B-11358, JULY 31, 1940, 20 COMP. GEN. 57

B-11358, JULY 31, 1940, 20 COMP. GEN. 57

SALARY LIMITATIONS - LABOR-FEDERAL SECURITY APPROPRIATION ACT, 1941 AN EMPLOYEE TRANSFERRED FROM AN AGENCY NOT INCLUDED IN THE LABOR FEDERAL SECURITY APPROPRIATION ACT, 1941, TO AN AGENCY INCLUDED THEREIN, AND WHO RECEIVED THREE STEPS OF ADMINISTRATIVE WITHIN-GRADE PROMOTION IN THE FISCAL YEAR 1939 IN THE FIRST AGENCY, BUT HAS RECEIVED NO PROMOTION FROM THE LATTER AGENCY, IS NOT AFFECTED BY SECTION 703 OF THE SAID ACT WHICH PROHIBITS THE USE OF APPROPRIATIONS THEREIN FOR ANY SALARY PAYMENT TO AN EMPLOYEE AT A RATE IN EXCESS OF THE SALARY RESULTING FROM THE FIRST TWO STEPS OF ADMINISTRATIVE PROMOTION IN 1939, BUT SAID PROHIBITION WOULD BE APPLICABLE TO AN EMPLOYEE SO PROMOTED AND TRANSFERRED FROM ANY ONE OF THE AGENCIES APPROPRIATED FOR BY SAID ACT. THE EXCEPTION IN SECTION 703 OF THE LABOR-FEDERAL SECURITY APPROPRIATION ACT, 1941, FROM THE PROHIBITION OF SAID SECTION AGAINST SALARY PAYMENTS DURING THE FISCAL YEAR 1941 BASED ON ADMINISTRATIVE WITHIN-GRADE PROMOTION OF AN EMPLOYEE OF MORE THAN TWO STEPS DURING THE FISCAL YEAR 1939, PERMITS AN EMPLOYEE TO RETAIN THE BENEFITS OF THREE OR MORE STEPS OF WITHIN-GRADE PROMOTION IF THIS IS NECESSARY IN ORDER TO PERMIT RETENTION OF THE BENEFITS OF A PROMOTION FROM ONE GRADE TO ANOTHER BUT DOES NOT PERMIT THE RETENTION OF ANY BENEFITS RESULTING FROM ANY FURTHER ADMINISTRATIVE PROMOTIONS IN THE HIGHER GRADE DURING THE FISCAL YEAR 1939. SECTION 703 OF THE LABOR-FEDERAL SECURITY APPROPRIATION ACT, 1941, PROHIBITING THE USE OF ANY APPROPRIATION IN SAID ACT TO PAY THE SALARY OF ANY EMPLOYEE WHO RECEIVED AS MANY AS THREE STEPS OF ADMINISTRATIVE WITHIN- GRADE PROMOTION DURING THE FISCAL YEAR 1939, AT A RATE IN EXCESS OF THE SALARY RESULTING FROM THE FIRST TWO STEPS OF SUCH PROMOTION, DOES NOT REQUIRE THAT AN EMPLOYEE'S SALARY FOR 1941 BE REDUCED IN AMOUNT EQUIVALENT TO ADMINISTRATIVE PROMOTIONS DURING THE FISCAL YEAR 1940. AN EMPLOYEE OF THE RAILROAD RETIREMENT BOARD WHO WAS GIVEN AN ADMINISTRATIVE THREE-STEP WITHIN-GRADE PROMOTION DURING THE FISCAL YEAR 1939, MUST BE REDUCED AS OF JULY 1, 1940, TO THE SALARY RATE RESULTING FROM THE SECOND STEP OF SAID PROMOTION IN VIEW OF THE PROVISIONS OF SECTION 703 OF THE LABOR-FEDERAL SECURITY APPROPRIATION ACT, 1941, BUT SAID SECTION WILL NOT PRECLUDE HIS ADVANCE TO A HIGHER GRADE DURING THE FISCAL YEAR 1941 OR PRECLUDE AN ADMINISTRATIVE PROMOTION DURING 1941 IN THE GRADE TO WHICH ADVANCED IF MADE IN GOOD FAITH AND NOT FOR THE PURPOSE OF OFFSETTING THE SALARY LIMITATIONS OF THE SAID SECTION.

ACTING COMPTROLLER GENERAL ELLIOTT TO THE CHAIRMAN, RAILROAD RETIREMENT BOARD, JULY 31, 1940:

I HAVE YOUR LETTER OF JULY 18, 1940, AS FOLLOWS:

THIS BOARD'S USE OF THE APPROPRIATION MADE IN THE RAILROAD RETIREMENT BOARD APPROPRIATION ACT, 1941, IS SUBJECT TO THE LIMITATIONS PRESCRIBED BY SECTION 703 OF THE LABOR-FEDERAL SECURITY APPROPRIATION ACT, 1941 ( PUBLIC NO. 665, 76TH CONGRESS, 3D SESSION). SECTION 703 PROVIDES:

"NO PART OF ANY APPROPRIATION IN THIS ACT SHALL BE USED TO PAY THE SALARY OF ANY PERSON WHO RECEIVED AS MANY AS THREE STEPS OF ADMINISTRATIVE WITHIN -GRADE PROMOTION IN ALL POSITIONS OCCUPIED BY SUCH PERSON DURING THE FISCAL YEAR 1939, AT A RATE OF PAY IN EXCESS OF THE SALARY RESULTING FROM THE FIRST TWO STEPS OF SUCH PROMOTION; BUT THIS SECTION SHALL NOT PRECLUDE THE PAYMENT OF THE MINIMUM SALARY OF THE GRADE TO ANY PERSON TRANSFERRED, UNDER STANDARD REGULATIONS, TO SUCH ADE.'

BOARD ADMINISTRATION REQUIRES THE EARLY RESOLUTION OF CERTAIN QUESTIONS CONCERNING THE INTERPRETATION OF SECTION 703. THE FIRST QUESTION IS TO WHAT PERSONS DOES SECTION 703 APPLY; OR, IN OTHER WORDS, WHAT IS THE PROPER INTERPRETATION OF THE LANGUAGE: "ANY PERSON WHO RECEIVED AS MANY AS THREE STEPS OF ADMINISTRATIVE WITHIN-GRADE PROMOTION IN ALL POSITIONS OCCUPIED BY SUCH PERSON DURING THE FISCAL YEAR 1939.' AND THE FIRST PROBLEM IS THAT OF THE TRANSFEREE. TO ILLUSTRATE, DOES SECTION 703 APPLY TO A BOARD EMPLOYEE WHO TRANSFERRED TO THIS AGENCY FROM ANOTHER GOVERNMENT AGENCY AFTER RECEIVING AT THAT AGENCY THREE STEPS OF ADMINISTRATIVE WITHIN -GRADE PROMOTION IN THE FISCAL YEAR 1939, BUT WHO HAS RECEIVED NO PROMOTION FROM THIS AGENCY. ON THE BASIS OF A THOROUGH ANALYSIS AND STUDY OF THE PROVISIONS OF THE STATUTE, ITS LEGISLATIVE HISTORY, AND THE DECISIONS OF THE COMPTROLLER GENERAL ENUNCIATING THE GENERAL PRINCIPLES APPLICABLE TO TRANSFERS, IT IS OUR CONSIDERED VIEW THAT SECTION 703 DOES NOT APPLY TO SUCH BOARD EMPLOYEE.

THE PHRASE "IN ALL POSITIONS OCCUPIED BY SUCH PERSON" COULD, IF USED IN ANOTHER AND HYPOTHETICAL STATUTE, FOR EXAMPLE, A STATUTE DEALING GENERALLY WITH THE WHOLE GOVERNMENT SERVICE, MEAN "IN ALL POSITIONS IN THE GOVERNMENT SERVICE OCCUPIED BY SUCH PERSON.' BUT THERE CAN BE LITTLE QUESTION THAT THE PHRASE "IN ALL POSITIONS OCCUPIED BY SUCH PERSON" IN ITS STATUTORY CONTEXT HERE, SO FAR AS APPLICABLE TO THE RAILROAD RETIREMENT BOARD, MEANS ONLY THE POSITIONS OCCUPIED IN THE RAILROAD RETIREMENT BOARD. THE PHRASE IS USED HERE, SO FAR AS THIS AGENCY IS CONCERNED, IN THE RAILROAD RETIREMENT BOARD APPROPRIATION ACT, 1941. ( THE LABOR- FEDERAL SECURITY APPROPRIATION ACT, 1941, CONTAINS SEVEN TITLES. EACH OF THE FIRST SIX TITLES MAKES AN APPROPRIATION TO THE ONE PARTICULAR GOVERNMENT AGENCY COVERED THEREBY, AND EACH OF SUCH TITLES IS SPECIFICALLY STATED TO BE A SEPARATE AND DISTINCT APPROPRIATION ACT FOR THE PARTICULAR AGENCY COVERED. TITLE VI, WHICH MAKES AN APPROPRIATION TO THE RAILROAD RETIREMENT BOARD, CONCLUDES WITH THE STATEMENT: " THIS TITLE MAY BE CITED AS THE" RAILROAD RETIREMENT BOARD APPROPRIATION ACT. 1941.'" THE SEVENTH TITLE CONSISTS OF SECTION 703 AND SEVERAL OTHER SECTIONS WHICH, LIKE SECTION 703, RESTRICT THE USE OF EACH APPROPRIATION MADE IN THE SIX INDIVIDUAL APPROPRIATION ACTS CONTAINED IN THE FIRST SIX TITLES. THUS, SO FAR AS THIS AGENCY AND ITS APPROPRIATION ARE CONCERNED, SECTION 703 IS INCORPORATED IN THE RAILROAD RETIREMENT BOARD APPROPRIATION ACT, 1941.) THAT ACT IS ENTITLED " RAILROAD RETIREMENT BOARD.' THE ONLY APPROPRIATION MADE BY THAT ACT IS AN APPROPRIATION TO THE RAILROAD RETIREMENT BOARD. THE PROVISIONS OF THAT ACT EXPLICITLY APPLY, AND COULD NOT APPLY, TO THE RAILROAD RETIREMENT BOARD. IN THIS CONTEXT, THEREFORE, THE PHRASE "IN ALL POSITIONS OCCUPIED BY SUCH PERSON" MEANS, IN THE COMPLETE ABSENCE OF ANY INDICATION BY CONGRESS TO THE CONTRARY, IN ALL POSITIONS OCCUPIED IN THE RAILROAD RETIREMENT BOARD.

THAT INTERPRETATION, DERIVED FROM THE FACT OF THE STATUTE, IS FULLY SUPPORTED BY THE LEGISLATIVE HISTORY. SECTION 703, SO FAR AS ITS APPLICABILITY TO THIS AGENCY IS CONCERNED, IS DIRECTED BY THE CONGRESS SPECIFICALLY TO THE CORRECTION OF ADMINISTRATIVE ACTION BY THIS AGENCY IN 1939 DEEMED BY CONGRESS TO CONSTITUTE AN ABUSE OF ADMINISTRATIVE DISCRETION. AT THE HEARINGS PRECEDING THE PASSAGE OF THE RAILROAD RETIREMENT BOARD APPROPRIATION ACT, 1941, AND THE OTHER INDIVIDUAL APPROPRIATION ACTS CONTAINED IN THE LABOR-FEDERAL SECURITY APPROPRIATION ACT, 1941, THE SUBCOMMITTEE, WHICH CONSIDERED THE PROPOSED APPROPRIATIONS, ELICITED INFORMATION AS TO THE ADMINISTRATIVE WITHIN-GRADE PROMOTIONS GRANTED IN 1939 BY EACH OF VARIOUS INDIVIDUAL AGENCIES INVOLVED IN THE PROPOSED APPROPRIATIONS. SEE HEARINGS BEFORE THE SUBCOMMITTEE OF THE COMMITTEE ON APPROPRIATIONS, HOUSE OF REPRESENTATIVES, 76TH CONGRESS, 3D SESSION, ON THE LABOR-FEDERAL SECURITY APPROPRIATION BILL, 1941, PART II, PP. 843-855. THE SUBCOMMITTEE DID NOT SEEK, DID NOT RECEIVE, AND WAS IN NO WAY CONCERNED WITH, INFORMATION AS TO ADMINISTRATIVE WITHIN-GRADE PROMOTIONS IN THE GOVERNMENT SERVICE GENERALLY IN 1939. AND EVEN MORE SIGNIFICANTLY, THE HOUSE COMMITTEE ON APPROPRIATIONS, IN ITS REPORT ( THE SENATE REPORT CONTAINS NO STATEMENT ON SECTION 703. SENATE REP. NO. 1487, 76TH CONGRESS, 3D SESSION, REPORT OF THE COMMITTEE ON APPROPRIATIONS ON THE LABOR-FEDERAL SECURITY APPROPRIATION BILL, 1941.) ON THE PROPOSED INDIVIDUAL APPROPRIATIONS MADE IN THE LABOR FEDERAL SECURITY APPROPRIATION ACT, 1941, EXPLAINED THE INTENT AND PURPOSE OF SECTION 703 AS FOLLOWS:

"IN THE OPINION OF THE COMMITTEE SOME OF THE AGENCIES PROVIDED FOR IN THE ACCOMPANYING BILL HAVE FLAGRANTLY ABUSED ADMINISTRATIVE DISCRETION, VESTED IN THEM BY CONGRESS, BY MAKING WHOLESALE ADVANCES IN SALARY TO EMPLOYEES. IN SOME FEW CASES ADVANCES HAVE RUN TO AS MANY AS SIX STEPS IN A SINGLE YEAR AND LARGER GROUPS OF EMPLOYEES HAVE RECEIVED AS MANY ADVANCES AS THREE, FOUR, AND FIVE STEPS. IN ONE CASE IT IS NOTED THAT AN EMPLOYEE HAVING AN EFFICIENCY RATING OF FAIR RECEIVED A THREE-STEP ADMINISTRATIVE ADVANCE DURING THE PAST FISCAL YEAR. THIS IS IN DIRECT VIOLATION OF THE TERMS OF THE CLASSIFICATION ACT OF 1923. WHETHER THESE PROMOTIONS WERE MADE IN THE FISCAL YEAR 1939 IN ANTICIPATION OF THE INHIBITION ON PROMOTIONS FOR 1940 ON ALL AGENCIES AFFECTED BY THE REORGANIZATION ACT IS NOT AS IMPORTANT TO THE COMMITTEE AS THE FACT THAT IN MAKING SUCH A LARGE SERIES OF THESE SALARY STEP-UPS, CERTAIN SELECTED INDIVIDUALS WERE STEPPED UP THREE, FOUR, FIVE, AND EVEN SIX STEPS DURING A SINGLE FISCAL YEAR. THE BELIEF THAT CONGRESS SHOULD MAKE ITS ATTITUDE CLEAR IN CASES WHERE IT FEELS THAT ADMINISTRATIVE DISCRETION HAS BEEN ABUSED, THE COMMITTEE HAS INSERTED IN THE BILL, FOR THE APPROVAL OF THE HOUSE, A PROVISION DENYING THE USE OF FUNDS APPROPRIATED IN THE BILL IN PAYING SALARY TO ANY EMPLOYEE IN EXCESS OF THE SALARY THAT HE WOULD HAVE BEEN ENTITLED TO ON THE BASIS OF A TWO-STEP ADVANCE DURING THE FISCAL YEAR 1939.' ( HOUSE REP. NO. 1822, 76TH CONGRESS, 3D SESSION, REPORT OF THE COMMITTEE ON APPROPRIATIONS ON H.R. 9007, PAGES 4-5.)

OBSERVE THAT IN THIS AUTHORITATIVE EXPLANATION OF THE INTENT AND PURPOSE OF SECTION 703, THE INTENT OF CONGRESS IS NOT THE REDUCTION OF SALARIES IN ALL CASES OF THREE-STEP WITHIN-GRADE PROMOTIONS GRANTED IN 1939 BY ANY AGENCY OF THE GOVERNMENT UNDER ANY CIRCUMSTANCES, BUT THE INTENT IS CLEARLY, DIRECTLY, AND SOLELY THE REDUCTION OF SALARIES IN THE CASES OF THREE-STEP PROMOTIONS MADE BY THE PARTICULAR AGENCY TO WHOM AN APPROPRIATION WAS MADE AND WHICH CONGRESS DEEMED ( TO BE FAIR TO THIS AGENCY, IT SHOULD BE NOTED THAT IN FACT, AS SHOWN BY THE DISCUSSION IN THE TEXT INFRA AT PAGE 6, THE CRITICISM OF CONGRESS AS TO THE WHOLESALE GRANTING OF ADMINISTRATIVE INCREASES IN 1939 WAS DIRECTED IN THE MAIN, IF NOT INDEED ENTIRELY, TO AGENCIES OTHER THAN THE RAILROAD RETIREMENT BOARD.) TO HAVE "FLAGRANTLY ABUSED ADMINISTRATIVE DISCRETION" IN "MAKING SUCH A LARGE SERIES OF THESE SALARY STEP-UPS" FOR "CERTAIN SELECTED INDIVIDUALS.'

SECTION 703, THEN, APPLIES ONLY TO THOSE EMPLOYEES OF THIS PARTICULAR AGENCY WHO RECEIVED IN 1939 AT LEAST THREE STEPS OF ADMINISTRATIVE WITHIN- GRADE PROMOTIONS FROM THIS AGENCY; AND DOES NOT APPLY TO TRANSFEREES NOW EMPLOYEES OF THIS AGENCY WHO MAY HAVE RECEIVED AT LEAST THREE STEPS OF ADMINISTRATIVE WITHIN-GRADE PROMOTIONS FROM OTHER GOVERNMENT AGENCIES PRIOR TO TRANSFER TO THIS AGENCY.

TO INTERPRET SECTION 703 AS APPLYING TO SUCH TRANSFEREES IS TO CREATE ABSURD RESULTS NOT REQUIRED EITHER BY THE CONTEXT OF THE PROVISION OR ITS LEGISLATIVE HISTORY. SECTION 703, AS ENACTED BY CONGRESS, CLEARLY PERMITS AN EMPLOYEE OF THE BOARD, WHO WAS A BENEFICIARY OF THE 1939 ADMINISTRATIVE ACTION OF THE BOARD NOW SOUGHT TO BE REMEDIED BY SECTION 703, TO AVOID SECTION 703 BY TRANSFER TO ANOTHER GOVERNMENT AGENCY WITHOUT REDUCTION IN SALARY. CONSISTENT WITH THE WELL-SETTLED PRINCIPLE OF STATUTORY CONSTRUCTION THAT AN ABSURD RESULT MUST BE AVOIDED IF POSSIBLE (19 COMP. GEN. 516, AND CASES THEREIN CITED), IT CANNOT BE ASSUMED HERE THAT CONGRESS, ALTHOUGH IT PERMITTED ESCAPE OF THE TRANSFEREE FROM THIS AGENCY, NEVERTHELESS INTENDED THAT THE COMPLEMENT CASE OF A TRANSFEREE TO THIS AGENCY WHO IN NO WAY BENEFITED BY ANY ADMINISTRATIVE ACTION OF THIS AGENCY SOUGHT TO BE REMEDIED BY SECTION 703, SHOULD BE INCLUDED WITHIN THE PURVIEW OF SECTION 703, THUS NECESSITATING A REDUCTION IN SALARY SOLELY BECAUSE OF A THREE-STEP INCREASE IN 1939 GRANTED BY THE AGENCY FROM WHICH TRANSFER WAS MADE.

NOR SHOULD IT BE ASSUMED THAT CONGRESS, IN REQUIRING THE BOARD TO APPLY SECTION 703, INTENDED THAT IT SHOULD BE APPLIED TO TRANSFEREES TO THE BOARD WHEN THE BOARD DOES NOT HAVE INFORMATION AS TO WHETHER A PARTICULAR TRANSFEREE DID OR DID NOT RECEIVE IN 1939 AT LEAST THREE STEPS OF ADMINISTRATIVE WITHIN-GRADE PROMOTION FROM ANOTHER GOVERNMENT AGENCY. 1939 AND 1940, THE BOARD WAS ENGAGED IN RECRUITING A LARGE NUMBER OF ADDITIONAL EMPLOYEES FOR THE ADMINISTRATION OF THE THEN NEW RAILROAD UNEMPLOYMENT INSURANCE ACT. NECESSARILY, THE BOARD, TO A CONSIDERABLE EXTENT, DREW UPON OTHER GOVERNMENT AGENCIES FOR EXPERIENCED GOVERNMENT PERSONNEL. OF COURSE, AT THE TIME OF EFFECTING TRANSFERS FROM OTHER GOVERNMENT AGENCIES, THERE WAS NO POSSIBLE REASON IN LAW OR POLICY FOR THE BOARD TO OBTAIN INFORMATION AS TO THE NUMBER OF STEPS OF ADMINISTRATIVE WITHIN-GRADE PROMOTIONS RECEIVED BY TRANSFEREES DURING THE YEAR 1939 FROM ONE OR MORE GOVERNMENT AGENCIES.

FINALLY, THE CONCLUSION HERE REACHED ACCORDS WITH WELL-SETTLED PRINCIPLES LAID DOWN BY THE COMPTROLLER GENERAL AND GENERALLY FOLLOWED IN GOVERNMENT PRACTICE IN THE CASES OF TRANSFERS. IT HAS LONG BEEN SETTLED THAT TRANSFERS BETWEEN GOVERNMENT AGENCIES MAY BE MADE AT THE SAME RATE IN SALARY AS THE TRANSFEREE RECEIVED AT THE AGENCY FROM WHICH HE WAS TRANSFERRED, THUS PROVIDING A GENERAL AND WELL-RECOGNIZED EXCEPTION TO THE RULE THAT APPOINTMENTS IN GRADES MUST BE AT THE MINIMUM SALARY OF THE GRADE. SEE, FOR EXAMPLE, 4 COMP. GEN. 493, 494, 495. IN THE ABSENCE OF ANY AFFIRMATIVE EVIDENCE, IT CANNOT BE CONCLUDED THAT CONGRESS INTENDED BY SECTION 703 TO CUT ACROSS THIS LONG AND WELL-SETTLED PRACTICE AS TO TRANSFERS. THE POLICY OF NOT INFERRING IMPINGEMENTS UPON THIS AUTHORIZED PRACTICE AS TO TRANSFERS HAS BEEN ENFORCED BY THE COMPTROLLER GENERAL AND HIS PREDECESSOR, THE COMPTROLLER OF THE TREASURY, IN A NUMBER OF CASES, WHICH SUPPORT THE CONCLUSION THAT SECTION 703 DOES NOT APPLY TO ADMINISTRATIVE INCREASES GRANTED TO TRANSFEREES BEFORE TRANSFERS MADE TO THE RAILROAD RETIREMENT BOARD, OR ANY OTHER AGENCY COVERED BY THE APPROPRIATION ACT. IN 24 COMP. DEC. 235, 25 COMP. DEC. 20, AND 19 COMP. GEN. 149, STATUTORY LANGUAGE WHICH WAS AMBIGUOUS AS TO THE EXACT EXTENT OF COVERAGE BUT WHICH IS RESTRICTING INCREASES INCOMPENSATION DEALT ONLY WITH TRANSFEREES WAS CONSTRUED SO AS TO AVOID THE ELIMINATION OF A TRANSFEREE'S INCREASE IN COMPENSATION WHICH WAS NOT CLEARLY WITHIN THE AMBIT OF THE STATUTORY LANGUAGE.

THE QUESTION AS TO WHO IS COVERED BY SECTION 703 RAISES IN BOARD ADMINISTRATION A SECOND PROBLEM, UNRELATED TO THAT OF THE TRANSFEREE. THE FOLLOWING EXAMPLE TYPIFIES THE PROBLEM. AN EMPLOYEE IN GRADE CAF 4, $1,800, WAS ON JULY 1, 1938, ADMINISTRATIVELY PROMOTED THREE STEPS TO $1,980; ON JULY 15, 1938, PROMOTED TO GRADE CAF-5, $2,000; AND ON APRIL 1, 1939, WAS ADMINISTRATIVELY PROMOTED TO CAF-5, $2,100. DOES SECTION 703 APPLY TO SUCH AN EMPLOYEE?

IN OUR VIEW, SECTION 703 DOES NOT APPLY TO SUCH AN EMPLOYEE FOR THE GRADE PROMOTION TO CAF-5, $2,000, COMPLETELY ABSORBED OR CANCELLED ALL ADMINISTRATIVE PROMOTIONS TO CAF-4, $1,980, THUS LEAVING BUT ONE STEP OF ADMINISTRATIVE WITHIN-GRADE PROMOTION IN THE YEAR 1939, THAT STEP FROM CAF -5, $2,000 TO CAF-5, $2,100. A CANCELLED THREE-STEP ADMINISTRATIVE PROMOTION THAT WAS NOT EXISTENT AT THE END OF THE FISCAL YEAR 1939 WOULD NOT APPEAR TO BE AN ADMINISTRATIVE WITHIN-GRADE PROMOTION IN 1939, WITHIN THE MEANING OF SECTION 703. CONGRESS RECOGNIZED AND UNDERSTOOD THIS. MR. ENGEL, MEMBER OF THE HOUSE COMMITTEE ON APPROPRIATIONS, WAS THE PROPONENT AND SPONSOR OF SECTION 703. IT WAS HE WHO PERSONALLY INVESTIGATED IN DETAIL THE ADMINISTRATIVE WITHIN-GRADE PROMOTIONS GRANTED BY THE SOCIAL SECURITY BOARD IN 1939, THE SOCIAL SECURITY BOARD BEING THE AGENCY UPON WHICH THE WHOLE DISCUSSION IN CONGRESS OF SECTION 703 CENTERED. 86 CONG. REC. PP. 4948-4949. IT WAS MR. ENGEL WHO, AT THE HEARINGS ON THE BILL, TOOK CHARGE OF THE QUESTIONING OF WITNESSES ON THE SUBJECT OF ADMINISTRATIVE INCREASES IN 1939. AND MOST IMPORTANT, IT WAS AGAIN MR. ENGEL, WHO AS SPONSOR OF SECTION 703, EXPLAINED THE INTENT OF ITS PROVISIONS ON THE FLOOR OF CONGRESS. 86 CONG. REC. PP. 4849-4949.

MR. ENGEL, AT MANY POINTS IN THE PASSAGE OF SECTION 703, MADE IT CLEAR THAT ADMINISTRATIVE PROMOTIONS GRANTED PRIOR TO A GRADE PROMOTION CAN BE AND ARE CANCELLED BY THE GRADE PROMOTION. IN QUESTIONING MR. ALTMEYER OF THE SOCIAL SECURITY BOARD AS TO ADMINISTRATIVE PROMOTIONS IN 1939 AT THAT AGENCY, MR. ENGEL SUMMED UP THE RECORD AS FOLLOWS (PAGE 844 OF THE HEARINGS BEFORE THE SUBCOMMITTEE):

" MR. ENGEL: * * * IN OTHER WORDS, THE TOTAL NUMBER OF ADMINISTRATIVE PROMOTIONS DURING THAT YEAR WERE 7,087 * * *.

"THE FIGURES THAT I HAVE SHOW THAT THERE WERE 100 OF THESE ADMINISTRATIVE PROMOTIONS THAT WERE CANCELED BECAUSE OF PROMOTIONS FROM GRADE TO GRADE, LEAVING THE TOTAL OF PROMOTIONS WITHIN THE GRADE OF 6,987 FOR PROMOTIONS "WITHIN THE GRADE," WHICH IS ALMOST PRECISELY THE LANGUAGE OF SECTION 703, WAS OBTAINED ONLY AFTER SUBTRACTION OF "ADMINISTRATIVE PROMOTIONS" THAT WERE CANCELLED BY GRADE PROMOTIONS.

IN EXPLAINING THE MEANING OF SECTION 703 ON THE FLOOR OF CONGRESS, MR. ENGEL MADE SUBSTANTIALLY THE SAME EXPLANATION. 86 CONG. REC. P. 4948.

THE CONGRESS NO DOUBT ACCEPTED MR. ENGEL'S EXPLANATION OF SECTION 703, WHICH HE SPONSORED, FOR NO ONE AT ANY POINT QUESTIONED IN ANY WAY HIS UNDERSTANDING THAT ADMINISTRATIVE PROMOTIONS CANCELLED BY GRADE PROMOTIONS DO NOT CONSTITUTE "WITHIN-GRADE PROMOTIONS," AS THAT TERM IS USED IN SECTION 703.

THEREFORE, IT IS CLEAR THAT IN THE ILLUSTRATION UNDER DISCUSSION HERE THE EMPLOYEE'S ADMINISTRATIVE PROMOTIONS IN CAF-4, $1,980, WERE CANCELLED BY THE GRADE PROMOTION TO CAF-5, $2,000, THUS REMOVING THAT CASE FROM THE COVERAGE OF SECTION 703.

THE FOREGOING PROBLEMS ARE CONCERNED WITH THE COVERAGE OF SECTION 703. AN ADDITIONAL PROBLEM ARISES IN BOARD ADMINISTRATION WHICH IS NOT CONCERNED WITH THE COVERAGE OF SECTION 703, BUT MERELY WITH THE OPERATION OF SECTION 703 WITH RESPECT TO A PERSON CLEARLY COVERED THEREBY. EMPLOYEE OF THE BOARD RECEIVED FROM THE BOARD IN THE FISCAL YEAR 1939 A THREE-STEP ADMINISTRATIVE PROMOTION FROM CAF-1, $1,260, TO CAF-1, $1,440. THE SAME EMPLOYEE RECEIVED FROM THE BOARD IN THE FISCAL YEAR 1940 A ONE- STEP INCREASE TO CAF-1, $1,500. OF COURSE, THE EMPLOYEE IS WITHIN THE MEANING OF SECTION 703 A "PERSON WHO RECEIVED AS MANY AS THREE STEPS OF ADMINISTRATIVE WITHIN-GRADE PROMOTIONS IN ALL POSITIONS OCCUPIED BY SUCH PERSON DURING THE FISCAL YEAR 1939," AND IS THEREFORE COVERED BY SECTION 703. SECTION 703 REQUIRES THAT SUCH EMPLOYEE BE NOT PAID "IN EXCESS OF THE SALARY RESULTING FROM THE FIRST TWO STEPS OF SUCH PROMOTION.' WHAT IS THE SALARY ,RESULTING FROM" THE FIRST TWO STEPS OF THE THREE-STEP ADMINISTRATIVE WITHIN-GRADE PROMOTION IN 1939? IT IS OUR VIEW THAT THE SALARY "RESULTING FROM" THE FIRST TWO STEPS OF THE 1939 PROMOTION IS $1,440. THE CRUCIAL POINT HERE IS WHETHER SECTION 703 REQUIRES THAT SUCH EMPLOYEE, IN ADDITION TO LOSING $60 OF THE $180 INCREASE RECEIVED IN 1939, SHOULD ALSO LOSE THE $60 INCREASE RECEIVED IN THE YEAR 1940. IT IS REASONABLY CLEAR, FIRST, THAT CONGRESS DID NOT INTEND TO STRIKE AT ADMINISTRATIVE PROMOTIONS IN THE FISCAL YEAR 1940, AND SECOND, THAT THE DETERMINATIVE LANGUAGE OF SECTION 703, I.E., THE PHRASE,"RESULTING FROM," IS INACCORD WITH THE CARRYING OUT OF THAT INTENTION.

THE SUBCOMMITTEE OF THE HOUSE COMMITTEE ON APPROPRIATIONS CAREFULLY ELICITED AND OBTAINED EXTREMELY DETAILED FIGURES AS TO THE NUMBER AND KIND OF ADMINISTRATIVE WITHIN-GRADE PROMOTIONS GRANTED BY THE SOCIAL SECURITY BOARD IN THE FISCAL YEAR 1939 AS COMPARED WITH THE FISCAL YEAR 1938. DISCUSSING SUCH FIGURES WITH MR. ALTMEYER, CHAIRMAN OF THE SOCIAL SECURITY BOARD, MR. ENGEL, SPONSOR OF SECTION 703, SEVERELY CRITICIZED WHAT HE THOUGH TO BE WHOLESALE ADMINISTRATIVE WITHIN-GRADE PROMOTIONS GRANTED IN THE FISCAL YEAR 1939 FOR THE PURPOSE OF EVADING THE PROVISIONS OF THE REORGANIZATION ACT OF APRIL 3, 1939, WHICH PROHIBITED ADMINISTRATIVE PROMOTIONS AT THAT AGENCY IN THE FISCAL YEAR 1940. SEE HEARINGS BEFORE THE SUBCOMMITTEE, CITED SUPRA, AT PP. 843 855.

AT VARIOUS POINTS IN THE HEARINGS FIGURES ON ADMINISTRATIVE WITHIN GRADE PROMOTIONS IN THE FISCAL YEAR 1939 WERE ALSO OBTAINED BY MR. ENGEL FROM OTHER AGENCIES TO WHOM APPROPRIATIONS ARE MADE IN THE LABOR-FEDERAL SECURITY APPROPRIATION ACT, 1941. NO SUCH CAREFUL INVESTIGATION OF THE QUESTION OF ADMINISTRATIVE WITHIN-GRADE PROMOTIONS IN THE FISCAL YEAR 1940 WAS UNDERTAKEN. INDEED NO INVESTIGATION, SUPERFICIAL OR OTHERWISE, OF THE SITUATION IN THE FISCAL YEAR 1940 WAS MADE AT ALL. WHETHER SUCH AN INVESTIGATION WOULD HAVE REVEALED ABUSES IN ADMINISTRATIVE ACTION REMAINS A MATTER OF SHEER SPECULATION. WHAT IS CLEAR IS THAT THE SUBCOMMITTEE WAS IN NO WAY INTERESTED IN THE FISCAL YEAR 1940, AND THAT THEREFORE CONGRESS WAS NEVER INFORMED AS TO WHETHER OR NOT THERE WAS AN EVIL TO BE REMEDIED IN THE FISCAL YEAR 1940. IT CAN BE REASONABLY INFERRED FROM THESE FACTS THAT CONGRESS DID NOT INTEND IN THE ENACTMENT OF SECTION 703 TO REQUIRE THE OBVIATING OF ADMINISTRATIVE ACTION LEGALLY TAKEN IN 1940 AND NOT KNOWN OR FOUND BY CONGRESS TO BE UNDESIRABLE.

BUT THAT INTENTION NEED NOT REST ON INFERENCE. THE HOUSE COMMITTEE ON APPROPRIATIONS FULLY STATED IN ITS REPORT THE INTENT AND PURPOSE OF SECTION 703:

"IN THE OPINION OF THE COMMITTEE SOME OF THE AGENCIES PROVIDED FOR IN THE ACCOMPANYING BILL HAVE FLAGRANTLY ABUSED ADMINISTRATIVE DISCRETION, VESTED IN THEM BY CONGRESS, BY MAKING WHOLESALE ADVANCES IN SALARY TO EMPLOYEES. IN SOME FEW CASES ADVANCES HAVE RUN TO AS MANY AS SIX STEPS IN A SINGLE YEAR AND LARGER GROUPS OF EMPLOYEES HAVE RECEIVED AS MANY ADVANCES AS THREE, FOUR, AND FIVE STEPS. IN ONE CASE IT IS NOTED THAT AN EMPLOYEE HAVING AN EFFICIENCY RATING OF "FAIR" RECEIVED A THREE-STEP ADMINISTRATIVE ADVANCE DURING THE PAST FISCAL YEAR. THIS IS IN DIRECT VIOLATION OF THE TERMS OF THE CLASSIFICATION ACT OF 1923. WHETHER THESE PROMOTIONS WERE MADE IN THE FISCAL YEAR 1939 IN ANTICIPATION OF THE INHIBITION ON PROMOTIONS FOR 1940 ON ALL AGENCIES AFFECTED BY THE REORGANIZATION ACT IS NOT AS IMPORTANT TO THE COMMITTEE AS THE FACT THAT IN MAKING SUCH A LARGE SERIES OF THESE SALARY STEP-UPS, CERTAIN SELECTED INDIVIDUALS WERE STEPPED UP THREE, FOUR, FIVE, AND EVEN SIX STEPS DURING A SINGLE FISCAL YEAR. THE BELIEF THAT CONGRESS SHOULD MAKE ITS ATTITUDE CLEAR IN CASES WHERE IT FEELS THAT ADMINISTRATIVE DISCRETION HAS BEEN ABUSED, THE COMMITTEE HAS INSERTED IN THE BILL, FOR THE APPROVAL OF THE HOUSE, A PROVISION DENYING THE USE OF FUNDS APPROPRIATED IN THE BILL IN PAYING SALARY TO ANY EMPLOYEE IN EXCESS OF THE SALARY THAT HE WOULD HAVE BEEN ENTITLED TO ON THE BASIS OF A TWO-STEP ADVANCE DURING THE FISCAL YEAR 9.'

THE EVIL, AND THE ONLY EVIL TO BE REMEDIED, IS EXPLICITLY SET FORTH BY THE COMMITTEE IN THIS STATEMENT. ON THE BASIS OF THE CAREFUL EXAMINATION BY THE COMMITTEE OF THE SITUATION AS TO ADMINISTRATIVE WITHIN-GRADE PROMOTIONS GRANTED IN THE FISCAL YEAR 1939, THE COMMITTEE FOUND THAT IN THAT YEAR "WHOLESALE ADVANCES" WERE MADE; THAT SOME ADVANCES RAN "TO AS MANY AS SIX STEPS IN A SINGLE YEAR; " THAT ONE EMPLOYEE WITH AN EFFICIENCY RATING OF "FAIR" WAS GRANTED IN AN ADMINISTRATIVE WITHIN-GRADE PROMOTION IN DIRECT VIOLATION OF LAW; AND THAT "IN MAKING SUCH A LARGE SERIES OF THESE SALARY STEP-UPS, CERTAIN SELECTED INDIVIDUALS WERE STEPPED UP THREE, FOUR, FIVE, AND EVEN SIX STEPS DURING A SINGLE FISCAL YEAR.' AND ON THESE SPECIFIC FINDINGS THE CONGRESS ENACTED SECTION 703 FOR THE SPECIFIC AND SOLE PURPOSE, AS THE COMMITTEE STATES,"THAT CONGRESS SHOULD MAKE ITS ATTITUDE CLEAR IN CASES WHERE IT FEELS THAT ADMINISTRATIVE DISCRETION HAS BEEN ABUSED.' THERE WAS NO ABUSE IN THE FISCAL YEAR 1940, INVESTIGATED, INDICATED, OR FOUND. CONGRESS THEREFORE DID NOT STRIKE DOWN IN SECTION 703 A NONEXISTENT EVIL IN 1940. BUT BEING CONCERNED ONLY WITH THE CORRECTION OF ADMINISTRATIVE ABUSE IN 1939, CONGRESS CAREFULLY PROVIDED IN SECTION 703, AS STATED BY THE COMMITTEE,"A PROVISION DENYING THE USE OF FUNDS APPROPRIATED IN THE BILL OF PAYING SALARY TO ANY EMPLOYEE IN EXCESS OF THE SALARY THAT HE WOULD HAVE BEEN ENTITLED TO ON THE BASIS OF A TWO- STEP ADVANCE DURING THE FISCAL YEAR 1939.'

SIGNIFICANTLY, THE COMMITTEE DOES NOT, IN EXPLAINING SECTION 703, STATE THAT THE MAXIMUM SALARY TO BE PAID AN EMPLOYEE AFFECTED BY SECTION 703 IS "THE SALARY THAT HE RECEIVED ON THE TWO-STEP ADVANCE DURING THE FISCAL YEAR 1939," WHICH WOULD HAVE BEEN A SIMPLE AND DIRECT WAY OF MAKING IT CLEAR THAT THE EMPLOYEE MUST ALSO LOSE THE BENEFIT OF ANY ADMINISTRATIVE INCREASE GRANTED IN 1940. WHAT THE COMMITTEE SAYS INSTEAD IS THAT THE MAXIMUM SALARY IS "THE SALARY THAT HE WOULD HAVE BEEN ENTITLED TO ON THE BASIS OF A TWO-STEP ADVANCE DURING THE FISCAL YEAR 1939," ( ITALICS SUPPLIED) AN INVOLUTION NECESSITATED ONLY BY THE FACT THAT THE SALARY RATE OF A TWO-STEP ADVANCE IN THE FISCAL YEAR 1939 IS NOT ITSELF TO BE THE MAXIMUM BUT IS TO BE USED ONLY TO PROVIDE A BASIS FOR THE ASCERTAINMENT OF THE MAXIMUM. IT IS TO BE CAREFULLY NOTED THAT THE COMMITTEE USES THE PHRASE,"HE WOULD HAVE BEEN ENTITLED TO.' THE USE HERE OF THE SUBJUNCTIVE "WOULD HAVE BEEN" RATHER CLEARLY CONNOTES ASCERTAINMENT OF A MAXIMUM SALARY RATE THAT WAS NOT ACTUALLY PAID IN THE FISCAL YEAR 1939, BUT WHICH IS TO BE COMPUTED NOW "ON THE BASIS" OF THE SALARY ARRIVED AT IN THE SECOND STEP OF PROMOTION IN 1939, BUT CONSISTENT WITH THE INTENTION OF CONGRESS TO STRIKE ONLY AT 1939, PLUS THE ADDITION TO THE BASIS OF ANY INCREASE GRANTED IN 1940.

THUS AND THUS ONLY CAN THERE BE DERIVED AS REQUIRED BY SECTION 703 THE SALARY "RESULTING FROM THE FIRST TWO STEPS OF SUCH PROMOTIONS.' ONCE AGAINS THE CONGRESS, THIS TIME IN THE VERY WORDING OF THE STATUTE, USES THE PHRASE "RESULTING FROM," A PHRASE WHICH AGAIN IMPLIES A POSSIBLE CHAIN OF CAUSATION BEGINNING WITH A BASIS OF THE SALARY RATE ARRIVED AT IN THE SECOND STEP OF PROMOTION IN THE FISCAL YEAR 1939. IF CONGRESS HAD INTENDED THAT THE MAXIMUM SALARY TO BE PAID TO AN EMPLOYEE AFFECTED BY SECTION 703 IS THE SALARY RATE ARRIVED AT IN THE SECOND STEP OF PROMOTION IN 1939, IT WOULD HAVE SIMPLY SUBSTITUTED FOR THE PHRASE IN SECTION 703 READING "SALARY RESULTING FROM THE FIRST TWO STEPS OF SUCH PROMOTION.' THE TWO PHRASES ARE IDENTICAL IN MEANING, WHICH WE MAINTAIN THEY ARE NOT, THEN IT MUST BE ASSUMED, CONTRARY TO THE ORDINARY USAGE OF LANGUAGE, THAT CONGRESS MEANT AS A MAXIMUM A SALARY WHICH "RESULTS" FROM ITSELF.

THE CONSTRUCTION WE ADVANCE, THEN, IS THE ONLY CONSTRUCTION WHICH GIVES FULL MEANING TO THE ODD INVOLUTION OF THE LANGUAGE OF SECTION 703, AND WHICH AT THE SAME TIME EFFECTS THE INTENT OF CONGRESS WHICH IS CLEARLY AND AUTHORITATIVELY EXPRESSED IN THE LEGISLATIVE HISTORY.

FINALLY, A FOURTH PROBLEM ARISES WHICH CONCERNS NEITHER THE COVERAGE OF SECTION 703, NOR ITS GENERAL OPERATION WITH RESPECT TO A PERSON COVERED THEREBY, BUT IS SPECIFICALLY CONCERNED WITH THE OPERATION OF THE CLAUSE AT THE END OF SECTION 703 READING,"BUT THIS SECTION SHALL NOT PRECLUDE THE PAYMENT OF THE MINIMUM SALARY OF THE GRADE TO ANY PERSON TRANSFERRED, UNDER STANDARD REGULATIONS, TO SUCH GRADE.' TO ILLUSTRATE THE PROBLEM--- AN EMPLOYEE OF THE BOARD RECEIVED THREE STEPS OF ADMINISTRATIVE WITHIN- GRADE PROMOTION IN THE FISCAL YEAR 1939 FROM P-1, $2,000, TO P-1, $2,300, AND REMAINED AT P-1, $2,300. IT APPEARS CLEAR THAT SUCH AN EMPLOYEE CAN, BY VIRTUE OF THE CLAUSE QUOTED, NOW BE PROMOTED TO GRADE P-2 AND PAID $2,600, THE MINIMUM SALARY OF THAT GRADE. OUR QUESTION IS WHETHER AFTER PROMOTION TO GRADE P-2 SUCH EMPLOYEE CAN BE ADMINISTRATIVELY PROMOTED AND PAID A SALARY BEYOND THE MINIMUM RATE OF THE GRADE. IT IS OUR VIEW THAT THIS CANNOT BE DONE. CAREFUL EXAMINATION OF THE LEGISLATIVE HISTORY OF THE SECTION SHEDS NO LIGHT ON THIS PARTICULAR PROBLEM. IN THE ABSENCE OF ANY EVIDENCE TO THE CONTRARY, WE BELIEVE THAT IT MUST BE ASSUMED THAT CONGRESS, IN EXPLICITLY PERMITTING PAYMENT OF THE MINIMUM SALARY OF THE GRADE TO WHICH AN EMPLOYEE IS PROMOTED, NECESSARILY BY IMPLICATION PROHIBITS THE PAYMENT OF A SALARY IN EXCESS OF THAT MINIMUM. THUS, THE CLAUSE OPERATES AS BOTH A SAVING CLAUSE AND A RESTRICTIVE CLAUSE ON THE PAYMENT OF SALARIES DURING THE PRESENT FISCAL YEAR.

1. THE FIRST QUESTION PRESENTED IN YOUR LETTER RELATES TO WHAT EFFECT, IF ANY, SECTION 703 OF THE LABOR-FEDERAL SECURITY APPROPRIATION ACT, 1941, 54 STAT. 597, HAS UPON AN EMPLOYEE OF THE RAILROAD RETIREMENT BOARD WHO TRANSFERRED WITHOUT CHANGE IN SALARY TO SAID AGENCY FROM ANOTHER GOVERNMENT AGENCY WHERE HE HAD RECEIVED THREE STEPS OF ADMINISTRATIVE WITHIN-GRADE PROMOTION DURING THE FISCAL YEAR 1939, BUT WHO HAS RECEIVED NO PROMOTION FROM THE RAILROAD RETIREMENT BOARD.

THE APPROPRIATION ACT IN QUESTION IS DIVIDED INTO SEVEN PARTS OR TITLES. THE FIRST SIX TITLES ARE CONCERNED PRINCIPALLY WITH THE MAKING OF REGULAR 1941 APPROPRIATIONS FOR THE DEPARTMENT OF LABOR, FEDERAL SECURITY AGENCY, EMPLOYEES' COMPENSATION COMMISSION, NATIONAL LABOR RELATIONS BOARD, NATIONAL MEDIATION BOARD, AND THE RAILROAD RETIREMENT BOARD, RESPECTIVELY. TITLE VII CONSISTS OF PROVISIONS GENERAL IN NATURE, DESIGNED TO PROVIDE CERTAIN RESTRICTIONS OR LIMITATIONS UPON ALL OF THE AGENCIES COVERED BY THE FIRST SIX TITLES AS REGARDS THE EXPENDITURE OF FUNDS APPROPRIATED FOR THEIR USE BY THE ACT. BUT WHILE THE PROVISIONS OF SAID TITLE VII ARE GENERAL IN THE SENSE THAT THEY ARE FOR APPLICATION IN THE CASE OF ALL OF THE AGENCIES PROVIDED FOR IN THE ENTIRE ACT, THEY ARE AT THE SAME TIME RESTRICTED IN THEIR APPLICATION TO THOSE AGENCIES, ONLY, AND DO NOT EXTEND TO ALL AGENCIES AND DEPARTMENTS OF THE GOVERNMENT. STATED IN YOUR LETTER, THE LEGISLATIVE HISTORY OF THE ACT IN QUESTION DISCLOSES THAT SECTION 703 OF TITLE VII WAS INSERTED IN THE BILL BECAUSE OF THE BELIEF OF THE COMMITTEE IN CHARGE OF THE LEGISLATION THAT "SOME OF THE AGENCIES PROVIDED FOR IN THE ACCOMPANYING BILL HAVE FLAGRANTLY ABUSED ADMINISTRATIVE DISCRETION, VESTED IN THEM BY CONGRESS, BY MAKING WHOLESALE ADVANCES IN SALARY TO EMPLOYEES" ( ITALICS SUPPLIED), AND BECAUSE IT WAS FELT THAT " CONGRESS SHOULD MAKE ITS ATTITUDE CLEAR IN CASES WHERE IT FEELS THAT ADMINISTRATIVE DISCRETION HAS BEEN ABUSED. HOUSE REPORT 1822, SEVENTY-SIXTH CONGRESS, THIRD SESSION, PAGES 4 AND 5. THERE IS NOTHING TO INDICATE ANY BELIEF ON THE PART OF THE COMMITTEE OR OF THE CONGRESS THAT ANY AGENCIES EXCEPT THOSE "PROVIDED FOR IN THE ACCOMPANYING BILL" HAD ABUSED ADMINISTRATIVE DISCRETION IN THE MAKING OF ADMINISTRATIVE PROMOTIONS. SO FAR AS APPEARS, THE COMMITTEE'S EXAMINATION OF THIS MATTER EXTENDED ONLY TO AGENCIES INCLUDED WITHIN THE TERMS OF THE ENACTMENT UNDER CONSIDERATION. THEREFORE, WHEN A RESTRICTION WAS PLACED BY SECTION 703 UPON THE USE OF ANY APPROPRIATION "IN THIS ACT" TO PAY THE SALARY OF ANY PERSON WHO RECEIVED MORE THAN TWO ADMINISTRATIVE WITHIN-GRADE PROMOTIONS "IN ALL POSITIONS OCCUPIED BY SUCH PERSON DURING THE FISCAL YEAR 1939," IT SEEMS REASONABLE TO CONCLUDE THAT THE WORDS "POSITIONS OCCUPIED" REFERS TO POSITIONS HELD IN THE AGENCIES FOR WHICH APPROPRIATIONS WERE MADE IN THE ACT, PUBLIC NO. 665, APPROVED JUNE 26, 1940. ACCORDINGLY, IN ANSWER TO YOUR FIRST QUESTION, IT IS HELD THAT SECTION 703 DOES NOT APPLY TO A RAILROAD RETIREMENT BOARD EMPLOYEE WHO TRANSFERRED TO THAT AGENCY FROM ANOTHER AGENCY NOT COVERED BY THE TERMS OF THE LABOR FEDERAL SECURITY APPROPRIATION ACT, 1941, WHERE HE HAD RECEIVED THREE STEPS OF ADMINISTRATIVE WITHIN-GRADE PROMOTION IN THE FISCAL YEAR 1939, BUT HAD RECEIVED NO PROMOTION FROM THE RAILROAD RETIREMENT BOARD OR FROM ANY OF THE OTHER AGENCIES APPROPRIATED FOR IN THE SAID ACT. HOWEVER, SINCE SECTION 703 APPLIES ALIKE TO ALL THE AGENCIES COVERED BY THE ACT IT FOLLOWS THAT THE SAID PROVISION WOULD APPLY IN THE CASE OF SUCH AN EMPLOYEE WHO TRANSFERRED TO THE RAILROAD RETIREMENT BOARD FROM ANY ONE OF THE OTHER AGENCIES INCLUDED WITHIN THE TERMS OF THE ACT--- REGARDLESS OF WHETHER THE THREE ADMINISTRATIVE PROMOTIONS WERE RECEIVED PRIOR OR SUBSEQUENT TO THE TRANSFER.

2. YOUR SECOND QUESTION RELATES TO THE EFFECT TO BE GIVEN SECTION 703 AS REGARDS AN EMPLOYEE OF THE RAILROAD RETIREMENT BOARD WHO RECEIVED A THREE- STEP WITHIN-GRADE ADMINISTRATIVE PROMOTION ON JULY 1, 1938, A PROMOTION TO A NEW GRADE ON JULY 15, 1938, AND A ONE-STEP ADMINISTRATIVE PROMOTION WITHIN THE NEW GRADE ON APRIL 1, 1939--- THE EMPLOYEE HAVING BEEN EMPLOYED DURING THIS ENTIRE PERIOD IN THE RAILROAD RETIREMENT BOARD AND NO TRANSFER FROM ONE AGENCY TO ANOTHER BEING INVOLVED.

IT APPEARS TO BE YOUR VIEW THAT THE EFFECT OF THE GRADE PROMOTION OF JULY 15, 1938, WAS TO ABSORB AND CANCEL COMPLETELY THE ADMINISTRATIVE PROMOTION RECEIVED JULY 1, 1938, WITH THE RESULT THAT THE EMPLOYEE IS TO BE CONSIDERED, SO FAR AS SECTION 703 IS CONCERNED, AS IN THE SAME STATUS AS THOUGH HE HAD NEVER RECEIVED THIS THREE-STEP WITHIN-GRADE PROMOTION AND MAY, THEREFORE, BENEFIT DURING 1941 FROM THE ONE-STEP ADMINISTRATIVE PROMOTION MADE IN THE NEW GRADE ON APRIL 1, 1939. SUCH AN INTERPRETATION WOULD MEAN THAT AN EMPLOYEE MIGHT RECEIVE AN INDEFINITE NUMBER OF ADMINISTRATIVE PROMOTIONS DURING THE FISCAL YEAR 1939 WITHOUT BEING AFFECTED BY THE PROVISIONS OF SECTION 703, SO LONG AS HE DID NOT RECEIVE AN ADVANCE OF MORE THAN TWO ADMINISTRATIVE STEPS AFTER HIS LAST GRADE PROMOTION. SUCH AN INTERPRETATION IS NOT BELIEVED TO ACCORD WITH THE INTENTION OF THE CONGRESS IN ENACTING THIS LEGISLATION. IT IS TRUE THAT THERE APPEARS TO HAVE BEEN NO INTENTION IN THE ENACTMENT OF SECTION 703 TO CRITICIZE OR INTERFERE WITH ANY ADMINISTRATIVE POLICY OF PROMOTING FROM GRADE TO GRADE. AS A MATTER OF FACT, MR. ENGEL, WHO APPEARS TO HAVE BEEN THE SPONSOR OF SECTION 703, STATED IN THE COURSE OF THE HEARINGS ON THE BILL THAT:

* * * I AM NOT SO MUCH CONCERNED ABOUT THE STEP-UP MADE, GRADE-TO GRADE PROMOTIONS, BECAUSE I THINK IT IS INDUCTIVE TO GOOD MORALE TO USE THE MAN THAT YOU CAN WITHIN THE DEPARTMENT, INSTEAD OF BRINGING OUTSIDE EMPLOYEES IN--- IF THEY ARE QUALIFIED. ( PAGE 853, HEARINGS BEFORE THIS SUBCOMMITTEE OF THE COMMITTEE ON APPROPRIATIONS, HOUSE OF REPRESENTATIVES, 76TH CONGRESS, 3D SESSION, ON THE DEPARTMENT OF LABOR -- FEDERAL SECURITY AGENCY APPROPRIATION BILL FOR 1941, PART 2.)

BUT IT MUST NOT BE OVERLOOKED THAT MR. ENGEL AND THE COMMITTEE IN CHARGE OF THE BILL WERE VERY DEFINITELY CRITICAL AS TO WHAT APPEARED TO THEM TO BE EXCLUSIVE ADMINISTRATIVE PROMOTIONS AND THAT THE CONGRESS BY ENACTING SECTION 703 INDICATED A SIMILARLY CRITICAL ATTITUDE. IT SEEMS CLEAR FROM THE ADMINISTRATIVE BACKGROUND OF THE LEGISLATION, AS WELL AS THE TERMS OF SECTION 703, THAT THE CONGRESS CONCLUDED THAT NO MORE THAN TWO STEPS OF ADMINISTRATIVE WITHIN-GRADE PROMOTION TO EMPLOYEES OF THE INVOLVED AGENCIES DURING THE FISCAL YEAR 1939 WAS JUSTIFIABLE. ACCORDINGLY, IT WAS APPARENTLY CONCLUDED THAT EMPLOYEES OF THE INVOLVED AGENCIES SHOULD NOT BE PERMITTED TO RECEIVE DURING THE FISCAL YEAR 1941 FROM FUNDS PROVIDED IN THE LABOR-FEDERAL SECURITY APPROPRIATION ACT, 1941, THE BENEFITS OF MORE THAN TWO STEPS OF ADMINISTRATIVE WITHIN GRADE PROMOTION RECEIVED BY THEM FROM AGENCIES COVERED BY SAID ACT DURING THE FISCAL YEAR 1939. IT WAS OBVIOUS, HOWEVER, THAT IF A GENERAL PROVISION TO ACCOMPLISH THAT PURPOSE WERE PLACED IN EFFECT IT WOULD MEAN THAT EMPLOYEES WHO HAD RECEIVED MORE THAN THREE STEPS OF WITHIN-GRADE PROMOTION PRIOR TO RECEIPT OF A GRADE PROMOTION, MIGHT LOSE A PART, AT LEAST, OF THE BENEFITS OF THE GRADE PROMOTION. SINCE IT WAS NOT THE DESIRE OF THE CONGRESS TO DENY THE BENEFITS OF GRADE PROMOTIONS, REGULARLY MADE DURING THE FISCAL YEAR 1939 IN ACCORDANCE WITH STANDARD REGULATIONS, AN EXCEPTION TO THE RULE RESPECTING THREE STEPS OR MORE OF ADMINISTRATIVE WITHIN-GRADE PROMOTIONS DURING THE FISCAL YEAR 1939 WAS ADDED TO SECTION 703. THE PURPOSE AND EFFECT OF THAT EXCEPTION WAS TO PERMIT EMPLOYEES TO RETAIN THE BENEFITS OF THREE OR MORE STEPS OF WITHIN-GRADE PROMOTION IF THIS WAS NECESSARY IN ORDER TO PERMIT RETENTION OF THE BENEFITS OF A GRADE PROMOTION. HOWEVER, THERE IS NOTHING TO INDICATE AN INTENTION THAT SUCH AN EMPLOYEE SHOULD BE PERMITTED TO ENJOY BENEFITS DURING THE FISCAL YEAR 1941 OF ANY FURTHER ADMINISTRATIVE PROMOTIONS RECEIVED DURING THE FISCAL YEAR 1939. WHILE, UNDER THE TERMS OF THE ACT IT IS TRUE THAT ONE WHO RECEIVES MORE THAN TWO STEPS OF ADMINISTRATIVE WITHIN-GRADE PROMOTIONS WITHIN THE FISCAL YEAR 1939 MAY, IF TRANSFERRED DURING SAID YEAR TO A HIGHER GRADE, ESCAPE THE EFFECT OF SECTION 703 UPON ANY EXCESSIVE STEPS OF WITHIN-GRADE PROMOTIONS PREVIOUSLY CONFERRED, IT SEEMS EQUALLY CLEAR THAT CONGRESS DID NOT INTEND THAT HE SHOULD CONTINUE TO RECEIVE THE BENEFITS OF ANY WITHIN-GRADE ADMINISTRATIVE PROMOTION RECEIVED DURING THE REMAINDER OF SAID FISCAL YEAR. SUCH AN INTERPRETATION AGREES NOT ONLY WITH THE TERMS OF THE ACT BUT WITH THE PURPOSE OF THE CONGRESS IN THE ENACTMENT OF THE PROVISION. THEREFORE, IN ANSWER TO YOUR SECOND QUESTION, YOU ARE ADVISED THAT THE CAF -4, $1,800, EMPLOYEE OF THE RAILROAD RETIREMENT BOARD REFERRED TO IN YOUR LETTER WHO RECEIVED ADMINISTRATIVE THREE-STEP WITHIN-GRADE PROMOTION ON JULY 1, 1938, TO $1,980; WHO WAS PROMOTED TO GRADE CAF-5, $2,000, ON JULY 15, 1938; AND WHO THEREAFTER RECEIVED AN ADMINISTRATIVE WITHIN-GRADE PROMOTION UNDER THE NEW GRADE ON APRIL 1, 1939, TO $2,100, MAY RETAIN THE BENEFIT OF HIS GRADE PROMOTION TO $2,000, THE MINIMUM SALARY OF GRADE CAF- 5, INCLUDING THE BENEFITS OF THE ADMINISTRATIVE PROMOTION WHICH PRECEDED IT, BUT HE MAY NOT CONTINUE TO RECEIVE FROM THE FUNDS APPROPRIATED BY THE LABOR-FEDERAL SECURITY APPROPRIATION ACT, 1941, THE BENEFITS OF THE ADMINISTRATIVE PROMOTION OF APRIL 1, 1939. IN OTHER WORDS, HE SHOULD RECEIVE $100 PER ANNUM REDUCTION IN SALARY, WHICH WOULD ALLOW PAYMENT TO HIM "OF THE MINIMUM SALARY OF THE GRADE," QUOTING FROM THE LAST SENTENCE OF SECTION 703 OF THE ACT.

3. THE THIRD QUESTION PRESENTED PERTAINS TO THE EFFECT, IF ANY, OF SECTION 703 UPON AN EMPLOYEE OF THE RAILROAD RETIREMENT BOARD WHO RECEIVED A THREE-STEP WITHIN-GRADE ADMINISTRATIVE PROMOTION DURING THE FISCAL YEAR 1939 AND WHO RECEIVED AN ADDITIONAL ONE-STEP WITHIN-GRADE ADMINISTRATIVE PROMOTION IN 1940.

THERE IS NOTHING IN THE TERMS OF SECTION 703 OR IN THE LEGISLATIVE HISTORY OF THE ENACTMENT WHICH MANIFESTS ANY INTENTION ON THE PART OF THE CONGRESS TO INTERFERE WITH ADMINISTRATIVE WITHIN-GRADE PROMOTIONS REGULARLY MADE DURING THE FISCAL YEAR 1940. THAT THE PROVISION WAS SOLELY DIRECTED AGAINST EXCESSIVE ADMINISTRATIVE PROMOTIONS MADE DURING THE FISCAL YEAR 1939, IS INDICATED BY THE FOLLOWING EXPLANATORY STATEMENT MADE BY THE SPONSOR OF THIS SECTION. MR. ENGEL, BEFORE THE HOUSE OF REPRESENTATIVES WHEN THE MATTER WAS THERE UNDER CONSIDERATION:

* * * I FOUND THAT THE SOCIAL SECURITY BOARD HAD FOR THE FISCAL YEAR ENDING JUNE 30, 1939, AN AVERAGE OF 8,723 EMPLOYEES. DURING THAT SAME FISCAL YEAR THEY MADE 7,087 ADMINISTRATIVE PROMOTIONS AT AN ANNUAL COST OF $538,180, AS AGAINST 1,404 ADMINISTRATIVE PROMOTIONS MADE DURING THE PRECEDING FISCAL YEAR AT A COST OF $117,960. THESE ARE ADMINISTRATIVE PROMOTIONS WITHIN THE GRADE, AND NOT STEP-UPS, THAT I AM SPEAKING ABOUT.

THE TABLES FURNISHED ME SHOW THAT, IN ADDITION TO THESE 7,087 ADMINISTRATIVE PROMOTIONS WE HAD 3,122 GRADE PROMOTIONS DURING THE SAME PERIOD OF TIME. SOME OF THESE EMPLOYEES WHO RECEIVED GRADE PROMOTIONS ALSO RECEIVED ADMINISTRATIVE PROMOTIONS AND WERE CANCELED OUT. HOWEVER, THIS SHOWS THAT THE BOARD MADE 10,109 ADMINISTRATIVE AND GRADE PROMOTIONS DURING THE FISCAL YEAR ENDING JUNE 30, 1939.

THE REORGANIZATION ACT PROVIDED THAT NO PROMOTIONS SHOULD BE MADE WITHIN 1 YEAR FROM THE EFFECTIVE DATE OF REORGANIZATION. THE EFFECTIVE DATE OF REORGANIZATION OF THE FEDERAL SECURITY AGENCY, OF WHICH THE SOCIAL SECURITY BOARD IS A PART, WAS JULY 1, 1939. THE TESTIMONY IN THE RECORD I HAVE SHOWS THAT THE SOCIAL SECURITY BOARD MADE 2,989 ADMINISTRATIVE PROMOTIONS AT AN ANNUAL COST OF $221,960, ON JUNE 15, 1939, OR WITHIN 15 DAYS NEXT PRECEDING THE EFFECTIVE DATE OF REORGANIZATION AFTER WHICH DATE CONGRESS SAID NO PROMOTIONS SHOULD BE MADE. * * * MR. ALTMEYER TRIED TO JUSTIFY THESE PROMOTIONS BY HIS DESIRE TO BRING THE AVERAGE PAY OF HIS EMPLOYEES UP TO THE GENERAL AVERAGE OF THE OTHER DEPARTMENTS. THE EMPLOYEES OF THESE OLDER DEPARTMENTS HAVE WORKED FOR YEARS AND HAVE EARNED THEIR PROMOTIONS AND THE SOCIAL SECURITY BOARD IS TRYING TO GIVE, WITHIN A FEW MONTHS, PROMOTIONS TO THEIR EMPLOYEES THAT EMPLOYEES OF OTHER DEPARTMENTS HAVE WORKED FOR YEARS TO EARN. LET ME NOT BE MISUNDERSTOOD. I AM NOT OPPOSED TO REASONABLE PROMOTIONS, BUT WE HAVE HERE A SITUATION WHERE I FIND EMPLOYEES WORTHY, HONEST, HARD-WORKING PEOPLE WITH EXCELLENT RECORDS WHO HAVE RECEIVED NO PROMOTIONS FOR YEARS. HERE WE HAVE A DEPARTMENT WHICH HAS GIVEN 32 1/2 PERCENT OF THEIR EMPLOYEES PROMOTIONS IN 1 MONTH. IT IS NOT CONDUCIVE TO GOOD MORALE ON THE PART OF OTHER EMPLOYEES. IT IS NOT FAIR. THESE OTHER EMPLOYEES WILL SAY," I HAVE NOT HAD A PROMOTION IN 4 OR 5 YEARS. IF I HAD BEEN IN THE SOCIAL SECURITY BOARD, I WOULD HAVE RECEIVED IT AT ONCE.'

THE TESTIMONY OF MR. ALTMEYER IS RATHER AMAZING. NATURALLY HE TRIED TO JUSTIFY HIS PROMOTIONS. ON PAGE 849 OF THE HEARINGS HE FRANKLY ADMITS THAT THESE PROMOTIONS WERE MADE TO GET AROUND THE REORGANIZATION ACT. QUOTE FROM THE TESTIMONY:

" MR. ENGEL. THE ADMINISTRATIVE PROMOTIONS, FROM JULY 1 AND THROUGH DECEMBER 31, 1938, WERE 2,778, AT AN ANNUAL COST OF $207,760, AND IN JUNE 1939 THERE WERE 2,889 AT AN ANNUAL COST OF $221,960. REGARDLESS OF WHETHER THE ACT OF CONGRESS IS ADVISABLE OR NOT, YOU "JUMPED THE GUN" ON THE ACT OF CONGRESS?

" MR. ALTMEYER. LET ME EXPLAIN.

" MR. ENGEL. IS IT NOT TRUE, MR. ALTMEYER, THAT YOU HAVE JUMPED THE GUN, AND THAT THESE 2,889 PROMOTIONS WERE MADE IN JUNE--- I AM NOT DISCUSSING THE JUSTIFICATION, BUT THEY WERE MADE TO GET AROUND THE REORGANIZATION ACT?

" MR. ALTMEYER. YES; THAT IS RIGHT.'

I MIGHT ADD THAT THEY MADE 2,989 ADMINISTRATIVE PROMOTIONS, BUT 100 WERE CANCELLED OUT BY GRADE PROMOTIONS * * *.

IT SEEMS CLEAR FROM THE STATEMENTS, SUPRA, THAT SECTION 703 WAS ADDRESSED TO A PARTICULAR PROBLEM, NAMELY, EXCESSIVE ADMINISTRATIVE PROMOTIONS DURING THE FISCAL YEAR 1939. OF COURSE, NO QUESTION RELATIVE TO ADMINISTRATIVE PROMOTIONS DURING THE FISCAL YEAR 1940 WOULD ARISE IN THE CASE OF AGENCIES AFFECTED BY THE PROVISIONS OF THE REORGANIZATION ACT--- WHICH PROHIBITED ADMINISTRATIVE PROMOTIONS DURING THAT YEAR. THERE IS NOTHING, HOWEVER, TO INDICATE THAT THE CONGRESS INTENDED BY THE TERMS OF SECTION 703 TO INTERFERE IN ANY WAY WITH ADMINISTRATIVE PROMOTIONS DURING THE FISCAL YEAR 1940 IN AGENCIES WHERE SUCH PROMOTIONS WERE OTHERWISE PERMITTED BY LAW. AS STATED IN THE COMMITTEE REPORT, QUOTED IN YOUR LETTER, THE ACT MERELY DENIES THE USE OF FUNDS APPROPRIATED IN THE 1941 LABOR-FEDERAL SECURITY APPROPRIATION ACT "IN PAYING SALARY TO ANY EMPLOYEE IN EXCESS OF THE SALARY HE WOULD HAVE BEEN ENTITLED TO ON THE BASIS OF A TWO-STEP ADVANCE DURING THE FISCAL YEAR 1939.' ( ITALICS SUPPLIED.) ANSWERING YOUR THIRD QUESTION, THEREFORE, YOU ARE ADVISED THAT AN EMPLOYEE OF THE RAILROAD RETIREMENT BOARD WHO RECEIVED FROM THE BOARD IN 1939 A THREE-STEP ADMINISTRATIVE PROMOTION, AND A ONE-STEP INCREASE IN 1940, MAY RETAIN DURING 1941 THE BENEFITS TO BE DERIVED FROM THE FIRST TWO STEPS OF HIS 1939 PROMOTION AND FROM THE ONE-STEP 1940 PROMOTION, BUT HIS SALARY FOR 1941 SHOULD BE REDUCED IN AN AMOUNT EQUIVALENT TO THE THIRD STEP OF THE ADMINISTRATIVE PROMOTION RECEIVED IN 1939.

4. YOUR FOURTH POINT OF INQUIRY RELATES TO THE QUESTION OF WHETHER AN EMPLOYEE OF THE RAILROAD RETIREMENT BOARD WHO RECEIVED FROM THE BOARD THREE STEPS OF ADMINISTRATIVE WITHIN-GRADE PROMOTION DURING THE FISCAL YEAR 1939 MAY NOW, DURING THE FISCAL YEAR 1941, BE PROMOTED TO A HIGHER GRADE, AND IF SO, WHETHER HE MAY THEN RECEIVE AN ADMINISTRATIVE PROMOTION IN 1941 IN THE NEW GRADE TO WHICH HE IS THUS PROMOTED.

AS PREVIOUSLY NOTED, IT IS CONSIDERED THAT SECTION 703 WAS INTENDED TO RELATE EXCLUSIVELY TO ADMINISTRATIVE PROMOTIONS MADE DURING THE FISCAL YEAR 1939. IT IS A PRONOUNCEMENT BY THE CONGRESS THAT ADMINISTRATIVE PROMOTIONS DURING THAT YEAR WERE EXCESSIVE AND THAT THE BENEFICIARIES THEREOF MAY NOT CONTINUE, DURING THE FISCAL YEAR 1941, TO RECEIVE SUCH EXCESS. IN THE CASE PRESENTED THE EMPLOYEE MUST BE REDUCED EFFECTIVE AS OF JULY 1, 1940, TO THE SALARY RATE RESULTING FROM THE SECOND-STEP PROMOTION RECEIVED DURING THE FISCAL YEAR 1939. BUT SAID SECTION 703 WILL NOT PRECLUDE HIM FROM BEING HEREAFTER PROMOTED TO A HIGHER GRADE IN GOOD FAITH AND IN ACCORDANCE WITH EXISTING LAW OR FROM THEREAFTER RECEIVING AN ADMINISTRATIVE PROMOTION DURING THE FISCAL YEAR 1941 IN THE HIGHER GRADE TO WHICH ADVANCED DURING SAID FISCAL YEAR. OF COURSE, THERE WOULD BE NO AUTHORITY TO PROMOTE AN EMPLOYEE EITHER BY ADVANCE IN GRADE OR WITHIN- GRADE FOR THE PURPOSE OF OFFSETTING THE EFFECT OF A REDUCTION REQUIRED UNDER THE TERMS OF SECTION 703 SO AS TO ENABLE THE EMPLOYEE TO ESCAPE ANY OR ALL OF THE CONSEQUENCES OF THE REQUIRED REDUCTION. IT WAS CLEARLY THE PURPOSE OF THE CONGRESS THAT EMPLOYEES OF THE INVOLVED AGENCIES SHOULD BE DENIED, DURING THE FISCAL YEAR 1941, THE BENEFITS OF CERTAIN ADVANCES RECEIVED IN 1939 AND THIS PURPOSE MUST BE GIVEN EFFECT.