variable market performance[.]\xe2\x80\x9d CRS Comm. Print at 6\xe2\x80\x937.\n14\n\n200\n\n\x0cService Credit for Retirement Annuities of USPS Employees\n\nThe consistent view of the Secretary of Labor is that, under ERISA\xe2\x80\x99s\nminimum participation, vesting, and benefit accrual standards for\npension plans . . . a pension plan covered by ERISA must award\ncredit \xe2\x80\x9csolely on the basis of service performed for a participating\nemployer, regardless [of] whether that employer is required to contribute for such service or has made or defaulted on his required contributions.\xe2\x80\x9d In the Secretary\xe2\x80\x99s judgment, \xe2\x80\x9c[a]ny plan term or Trustees\xe2\x80\x99 resolution to the contrary is . . . unlawful and unenforceable.\xe2\x80\x9d\nCent. States, Se. & Sw. Areas Pension Fund v. Cent. Transp., Inc., 472\nU.S. 559, 567 n.7 (1985) (citations omitted). 15\nGiven this backdrop, it would be reasonable to expect some indication\nin the text of FERS, or at least in its legislative history, if Congress had\nintended to depart from these principles and make accrual of employee\n\n15 Accord Cent. States, Se. & Sw. Areas Pension Fund v. Gerber Truck Serv., Inc.,\n870 F.2d 1148, 1151 (7th Cir. 1988) (\xe2\x80\x9cMulti-employer plans are defined-contribution in,\ndefined-benefits out. Once they promise a level of benefits to employees, they must pay\neven if the contributions they expected to receive do not materialize[.]\xe2\x80\x9d); Bruce at 135\xe2\x80\x93\n36 (\xe2\x80\x9c[H]ours of service for use in determining [years of work] are determined solely on\nthe basis of hours of work, or hours for which payment is due the employee from the\nemployer, without reference to the delinquency or nondelinquency of the employer\xe2\x80\x99s\ncontributions to the [multiemployer] plan.\xe2\x80\x9d). As the Supreme Court noted, the longstanding position of the Secretary of Labor at the time of the enactment of FERS was that\nERISA required that credit for hours worked \xe2\x80\x9cmust be given solely on the basis of\nservice performed for a participating employer, regardless whether that employer is\nrequired to contribute for such service or has made or defaulted on his required contributions. Any plan term or Trustees resolution to the contrary is, in our judgment, unlawful\nand unenforceable.\xe2\x80\x9d Dep\xe2\x80\x99t of Labor Advisory Op. No. 76\xe2\x80\x9389 (Aug. 31, 1976); accord\nDep\xe2\x80\x99t of Labor Advisory Op. No. 78-28A (Dec. 5, 1978); Dep\xe2\x80\x99t of Labor Advisory Op.\n78-21A (Oct. 16, 1978); Dep\xe2\x80\x99t of Labor Advisory Op. No. 78-20A (Oct. 6, 1978); see\nalso Rules and Regulations for Minimum Standards for Employee Pension Benefit Plans,\n41 Fed. Reg. 56,462, 56,464 (Dec. 28, 1976) (explaining, with respect to 29 C.F.R.\n\xc2\xa7 2530.200b-2, regarding accrual of hours of service, that employee hours \xe2\x80\x9cmust be\ncredited to an employee regardless of whether contributions are required to be made to\nthe plan on account of such hours or whether such contributions, even though required,\nhave not in fact been made\xe2\x80\x9d). Before the passage of FERS, the IRS had also issued a\nRevenue Ruling explaining that a multiemployer plan that did not credit all years of\nservice because of an employer\xe2\x80\x99s failure to make the required contributions failed to\nmeet the requirements of \xe2\x80\x9ca qualified pension plan\xe2\x80\x9d that it provide \xe2\x80\x9cdefinitely determinable benefits\xe2\x80\x9d to its employees and violated the minimum participation and vesting\nstandards of the Internal Revenue Code. Rev. Ruling 85-130, 1985-2 C.B. 137.\n\n201\n\n\x0c35 Op. O.L.C. 181 (2011)\n\nbenefits contingent on employer contributions. Instead, the legislative\nhistory underlines that Congress intended to establish a new retirement\nplan for federal employees that would \xe2\x80\x9cprovid[e] employees with financial security through a retirement program that compares favorably with\nthose found in the private sector.\xe2\x80\x9d S. Rep. No. 99-166, at 38. 16 It is unlikely, in light of this goal, that Congress would have incorporated into FERS\nan arrangement that would have been unlawful in the private sector without saying so.\nFinally, OPM argues that construing FERS to give employees an entitlement to service credit without the employer\xe2\x80\x99s contribution \xe2\x80\x9cwould be\ninconsistent with the Director\xe2\x80\x99s fiduciary responsibilities to the Fund.\xe2\x80\x9d\nOPM Memo at 7. But, as set forth above, OPM is obligated under the\nstatute to award service credit to employees who satisfy the statutory\nconditions set forth, see supra Part III.A, and to \xe2\x80\x9cpay all benefits that are\npayable under subchapter II, IV, V, or VI of this chapter from the Fund.\xe2\x80\x9d\n5 U.S.C. \xc2\xa7 8461(a). As we read the statute, OPM is required to pay those\nbenefits without regard to whether the employing agency\xe2\x80\x94here, the\nPostal Service\xe2\x80\x94has made its employer contributions to the Fund. The\nDirector\xe2\x80\x99s fiduciary obligations thus include awarding service credit and\npaying benefits in accordance with the statute, and he would not violate\nthose obligations by doing so.\n16 See also, e.g., 132 Cong. Rec. 11,912 (1986) (statement of Rep. Myers) (conference\nreport includes \xe2\x80\x9cmany of the concepts that a great many of the better private retirement\nprograms have\xe2\x80\x9d); id. at 11,909 (1986) (statement of Rep. Ford) (Congress had an opportunity \xe2\x80\x9cto create a new pension system with the best features found in the private sector\xe2\x80\x9d);\nid. at 11,304 (1986) (statement of Sen. Gore) (\xe2\x80\x9cThe retirement system which we have\ndeveloped employs a three-tier design that combines Social Security with a defined\nbenefit tier that focuses on providing a reliable base pension benefit[.]\xe2\x80\x9d); id. at 11,303\n(1986) (statement of Sen. Glenn) (FERS \xe2\x80\x9cprovides Government employees with a threepart program which is comparable to plans widely used in private industry\xe2\x80\x9d and \xe2\x80\x9cone that\nhelps to recruit and maintain an excellent and skilled work force\xe2\x80\x9d); id. at 11,301 (1986)\n(statement of Sen. Stevens) (praising the new retirement plan as \xe2\x80\x9ca top notch, economical\nretirement system for the Federal workforce which is on part with the best in the private\nsector,\xe2\x80\x9d providing \xe2\x80\x9csolid retirement benefits\xe2\x80\x9d and \xe2\x80\x9coffering financial security to Federal\nretirees\xe2\x80\x9d); S. Rep. No. 99-166, at 4 (emphasizing that \xe2\x80\x9cthe Federal Government must have\nthe ability to attract and retain highly qualified individuals in all occupations\xe2\x80\x9d and that\n\xe2\x80\x9c[a]n attractive, flexible retirement plan can assist the government in meeting these\nobjectives . . . to build a career workforce\xe2\x80\x9d and \xe2\x80\x9cto assist in recruiting midcareer employees\xe2\x80\x9d).\n\n202\n\n\x0cService Credit for Retirement Annuities of USPS Employees\n\nIV.\n\xe2\x80\x9cIf, upon examination of \xe2\x80\x98the particular statutory language at issue, as\nwell as the language and design of the statute as a whole,\xe2\x80\x99 . . . it is clear\nthat [the agency\xe2\x80\x99s] interpretation is incorrect, then we need look no further[.]\xe2\x80\x9d Fort Stewart Sch. v. FLRA, 495 U.S. 641, 645 (1990) (quoting\nK Mart Corp. v. Cartier, Inc., 486 U.S. 281, 291 (1988)). In our view,\nFERS has \xe2\x80\x9cdirectly spoken to the precise question at issue,\xe2\x80\x9d Chevron, 467\nU.S. at 842, and OPM may not address the Postal Service\xe2\x80\x99s failure to\nmake the employer contributions required by FERS by denying postal\nemployees coverage or creditable service under FERS. We do not address\nthe propriety of any other action OPM might take to address the Postal\nService\xe2\x80\x99s failure to make the required contributions to the Fund.\nVIRGINIA A. SEITZ\nAssistant Attorney General\nOffice of Legal Counsel\n\n203\n\n\x0c'


b"The President\xe2\x80\x99s Power to Impose a Fee on Imported Oil\nPursuant to the Trade Expansion Act of 1962\nT h e P resident has authority under \xc2\xa7 232(b) of the Trade Expansion Act of 1962 to impose a license fee\nd irectly on foreign oil in order to restrict its im portation in the interest of national security.\nHowever, the case law casts doubt on the P resident\xe2\x80\x99s authority to act under \xc2\xa7 232(b) when the\nim pact o f his action falls only rem otely and indirectly on im ported articles, as was the case when\nPresident C arter sought in 1980 to im plem ent a program designed prim arily to restrict dom estic\ncon su m p tio n o f gasoline.\nPrior to im posing a license fee on oil im ports under \xc2\xa7 232(b), the President is required to make certain\nfindings, based on an investigation by the Secretary o f C om m erce, relating to the effects on the\nnational security o f oil imports, a n d to issue a proclam ation.\n\nJanuary 14, 1982\nM EM O R A N D U M OPINION FOR TH E DEPUTY ATTORNEY GENERAL\nYou have asked this Office to provide you with a preliminary and summary\nreview concerning the President\xe2\x80\x99s authority under \xc2\xa7 232(b) of the Trade Expan\xc2\xad\nsion A ct o f 1962, as amended, 1 9 U .S .C .\xc2\xa7 1862 (1976ed. & Supp. IV 1980), to\nim pose a fee on imported o il. Specifically, you have asked whether such\nauthority can be exercised under that section of the Act and, if so, the proper\nprocedures by w hich it can be invoked. Based upon our preliminary analysis, we\nare o f the view that the President has such authority and may exercise it by\npresidential proclamation based upon certain findings.\n\nA. The Statute\nSection 232(b) of the Act provides that if the Secretary of Com m erce1finds that\nan \xe2\x80\x9c article is being imported into the U nited States in such quantities or under\nsuch circum stances as to threaten to im pair the national security,\xe2\x80\x9d the President is\nauthorized to\ntake such action, and fo r such tim e, as he deems necessary to\nadjust the im ports of [the] article and its derivatives so that . . .\nim ports [of the article] w ill not so threaten to impair the national\nsecurity.\n\n1 T h is re sp o n sib ility was transferred to the S ecretary o f C om m erce from the S ecretary o f the Treasury pursuant to\n\xc2\xa7 5(a)(1 )(B ) o f R eorganization Plan No 3 o f 1979, 3 C .F .R . 513 (1979 C o m p ).\n\n74\n\n\x0cThe Secretary, upon his own motion or at the request of the head of any\ndepartm ent or agency, is directed by this section to make an \xe2\x80\x9c appropriate\ninvestigation\xe2\x80\x9d in the course of which he must consult with the Secretary of\nDefense and \xe2\x80\x9c other appropriate officers of the United States\xe2\x80\x9d to determ ine the\neffects on the national security of imports of the subject article. The Secretary is\nfurther instructed that \xe2\x80\x9c if it is appropriate,\xe2\x80\x9d he shall give reasonable notice, hold\npublic hearings, and otherwise give interested parties an opportunity to present\ninformation and advice relevant to his investigation.\nSection 232(c) of the Act provides the President and the Secretary with\nguidance as to some of the factors to be considered in implementing \xc2\xa7 232(b).\n\xe2\x80\x9c [W ]ithout excluding other relevant factors,\xe2\x80\x9d this section directs the Secretary\nand the President to consider such factors as domestic production of the article\nnecessary for national defense needs, the capacity of domestic industries to meet\nsuch requirem ents, and, generally, the availability o f materials and services\nnecessary to meet national security requirements. This section further provides:\nIn the administration of this section, the Secretary and the Presi\xc2\xad\ndent shall further recognize the close relation of the economic\nwelfare of the Nation to our national security, and shall take into\nconsideration the impact of foreign competition on the economic\nwelfare of individual domestic industries; and any substantial\nunemployment, decrease in revenues of government, loss of skills\nor investment, or other serious effects resulting from displace\xc2\xad\nment of any domestic products by excessive imports shall be\nco nsidered, w ithout excluding other factors, in determ ining\nwhether such weakening of our internal economy may impair the\nnational security.\nPower under \xc2\xa7 232(b) and its predecessors2 has frequently been exercised in\nthe context of presidential proclamations designed to restrict the importation of\npetroleum and petroleum products. Thus in 1959 President Eisenhower, having\nbeen advised that crude oil products were being imported in such quantities and\nunder such circum stances as to threaten the national security, imposed a system\nof quotas on the importation of petroleum and petroleum products. Presidential\nProclamation No. 3279, 3 C.F.R. 11 (1959-1963 Comp.). Thereafter, Presidents\nKennedy, Johnson, and Nixon each am ended the quota program by raising the\npermissible quota levels. See proclamations cited at 19 U .S.C . \xc2\xa7 1862 note.\n\nB. Authority to Impose Import Fees\nThe authority of the President to impose a fee on imported oil pursuant to the\nAct was upheld by the Supreme Court in Federal Energy A dm inistration v.\nAlgonquin S N G , Inc., 426 U.S. 548 (1976). In that case, the Secretary of the\n2 S ection 232(b) w as originally enacted by C ongress as \xc2\xa7 7 o f the Trade A greem ents Extension A ct o f 195 5 , ch\n1 6 9 .6 9 Stat. 162, 166, and am ended by \xc2\xa7 8 of the Trade A greem ent Extension A ct o f 1958. Pub. L. N o. 8 5 -6 8 6 ,7 2\nSlat 6 7 3 , 678.\n\n75\n\n\x0cTreasury, acting pursuant to \xc2\xa7 232(b), had initiated an investigation \xe2\x80\x9c to deter\xc2\xad\nmine the effects on the national security of imports of petroleum and petroleum\nproducts.\xe2\x80\x9d Id. at 553. Although \xc2\xa7 232(b) directs the Secretary \xe2\x80\x9c if it is appropri\xc2\xad\nate [to] hold public hearings or otherw ise afford interested parties an opportunity\nto present information and advice\xe2\x80\x9d as part of such an investigation, the Secretary\nfound that such procedures would interfere with \xe2\x80\x9c national security interests\xe2\x80\x9d and\nwere \xe2\x80\x9c inappropriate\xe2\x80\x9d in this case. Id. at 554. The investigation therefore\nproceeded w ithout any public hearings or submissions from interested non\xc2\xad\ngovernm ental parties. I d ?\nOn January 14, 1975, ten days after the Secretary initiated his investigation, he\nreported to President Ford that prior measures under \xc2\xa7 232(b) had not solved the\nproblem of the N ation\xe2\x80\x99s dependence on foreign oil and concluded\ncrude oil . . . and related products . . . are being imported into\nthe U nited States in such quantities . . . [and] under such circum \xc2\xad\nstances as to threaten to im pair the national security.\n426 U .S . at 554.\nOn the basis of these findings, the President issued a proclamation on January\n23, 1975, w hich, in ter a lia , imposed a \xe2\x80\x9c supplemental fee\xe2\x80\x9d on all imported oil.\nPresidential Proclam ation No. 4341, 3 C.F.R. 431 (1971-1975 Comp.). The fee\nwas initially $1 per barrel for oil entering the United States on or after February 1,\n1975, but was scheduled to be raised to $2 per barrel for oil entering after M arch\n1, 1975, and to $3 per barrel fo r oil entering after April 1, 1975.\nFour days after Proclamation N o. 4341 was issued it was challenged by eight\nstates, 10 utility com panies, and a Congressm an in the United States District\nC ourt for the D istrict of Columbia, who alleged that the imposition of the fees\nwas beyond the President\xe2\x80\x99s constitutional and statutory authority, and that the fees\nwere im posed w ithout the necessary procedural steps having been taken. The\ndistrict court ruled that \xc2\xa7 232(b) was a valid delegation to the President of the\npow er to im pose license fees on oil im ports, and that the procedures followed by\nthe Secretary in im posing the fees had fully conformed to the requirements of the\nstatute. The C ourt of Appeals for the District of Columbia Circuit reversed,\nholding that \xc2\xa7 232(b) did not authorize the President to impose a license fee\nschem e as a m ethod for adjusting im ports because, in its view, the Act authorized\nonly the use of \xe2\x80\x9c d irect\xe2\x80\x9d controls, such as quotas, and did not encompass license\nfees. T he Suprem e C ourt, in turn, reversed the court of appeals, holding that\n\xc2\xa7 232(b) authorized the implementation of im port fees and stating:\n3\nT h e S ecretary had solicited the views of th e A ttorney G eneral o n this subject. In an opinion dated January 14,\n1975, the A ttorney G eneral determ ined that, u n d er the statute and Treasury Regulations, the public notice and\nco m m en t pro v isio n s could be \xe2\x80\x9c varied or d isp en sed with in em ergen cy situations o r w hen, in [the S ecretary \xe2\x80\x99s]\nju d g m e n t, national secu rity interests require. . .\nO pinion o f A ttorney G eneral W illiam B S a x b e ,4 3 0 p A tt\xe2\x80\x99y\nG en N o. 3 (Jan. 14, 1975) at 4. T h is opinion w as also based in p art on the fact that the S ecretary proposed to follow\nthe pattern o f regulating oil im ports by am ending Proclam ation N o 3 2 7 9 ,3 C F R . 11 (1 9 5 9 -1 9 6 3 C o m p ). T he\nfindings o f that orig in al proclam ation had, by that tim e, \xe2\x80\x9c been sanctio n ed by C ongress\xe2\x80\x99 failure to o b ject to the\nP resid en t\xe2\x80\x99s p ro cee d in g on that basis repeatedly d u rin g the past 15 y ea rs\xe2\x80\x9d to co u n ter the threat of oil im ports. Because\nP roclam ation N o 3279 already had \xe2\x80\x9c been am ended at least 26 tim es since its issuance in 1 9 5 9 ,\xe2\x80\x9d id. at 3, citin g 19\nU S C \xc2\xa7 1862 n o te , th e A ttorney General co n c lu d ed that no new findings w ere necessary.\n\n76\n\n\x0cTaken as a whole then, the legislative history of \xc2\xa7 232(b) belies\nany suggestion that Congress, despite its use of broad language in\nthe statute itself, intended to limit the President\xe2\x80\x99s authority to the\nimposition of quotas and to bar the President from imposing a\nlicense fee system like the one challenged here. To the contrary,\nthe provision\xe2\x80\x99s original enactment, and its subsequent reenact\xc2\xad\nment in 1958, 1962, and 1974 in the face of repeated expressions\nfrom M embers of Congress and the Executive Branch as to their\nbroad understanding of its language, all lead to the conclusion\nthat \xc2\xa7 232(b) does in fact authorize the actions of the President\nchallenged here. Accordingly, the judgm ent of the Court of\nAppeals to the contrary cannot stand.\n426 U.S. at 570-71.\nAlthough the Court upheld the President\xe2\x80\x99s power under \xc2\xa7 232(b) to affect the\nprice of imports, as well as their quantity, its opinion ended on a note of caution,\nstating as follows:\nA final word is in order. Our holding today is a limited one. As\nrespondents themselves acknowledge, a license fee as much as a\nquota has its initial an d direct im pact on im ports, albeit on their\nprice as opposed to their quantity. Brief for Respondents 26. As a\nconsequence, our conclusion here, fully supported by the relevant\nlegislative history, that the imposition of a license fee is autho\xc2\xad\nrized by \xc2\xa7 232(b) in no way compels the further conclusion that\nany action the President might take, as long as it has even a remote\nimpact on imports, is also so authorized.\n426 U .S. at 571 (emphasis added).\nC . \xe2\x80\x9c Indirect\xe2\x80\x9d Import Restrictions\nIn 1980, President Carter sought to use his authority under the Act in conjunc\xc2\xad\ntion with authority derived from the Emergency Petroleum Allocation Act of\n1973, 15 U .S .C . \xc2\xa7\xc2\xa7 751-760a (1976 ed. & Supp. IV 1980), to im plement a\nprogram designed to decrease domestic consumption of gasoline. Presidential\nProclamation No. 4744, 3 C .E R . 38 (1980 Comp.). Although styled as a\n\xe2\x80\x9c petroleum import adjustment program ,\xe2\x80\x9d the program was intended and de\xc2\xad\nsigned \xe2\x80\x9c to ensure that the burden of the crude oil fee [fell] on gasoline,\xe2\x80\x9d and not\non such products as home heating oil. This was accomplished through imposition\nof a \xe2\x80\x9c gasoline conservation fee\xe2\x80\x9d which applied irrespective of whether the\ngasoline was refined from domestic or imported crude oil.\nThe decision to impose the fee on gasoline proceeded after the requisite\ninvestigation and finding by the Secretary of the Treasury that oil imports were\nentering the country \xe2\x80\x9c in such quantities and under such circumstances as to\nthreaten to impair the national security.\xe2\x80\x9d 44 Fed. Reg. 18818 (1979).\n77\n\n\x0cThis Office was consulted about the proposed fee in January 1980. Memoranda\nm em orializing conversations w ith D epartm ent of Energy and Office of M anage\xc2\xad\nm ent and Budget officials expressed concerns that the Act, by itself, could not\nauthorize im position of a system for allocating to domestic producers of gasoline\na tax on foreign crude. Although we recognized that the President clearly had\npower to adjust im ports under \xc2\xa7 232(b) by establishing quotas or affecting import\nprices, we also noted that the Supreme C ourt\xe2\x80\x99s language in the Algonquin\ndecision had distinguished between import fees, which have an \xe2\x80\x9c initial and direct\nim pact\xe2\x80\x9d on im ports, and actions with only \xe2\x80\x9c a remote impact on imports.\xe2\x80\x9d Based\non this decision and on the legislative history of the Act, we questioned that the\nPresident\xe2\x80\x99s powers under \xc2\xa7 232(b) encom passed measures that applied indirectly\nto the im ported article itself. These doubts notwithstanding, this Office even\xc2\xad\ntually approved the final version of Proclamation No. 4744 as to form and\nlegality. As noted, that version relied for the President\xe2\x80\x99s authority not only on\n\xc2\xa7 232(b) o f the Act but also on provisions of the Emergency Petroleum Alloca\xc2\xad\ntion A ct of 1973.\nT he Petroleum Im port Adjustment Program (PIAP), set in place by Proclama\xc2\xad\ntion No. 4744, was challenged in court on the ground that in imposing it the\nPresident had exceeded his authority under the Act. Independent G asoline\nM arketers C ou ncil, Inc. v. D uncan, 492 F. Supp. 614 (D .D .C . 1980). A fter an\nextended discussion o f the m echanics of PIAP, the intent behind it and its\npredictable im pact, the district court, focusing on the Supreme C ourt\xe2\x80\x99s warning\nin A lgonquin held:\nIn A lgonquin, the Suprem e C ourt indicated that TEA [Trade\nExpansion Act] does not authorize \xe2\x80\x9c any action the President\nm ight take, as long as it has even a remote impact on imports.\xe2\x80\x9d\nAny possible benefits o f the PIAP on levels o f oil imports are far\ntoo rem ote and indirect for the TEA alone to support the program.\nThe rem oteness of the program \xe2\x80\x99s effect on imports is apparent\nfrom three factors. First, the quantitative impact of the program\non im port levels will adm ittedly be slight. Second, the program\nim poses broad controls on domestic goods to achieve that slight\nimpact. T hird, Congress has thus far denied the President au\xc2\xad\nthority to reduce gasoline consumption through a gasoline con\xc2\xad\nservation levy. PIAP is an attempt to circumvent that stumbling\nblock in the guise of an im port control measure. TEA alone does\nnot sanction this attem pt to exercise authority that has been\ndeliberately withheld from the President by the Congress.\n492 F. Supp. at 618 (footnote om itted).4\nSubsequent to the district c o u rt\xe2\x80\x99s decision in Independent G asolin e M arketers\nC ou ncil, Inc. v. D uncan, supra, Congress terminated PIAP by legislation passed\n4 T he g o vernm ent also arg u ed that the P re sid e n t\xe2\x80\x99s authority could be deriv ed from the Em ergency Petroleum\nA llocation A ct, 15 U S C . \xc2\xa7\xc2\xa7 751-760a T h e co u rt rejected th is argum ent on the ground that the President had not\nco m p lie d w ith procedu res required by that A ct Id at 619\n\n78\n\n\x0cover the President\xe2\x80\x99s veto. Pub. L. No. 96-264, \xc2\xa7 2, 94 Stat. 439. This foreclosed\nsubstantive appellate action in the case.\n\nD. Conclusion\nOn the basis of the Algonquin decision it is clear that the President has\nauthority under \xc2\xa7 232(b) to impose a direct fee on imported oil. Both the\ncautionary language in Algonquin, and the district court\xe2\x80\x99s decision in the In de\xc2\xad\npen d en t G asoline M arketers Council case indicate, however, that his authority\nmay be limited to the power to impose fees directly on imported articles. 426\nU.S. 548, 571; 492 F. Supp. 614, 618-19. The President\xe2\x80\x99s authority to act\npursuant to that section becomes increasingly suspect as the impact of his action\nfalls less directly on the imported articles and increasingly affects domestic\nproducts. This interpretation is also supported by the legislative history of\n\xc2\xa7 232(b).\nBased on the Algonquin case, we are confident that a $2 per barrel import fee\non imported oil could be imposed by the President pursuant to his authority under\nthe A ct, provided it applied solely to imported petroleum or petroleum products.\nThis fee could be imposed by a presidential proclamation similar to Proclamation\nNo. 4341 of President Ford, supra. The proclamation could also specify which\nagency would be responsible for its implem entation.5\nThe 1975 Opinion of Attorney General Saxbe advising the Secretary of the\nTreasury with respect to the necessary procedures for imposing an import fee\nunder \xc2\xa7 232(b) stated alternatively (a) that the Secretary would be justified in\nfollowing his own regulations in deciding that an emergency situation existed\nsuch that notice and hearings would be \xe2\x80\x9c inappropriate\xe2\x80\x9d 6 were he to conduct an\ninvestigation, and (b) that an investigation and further finding with respect to the\nimpact of oil imports on the national security were unnecessary, at least in the\ncontext of a proposed amendment to the series of programs that had been in\nexistence since President Eisenhower issued Proclamation No. 3279 in 1959.\nAlthough we agree that the harmful impact o f oil imports on the national\nsecurity is well established by prior findings under \xc2\xa7 232(b), and further action\nunder that section is not likely to be questioned on this basis, we note that the Act\ndoes specifically state that the Secretary shall make \xe2\x80\x9c an appropriate investiga\xc2\xad\ntion, in the course of which he shall seek information and advice from , and shall\nconsult with, the Secretary of Defense and other appropriate officers of the\nUnited States. . .\nThis procedure was followed prior to President Ford\xe2\x80\x99s\n5 T he departm ent assigned to im plem ent the proclam ation w ould be required to co n sid er the p o ssib le application\nof the N ational E nvironm ental Policy A ct, 4 2 U .S C . \xc2\xa7\xc2\xa7 4321-4361 (Supp. IV 1980) (N E P A )to its actions tak en in\nconnection w ith the im port fee program . Based upon o u r prelim inary review, we do not believe that the S ecretary, in\nconnection w ith an investigation and recom m endation concerning the necessity for a \xc2\xa7 232(b) p roclam ation, o r the\nPresident, in connection w ith his issuance of such a proclam ation, would be required by NEPA to file an\nenvironm ental im pact statem ent.\n6 R egulations issued by the S ecretary o f C om m erce after \xc2\xa7 232(b) functions w ere transferred to h im , see N o te 1,\nsupra, contain sim ilar discretion for him to dispense w ith public participation in the conduct o f any \xc2\xa7 232\ninvestigation conducted 15 C F R . R irt 359 (1981 ed.).\n\n79\n\n\x0cim position of im port fees in Proclamation N o. 4341 in 1975 and was recounted in\nthe Suprem e C o u rt\xe2\x80\x99s opinion in Algonquin upholding the President\xe2\x80\x99s power to\nim pose the fees. Because this approach has survived court challenge and because\nit would be perm issible and n o t unreasonably difficult or time-consuming to\nfollow the current, applicable D epartm ent of Commerce regulations, 15 C .F.R .,\nPart 359 (1981), we recommend that that D epartm ent conduct a new, nonpublic\ninvestigation to support any proclam ation imposing new import fees. Such an\ninvestigation, like the one com pleted in only ten days in 1975, would, we\nbelieve, w ithstand a legal challenge. Based on the results of such an investigation\nand the report of the Secretary, the President could reasonably make the requisite\nfindings7 set forth in \xc2\xa7\xc2\xa7 232(b) and (c) of the Act and issue a proclamation\nim posing im port fees.\nT\n\nheodore\n\nB. O\n\nlson\n\nA ssistan t A ttorn ey G en eral\nOffice c f L egal Counsel\n\n1 B ecause o f the cautionary note in the Algonquin decision and the d istrict court s holding in Independent\nGasoline M arketers Council, Inc. v Duncan, w e would counsel against the P resident\xe2\x80\x99s prem isin g the issuance of a\np roclam ation o n a finding that th e import fee w ould provide revenues w hich could be used for a national security\np u rp o se, such as to defray th e expense of fillin g the S trategic Petroleum R eserve This m ight be m isconstrued as the\nprim ary pu rp o se for the proclam ation, thus su b jec tin g it to ch a llen g e on the g round that it w as not truly intended by\nthe P resident \xe2\x80\x9c to adjust th e imports of (petroleum ]\n. so that su ch import r w ill not threaten to im pair the national\nsecu rity\n.\nas req u ired by \xc2\xa7 232(b) (em p h asis added) N evertheless, w e recognize that the im port fee would\ng enerate rev en u es, and w e see no im pedim ent to C ongress' authorizing the Executive to apply these additional\nrevenues for such a national security purpose.\n\n80\n\n\x0c"