Construction of Certain Statutory Provisions Relating to the Foreign Service Retirement and Disability System

Opinion

April 19, 1979

79-27 MEMORANDUM OPINION FOR THE ACTING LEGAL ADVISER DEPARTMENT OF STATE

Foreign Service—Retirement—Amount of Annuity (22 U.S.C. § 1076)

Assistant Attorney General Harmon has asked me to respond to your request for our opinion regarding the proper construction o f certain statutory provisions relating to the Foreign Service Retirement and Dis­ ability System. Congress, by § 406 o f Pub. L. N. 95-426, approved October 7, 1978, 92 Stat. 979, liberalized retirement provisions for certain Foreign Service per­ sonnel. Section 821(a) o f the Foreign Service Act o f 1946, 22 U.S.C. § 1076(a), provides that one o f the factors in computing the amount o f an annuity under the Foreign Service Retirement and Disability System (Retirement System) is the annuitant’s “ average basic salary for his highest three consecutive years o f service.” Section 406 allowed any par­ ticipant in the Retirement System whose salary was limited by 5 U.S.C. § 5308 to compute his or her annuity based on his or her highest single annual salary instead o f the average 3-year form ula.' This benefit was to accrue only to eligible persons retiring between October 1, 1978, and December 31, 1979. In simple terms, § 406 permitted those whose annual salaries were frozen at„$47,500 to retire after 1 year at that salary level, and to have that am ount factored into the annuity formula as if they had served 3 years at that level. The stated and obvious purpose o f § 406 was to induce early retirement among senior Foreign Service personnel during the operative period o f the provision.2

1 Section 5308 limits the Federal pay-comparability system (5 U.S.C. §§ 5301-5308) to the basic rate o f pay for level V o f the Executive Schedule, which at all relevant times was $47,500. ! The House International Relations Com mittee, in H. Rept. 1160, p. 29, 95th C ong., 2d Sess. (1978), stated that, “ It is hoped that this tem porary annuity provision will help alleviate the overcrowding in the Foreign Service * * See also H. Conf. Rept. 1535, 95th Cong., 2d Sess., at 52-53 (1978).

183 However, immediately after Pub. L. No. 95-426 was reported out of conference, Congress reconsidered the wisdom o f § 406 and set the legisla­ tive machinery in motion to stop it from becoming operative.3 One effort took the form o f an appropriation restriction passed as part o f Pub. L. No. 95-481, approved O ctober 18, 1978. The other effort, in more con­ ventional terms, was a simple repeal o f § 406, which was included in Pub. L. No. 95-482, approved O ctober 18, 1978. We understand that during the 11-day period § 406 was in effect, 64 persons retired who were eligible to receive the liberalized retirement benefits. It is clear that persons retiring after O ctober 18, 1978, cannot take ad­ vantage o f § 406. The question is whether the 64 retirees are entitled to the “ high one” benefit o f § 406. For the reasons that follow we believe that they are.

I. Public Law 95-426 is the Foreign Relations Authorization Act for fiscal year 1979. As stated above, § 406 was intended as an early retirement in­ ducement for certain Foreign Service personnel. The House International Relations Committee in H. Rept. 1160, 95th Cong., 2d Sess. (1978), ex­ plained § 406 and the reasons leading to its enactment as follows: [It] provides a special retirement annuity for those Foreign Serv­ ice officers and other participants in the Foreign Service retire­ ment system who retire between O ctober 1, 1978 and December 31, 1979 equal to 2 percent o f the basic salary for the highest single year o f service multiplied by the num ber o f years o f service credit obtained. Current law com putes annuities on the basis of the highest three years o f service. The committee wishes to note that this provision is not intended to be a precedent for Federal employees generally or for Foreign Service personnel other than those to whom this section applies. The problems which gave rise to this solution are unique to the Foreign Service. It is hoped that this tem porary annuity provision will help alleviate the overcrowding in the Foreign Service which has been caused by the President’s personnel ceiling and the 1977 District C ourt decision in Bradley v. Vance holding the m andatory retirement age for Foreign Service officers unconstitutional.4 The conference report, H. Rept. 95-1535, elaborated on this explanation as follows (p. 53): The civil service system has authority for both reduction-in-force and early retirement inducements to handle similar personnel problems. Tem porary and specific retirement inducements are

’ The legislative history o f Congress’ reaction to § 406 is set forth more fully infra. 4 The District C ourt opinion in Bradley v. Vance 436 F. Supp. 134 (D .D .C . 1977) (per curiam), was reversed by the Supreme C ourt. Vance v. Bradley, 440 U .S. 93 (1979).

184 used in civil service-staffed agencies when such agencies face dif­ ficult personnel problems such as that now confronting the Foreign Service. This section [§ 406] is necessitated by the separate personnel system o f the Foreign Service which has neither reduction-in- force nor special retirement inducement authority. The Administration voiced strong opposition to § 406, asserting that it would set an unacceptable precedent for other retirement systems and con­ tribute to inflation. It was also claimed that § 406 would frustrate the A d­ ministration’s pending effort to freeze executive pay by compensating for the freeze with higher annuities.5 The President, however, approved Pub. L. No. 95-426 despite his strong opposition to § 406’s “ high one” retire­ ment benefit. In his signing statement he stated that he did so because Pub. L. No. 95-426 authorized “ urgently needed appropriations” for the Department o f State, the International Communication Agency, and the Board o f International Broadcasting. 14 Weekly Comp, o f Pres. Doc. 1734-1735.

II.

Shortly after § 406 became law, two separate provisions were enacted: one to prohibit the expenditure o f appropriated funds for § 406 purposes (Pub. L. No. 95-481), and the other to repeal it (Pub. L. No. 95-482). These provisions raise the question whether those Foreign Service person­ nel who retired after § 406 was passed but before these provisions came into effect are entitled to receive the liberalized retirement benefits o f § 406. More precisely, the issue is whether these provisions should be con strued to apply prospectively, i.e., so as not to divest those who timely took advantage o f § 406’s “ high one” benefit, or whether they should be given retrospective effect. The general rule concerning such an issue was dealt with in Greene v. United States, 376 U.S. 149 (1964). There the Court quoted with approval (id., at 160) from Union Pac. R. Co. v. Laramie Stock Yards Co., 231 U.S. 190, 199(1913): * * * the first rule o f construction is that legislation must be considered as addressed to the future, not to the past * * * [and] a retrospective operation will not be given to a statute which interferes with antecedent rights * * * unless such be the unequivocal and inflexible import o f the terms, and the manifest intention o f the legislature.

5 These views are set forth in a June 26, 1978, letter from Secretary of State Vance and in a July 18, 1978, letter from the Director o f the Office o f M anagement and Budget, both a d ­ dressed to the Chairm an o f the Senate Foreign Relations Committee. The letters are printed at 124 C o n g r e s s i o n a l R e c o r d S15725 (daily ed. Sept. 21, 1978), and in S. Rept. 1194, 95th Cong., 2d Sess., at 75-77 (1978), on the 1979 Foreign Assistance and Related Program s A p­ propriation bill.

185 The presumption against retrospectivity is designed to protect reasonable reliance on prior settled law. At bottom , the rule is basically one o f fair­ ness. Prospective construction is also presumed because retrospective application in some cases would raise serious constitutional issues and courts will not lightly infer a congressional intent fraught with such diffi­ culties. United States v. Larionoff, 431 U.S. 864, 879 (1977). We believe that retrospective construction in this case would present a constitutional problem. We need not resolve it here because we conclude that Congress did not intend a retrospective repeal o f § 406.

III. As we have already noted, even before § 406 became law, Congress was moving on two fronts to negate it. One such effort was enacted as part of Pub. L. No. 95-481. We deal with that effort below. Congress in the 1979 Foreign Assistance and Related Programs A ppro­ priations A ct, P ub. L. No. 95-481, appropriated funds to the Foreign Service Retirement and Disability Fund. However, this appropriation pro­ vided (92 Stat. 1592): T hat none o f these funds or other funds available to the Foreign Service Retirement and Disability Fund shall be available to carry out the provisions o f section 406 o f the Foreign Relations Authorization A ct, Fiscal Year 1979. The appropriation restriction, literally read, would preclude funding for any payments made pursuant to § 406’s “ high one” provision. This, in ef­ fect, constitutes a repeal with retroactive effect, at least for fiscal year 1979, o f § 406’s benefit. However, the restriction, despite its seemingly plain language, was intended to be no more than a simple 1-year repeal of § 406. The general rule against retrospective construction thus requires that this action, absent a clear congressional intent to the contrary, apply only prospectively. The Supreme C ourt has recently stated that however clear statutory language may appear, resort to the statute’s legislative history to discern Congress’ intent is proper. Train v. Colorado Pub. Int. Research Group, 426 U.S. 1, 10 (1976). The legislative history o f the appropriation restric­ tion dem onstrates, in our view, that it was, no doubt, intended as a repeal­ ing provision but that the language was used because the restriction’s sponsors seemed to believe that to employ more conventional repealing language would undermine the conference report and delay the urgently needed authorization bill. Senator Inouye, the restriction’s sponsor, ex­ plained this as follows (124 C o n g r e s s io n a l R e c o r d S15725): [I]t might be said that the most logical and direct challenge to [§ 406] would have been a move to reject the conference report, which was adopted yesterday by the Senate, but that would have necessitated a reconvening o f the conference and a further delay on an already too-long delayed authorization bill. Therefore, in the effort to focus direct attention on the “ high-one” retirement,

186 the [Senate Appropriations] committee chose another route readily available to it, which was to restrict the funding o f this Foreign Service retirement fund. It seem s p lain th a t S e n a to r In o u y e u rg ed th e re stric tio n ro u te in o r d e r to acco m p lish th e sam e resu lt as a d irec t rep eal. O th e r legislative h isto ry s u p ­ p o rts th is view. In th e H o u se , R e p re se n tativ e F ascell sta te d th a t th e re stric ­ tio n w as in te n d e d “ to rep eal [§ 406] o f th e a u th o riz in g a c t.” 124 C o n ­ g r e s s io n a l R e c o r d H12629 (daily ed . O c t. 12, 1978). T h e te rm “ re p e a l” w as u sed re p e a te d ly to re fe r to th e re stric tio n . Id. V iew ing th e restric tio n as a sim ple rep e al, th e g eneral rule again st retro sp e ctiv e c o n ­ stru c tio n sh o u ld ap p ly . T h a t is, unless C o n g ress m a n ifestly in te n d s r e tr o ­ spective rep eal, a repeal sh o u ld ap p ly o n ly prosp ectiv ely . H ere, n o su ch in te n t w as expressed. In d e e d , th e re is n o in d ic a tio n th a t C o n g ress sp ecifi­ cally c o n c e rn e d itself w ith th is asp ec t o f th e m a tte r. A lth o u g h it is tru e th a t th e legislative h isto ry referre d to p e rso n s w hose § 406 e n title m e n t h a d v ested , th e se referen ces d o n o t ta k e o n th e c o lo r o f a m an ifest in te n tio n th a t th e y w o u ld be d ivested o f th e ir e n title m e n ts. R ep resen tativ e B u c h a n a n , in o p p o sin g th e re stric tio n , sta te d (124 C o n ­ g r e s s io n a l R e c o r d H 12628): But let us look for a moment to see whether this am endment will accomplish what the Senate intends. The retirement provision is law, the President signed it. It is an entitlement. Thus those plan­ ning to take advantage o f this provision—and it is my under­ standing that 45 individuals have already done so—could, and no doubt would, take the United States to court to obtain the money to which they are entitled. Representative Fascell stated (124 C o n g r e s s io n a l R e c o r d H12629): [The appropriation restriction] has the direct legal effect o f sim­ ply complicating an issue which has already taken place and upon which people have relied. The proper process would be to submit a direct repealer or some other modification o f the issue in a proper legislative vehicle. [Emphasis added.] By these remarks, the speakers in arguing against the restriction expressed doubt as to whether it would have any legal effect. O f course, this doubt was unfounded since it is well settled that Congress, where it clearly in­ tends to do so, can in an appropriation act suspend, repeal, or otherwise amend a statute. See, United States v. Dickerson, 310 U.S. 554, 555 (1940); City o f L os Angeles v. Adams, 556 F. 2d 40, 48-49 (D.C. Cir. 1977).6 Section 109 o f Pub. L. No. 95-482, the Continuing Appropriations Act for Fiscal Year 1979, reads as follows: “ Section 406 o f Public Law 95-426 is repealed.” But we find no legislative history suggesting that § 109 was

* We do not mean to say that every appropriation restriction must be applied only pros­ pectively. However, we stress that in this case the restriction was intended to function only as a repeal.

187 intended to have retrospective effect. See 124 C o n g r e s s io n a l R e c o r d 18862 for the brief Senate consideration. There was no debate in the House. We also note that retrospective application o f § 406’s repeal by Pub. L. No. 95-482 or retrospective application o f the appropriation restriction in Pub. L. No. 95-481 would result in a particularly harsh and inequitable situation for those who retired while § 406 was in effect. They were in­ duced to end their status as Governm ent employees in exchange for a designated benefit. Now that the Governm ent has induced such action it would, at a minimum, be unseemly to renege on the “ high one” promise. T hat result, with its harsh consequences, should not lightly be presumed to have been Congress’ intent.

L e o n U lm a n Deputy Assistant A ttorney General Office o f Legal Counsel