Fort Knox Dependent Schools v. Federal Labor Relations Authority

WELLFORD, Circuit Judge. This is a dispute about the authority of the Federal Labor Relations Authority (FLRA) under the Federal Service Labor-Management Relations Act (FSLMRA) to order the United States Army, operating Fort Knox, Kentucky, and its base school system, to bargain with the teachers and their union over salary. A similar dispute about certain employees working at military facilities has been the subject of a number of recent decisions by other federal circuit courts which differ materially as to results reached and the basis for the dis-párate opinions and analysis. Because we believe after a careful consideration of these decisions that those which have reversed the FLRA in like situations are correct in their analysis of the statute and regulations involved, we reverse the order in this case appearing at 25 F.L.R.A. (No. 95) 203 (1987) (WESTLAW, FLB-FLRA database). It is clear that we need not defer to the FLRA’s interpretations and legal conclusions in this case, because “such deference only applies when the FLRA interprets the FSLMRA.” Fort Stewart Schools v. F.L.R.A., 860 F.2d 396, 419 (11th Cir.1988); see West Point Elementary School Teachers Association v. F.L.R.A., 855 F.2d 936, 940 (2d Cir.1988); Shanty Town Associates Limited Partnership v. E.P.A., 843 F.2d 782, 790 n. 12 (4th Cir.1988); Department of the Treasury, Bureau of Engraving and Printing v. F.L.R.A., 838 F.2d 1341, 1342 (D.C.Cir.1988); Department of the Navy, Military Sealift Command v. F.L.R.A., 836 F.2d 1409, 1410 (3d Cir.1988); New Jersey Air National Guard v. F.L.R.A., 677 F.2d 276, 281-82 & n. 6 (3d Cir.), cert. denied, 459 U.S. 988, 103 S.Ct. 343, 74 L.Ed.2d 384 (1982); Tsosie v. Califano, 651 F.2d 719, 722 (10th Cir.1981). The issues here are not confined to interpretation of the law or regulations thereunder which create FSLMRA or FLRA, and FLRA is not entitled to the ordinary deference afforded an agency decision or interpretation when it “resolves a conflict between the FSLMRA and another statute” or a regulation promulgated under another statute. West Point, 855 F.2d at 940, 942; see also Department of the Treasury, 838 F.2d at 1342; Sealift, 836 F.2d at 1410; Veterans Administration Medical Center v. F.L.R.A., 732 F.2d 1128, 1132 n. 7 (2d Cir.1984). Our procedure, then, is to review the applicable law and regulations in this dispute in a fashion that other courts have described as “de novo” or “plenary.” Department of the Treasury, 838 F.2d at 1342; Sealift, 836 F.2d at 1410; see also Creque v. Luis, 803 F.2d 92, 93 (3d Cir.1986). On the other hand, at issue in this controversy along with FSLMRA is the appropriate interpretation of 20 U.S.C. § 2411 by — 1181 — the Army, the agency charged with the responsibility for carrying out this statute. The Army has issued its regulation, AR 352-3, 1-7;2 in carrying out the statutory mandate. It is the Army, rather than FLRA, which may be entitled to deference in the construction of § 241, because “[n]ormally, an agency’s interpretation of the statute it administers is entitled to deference, provided that the interpretation is a permissible construction of the statute. Chevron, U.S.A., Inc. v. Natural Resources Defense Council, Inc., 467 U.S. 837, 844-45 [104 S.Ct. 2778, 2782-83, 81 L.Ed.2d 694 (1984)].” Sealift, 836 F.2d at 1410; see Jones v. Board of Education Cleveland City School District, 474 F.2d 1232 (6th Cir.1973). This court, then, owes no particular deference to FLRA in reaching our decision as to the meaning of § 241. Instead, it is the Army’s interpretation which is entitled to deference. The Army has interpreted 20 U.S.C. § 241 to mean that there may be no bargaining over “salary schedules” or wages. See AR 352-3, 1-7 (reprinted supra n. 2). One statute in question, which FLRA has interpreted in its decision on appeal, requires bargaining over “conditions of employment,” defined as “personnel policies, practices and matters ... affecting working conditions.” 5 U.S.C. § 7103(a)(14). Absent from this statute mandating bargaining by federal agencies with its employees is any word of “wages,” “pay,” “rates of pay,” or “salary.” If, as did the Third Circuit in Sealift, one compares the above language in § 7103 to the language in 29 U.S.C. § 158(d) of the National Labor Relations Act, it must be deemed that the phrase “conditions of employment,” as defined in FSLMRA, “implies a narrower range of bargainable matters under the [above] Labor Management Statute than under NLRA.” 836 F.2d at 1416 n. 14. The FSLMRA itself “does not specifically include ‘pay’ or ‘pay practices’ as bargaina-ble matters.” Id. at 1416. We agree with the Sealift court that “[t]he history [of FSLMRA] is replete ... with indications that Congress did not intend to subject pay of federal employees to bargaining.” Id. at 1417 (emphasis added). A detailed analysis of the legislative history of FSLMRA reveals that “ ‘wages, fringe benefits, and numbers of employees in an agency’ remain beyond the scope of collective bargaining” by federal departments and agencies. Id. at 1418 (quoting 124 Cong.Ree. H9639 (daily ed. Sept. 13, 1978) and citing House Reports, Senate Reports, and statements of Congressmen Clay, Udall, Ford, and Devinski, and of Senator Sasser); see 124 Cong.Ree. S14,281 (daily ed. Aug. 24, 1978); Subcomm. on Postal Personnel and Modernization of the House Comm, on Post Office and Civil Service, 96th Cong., 1st Sess., Legislative History of the Federal Service, Labor-Management Relations Statute, Title VII of the Civil Service Reform Act of1978, at 914 (1979) [hereinafter Legislative History]; see also Department of the Treasury v. F.L.R.A., 838 F.2d 1341, 1342-43 (D.C.Cir.1988) (stating that it agreed with this interpretation reached “after examining incisively the language and legislative history” of FSLMRA).3 We conclude that wages and other compensation matters with regard to federal employees fall outside the duty to bargain under 5 U.S.C. §§ 7101-7135 (FSLMRA). In this respect we agree with the rationale of Judge Starr expressed in Department of Defense De — 1182 — pendents Schools v. F.L.R.A., 863 F.2d 988, 988 (D.C.Cir.1988).4 Not only do the words of the statute, when contrasted with NLRA and other statutes dealing with the duty to bargain, fail to include wages and rates of compensation as a condition of employment, the legislative history of the statute indicates that Congress intended the omission. More than that, logic indicates that Congress would not leave to various federal agencies the authority to expand the budgets and fiscal limitations placed upon those agencies by requiring them to bargain about increases in pay and fringe benefits once budget boundaries were set by the Congress. It is obvious that salary and fringe benefits are the items most likely to involve substantial overspending if left to collective bargaining, particularly with respect to a school system for minor dependents of United States military and civilian personnel. Fort Stewart Schools v. F.L.R.A., 860 F.2d 396 (11th Cir.1988), reaches a contrary result by relying basically on FLSA authority, including the decision involved in the instant appeal.5 In its analysis of legislative history, Judge Hatchett concedes that Congressman Devinski “stated that wages and fringe benefits remained beyond the scope of collective bargaining^] 124 Cong. Rec. H9639 (daily ed. Sept. 13, 1978) (remarks of Rep. Devinski); Legislative History at 935[,]” and that Congressman Clay “stated that ‘employees still ... cannot bargain over pay[,]' 124 Cong.Rec. E4293 (daily ed. Aug. 3, 1978 (remarks of Rep. Clay); Legislative History at 935.” 860 F.2d at 402 (emphasis in original). We find the rationale of Fort Stewart to be unconvincing, particularly in its observation that “the Army could maintain cost parity and educational comparability despite wide variations in teachers’ salaries” without indicating how this legerdemain might be accomplished. Id. at 403 (emphasis added). Fort Stewart gave no deference to the Army’s interpretation of § 241, and the court concluded that “section 241 requires equality only to the maximum extent possible, not exact equality.” Id. at 405. We decline to defer to FLRA rather than the Army in deciding whether or not a union’s proposals on higher salary or overtime pay would not “infringe on an agency’s right to determine its budget merely because the proposed matter will increase the agency’s costs.” Id. at 423. In addition to FLRA decisions, the Second Circuit’s holding in West Point, 855 F.2d 936, was the basis for the Fort Stewart opinion. See 860 F.2d at 403, 405. The West Point decision is dubious because it relied upon the FLRA decision at issue in the instant appeal, and cited no authority for its assertion that “cost parity [between the Army base schools and public schools] be maintained despite wide variation in what teachers are paid.” See 855 F.2d at 943. There is no legislative history analysis set out in West Point. Instead, the court relied on unsupported assertions that wage or salary increases would not “necessarily result in increased costs to the Army.” Id. at 944. The court concluded that the Army did not have a compelling need to regulate teacher salaries and that the court’s interpretation of § 241 did not interfere with the Army’s right to determine its own budget. Id. at 943. The Fourth Circuit has sent conflicting signals with regard to this issue. Initially, in United States Department of Defense Dependent Schools, Ft. Bragg, N.C. v. F.L.R.A., 838 F.2d 129 (4th Cir.1988), rev’ing, 25 F.L.R.A. 1132 (1987), the court carefully analyzed § 241 and held that the — 1183 — Army’s regulation precluding wage bargaining implemented properly the mandate of the statute. That decision, however, was vacated after a stipulation to dismiss was filed. The Fourth Circuit then issued another opinion which seemed to reach a result contrary to that in Fort Bragg, although not in a military base school context. Nuclear Regulatory Commission v. F.L.R.A., 859 F.2d 302 (4th Cir.1988). But, that decision has also been vacated for an en banc resolution. In any event, apart from the case under consideration, the defense dependents school cases involving similar issues have resulted in a split upon appellate consideration. There is, then, no “majority” view on the issues we now ponder. For the reasons indicated, we adopt what we believe to be the better reasoned view. We accordingly REVERSE the decision of FLRA in this case. Footnotes [1] 20 U.S.C. § 241 states, in pertinent part: ... To the maximum extent practicable, the local educational agency, or the head of the Federal department or agency, with which any arrangement is made under this section, shall take such action as may be necessary to ensure that the education provided pursuant to such arrangement is comparable to free public education provided for children in comparable communities in the State, or, in the case of education provided under this section outside the continental United States, — 1181 — Alaska, and Hawaii, comparable to free public education provided for children in the District of Columbia. [2] The Army’s interpretation of 20 U.S.C. § 241, as stated in the Army regulation, is: Education provided pursuant to the provisions of Section 6 for children residing on Federal property will be considered comparable to free public education offered by selected communities of the State when the following factors are, to the maximum extent practicable, equal: * * * h. Salary schedules. AR 352-3, 1-7. [3] Contrary to the implication of Judge Boggs, the Sealift and Department of the Treasury decisions are based squarely on an analysis of FSLMRA. Both cases hold that wages and compensation matters are outside the duty to bargain under FSLMRA apart from considerations of the Prevailing Rate Act. See Department of the Treasury, 838 F.2d at 1342-43; Sealift, 836 F.2d at 1419-20. [4] This opinion is now the subject of an en banc review by the District of Columbia circuit. [5] "Because this FLRA decision is within its authority, we must defer to its conclusion unless it is 'arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law.’ ” Fort Stewart, 860 F.2d at 400 (referring to Fort Knox Teachers Association and Fort Knox Dependent Schools, 28 F.L.R.A. (No. 29) 179 (1987) (WESTLAW, FLB-FLRA database)). The court also relied upon West Point Elementary School Teachers Association v. F.L.R.A., 855 F.2d 936, 942 (2d Cir.1988), observing that "the Second Circuit implicitly adopted the FLRA’s conclusion that the FSLMRA does not bar negotiation of proposals involving compensation and fringe benefits.” 860 F.2d at 401.