Applicability of the Civil Service Provisions of Title 5 of the United States Code to the United States Enrichment Corporation
The United States E nrichm ent C orporation is exem pt from the civil service provisions o f title 5 o f the U nited S tates Code
Ju n e 22, 1993
M e m o r a n d u m O p in io n for th e G eneral C o unsel U n it e d S t a t e s E n r ic h m e n t C o r p o r a t io n
You have requested our opinion on whether the United States Enrichm ent C or poration (“USEC”) is subject to the civil service provisions of title 5 of the United States Code. We have concluded that, under the statute establishing USEC, title IX o f the Energy Policy Act of 1992, Pub. L. No. 102-486, 106 Stat. 2776, 2923 (codified at 42 U.S.C. §§ 2297-2297e-7) (“the Act”), USEC is exempt from the civil service provisions o f title 5.
I.
Before USEC was established, the Department o f Energy (“D OE”) produced enriched uranium for use as fuel for commercial nuclear power plants. Congress decided that the DOE program was inefficient; the problems included increasing international competition, declining global market share, and billions of dollars in unrecovered costs of production. In response to these problems, Congress decided to transfer the DOE program to a government corporation that could eventually be sold to the private sector, in order to ensure that the program would be operated in a more business-like fashion. See, e.g., H.R. Rep. No. 102-474, pt. VIII, at 75-76 (1992), reprinted in 1992 U.S.C.C.A.N. 1953, 2293-94; see also 42 U.S.C. § 2297a(l), (7) (identifying purposes of USEC, including “[t]o operate as a busi ness enterprise on a profitable and efficient basis” and “[t]o conduct the business as a self-financing corporation and eliminate the need for Federal Government appro priations or [most] sources of Federal financing”).
The rules regulating USEC’s employees are set forth in 42 U.S.C. § 2297b-4. This provision authorizes the Board of Directors of USEC to “appoint such offi cers and employees as are necessary for the transaction o f its business.” 42 U.S.C. § 2297b-4(a). In addition, 42 U.S.C. § 2297b-4(b) provides:
The Board shall, without regard to section 5301 of title 5, fix the com pensation o f all officers and employees of the Corporation, de fine their duties, and provide a system of organization to fix respon
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sibility and prom ote efficiency. Any officer or employee of the Corporation may be removed in the discretion of the Board.
By granting the Board broad discretion to make decisions regarding hiring and employm ent, including decisions on wage rates and removal of employees, these provisions suggest a congressional intent to exem pt USEC from the civil service laws regulating such decisions, including the statutory pay system embodied in 5 U.S.C. §§ 5301-5392.
W e recognize that, arguably, the use in § 2297b-4(b) o f the phrase “without re gard to section 5301 o f title 5” reveals an intent not to exempt USEC from any provisions o f title 5 other than § 5301. However, under the traditional rules of statutory construction, this is not a plausible interpretation of the Act, and the Act should be read as fully exempting U SEC from the civil service laws, including title 5 ’s provisions regarding pay rates.
II.
A.
In interpreting the Act we “must look to the particular statutory language at is sue, as well as the language and design o f the statute as a whole,” K M art Corp. v. Cartier, Inc., 486 U.S. 281, 291 (1988), and we m ust interpret the specific statu tory language identified above in the context o f the “remainder of the statutory schem e,” United Savings A ss’n v. Tim bers o f Inw ood Forest Assocs., 484 U.S. 365, 371 (1988).
Section 5301 o f title 5 establishes general policy criteria for setting pay rates for federal em ployees under the General Schedule; the specific rules regulating federal pay rates and system s, in turn, are set forth in the subsequent sections o f chapter 53 of title 5. A ccordingly, construing the Act to exem pt USEC from § 5301 but not the im plem enting provisions of chapter 53 would create an anomaly: the Board would be authorized to make em ploym ent decisions without complying with the basic policy provision o f chapter 53, but would have to comply with the specific statutory and regulatory provisions intended to effectuate that policy. It would not make sense to interpret the Act as containing this contradiction, especially because all the other relevant evidence shows that Congress intended to exempt USEC from all o f title 5 ’s civil service provisions.1 W hen 42 U.S.C. § 2297b-4(b) is read in the context o f the other employee pro visions in § 2297b-4 and the rest o f the Act as a whole, it becomes even clearer that U SEC is exem pt from the civil service provisions of title 5, including all the
1 This reasoning is sufficient to defeat the expressio unius est exclusio alterius maxim on which the argument for a contrary interpretation would be based. See 2A Norman J. Singer, Sutherland Statutory Construction § 47 25 (5th ed 1992) (expressio untus maxim should not be applied if its application would result in a contradiction o r would noi serve the purpose for which the statute was enacted)
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A p p licability o f the Civil Service P rovisions o f Title 5 o f the U nited States Code to the U nited States E nrichm ent C orporation
rules regarding pay in chapter 53. First, the other provisions in 42 U.S.C. § 2297b-4 demonstrate that Congress authorized USEC to make employmentrelated decisions w ithout regard to the civil service laws. For example, subsection 2297b-4(c) provides that USEC is to follow certain general principles set forth in title 5 governing personnel matters, but also expressly exempts USEC from the specific requirements o f title 5 in making these decisions:
Applicable criteria. The Board shall ensure that the personnel function and organization is consistent with the principles o f section 2301(b) of title 5, relating to merit system principles. Officers and employees shall be appointed, promoted, and assigned on the basis of merit and fitness, and other personnel actions shall be consistent with the principles of fairness and due process but without regard to those provisions o f title 5 governing appointments and other p e r sonnel actions in the competitive service.
42 U.S.C. § 2297b-4(c) (emphasis added).
Furthermore, 42 U.S.C. § 2297b-4 contains certain provisions relating to the rights of employees transferred to USEC from DOE and other governm ent posi tions. These provisions indicate that Congress contemplated that USEC employees would not be protected by the civil service laws. For example,
[c]ompensation, benefits, and other terms and conditions of em ployment in effect immediately prior to the transition date, whether provided by statute or by rules of the Department or the executive branch, shall continue to apply to officers and employees who trans fer to the Corporation from other Federal employment until changed by the Board.
42 U.S.C. § 2297b-4(d) (emphasis added). This provision reflects C ongress’s as sumption that USEC would be free to set the terms and conditions of employment for its employees, because if USEC were bound by civil service statutes Congress would not have needed to guarantee transferred employees their existing em ploy ment terms and conditions. Furthermore, the protection is merely temporary, for it lasts only “until changed by the Board.” Thus, Congress provided that USEC would be authorized to change the terms and conditions of employment for trans ferred government employees without regard to civil service laws. The natural inference from this authorization is that Congress assumed it had given USEC the same authority with respect to new hires and other non-governmental employees.
In addition, the part o f the Act that governs the benefits o f transferees and detailees reflects C ongress’s assumption that USEC would retain discretion to set
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pension and other benefits without regard to the statutory civil service benefit re quirem ents. That provision states:
At the request o f the Board and subject to the approval of the Sec retary, an em ployee of the [DOE] may be transferred or detailed as provided for in section 2297b-14 o f this title, to the Corporation without any loss in accrued benefits or standing within the Civil Service System. For those em ployees who accept transfer to the C orporation, it shall be their option as to whether to have any ac crued retirem ent benefits transferred to a retirement system estab lished by the Corporation o r to retain their coverage under either the Civil Service Retirement System or the Federal Em ployees’ Re tirem ent System, as applicable, in lieu of coverage by the Corpora tio n ’s retirem ent system. F or those employees electing to remain with one o f the Federal retirem ent systems, the Corporation shall withhold pay and make such payments as are required under the Federal retirem ent system. For those [DOE] employees detailed, the [DOE] shall offer those employees a position of like grade, com pensation, and proximity to their official duty station after their services are no longer required by the Corporation.
42 U.S.C. § 2297b-4(e)(4) (emphasis added). If Congress had intended that USEC would generally be subject to the civil service laws, it would not have been neces sary for the Act to state that employees transferred or detailed from government jobs to USEC would retain “accrued benefits [and] standing within the Civil Serv ice System .” Furtherm ore, subsection 2297b-4(e)(4) constitutes congressional authorization for USEC to establish its own retirement system in lieu of one of the two retirem ent systems established in title 5.2 Finally, 42 U.S.C. § 2297b-4(e)(3) states that USEC is subject to the National Labor Relations A ct (“NLRA”), 29 U.S.C. §§ 151-169. This provision also reflects C ongress’s intent to treat USEC more like a private employer than a governm ent em ployer for purposes o f em ploym ent guidelines. Government agen cies and departm ents subject generally to the civil service system of title 5 are not covered by the N LRA ; instead, these governm ent entities are subject to the Labor-M anagem ent and Employee Relations subpart o f title 5. See 5 U.S.C. §§ 7101-7135.
Thus, when read together, the employee provisions of the Act require the conclusion that the Act exempts USEC from all of title 5 ’s pay provisions. This interpretation is also consistent w ith the general purposes of USEC’s enabling stat ute as a whole. As discussed above, Congress established USEC so that it could
2 See 5 U.S C. §§ 8331-8351 (Civil Service Retirement System ), id. §§ 8401-8479 (Federal Employees’
Retirement System)
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A pplicability o f the Civil Service P rovisions o f Title 5 o f the U nited States Code to the U nited States E nrichm ent Corporation
implement the uranium enrichm ent program in a more efficient and com petitive manner. USEC was created in order to “operate as a business enterprise on a profitable and efficient basis,” 42 U.S.C. § 2297a(l); see id. § 2297a(7) (citing as one purpose of USEC, to “conduct the business as a self-financing corporation and eliminate the need for Federal Government appropriations or sources o f Federal financing”),3 and accordingly was authorized to have “all the powers o f a private corporation incorporated under the District of Columbia B usiness Corporation Act,” id. § 2297b-2(l). The flexibility to make employment decisions without regard to the civil service laws, and particularly to attract highly qualified business executives without regard to federal salary caps, constitutes the sort of competitive advantage that USEC needs to carry out the purpose o f the Act.
Our conclusion is also supported by the fact that Congress contem plated that USEC would start out as a government corporation but would eventually be pri vatized without further action by Congress. Under 42 U.S.C. § 2297d(a), USEC is required to “prepare a strategic plan for transferring ownership of the C orporation to private investors” within two years after the date D O E’s uranium enrichm ent program is transferred to USEC. The privatization plan must be transmitted to the President and Congress, id. § 2297d(d); USEC is authorized to implement the plan without additional legislation, so long as the President approves the plan and USEC notifies Congress of its intent to implement the plan and then waits 60 days, id. § 2297d-l. Thus, if the Act were interpreted to subject USEC to title 5 ’s civil service provisions and USEC is then privatized, USEC as a private corporation would be covered by the civil service laws. This would produce a very odd result, and one that contradicts the purpose of the Act — namely, to enable USEC to take advantage of the added flexibility a private corporation has to compete in interna tional markets.
B.
The sparse legislative history of the Act supports the above analysis, because it shows that Congress rejected the Senate’s language, which would have subjected USEC to most of the civil service laws. The original Senate and House versions o f
3 See also H.R. Rep. No. 102-474, pt. II, at 77, reprinted in 1992 U S.C C A N at 2084 ( ‘A Government corporation, with a clearly defined mission to operate as a commercial enterprise on a profitable and efficient basis, will provide the enrichment program with the businesslike structure and flexibility that is crucial to the survival of the program "), H R. Rep No. 102-474, pt VIII, at 76, reprinted in 1992 U.S.C.C.A.N. at 2294 (“This proposal [establishing USEC] addresses the current problems of the DOE program through the estab lishment of a Government Corporation which eventually could be sold to the private sector However, it is critical that the new Government Corporation operate according to certain principles in order to be success ful The first principle is that the Government Corporation must be treated like a private corporation to the fullest extent practicable In order for the Government Corporation to become attractive to private investors, it will have to be competitive in the marketplace This will require freedom from bureaucratic behavior and weaning from special government favoritism ") (emphasis added).
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the Act treated U S E C ’s employees quite differently. Section 1504 of S. 2166, 102d Cong. (1992), the bill first passed by the Senate,4 provided:
(a) O fficers and employees o f the Corporation shall be officers and em ployees of the United States.
(b) The Administrator [o f USEC] shall appoint all officers, em ployees and agents of the Corporation as are deemed necessary to effect the provisions of this title without regard to any administra tively imposed limits on personnel, and any such officer, employee or agent shall only be subject to the supervision of the Administra tor. The Administrator shall fix all com pensation in accordance with the com parable pay provisions o f section 5301 o f title 5, U nited States Code, with com pensation levels not to exceed Execu tive Level II, as defined in section 5313 o f title 5, United States Code\ Provided, That the A dm inistrator may, upon recommenda tion by the Secretary and the Corporate Board . . . and approval by the President, appoint up to ten officers whose compensation shall not exceed an amount which is 20 per centum less than the compen sation received by the Adm inistrator, but not less than Executive Level II.
(Em phasis added.) The Senate bill also provided that USEC employees were to be included in one of the two federal civil service retirement systems, S. 2166, § 1504(c), and it explicitly subjected USEC em ployees to federal laws restricting em ployee conduct such as the Hatch Act, id. § 1504(e). As explained in the com mittee report accom panying S. 210, 102d Cong. (1991), a bill with identical em ployee provisions introduced the previous year, the Senate bill would have “su b je c te d ] USEC employees to all civil service laws except as otherwise provided” in the bill. S. Rep. N o. 102-63, at 29 (1991) (discussing effect of § 1504(a)).
Thus, the Senate bill would have explicitly subjected USEC to the compensa tion provisions of title 5, including the pay cap provision. By contrast, the bill first passed by the H ouse o f Representatives, H.R. 776, 102d Cong. (1992), specifically provided that the “ [o]fficers and em ployees of the Corporation shall not be officers and em ployees o f the United States.” Id. § 1305(a) (emphasis added). This lan guage would have unambiguously exem pted USEC from all civil service laws.5
4 See 138 Cong Rec. 2567 (1992) 3 The only oiher employee-related provisions in the bill protected the existing rights of employees at facilities performing functions vested in USEC and subjected USEC to the NLRA. H.R 776, § 1305(b). Similar provisions were incorporated into the legislation ultimately enacted into law. See 42 U S.C. § 2297b-4(e)( l)-(3).
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A p p licability o f the Civil Service P rovisions o f Title 5 o f the U nited States Code to the U nited States E nrichm ent Corporation
H.R. 776 was passed by the House on May 27, 1992 and sent on to the Senate. 138 Cong. Rec. at 12,725. The Senate amended H.R. 776 and replaced the House language regarding USEC employees with the language contained in its own bill, S. 2166 (quoted above); the Senate passed the amended bill on July 30, 1992. 138 Cong. Rec. at 20,430.
No legislative history explains the differences between the House and Senate versions o f the employee provisions and the language produced by the House-Senate conference and enacted into law. However, a comparison o f the House and Senate bills makes clear that the provisions agreed upon effected a compromise under which USEC was exempted from all of the civil service laws relating to employee pay and benefits, but was required to implement “merit sys tem principles” and apply fairness and due process in carrying out personnel ac tions under 42 U.S.C. § 2297b-4(c).6 Thus, unlike the Senate version, the Act specifically exempts USEC from 5 U.S.C. § 5301 and authorizes it to fix the com pensation o f employees, take personnel actions without regard to the relevant title 5 rules, and establish its own pension plan. Furthermore, the Act provides that the “[b]oard shall appoint such officers and employees as are necessary for the trans action of its business,” 42 U.S.C. § 2297b-4(a), in contrast to the original Senate version of the bill, which provided that officers and employees would be officers and employees of the United States.
III.
Based on the foregoing analysis of the Act and its legislative history, we have concluded that USEC is exempt from the civil service provisions of title 5 o f the United States Code.
DANIEL L. KOFFSKY
Acting Assistant Attorney General Office o f Legal Counsel
6 See Letter for Honorable James B. King, Director, Office of Personnel Management, from J. Bennett Johnston, Chairman, Senate Committee on Energy and Natural Resources (May 6, 1991) (explaining the Senator's view of the legislative history, based on informal sources that did not become part of the official recorded legislative history) We merely note that this letter supports the theory explaining the change in the b ill's language, because the letter is a post-enactment interpretation by one Member of Congress, we do not rely on K in any way for our interpretation. See, e.g , Sullivan v. Fmkelstein, 496 U S. 617, 631-32 (1990) (Scaha, J , concurring in part); Tataranowicz v Sullivan, 959 F 2d 268, 278 n 6 (D C. Cir 1992), cert de nied, 506 U S. 1048 (1993), Multnomah Legal Servs Workers Union v. Legal Servs. Corp., 936 F 2d 1547, 1555 (9th Cir 1991).