Court Opinion

ID: 4120317
Source: CourtListenerOpinion
Date Created: 2017-01-27 22:46:47.855366+00
Date Added: 2024-06-11T09:20:55.057565
License: Public Domain

July 3, 1979

79-47      MEMORANDUM OPINION FOR THE
           DIRECTOR, OFFICE OF PERSONNEL
           MANAGEMENT

           Garnishment—Remuneration Paid to Federal
           Employees—Tennessee Valley Authority—
           Smithsonian Institution—42 U.S.C. §§ 659, 662

   This responds to your request for our opinion whether your agency’s
draft regulation on garnishment for alimony and child support may
lawfully cover payments for Federal workers’ compensation, payments
from the Tennessee Valley Authority (TVA) retirement system, and the
salaries and benefits of “ private roll” employees of the Smithsonian
Institution.
   We conclude that both workers’ compensation payments and TVA
retirement payments are subject to garnishment. The status of the
Smithsonian’s “ private roll” employees is a more complex matter on
which we are unable to give an opinion without first obtaining its views.
   Under § 459(a) of the Social Security Act, as amended, 42 U.S.C.
§ 659(a), added in 1977,' remuneration for employment by the United
States is subject to garnishment for alimony and child support. Section
461(a) of the Act, 42 U.S.C. § 661(a), authorizes the President to pro­
mulgate regulations implementing § 459 for the executive branch, in­
cluding any wholly owned Federal corporation created by act of Congress.
This authority has been delegated to you. Under § 462(0(2) of the Act, 42
U.S.C. § 662(f)(2), “ remuneration of employment” is defined to include:
      (2)    periodic benefits (including a periodic benefit as defined in
    section 428(h)(3) o f this title) or other payments to such in­
    dividual under the insurance system established by subchapter II
    of this chapter or any other system or fund established by the

 1 P ub. L. No. 95-30, Title V, § 501(a).

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      United States (as defined in subsection (a) of this section) which
      provides for the payment of pensions, retirement or retired pay,
      annuities, dependents or survivors’ benefits, or similar amounts
      payable on account of personal services performed by himself or
      any other individual (not including any payment as compensa­
      tion for death under any Federal program, any payment under
      any Federal program established to provide “ black lung” bene­
      fits, any payment by the Veterans’ Administration as pension, or
      any payments by the Veterans’ Administration as compensation
      for a service-connected disability or death, except any compensa­
      tion paid by the Veterans’ Administration to a former member of
      the Armed Forces who is in receipt of retired or retainer pay if
      such former member has waived a portion of his retired pay in
      order to receive such compensation), and does not consist of
      amounts paid, by way of reimbursement or otherwise, to such in­
      dividual by his employer to defray expenses incurred by such in­
      dividual in carrying out duties associated with his employment.
   Your first question is whether proposed § 552.102(i)(3) of the regulation
may lawfully include “ amounts received under any federal program for
compensation for work injuries” 2 as remuneration subject to garnish­
ment. In our opinion, it can. As you point out, Senator Nunn, the sponsor
of title V, expressly stated on the floor of the Senate that such payments
would be subject to garnishment. See 123 C o n g r e s s i o n a l R e c o r d S.
12909 (1977). This explanation, the sole relevant legislative history, is
strong evidence that Congress intended Federal workers compensation
payments to be covered. See, e.g., United States v. Dickerson, 310 U.S.
554, 557 (1940); Richbourg Motor Co. v. United States', 281 U.S. 528, 536
(1930). In addition, the text of § 462(b)(2) conforms to this expression of
intent. By expressly excluding payments for disability arising from black
lung, military service, or death related to employment, Congress showed
that it considered the statute broad enough to include the general class of
employment-related disability payments. Since workers’ compensation
payments (other than for death) were not excluded, they are covered as
“ remuneration” under § 462(b)(1). See, e.g., United States v. Jones, 567
F. (2d) 965 (10th Cir. 1977); Tom v. Sutton, 553 F. (2d) 1101 (9th Cir.
1976).
   Your second question is whether payments from the Tennessee Valley
Authority retirement system are “ remuneration” under § 462(0(2). The
statute expressly provides that payments from a “ fund established by the
United States (as defined in subsection (a) of this section) which provides
for the payment of pensions, retirement or retired pay, [or] annuities” is
subject to garnishment. The TVA contends that its retirement system is

  1 We understand this to m ean payments under the Federal Employees Com pensation Act,
S U .S.C . § 8101 et seq., and any similar statute.

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not established by the United States within the meaning of the Act because
it is a separate legal entity not under the control of either TVA or your
agency. We have examined the arguments presented by TVA, and we con­
clude that payments from its retirement system are subject to the Act.
   The TVA argues that its retirement system is an unincorporated associa­
tion directed by a separate board of directors: three appointed by the
Authority, three elected by members of the system, and the seventh chosen
by the others. Section 12 of the system’s rules provides that:
      No transfer, assignment, pledge, seizure or other voluntary or in­
      voluntary alienation or encumbrance of any pension, annuity, or
      other benefit provided [by the retirement system is] permitted or
      recognized.
This “ spendthrift” provision, asserts TVA, was held valid in TVA v.
Kinzer, 142 F. (2d) 833 (6th Cir. 1944). In addition, it argues, the rules of
the retirement system constitute a contract between TVA and its
employees, and 16 U.S.C. § 831b forbids any statutory change that would
 “ impair the obligation of any contract” made by TVA.
    A closer reading of the Act and the Kinzer case, however, leads to the
opposite conclusion. First, § 462(a) of the Act defines the “ United States”
to include “ any wholly owned Federal corporation.” This includes TVA.
See 16 U.S.C. § 831.3 Nothing in the legislative history indicates that TVA
was not to be included in this definition. Second, analysis of Kinzer plainly
shows that the retirement system is “ established” by TVA. The Court of
Appeals held that TVA created the system, including rule 12, under its
statutory authority to employ officers and agents without regard to the
Civil Service laws and to “ fix their compensation * * * and provide a
system of organization to fix responsibility and promote efficiency.” 142
F. (2d) at 835-836. The court noted that the retirement system was funded
half by employee contributions and half by funds appropriated by Con­
gress. 142 F. (2d) at 834-835. In finding the plan, including rule 12, to be
within TVA’s authority under 16 U.S.C. § 831b, the court pointed out that
TVA employees were employees of the United States and that Congress
regarded the retirement system as “ the equivalent of the Civil Service
Retirement System.” 142 F. (2d) at 837-838. For that reason, the court
held, rule 12 was valid despite a Tennessee law that prohibited such
“ spendthrift” provisions. Id.
    Thus, Kinzer, on which TVA relies, is based on the view that the retire­
ment system was established by a Federal instrumentality under statutory
authority to further its purposes by enhancing the welfare of its
employees. The retirement system is funded in the same way as the civil
service retirement system and serves the same purpose. Despite TVA’s

  ' Office o f Personnel M anagem ent’s rulem aking authority under the Act also extends to any
wholly owned Governm ent corporation. Social Security A ct, § 461(a)(1), 42 U.S.C.
661(a)(1).

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asserted inability to control its trustees, the system is plainly “ established”
within the meaning of 459(a), 462(0(2).
   Nor can it be said that the application of the Act to the retirement
system invalidates any contract right. TVA provides no authority for its
assertion that the retirement system is based on contract. Insofar as we are
aware, the system, including the restraint on alienation, was unilaterally
created by the Authority. See, TVA v. Kinzer, supra, at 834-835. Where
Congress has created a contributory retirement system by statute, it is well
settled that an employee has no contractual right to future payments and
thus lacks standing to object to statutory changes affecting only unaccrued
future payments. Nordstrom v. United States, 342 F. (2d) 55, 169 Ct. C l.
632 (1965); Rafferty v. United States, 210 F. (2d) 934 (3rd Cir. 1954). The
same principle would apply to a unilateral change in the retirement system
rules by TVA, and it applies a fortiori to a change required by statute.
Thus, no contract obligation is impaired by the application of the Act to
TVA.
   Your third question is whether the salaries and benefits of the Smithso­
nian Institution’s “ private roll” employees may be subjected to garnish­
ment under your proposed regulations. We understand that the “ private
roll” employees are paid with the Smithsonian’s non-Federal funds, con­
sisting of gifts, bequests, profits from its commercial activities, and the
like. Whether their salaries and benefits may be subject to garnishment
under your regulations has two aspects: first, whether these payments are
“ remuneration for employment due from or payable by the United
States” within the meaning of § 459(a); second, whether the Smithsonian
Institution is an agency in the executive branch within your rulemaking
authority under § 461(a)(1). These are difficult and complex questions.
The Smithsonian is sui generis: a fusion of a private and public body and a
joint instrument, in a sense, of all three branches of the Government.
Before expressing an opinion on its legal status or that of its “ private roll”
employees, we require more information than you have provided. Accord­
ingly, we have requested the views of the General Counsel of the Smithso­
nian. Any further information or comment from you will also be
welcome, including prior Civil Service Commission rulings relating to
“ private roll” employees.

                                        Leo n U lm an
                            Deputy Assistant Attorney General
                                                Office o f Legal Counsel

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