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JENNINGS v. CONNALLY

July 14, 1972

Paul JENNINGS and International Union of Electrical, Radio and Machine Workers, AFL-CIO, Plaintiffs, George Meany et al., Plaintiffs-Intervenors,
v.
John B. CONNALLY, Chairman,* et al., Defendants


William B. Jones, District Judge.


The opinion of the court was delivered by: JONES

On August 15, 1971, the President issued Executive Order 11615 *fn1" which placed a ninety-day freeze on wages and prices in the United States. The legal basis for establishing these controls was the Economic Stabilization Act of 1970, as amended, 12 U.S.C. § 1904 note (1970). Executive Order 11615 established the Cost of Living Council (COLC), delegated to it the President's powers under the law, and authorized COLC to delegate any of its powers.

 Wage controls for the period beginning November 14, 1971 (Phase II), were authorized by Executive Order 11627, issued on October 15, 1971. *fn2" This order continued the Council and established the Pay Board to perform such functions with respect to the stabilization of wages and salaries as the Council delegates to the Board. On the same day, the Council issued an order delegating to the Pay Board authority to:

 
establish criteria, standards, and implementation procedures designed to stabilize wages and salaries within the general economic stabilization goals and coverage determination developed by the Council. *fn3"

 On November 13, 1971, the Council and the Pay Board issued initial Phase II wage control regulations. The Pay Board's regulations in effect since that time have provided that aggregate first-year wage increases for employees under newly adopted collective bargaining agreements are limited to 5.5% of existing wage levels except where specific approval for a larger increase is administratively granted. *fn4"

 On December 22, 1971, Congress amended the Economic Stabilization Act. *fn5" Section 203(d) of the Act, as amended, provides:

 
(d) Notwithstanding any other provisions of this title, this title shall be implemented in such a manner that wage increases to any individual whose earnings are substandard or who is a member of the working poor shall not be limited in any manner, until such time as his earnings are no longer substandard or he is no longer a member of the working poor.

 On January 29, 1972, COLC determined that hourly wages under $1.90 were exempted from wage increase controls by Section 203(d) of the Act. *fn6"

 Plaintiffs brought this action seeking a declaratory judgment that COLC's ruling that wages under $1.90 per hour are exempt from control under the Act is in excess of agency authority and therefore unlawful. Plaintiffs also seek to enjoin application of that regulation to them in their negotiations with employers in behalf of the members of their unions. Plaintiffs here include not only Paul Jennings and the International Union of Electrical, Radio and Machine Workers, AFL-CIO, but also George Meany and the American Federation of Labor and Congress of Industrial Organizations and the Amalgamated Meat Cutters and Butcher Workmen of North America, AFL-CIO, whose motions to intervene as plaintiffs were granted by order of this Court, dated April 18, 1972.

 The parties in this action have filed cross-motions for summary judgment. Having considered the memoranda and affidavits and the statements submitted in accord with Local Rule 9(h) in support of those motions, the Court finds that there are no material facts genuinely in dispute and that summary judgment is appropriate at this juncture in accord with the conclusions of law discussed below.

 Two questions are presented to the Court in this case:

 1. Whether Section 203(d) requires the President, or his delegates (COLC), to exempt from wage controls "all persons whose earnings are at or below levels established by the Bureau of Labor Statistics in determining an income necessary to afford adequate food, clothing and shelter and similar necessities." *fn7"

 2. Whether the President (COLC) has any discretion under Section 203(d), and if so, whether that discretion has been abused in exempting from wage controls those individuals whose earnings are below $1.90 per hour.

  I.

 In order to address the first question presented above, whether Congress has provided a mandatory level for exemption from wage controls, it is necessary to consider the terms of the statute itself and the legislative history of the provision in question.

 The terms of Section 203(d), supra, do not specify any particular level of individual earnings, either annual or hourly, which must be exempt from controls. Absent the legislative history of Section 203(d), one might conclude that the terms of the statute alone indicate a Congressional intent to leave the application of those terms ultimately within the discretion of the President (COLC). Such an interpretation would incorporate the more explicit references in the legislative history of Section 203(d) as mere guidelines or suggestions on the part of Congress to help inform the discretion of the President. That in short is the position of the defendants in this case, and they cite particularly Sections 202 and 203(a) of the Amendments in support of Executive discretion.

 The statute does indeed confer upon the Executive broad discretion in implementing the purposes of the Economic Stabilization Program. Section 203(d), however, does not present the only limitation upon that discretion. Sections 203(c) through (g) present several specific mandatory exemptions from controls. Where provision is made for Executive discretion in implementing those sections, it is generally limited to a determination that a specific agreement as to wages or benefits is unreasonably inconsistent with the purposes of the Act.

 As to the specific exemption from wage controls granted in Section 203(d), an additional indication of Congressional intent to limit Executive discretion in implementing that section can be found in the introductory clause of the provision, which begins: "Notwithstanding any other provision of this title. . . ." Those words would be superfluous unless they refer to those sections of ...


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