Court Opinion

ID: 8967693
Source: CourtListenerOpinion
Date Created: 2022-11-27 10:16:04.201512+00
Date Added: 2024-06-11T17:10:21.891711
License: Public Domain

PHILLIPS, Circuit Judge,
dissenting:
The majority concludes that § 4(c) of the McNamara-O’Hara Service Contract Act (the Act), 41 U.S.C. § 353(c), provides for downward adjustments of wages alone— that is, for administrative abrogation of the express terms of a collective bargaining agreement only where the agreement provides for wages which substantially exceed those paid in the local community for similar services. The substance of the court’s holding, then, is that the statute’s wage adjustment mechanism permits only adjustments that favor employers. I am persuaded, however, that on this point the language of § 353(c) is patently ambiguous. In that circumstance, we should defer to the Labor Department’s long-standing contrary interpretation of the provisions of the Act in issue, as well as to contrary indications of congressional intent as reflected in the legislative history. With all respect, therefore, I dissent.
I
First off, I disagree with the majority’s assertion that “Congress has clearly expressed its intentions in this case,” if by that it is suggested that it has done so through the express language of the stat*678ute.1 Slip op. at 677. To the contrary, I think § 353(c) is so patently ambiguous as to make impossible its proper interpretation without resort to outside interpretative aids.
Complexity of text may too often and too easily be mistaken for clarity and precision. Inspection of even the most detailed and facially comprehensive statutory text may raise and leave unanswered fundamental questions about the legal obligations and rights of those subject to a statute’s commands. The resulting problem may reflect not so much a failure to think the matter through as a failure to communicate what was intended after thinking it through. “Congress may intend to be precise, yet fail for want of a grammarian.”2 Whatever the cause, the problem of interpretation is the same for us, and we confront it here with a vengeance. Section 353(c) of the Service Contract Act consists of but one lengthy and convoluted sentence:
No contractor or subcontractor under a contract, which succeeds a contract subject to this chapter and under which substantially the same services are furnished, shall pay any service employee under such contract less than the wages and fringe benefits, including accrued wages and fringe benefits, and any prospective increases in wages and fringe benefits provided for in a collective-bargaining agreement as a result of arm’s-length negotiations, to which such service employees would have been entitled if they were employed under the predecessor contract: Provided, That in any of the foregoing circumstances such obligations shall not apply if the Secretary finds after a hearing in accordance with regulations adopted by the Secretary that such wages and fringe benefits are substantially at variance with those which prevail for services of a character similar in the locality.
41 U.S.C. § 353(c). When literal meaning is sought, at least three fundamental, logically intractable questions are presented. Each challenges any perception that the provision is sufficiently clear to permit a literal interpretation; taken together they completely refute the possibility. First, what are the “obligations” that “shall not apply” pursuant to the substantial variance proviso? Second, why does the proviso speak generally to wages “substantially at variance” with those prevailing in the local community if adjustment of such wages is permissible, as the majority concludes, only when they exceed prevailing rates? Finally, and most importantly, in what particular “circumstances” is the proviso triggered?
A
The majority insists that the proviso is designed to provide relief from a “sole obligation” — namely, a contractor’s duty under the preceding language of § 353(c) to pay service employees “no less than” the wages to which they would have been entitled pursuant to a “predecessor” contract. Slip op. at 675. Of course, the question then remains why the proviso uses the plural “obligations.”
The question is not a mere quibble. Con-cededly, the prohibitory language of § 353(c) itself “speaks solely to the employer’s ... obligation ... to provide wage and benefit levels equal to or above those of [a] predecessor agreement.” Id. at 674. Looking to the rest of the statute, however —as we must — we find that this obligation is not the only wage standard to be found in the four corners of the statute. Provisions which precede § 353(c) require contractors to pay wages “in accordance with prevailing rates for [other] employees in the locality, or, where a collective-bargaining agreement covers any such ... employees, in accordance with the rates for such employees provided for in such agreement.” 41 U.S.C. § 351(a)(1); cf. id. *679§ 351(a)(2) (similar standard applicable to provision of fringe benefits). In all cases, moreover, a contractor must pay at least the federal minimum wage. Id. § 351(b)(1). The point is that the § 353(c) proviso’s plural reference to “obligations” plausibly encompasses the Act’s full range of wage protection standards, which usually require adherence to the terms of extant collective bargaining agreements. Thus, for present purposes, the proviso might be read to mean that, in certain circumstances, such bargaining agreements “shall not apply” —that is, shall not serve as the standard against which the sufficiency of wage rates will be measured.3
B
Equally ambiguous is the proviso’s use of the phrase “substantially at variance.” The majority’s conclusion essentially is that the proviso authorizes the Secretary to order wage rate adjustments only where an employer seeks to pay less than the wages fixed by a “predecessor” service contract. In other words, adjustments may be made only where a predecessor contractor paid wages which substantially exceed those now prevailing in the local community. The difficulty, however, is that this reading does not account for the proviso’s requirement that the Secretary determine whether the wages payable under a predecessor’s contract are “at variance” with those which prevail in the locality. If the sole purpose of conducting a hearing pursuant to the § 353(c) proviso is to determine whether a contractor may adjust wages downward, why is not the determination required by the statute posed as whether locally prevailing wages are “substantially less than” (rather than “substantially at variance with”) those payable under the predecessor contract? Section 353(c) would appear, in other words, to permit broader administrative inquiry than is necessary to serve what the majority claims is the narrow purpose of the proviso. In turn, the language casts doubt on the majority’s broad assertion that the Act was not meant to be a “prevailing wage statute.” Slip op. at 677.
C
Lastly, the language of § 353(c) is ambiguous as to the “circumstances” which invoke the proviso. The majority resolves the ambiguity by referring to the “effect” of the proviso, which it says is to relieve an employer of his “obligation” to pay no less than the wages set by a predecessor contractor. If an employer is already complying with this duty, says the majority, the proviso “simply does not operate.” Id. at 674.
But on my reading, such an interpretation wrongly focuses solely on the phrase “such obligations shall not apply.” The more relevant language expressing the circumstances which invoke the proviso is that found in the next phrase — “if the Secretary determines.” From this I would claim, if not a better literal reading, at least an equally plausible reading that the only express precondition to operation of the proviso is an administrative determination that wages to be paid by a contractor vary substantially from those prevailing locally.
More importantly, the majority’s analysis at some point puts the cart before the horse, primarily by drawing conclusions with respect to the proviso’s effect on the basis of a questionable assumption about who might be interested in seeking its protection. The faulty premise is that the proviso provides “relief” for employers from certain of their “obligations.” In my view, however, it is at least equally plausible to read the proviso simply as substituting one “obligation” for another. If a contractor need not, by virtue of the proviso, pay employees according to a predecessor’s wage rate schedules, it must still pay according to rates prevailing in the community. Of course, “substitution” of this latter obligation might, depending on the circumstances, be in the ultimate best interest *680of any party. This reading treats the Act as establishing a system of “fallback” wage standards, and of course suggests that the § 353(c) proviso inures to the benefit of employers and employees alike.
II
In the face of such patent ambiguities, we first must give deference to “reasonable” agency interpretations of the relevant statute. “A reviewing court is ... to be guided by the ‘venerable principle that the construction of a statute by those charged with its execution should be followed unless there are compelling indications that it is wrong.” E.I. duPont de Nemours & Co. v. Collins, 432 U.S. 46, 54-55, 97 S.Ct. 2229, 2234-35, 53 L.Ed.2d 100 (1977), (quoting Red Lion Broadcasting Co. v. FCC, 395 U.S. 367, 381, 89 S.Ct. 1794, 1802, 23 L.Ed.2d 371 (1969)). Indeed, our role is highly circumscribed. “[Considerable weight should be accorded to an executive department’s construction of a statutory scheme it is entrusted to administer,” Chevron U.S.A. v. Natural Resources Defense Council, 467 U.S. 837, 844, 104 S.Ct. 2778, 2781, 81 L.Ed.2d 694 (1984), and courts “should not disturb” an agency’s interpretation “unless it appears from the statute or its legislative history that the accommodation is not one that Congress would have sanctioned.” United States v. Shimer, 367 U.S. 374, 383, 81 S.Ct. 1554, 2782, 6 L.Ed.2d 908 (1961). “The court need not conclude that the agency construction was the only one it permissibly could have adopted to uphold the construction, or even the reading the court would have reached if the question initially had arisen in a judicial proceeding.” Chevron, 467 U.S. at 843 n. 11, 104 S.Ct. at 2782 n. 11 (citations omitted). Instead, courts must determine only whether the agency’s interpretation of the statute is “reasonable.” Zenith Radio Corp. v. United States, 437 U.S. 443, 450, 98 S.Ct. 2441, 2445, 57 L.Ed.2d 337 (1978).
Based upon the statute’s text as illuminated by relevant evidence of congressional intent, I am persuaded that the Secretary’s consistent and long-standing interpretation of § 353(c) — which stands wholly at odds with the majority’s reading of the statute— is not only “reasonable” but correct. That it is at odds with the majority’s interpretation is plain, both in Department regulations and rulings.
First, the Department’s regulations governing § 353(c) “substantial variance” hearings clearly contemplate suspension of the § 351(a)(1) minimum wage standards and, in turn, the wage provisions of an operative collective bargaining agreement. See 29 C.F.R. § 4.10(a). They expressly provide that “[a] request for a hearing ... may be made by the contracting agency or other person affected or interested, including contractors or prospective contractors and associations of contractors, representatives of employees, and other interested Governmental agencies.” Id. § 4.10(b)(1)(i) (emphasis supplied). Thus, the Department’s regulations are patently inconsistent with the majority’s conclusion that § 353(c) substantial variance hearings may be held only where a contractor seeks relief from its obligation to pay wages not less than those paid under predecessor contracts.
Second, the Department has repeatedly rejected employers’ claims that substantial variance hearings may not be held in circumstances where a union seeks an upward adjustment of wage rates fixed by collective bargaining agreements. Shortly after Congress enacted § 353(c), a Labor Department administrative law judge responded to such a claim as follows:
I do not read nor construe § [353](c) of the Act as being so clear that it permits only a lower and not an upward wage adjustment when the predecessor contract collectively bargained wage rates are incorporated in a successor contract and found to be at substantial variance with those which prevail for services of a character similar in the locality as urged.
[T]he language of the amendment to the Act, and the supporting legislative history and findings are quite consistent as reflecting that the statement [the § 353(c) proviso] not be construed as au*681thorizing a wage adjustment only when the predecessor wage rates substantially exceed the prevailing local rate....
In re Applicability of Collectively Bargained Wage Rates (Patrick Air Force Base), SCA-CBV-3, slip op. at 11, 14-15 (Aug. 7, 1973). See also In re Applicability of Collectively Bargained Wages (IBEW, Local 2088), 22 Wage & Hour Cas. (BNA) 831, 833 n. 2 (1974) (same). The Department clearly considers this interpretation of the § 353(c) proviso to be “settled.” In connection with the present litigation, the Administrator of the Department’s Wage and Hour Division rendered a definitive statement of the Secretary’s interpretation of the § 353(c) substantial variance proviso.
It has been the consistent policy of the Wage and Hour Division to hold substantial variance hearings for the purpose of determining whether collectively bargained wages are below those prevailing in the locality since the enactment of Section [353](c) in 1972.
Letter from Paula V. Smith, Division Administrator to Counsel for the Klate Holt Company, at 3 (March 25, 1988) (Supplemental Joint Appendix at 4) (emphasis supplied).
This agency interpretation, consistently maintained over a long period, more than plausibly reconciles the ambiguities in the statute’s language. It therefore satisfies the reasonableness standard and is entitled to our deference, even were we to think we had a “more reasonable” interpretation of the statute. “[T]he task for the Court of Appeals [is] not to interpret the statute as it [thinks] best but rather the narrower inquiry into whether the [agency’s] construction [is] ‘sufficiently reasonable’ to be accepted by a reviewing court.” FEC v. Democratic Senatorial Campaign Comm., 454 U.S. 27, 39, 102 S.Ct. 38, 46, 70 L.Ed.2d 23 (1981).4
III
The legislative history of § 353(c), normally the best extratextual evidence of an ambiguous statute’s meaning, see, e.g., Blum v. Stenson, 465 U.S. 886, 896, 104 S.Ct. 1541, 1547, 79 L.Ed.2d 891 (1984); Baltimore Gas & Elec. Co. v. Heintz, 760 F.2d 1408, 1413 (4th Cir.1985), confirms the reasonableness of the Secretary’s interpretation. Indeed it supplies a compelling guide to a direct interpretation of this ambiguous statute at odds with that of the majority here.
Section 353(c) was the central feature of extensive amendments to the Service Contract Act passed by Congress in 1972. See Pub.L. No. 92-473, § 3(b), 86 Stat. 789 (1972). The legislative history of the 1972 amendments indicates that Congress was primarily concerned, as it was when the statute was originally enacted, with ensuring that employees be paid according to locally prevailing wage rates. Indeed, the House and Senate committee reports accompanying the amendments show that, contrary to the majority’s suggestion, Congress meant for the Act to operate as a “prevailing wage standards” statute.
The Service Contract Act was enacted to provide wages and safety protection for employees working under Government service contracts. It makes the Department of Labor responsible for assuring that service employees are paid at least the prevailing wages and fringe benefits for the same work in their locality as others are paid, so that his [sic] is simply a wage standards protection statute.
S.Rep. No. 1131, 92d Cong., 2d Sess. reprinted in 1972 U.S.Code Cong. & Admin. News 3534, 3534 (emphasis supplied) (statement of Act’s purpose).
The Senate Report’s “Section-by-Section Analysis” of the amendments also indicate that Congress meant to vest the Secretary *682with much broader authority than the majority has concluded. It is clear, for example, that the § 353(c) proviso was meant to suspend, in appropriate circumstances, not only the substantive obligation imposed by § 353(c) itself, but also the general wage and benefit standards found in §§ 351(a)(1) and (2). The report explicitly characterizes the remedial language of § 353(c) as “a proviso that the provisions of this subsection [353(c) ] and sections [351 ](a )(1) and [351 ](a )(2) will not apply if the Secretary finds after a hearing that [the] wages and fringe benefits [required to be paid thereunder] are substantially at variance with those which prevail for services of a character similar in the locality.” Id. at 3536 (emphasis supplied). See also id. at 3537 (“It is the intention of the committee that sections [351](a)(l) and [351](a)(2) and [353](c) be so construed that the proviso in section [353](c) applies equally to all of the above provisions.”). Sections 351(a)(1) and (2) establish minimum wage standards and require, by their terms, adherence to the provisions of extant collective bargaining agreements. Thus, insofar as the § 353(c) proviso makes §§ 351(a)(1) and (2) inapplicable, it abrogates the terms of such agreements. In turn, the proviso authorizes the Secretary to order rate adjustments whenever the wages to be paid under collective bargaining agreements are “substantially at variance” with those prevailing in the local community.
The majority protests that “[t]he statute does not encumber ... the collective bargaining process to the extent [IBEW] suggests. Certainly it does not contemplate that an armslength bargaining agreement would be reached, only to be routinely abrogated in another forum.” Slip op. at 676. It appears, however, that such a result is precisely what Congress had in mind, at least in situations where the parties have, for whatever reason, contracted for wages which do not comport with locally prevailing rates of pay.
Ordinarily, where service employees are covered by a collective bargaining agreement, a successor contractor furnishing substantially the same services at the same location will be obligated to pay to such service employees no less than wages and fringe benefits required by such agreement.
This provision should not be construed to confer windfall benefits.
However, the committee was concerned about safeguarding against any possible abuse. There are certain unusual circumstances where 'predetermination of wages and fringe benefits contained in ...a collective agreement might not be in the best interest of the worker or the public.
For example, a union and an employer may enter into a contract, calling for wages and fringe benefits substantially lower than the rates presently prevailing for similar services in the locality. Likewise, a union and employer may reach an agreement providing for future increases substantially in excess of any justifiable increases in the industry. Finally, it is possible that over a long period of time, predetermined contractual rates might become substantially at variance with those actually prevailing for services of a character similar in the locality.
The committee concluded that the dual objectives of protecting the service worker and safeguarding other legitimate interests of the federal government could best be achieved by requiring the Secretary to predetermine the wages and fringe benefits contained in the collective agreement, except in the instance where he finds, after notice to interested parties, and a hearing, that the record discloses by a clear showing that such contractual wages and fringe benefits are substantially at variance with those prevailing for services of a character similar in the locality.
Clearly, contractual wages and fringe benefits shall continue to be honored ..., unless and until the Secretary finds, after hearing, that such wages and fringe benefits are substantially at *683variance with those prevailing in the locality for like services.
Id. at 3537-38 (emphasis supplied). Discussing the first sentence of the quoted passage, the majority places heavy emphasis on the word “ordinarily,” arguing that the collective bargaining agreement is the touchstone of the Act’s wage standards. For our purposes, however, I would place greater emphasis on the words “however,” “except” and “unless.” Congress has made it clear that, in specified circumstances, the Act gives the Secretary broad authority to adjust contractual wage rates. Such circumstances expressly include those in which locally prevailing rates substantially exceed those set by collective bargaining agreements. The legislative history thus compels the conclusion that, contrary to the majority’s holding, the § 353(c) “substantial variance” proviso authorizes the Secretary to order upward adjustments to wages.5
IV
The interpretation above suggested is also compelled by considering which of the possible interpretations of this ambiguous provision is most consistent with the policies Congress sought to advance by this Act. “Our duty ... is ‘to find that interpretation which can most fairly be said to be imbedded in the statute, in the sense of being most harmonious with its scheme and with the general purposes that Congress manifested.’” Commissioner v. Engle, 464 U.S. 206, 217, 104 S.Ct. 597, 604, 78 L.Ed.2d 420 (1984), (quoting NLRB v. Lion Oil Co., 352 U.S. 282, 297, 77 S.Ct. 330, 338, 1 L.Ed.2d 331 (1957) (Frankfurter, J., concurring in part and dissenting in part)).
Courts construing the Act have agreed that one of its general purposes is “to insure that service employees working on government contracts are not paid wages below the prevailing wages being paid in the locality by non-government contractors.” International Ass’n of Mach. & Aeronautics Workers v. Hodgson, 515 F.2d 373, 375 (D.C.Cir.1975). See also AFL-CIO v. Donovan, 582 F.Supp. 1015, 1024 (D.D.C.1984) (“a primary intent of Congress was ‘to prevent Government contracts from disrupting local wage standards’ ”); Berry v. Andrews, 535 F.Supp. 1317, 1318 (M.D.Ala.1982) (“The purpose of the SCA is to require contractors to pay their employees working on a federal service contract in accordance with the prevailing rate and benefits for such employees in the locality.”).
The Act was enacted, in other words, for the protection of employees. The majority recognizes as much, slip op. at 673, but reaches a result wholly at odds with this purpose. The court’s holding is that employees working under government service contracts are completely foreclosed from seeking upward adjustments of wage rates. Under this logic, the § 353(c) proviso abrogates the terms of collective bargaining agreements only when the interests of employers would thereby be served. In my view, Congress did not intend such a result.
V
For the foregoing reasons, I believe that § 353(c) permits the Department of Labor to order rate adjustments in any ease where it finds that wages set by collective bargaining agreements are "substantially at variance” with those prevailing in the local community — notwithstanding whether the interests to be served thereby are those of a service contractor or its employees. I would therefore reverse and remand with directions to enter judgment for ÍBEW, permitting the Secretary to go forward as she proposed with a g 353(c) substantial variance hearing.

. This is not altogether clear. At times the majority opinion seems to be relying on a “plain meaning” analysis. But of course, in the end, it also resorts to elements of legislative history to bolster its interpretation — a course technically not required, nor indeed permitted, if the statute’s text conveys a plain meaning. In the end perhaps we are in agreement that the provision in issue will not actually yield to a "plain meaning" interpretation.

. R. Ginsburg, A Plea for Legislative Review, 60 S.Cal.L.Rev. 995, 997 (1987).

. As shall be seen, the legislative history quite explicitly indicates that this interpretation of the § 353(c) proviso is in fact the correct one— hence that the asserted singular/plural distinction is far more significant than a casual reading might suggest. See Section III, infra.

. The majority fails to consider the Secretary’s interpretation of § 353(c), apparently on the grounds that she failed to participate in this appeal. Slip op. at 677. The record is devoid of any suggestion, however, that the Department has changed its position on the interpretive issues. We are in no position to speculate about the many imaginable reasons for the Secretary’s abandonment of this case. So long as it is reasonable, we remain obliged to defer to the prevailing administrative construction of the statute.

. Simply by way of response, I would argue that the legislative history relied upon by the majority is inapposite. It consists of statements which are relevant to interpretation of the substantive obligations imposed by §§ 351(a)(1), 351(a)(2) and 353(c), but which say nothing about the scope and applicability of the § 353(c) substantial variance proviso.