[House Report 106-387]
[From the U.S. Government Publishing Office]



106th Congress                                                   Report
                        HOUSE OF REPRESENTATIVES
 1st Session                                                    106-387

======================================================================



 
 AUTHORIZING A COST OF LIVING ADJUSTMENT IN THE PAY OF ADMINISTRATIVE 
                               LAW JUDGES

                                _______
                                

October 18, 1999.--Committed to the Committee of the Whole House on the 
              State of the Union and ordered to be printed

                                _______


    Mr. Burton of Indiana, from the Committee on Government Reform, 
                        submitted the following

                              R E P O R T

                        [To accompany H.R. 915]

      [Including cost estimate of the Congressional Budget Office]

  The Committee on Government Reform, to whom was referred the 
bill (H.R. 915) to authorize a cost of living adjustment in the 
pay of administrative law judges, having considered the same, 
report favorably thereon with an amendment and recommend that 
the bill as amended do pass.

                                CONTENTS

                                                                   Page
  I. Summary of Legislation...........................................2
 II. Background and Need for the Legislation..........................2
III. Legislative Hearings and Committee Actions.......................2
 IV. Committee Hearings and Written Testimony.........................3
  V. Explanation of the Bill..........................................4
 VI. Compliance With Rule XI..........................................4
VII. Budget Analysis and Projections..................................4
VIII.Cost Estimate of the Congressional Budget Office.................4

 IX. Specific Constitutional Authority for This Legislation...........5
  X. Committee Recommendation.........................................5
 XI. Congressional Accountability Act; Public Law 104-1...............5
XII. Unfunded Mandates Reform Act; Public Law 104-4, Section 423......5
XIII.Federal Advisory Committee Act (5 U.S.C. App.) Section 5(b)......5

XIV. Changes in Existing Law..........................................6

  The amendment is as follows:
  Strike out all after the enacting clause and insert in lieu 
thereof the following:

SECTION 1. PAY OF ADMINISTRATIVE LAW JUDGES.

  Section 5372(b) of title 5, United States Code, is amended--
          (1) in paragraph (1), by inserting ``(A)'' after ``(1)'' and 
        by striking all after the first sentence and inserting the 
        following:
  ``(B) Within level AL-3, there shall be 6 rates of basic pay, 
designated as AL-3, rates A through F, respectively. Level AL-2 and 
level AL-1 shall each have 1 rate of basic pay.
  ``(C) The rate of basic pay for AL-3, rate A, may not be less than 65 
percent of the rate of basic pay for level IV of the Executive 
Schedule, and the rate of basic pay for AL-1 may not exceed the rate 
for level IV of the Executive Schedule.'';
          (2) in paragraph (3)(A), by striking ``upon'' each time it 
        appears and inserting ``at the beginning of the next pay period 
        following''; and
          (3) by adding at the end the following:
  ``(4) Subject to paragraph (1), effective at the beginning of the 
first applicable pay period commencing on or after the first day of the 
month in which an adjustment takes effect under section 5303 in the 
rates of basic pay under the General Schedule, each rate of basic pay 
for administrative law judges shall be adjusted by an amount determined 
by the President to be appropriate.''

                    I. Short Summary of Legislation

    H.R. 915 would amend 5 U.S.C. Sec. 5372 to change the 
method for adjusting the basic pay of the more than 1,300 
administrative law judges (ALJ) employed by the Federal 
Government. It gives the President the same authority to 
provide annual pay adjustments to ALJs that he now has with 
respect to the Senior Executive Service (SES).

              II. Background and Need for the Legislation

    ALJ pay levels have not kept pace with other Federal 
employees. The basic pay of ALJs has been raised only three 
times since 1991: by 3.5% in 1992, by 3.2% in 1993, and by 2.3% 
in1998. In contrast, employees under the General Schedule have 
received annual increases in basic pay, and the President has adjusted 
SES pay in most of those years. Like the SES, ALJs have received 
locality pay increases during this period. Nevertheless, because their 
pay has been linked to Executive Level IV, ALJ pay increases have 
lagged significantly behind most Federal employees and senior 
executives.
    Many have expressed concern that this pay disparity will 
deter many qualified attorneys from becoming ALJs. H.R. 915 
will help to address this problem because the President will 
have the authority to adjust the pay of all ALJs whose pay is 
below the rate for Executive Level IV.

            III. Legislative Hearings and Committee Actions

    The Committee held no legislative hearings on H.R. 915. 
Rep. George W. Gekas introduced this bill on March 2, 1999. On 
the same date, H.R. 915 was erroneously referred to the 
Committee on the Judiciary rather than this Committee. On May 
27, 1999, Judiciary's Subcommittee on Commercial and 
Administrative Law held a hearing on H.R. 915 and marked it up. 
By voice vote, that subcommittee favorably reported the bill to 
the full Judiciary Committee. On June 10, 1999, by unanimous 
consent, the House discharged the Judiciary Committee from 
further consideration and re-referred H.R. 915 to the Committee 
on Government Reform. The Committee on Government Reform 
referred the measure on July 14, 1999 to the Subcommittee on 
the Civil Service, which marked up the bill and forwarded it to 
the full Government Reform Committee on July 27, 1999.
    The Committee on Government Reform marked up the bill on 
September 30, 1999. Rep. John L. Mica offered an amendment to 
clarify congressional intent, which was adopted by voice vote. 
By voice votes, the Committee adopted H.R. 915, as amended, and 
ordered it favorably reported to the House of Representatives.

              IV. Committee Hearings and Written Testimony

    Although the Committee held no legislative hearings on H.R. 
915, it relied upon the record developed in the hearing held by 
the Commercial and Administrative Law Subcommittee of the 
Committee on the Judiciary. The witnesses at this hearing were 
Henry Romero, Associate Director for Workforce Compensation and 
Performance, Office of Personnel Management; Judith A. Dowd, 
President of the Federal Administrative Law Judges Conference; 
and Ronald G. Bernoski, President, Association of 
Administrative Law Judges. The latter two witnesses submitted a 
joint statement.
    Mr. Romero noted that the law currently fixes each ALJ pay 
level and step as a percentage of level IV of the Executive 
Schedule, which covers such top government officials as 
Assistant Secretaries of cabinet departments and members of 
regulatory boards and commissions. The problem with this 
arrangement, he testified, is that ALJs cannot receive 
increases in basic pay while Executive Schedule pay remains 
unchanged. According to his testimony, the basic pay of ALJs 
has been raised only three times since 1991: by 3.5% in 1992, 
by 3.2% in 1993, and by 2.3% in 1998. Like the SES, ALJs have 
received locality pay increases during this period, but net pay 
increases for ALJs, he pointed out, have lagged significantly 
behind most Federal employees and senior executives.
    Administrative Law Judges Bernoski and Dowd summarized the 
history of ALJ compensation, pointing out that ALJs were under 
the General Schedule until their current pay system was 
established by the Federal Employee Pay Comparability Act of 
1990. Before the new system was adopted, they testified, ALJs 
were paid at the GS-15 and GS-16 rates, but because ALJ pay 
increases have lagged, the first three steps of the ALJ pay 
scale are now lower than the maximum rate for GS-15. They also 
testified that pensions for administrative law judges are 
adversely affected by these pay lags.
    They also contended that better qualified attorneys will 
not compete to become ALJs because of the lower pay. Federal 
attorneys at the GS-15 level, they argue, will be reluctant 
because they would find their pay soon falling behind their 
former colleagues. In addition, they argue that attorneys in 
private practice will be even more severely impacted because 
they must start at the bottom of the pay scale. In contrast, 
Federal attorneys are entitled to move laterally into the ALJ 
pay schedule at a comparable salary. This will, in their view, 
frustrate the congressional intent of selecting attorneys with 
a wide variety of legal experience in order to avoid domination 
of the adjudicative process by an ``agency culture.''
    ALJs Bernoski and Dowd also testified that administrative 
law judges are more comparable to the career employees in the 
General Schedule and the Senior Executive Service than 
political appointees covered by the Executive Schedule.

       V. Explanation of the Bill as Reported: Section-by-Section

    Section 1. This section reforms the process for setting the 
pay of administrative law judges. The bill retains the current 
grade and step structure. However, rather than tie each grade 
and step to fixed percentages of Executive Level IV, it only 
sets minimum and maximum pay. The highest level (AL-1) is set 
at Executive Level IV, and the lowest rate of pay in grade AL-3 
is set at 65% of Executive Level IV. The President is 
authorized to adjust the basic pay of ALJs below the cap when 
employees under the General Schedule receive an annual 
adjustment in basic pay under 5 U.S.C. Sec. 5303.

                      VI. Compliance With Rule XI

    Pursuant to rule XI, clause 2(l)(3)(A) of the Rules of the 
House of Representatives, under the authority of rule X, clause 
2(b)(1) and clause 3(f), the results and findings from 
Committee oversight activities are incorporated in the bill and 
this report.

                  VII. Budget Analysis and Projections

    The budget analysis and projections required by section 
308(a) of the Congressional Budget Act of 1974 are contained in 
the estimate of the Congressional Budget Office.

         VIII. Cost Estimate of the Congressional Budget Office

                                     U.S. Congress,
                               Congressional Budget Office,
                                  Washington, DC, October 13, 1999.
Hon. Dan Burton,
Chairman, Committee on Government Reform,
House of Representatives, Washington, DC.
    Dear Mr. Chairman: The Congressional Budget Office has 
prepared the enclosed cost estimate for H.R. 915, a bill to 
authorize a cost-of-living adjustment in the pay of 
administrative law judges.
    If you wish further detail on this estimate, we will be 
pleased to provide them. The CBO staff contact is Lanette J. 
Keith.
            Sincerely,
                                          Barry B. Anderson
                                    (For Dan L. Crippen, Director).
    Enclosure.

H.R. 915--A bill to authorize a cost-of-living adjustment in the pay of 
        administrative law judges

    H.R. 915 would change the laws affecting the pay of 
Administrative Law Judges (ALJs). CBO estimates that 
implementing H.R. 915 could increase discretionary spending by 
$3 million to $6 million a year. Any increases, however, would 
depend on future Congressional action with regard to cost-of-
living adjustments (COLAs). Because H.R. 915 would not affect 
direct spending or receipts, pay-as-you-go procedures would not 
apply. H.R. 915 contains no intergovernmental or private-sector 
mandates as defined in the Unfunded Mandates Reform Act and 
would have no effect on the budgets of state, local, or tribal 
governments.
    The bill would establish maximum and minimum salaries for 
ALJs and would authorize the President to adjust pay rates 
within that range. Based on information from the Office of 
Management and Budget, CBO expects that the President would 
modify the method of calculating ALJ salaries to allow for 
cost-of-living adjustments, but the basic pay schedule would 
remain unchanged.
    H.R. 915 would link COLAs for most ALJs to changes in the 
Senior Executive Service (SES) instead of changes to the 
Executive Schedule. Currently, ALJs receive COLAs from 
appropriated funds only when the Congress approves such 
increases for the Executive Schedule. In the past five years, 
the Congress approved COLAs for the Executive Schedule only 
once. In contrast, the SES has received pay adjustments in four 
of the past five years. Enacting the provision could increase 
discretionary spending, depending on future actions of the 
Congress regarding COLAs. For example, H.R. 915 would result in 
higher salary costs for ALJs if future COLAs are not granted 
for Executive Schedule positions but are provided for the SES. 
For each year in which this occurs, we estimate a cost of $3 
million to $6 million for that year and subsequent years, 
assuming appropriation of the necessary amounts.
    The CBO contact for this estimate is Lanette J. Keith. This 
estimate was approved by Peter H. Fontaine, Deputy Assistant 
Director for Budget Analysis.

       IX. Specific Constitutional Authority for This Legislation

    Clauses 1 and 18 of Article I, Sec. 8 of the Constitution 
grant Congress the power to enact this law.

                      X. Committee Recommendation

    On September 30, 1999, a quorum being present, the 
Committee ordered the bill, as amended, favorably reported by 
voice vote.

    XI. Congressional Accountability Act; Public Law 104-1; Section 
                               102(b)(3)

    The bill affects only the pay of administrative law judges, 
all of which are employed in the executive branch. Therefore, 
H.R. 915 does not apply to the legislative branch.

    XII. Unfunded Mandates Reform Act; Public Law 104-4; Section 423

    H.R. 915 does not impose any Federal mandates on state, 
local, or tribal governments, or the private sector, and it 
does not preempt any state or local law.

   XIII. Federal Advisory Committee Act (5 U.S.C. App.) Section 5(b)

    The Committee finds that H.R. 915 does not establish or 
authorize establishment of an advisory committee within the 
definition of 5 U.S.C. App., Section 5(b).

       XIV. Changes in Existing Law Made by the Bill, as Reported

  In compliance with clause 3(e) of rule XIII of the Rules of 
the House of Representatives, changes in existing law made by 
the bill, as reported, are shown as follows (existing law 
proposed to be omitted is enclosed in black brackets, new 
matter is printed in italic, existing law in which no change is 
proposed is shown in roman):

              SECTION 5372 OF TITLE 5, UNITED STATES CODE


Sec. 5372. Administrative law judges

  (a)  * * *
  (b)(1)(A) There shall be 3 levels of basic pay for 
administrative law judges (designated as AL-1, 2, and 3, 
respectively), and each such judge shall be paid at 1 of those 
levels, in accordance with the provisions of this section. [The 
rates of basic pay for those levels shall be as follows:


[AL-3, rate A.............................   65 percent of the rate of
                                             basic pay for level IV of
                                             the Executive Schedule.
AL-3, rate B..............................   70 percent of the rate of
                                             basic pay for level IV of
                                             the Executive Schedule.
AL-3, rate C..............................   75 percent of the rate of
                                             basic pay for level IV of
                                             the Executive Schedule.
AL-3, rate D..............................   80 percent of the rate of
                                             basic pay for level IV of
                                             the Executive Schedule.
AL-3, rate E..............................   85 percent of the rate of
                                             basic pay for level IV of
                                             the Executive Schedule.
AL-3, rate F..............................   90 percent of the rate of
                                             basic pay for level IV of
                                             the Executive Schedule.
AL-2......................................   95 percent of the rate of
                                             basic pay for level IV of
                                             the Executive Schedule.
AL-1......................................  The rate of basic pay for
                                             level IV of the Executive
                                             Schedule.]


  (B) Within level AL-3, there shall be 6 rates of basic pay, 
designated as AL-3, rates A through F, respectively. Level AL-2 
and level AL-1 shall each have 1 rate of basic pay.
  (C) The rate of basic pay for AL-3, rate A, may not be less 
than 65 percent of the rate of basic pay for level IV of the 
Executive Schedule, and the rate of basic pay for AL-1 may not 
exceed the rate for level IV of the Executive Schedule.

           *       *       *       *       *       *       *

  (3)(A) Upon appointment to a position in AL-3, an 
administrative law judge shall be paid at rate A of AL-3, and 
shall be advanced successively to rates B, C, and D of that 
level [upon] at the beginning of the next pay period following 
completion of 52 weeks of service in the next lower rate, and 
to rates E and F of that level [upon] at the beginning of the 
next pay period following completion of 104 weeks or service in 
the next lower rate.

           *       *       *       *       *       *       *

  (4) Subject to paragraph (1), effective at the beginning of 
the first applicable pay period commencing on or after the 
first day of the month in which an adjustment takes effect 
under section 5303 in the rates of basic pay under the General 
Schedule, each rate of basic pay for administrative law judges 
shall be adjusted by an amount determined by the President to 
be appropriate.

                                  
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