« iepriekšējāTurpināt »
FORMER EMPLOYEES OF THE FEDERAL SUBSISTENCE HOMESTEADS CORPORATIONS
MAY 19, 1937.-Committed to the Committee of the Whole House on the state of the Union and ordered to be printed
Mr. COFFEE of Washington, from the Committee on Claims, submitted the following
[To accompany H. R. 3058]
The Committee on Claims, to whom was referred the bill (H. R. 3058) for the relief of former employees of the Federal Subsistence Homesteads Corporations, having considered the same, report thereon with the recommendation that it do pass.
STATEMENT OF FACTS
The bill provides that in the case of any person who was employed by any corporation, all of the stock of which was owned by the Federal Subsistence Homesteads Corporation of Delaware, and who was transferred to a position in the Department of the Interior with the same or substantially similar duties but at an increase in his rate of compensation, if there have been heretofore withheld or deducted from any amounts otherwise payable to such person out of Government funds, any amount on account of any payment of salary to such person, disallowed or held to have been illegally made under any decision of the Comptroller that such transfer to such position in the Department of the Interior constitute an administrative promotion within the provisions of section 7, as amended and extended, of the TreasuryPost Office Appropriation Act, fiscal year 1934, the Secretary of the Treasury is directed to pay a sum equal to the amount so withheld or deducted. Section 2 of the bill relieves from any liability, to refund or pay to the Government or otherwise discharge, any such amounts, each person referred to in section 1, and each disbursing officer who made said payments of salary referred to in said section.
These claims arise out of a misinterpretation of the law. The subsistence homesteads program was provided for by section 208 of title
II of the National Industrial Recovery Act of June 16, 1934 (48 Stat. 205). The President delegated his authority thereunder to the Secretary of the Interior, who directed the formation of the Federal Subsistence Homesteads Corporation of Delaware. This was a Government corporation and all of the stock was held by the Secretary of the Interior in trust for the United States. The Attorney General of the United States suggested the formation of said corporation for the purpose of carrying on the subsistence homesteads projects.
Under this plan, separate subsidiary corporations were organized for each homestead project undertaken. There were about 30 of them, and although their directors were made up of local residents, their entire stock was owned and held by the Federal corporation. These subsidiary corporations hired the necessary personnel to carry out the projects. Some of the persons so hired were employed at salaries below those provided for in corresponding Government positions, inasmuch as it was believed they would never be considered employees of the Government. Later, however, it became necessary to direct the activities of the corporations from Washington, and a number of the employees were given Government appointments in the Interior Department and the salaries of a good many of them were raised to correspond with salaries of the positions to which they were appointed. When these changes were made the Economy Act of March 3, 1933 (47 Stat. 1515) was still in force and the Comptroller General held that the Subsistence Homesteads corporations were Federal agencies in the "civil branch of the United States Government" within the meaning of the Economy Act. The act prohibited administrative promotions, and the Comptroller General therefore held that these appointments by the Secretary of the Interior and increases in compensation were in contravention of the law. He disallowed payments that were made by the disbursing officers, and the money was either collected back from the payees by the disbursing officers or deducted from salaries that were due.
Favorable consideration of the bill is recommended by the Secretary of Agriculture, who states that the appointments made by the Secretary of the Interior were new appointments and not administrative promotions as held by the Comptroller General. We think the circumstances fairly show that that was the general belief. As the persons involved were ultimately considered Federal employees they were entitled from the first instance then to receive the salary paid to persons who held corresponding positions in the Government service. They were not, however, so paid as employees of the corporations, and in our opinion they are entitled to be so paid from the date of their appointment as employees of the Department of the Interior. The enactment of this bill will accomplish that purpose.
The Comptroller General makes no recommendation on the passage of the bill, and we are not ready to say that his construction of the law was not correct. However, we do feel that this is another case where the technical operations of the United States Government, including various constructions of the law, work a hardship on the persons involved, and relief in the form of legislation by the Congress would be justified. Passage of the bill is accordingly recommended. Attached hereto are reports from the Secretary of Agriculture and the Comptroller General, and other material correspondence.
Hon. AMBROSE J. KENNEDY,
DEPARTMENT OF AGRICULTURE,
Chairman, Committee on Claims, House of Representatives,
Washington, D. C.
DEAR MR. KENNEDY: Receipt is acknowledged of your letter of February 15, 1937, to the Administrator of the Resettlement Administration, enclosing H. R. 3058, and requesting copies of papers dealing with employees of the Subsistence Homesteads Corporations, together with an opinion as to the merits of their claim for relief.
An account of the various events and facts surrounding the origin of the claim of these former Subsistence Homesteads Corporations employees is contained in a letter of February 11, 1936, from the Administrator of the Resettlement Administration to the Honorable William M. Colmer, who introduced H. R. 3058. Two copies of this letter are enclosed herewith. There are also enclosed four decisions of the Comptroller General, referred to in the letter to Mr. Colmer, dealing with the Subsistence Homesteads Corporations and employees thereof. These decisions contain the text of letters prepared by the Resettlement Administration and asking for a review of the audit action in disallowing credit for the salary payments to former Corporation employees.
As indicated in these letters, it was the belief of the Division of Subsistence Homesteads of the Department of the Interior that the transfer of the corporation employees to the Department of the Interior constituted new appointments and not administrative promotions.
All matters giving rise to the claim now embodied in H. R. 3058 occurred prior to the transfer of the Resettlement Administration to the Department of Agriculture by Executive Order No. 7530, of December 31, 1936. However, on the basis of the information derived from Resettlement Administration officials transferred to this Department, I am of the opinion that the relief provided for in H. R. 3058 is necessary and just under the unusual circumstances characterizing the situation of the employees involved.
We assume that your committee does not desire copies of the hundreds of notices of disallowance issued by the General Accounting Office covering each salary payment held to have been unauthorized on the ground that there were forbidden administrative promotions involved. Any further information and data with regard to this matter will be forwarded to your committee as soon as possible. In the meantime, if you desire information with regard to any particular aspect, will you please advise me so that every effort can be made to supply it?
Hon. WILLIAM M. COLMER,
H. A. WALLACE, Secretary.
House of Representatives.
MY DEAR MR. COLMER: This will acknowledge your letter of January 20, 1936, requesting information in connection with the relief bill which you propose to draft to cover the situation created by the rulings of the Comptroller General that appointments of former employees of the Subsistence Homesteads Corporations constituted administrative promotions prohibited by the Economy Act.
For your ready reference I am enclosing herewith copies of the following decisions of the Comptroller General which pertain to cases almost identical with that of Mr. O. Z. Smith, project manager, Richton Resettlement project, Richton, Miss., whose letters you forwarded: (1) Decision A-61949, July 12, 1935; (2) Decision A-61352, July 24, 1935; (3) Decision A-61949, December 21, 1935.
A brief summary of the chronology of the events leading up to the above decisions may be of some assistance to you. On June 16, 1933, the subsistencehomesteads program was provided for under section 208 of title II of the National Industrial Recovery Act of June 16, 1933 (48 Stat. 205, 40 U. S. C. 408). Executive Order No. 6209, of July 21, 1933, the President delegated his authority under said section to the Secretary of the Interior. On December 2, 1933, the Secretary of the Interior issued a departmental order directing the formation of the Federal Subsistence Homesteads Corporation under the laws of Delaware. The stock of this corporation was held exclusively by the Secretary of the Department of Interior in trust for the United States. In most instances a separate subsidiary corporation was organized for each homestead project undertaken.
In order to achieve a decentralization of administrative operations and to enlist the active cooperation of the people in the locality, approximately 30 of such local subsidiary corporations were organized. While the directorate of thees subsidiary corporations was made up of local residents, their entire stock was owned and held by the Federal Subsistence Homesteads Corporation. In Decision A-60329, December 14, 1935, a copy of which is enclosed herewith, the Comptroller General held that the organization of such corporations was not authorized. The Attorney General in an opinion to the Secretary of the Interior, dated October 4, 1933, suggested that "consideration be given to the organization of a Governmentcontrolled corporation for the purpose of carrying on the subsistence-homesteads projects."
These subsidiary homestead corporations hired necessary administrative personnel, such as project managers, disbursing officers, accountants, and stenographers. Some of these persons were employed at salaries below those provided for corresponding positions in Government service, since it was then believed that these persons would never be considered employees of the United States Government. Later it became necessary to handle these activities directly from Washington and a number of the employees of the corporation were given Government appointments in the Department of the Interior. Where the salaries for these appointed positions were higher than the salaries these persons had been receiving, the salaries of the affected employees were correspondingly raised. Where this happened the General Accounting Office, upon auditing the accounts, sent out notices to the disbursing officers stating that these appointments at the salaries regularly paid for such positions constituted administrative promotions prohibited by the Economy Act (sec. 7 of the act of Mar. 3, 1933, 47 Stat. 1515; sec. 24 of the act of Mar. 28, 1934, 48 Stat. 523). This meant that the disbursing officers, upon their personal responsibility, were to recover back from the recipients of these higher salaries the amount of the prohibited increase. Three separate appeals from the action of the audit officers were taken to the Comptroller General. In each instance, as is apparent from the attached decisions, the Comptroller General sustained the action of his audit officers. In some cases, by arrangement with the employees, deductions have been made from salaries by the Government as a result of these decisions. In other cases, the persons have been notified that they must repay to the United States amounts equivalent to the prohibited increases which they received. In all cases the disbursing officers and their bondsmen are considered by the General Accounting Office liable to the United States for the amounts disbursed insofar as they are now held to be unauthorized.
Although the General Accounting Office in each case sends a notice to the disbursing officer involved, the Resettlement Administration, which pursuant to Executive Order No. 7041 of May 15, 1935, has taken over the work of the Subsistence Homesteads Division of the Department of the Interior, has not always received copies of such notices and for that reason our records are not complete. It is, therefore, suggested that, should you desire a complete financial record of all the cases involved, you may secure it upon application to the Comptroller General.
We shall be glad to furnish you, upon request, with any other information which our records may disclose.
Mr. Smith's letters are returned herewith.
COMPTROLLER GENERAL OF THE UNITED STATES,
Hon. AMBROSE J. KENNEDY,
Chairman, Committee on Claims,
House of Representatives.
MY DEAR MR. CHAIRMAN: Further reference is made to your request of February 15, 1937, acknowledged February 17, 1937, for report on bill H. R. 3058, Seventy-fifth Congress, for the relief of former employees of the Federal Subsistence Homesteads Corporations, which provides as follows:
"Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled, That in the case of any person who was employed by any corporation, all of the stock of which was owned by the Federal Subsistence Homesteads Corporation of Delaware, and who was transferred to a position in the Department of the Interior with the same or substantially similar duties but at an increase in his rate of compensation, if there have been heretofore withheld or deducted from any amounts, otherwise payable to such person
out of Government funds, any amount on account of any payment of salary to such person, subsequently disallowed or held to have been illegally made under any decision of the Comptroller General that such transfer to such position in the Department of the Interior constituted an administrative promotion within the provisions of section 7, as amended and extended, of the Treasury-Post Office Appropriation Act, fiscal year 1934, the Secretary of the Treasury is authorized and directed to pay, out of any money in the Treasury not otherwise appropriated, to such person a sum equal to the amount so withheld or deducted.
"SEC. 2. Each person referred to in section 1, and each disbursing officer who made any payments of salary referred to in such section to any such person, is hereby released from any liability to refund or pay to the Government, or otherwise discharge, any amount on account of any such payment of salary to such person, subsequently disallowed or held to have been illegally made under any decision of the Comptroller General that the transfer of such person to such position in the Department of the Interior constituted an administrative promotion within the provisions of section 7, as amended and extended, of the TreasuryPost Office Appropriation Act, fiscal year 1934, and no deduction shall be made from any amount due or payable out of Government funds to any such person or disbursing officer by reason of any such decision."
Section 7 of the act of March 3, 1933 (47 Stat. 1515), as extended through the fiscal year 1935 by title II of the act of March 28, 1934 (48 Stat. 522), enacted by the Congress as an economy measure, provided as follows:
"No administrative promotions in the civil branch of the United States Government or the government of the District of Columbia shall be made during the fiscal year ending June 30, 1934:
The decisions of this office dated July 9, 1935, and January 20, 1936, A-61968, December 18, 1935, A-66264, and December 21, 1935, A-61949, copies of which are enclosed, held that the former subsistence-homestead corporations created under authority of Executive Order No. 6209, dated June 21, 1933, issued pursuant to section 208 of the National Recovery Act of June 16, 1933 (48 Stat. 205), were Federal agencies in the “civil branch of the United States Government" within the meaning of the above-quoted provision of the Economy Act prohibiting administrative promotions, and that the action of the Secretary of the Interior in transferring or reappointing employees of the corporations to positions in the Department of the Interior at increases in compensation was in contravention of law.
While this office had no alternative under the plain terms of the statute but to withhold credit in the accounts of the disbursing officers for the increased compensation resulting from such administrative promotions, it is recognized that the rates paid by the corporations were in most instances below the salary rates authorized under Executive order requiring classification of emergency positions in the Federal service, and that the Secretary of the Interior would have been justified, had it not been for the statutory inhibition against administrative promotions, in fixing initial salary rates of the employees of the corporations transferred or reappointed to the same or similar positions in the Department of the Interior at the higher classification rates otherwise authorized under Executive order.
If the Congress concludes that relief should be granted, enactment of the bill in its present form would satisfactorily accomplish that end.
R. N. ELLIOTT, Acting Comptroller General of the United States.
COMPTROLLER GENERAL OF THE UNITED STATES,
W. L. Conover, assistant treasurer, Houston Gardens, Inc., Houston, Tex., and special disbursing agent, Houston Gardens Project No. 21, has requested review of the audit action of this office disallowing credit for increased compensation payments, as constituting an administrative promotion, to E. B. Pettit, stenographer-clerk, effective May 21, 1934, representing the difference between $75 per month and $1,440 per annum, less 10 percent Economy Act deduction. The disbursing officer reports as follows:
"On February 1, 1934, E. B. Pettit was employed by the Board of Directors of Houston Gardens, Inc., as stenographer-clerk at $75 per month salary. At that time Houston Gardens, Inc., was not operating under Federal procedure and this salary was not based on that of the Government grade for stenographer