Plaintiffs, National Association of Retired Federal Employees and its officers, four retired federal employees, seek a declaratory judgment that section 252(a)(6)(C)(i) of Pub. L. No. 99-177, 99 Stat. 1037 (1985), popularly known as the Gramm-Rudman-Hollings Act, effects an unconstitutional taking of property without just compensation under the fifth amendment. Plaintiffs also request that we permanently enjoin the defendants, the Director of the Office of Personnel Management and the United States, from applying the section to plaintiffs and their class. Both plaintiffs and defendants have moved for judgment on the pleadings. We grant the defendants' motion, deny the plaintiffs' motion, and hold that section 252(a)(6)(C)(i) is not unconstitutional as applied to plaintiffs.
The facts are not in dispute. Plaintiffs represent approximately 500,000 retired federal employees receiving annuities under the Civil Service Retirement Act, 5 U.S.C. § 8331 et seq. (1982). As amended, the Act covers almost 90% of all federal employees and requires a mandatory 7% contribution from most covered employees which is matched by the employing agency. See 5 U.S.C. § 8334(a)(1). Benefit levels are determined according to a formula based on the employee's length of employment and rate of pay. See id. §§ 8331(4), 8339.
The 1984 enactment provides in pertinent part:
Effective December 1 of each year, each annuity payable from the Fund having a commencing date not later than such December 1 shall be increased by the percent change in the price index for the base quarter of such year over the price index for the base quarter of the preceding year in which an adjustment under this subsection was made, adjusted to the nearest 1/10 of 1 percent.
5 U.S.C.A. § 8340(b) (West Supp. 1985). "Each annuity is stated as an annual amount, one-twelfth of which, rounded to the next lowest dollar, constitutes the monthly rate payable on the first business day of the month after the month or other period for which it has accrued." 5 U.S.C. § 8345(a) (1982). Thus, on December 1, 1985, retirement benefits began accruing at a rate 3.1% higher than the previous month. The increase for the first month was to be paid on January 2, 1986.
On December 12, 1985, however, the President signed into law the Balanced Budget and Emergency Deficit Control Act of 1985, Pub. L. No. 99-177, 99 Stat. 1037, which suspended payment of the COLA increase. Section 252(a)(6)(C)(i) of the Act provides in part:
Notwithstanding any other provision of law, any automatic spending increase that would (but for this clause) be first paid during the period beginning with the date of the enactment of this joint resolution and ending with the effective date of an order issued by the President under paragraph (1) for the fiscal year 1986 shall be suspended until such order becomes effective, and the amounts that would otherwise be expended during such period with respect to such increases shall be withheld. If such order provides that automatic spending increases shall be reduced to zero during such fiscal year, the increases suspended pursuant to the preceding sentence and any legal rights thereto shall be permanently cancelled.
Pub. L. No. 99-177, § 252(a)(6)(C)(i), 99 Stat. 1037 (1985). On February 1, 1986, the President issued an order permanently cancelling as of March 1, 1986, the COLA that became effective on December 1, 1985, but that had not yet been paid. See Order, Emergency Deficit Control Measures for Fiscal Year 1986, 51 Fed. Reg. 4291 (1986).
The fifth amendment provides that "private property [shall not be] taken for public use, without just compensation." U.S. Const. amend. V. The dispute is whether the COLA became the "private property" of the plaintiffs on December 1, 1985. We hold that it did not.
Plaintiffs concede that the Constitution does not create a property right to receive the contested COLA. They also concede that no legislative history indicates anything, one way or the other, about a congressional intention to create a property right. Rather, their argument is that the plain meaning of the statute providing for COLAs establishes their property right in the COLA. They rely for that conclusion on the language making December 1, 1985, the date the COLA becomes "effective" and the language providing that "each annuity is stated as an annual amount." Thus, they claim, the 3.1% COLA for a whole year became their ...