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H.R. 11738 is the product of recent realization by the Civil Service Commission that it has long acted without authority of law in suspending payment of civil service retirement annuities earned by federal judges before they became judges and in paying such annuities only when active judges became senior judges. The Commission has now accepted the legal advice of the General Accounting Office, the Department of Defense, and its own general counsel that it cannot do this without new statutory authority. H.R. 11738 seeks to provide such authority. As I understand it, the bill would in no way affect the rights of survivors of judges whose rights vest when the judge's right to an annuity vests by his age and length of prior service, and accumulate from that date. However, the bill would bar payment of any annuity to the judge himself while he lives and draws the salary of his office. His annuity would be impounded.

There are about four general approaches that it would seem are available to the Committee on the pending bill. First, it can report the bill in its present form, in which case it would appear that payments now being made will be stopped when it becomes law, or by October 1, 1976, whichever date is later. Second, the Committee can amend the bill so that it will apply only prospectively to those who become judges after it becomes law. Third, the bill can be amended to permit annuities to be paid to senior judges only, regardless of the vested rights of those who have already earned and are being paid their annuities and who would be left slowly twisting in the wind until such day as they might survive the mortality tables and become senior judges. Fourth, the bill can be rejected, and that is the position of the Judicial Conference of the United States. Permit me now to address you briefly on these alternatives.

First, some comments as to the retroactive nature of the bill in its present form. It is my impression from conversations with Commission officials and from conversations other judges have had with them, that they do not desire that the bill be retroactive. Upon this assumption, therefore, I would trust that you would agree with them and with us and little more need be said about it. I would only emphasize that in America where we believe in fair play that we do not change the rules of the game in the middle of a contest when it seems to be going against us, and that we do not deprive the winner of his success when he has followed the rules and the game is over. But, that is a literal interpretation of what could happen if the retroactive feature of the bill is permitted to stand, barring all annuity payments to a judge after the bill becomes law, even though such an annuity has already been awarded and is being paid according to law. Congress can, of course, change any law, but it too is subject to certain rules and has surrendered sovereignty by statute so that when it makes an inadvertent mistake or breaches a trust, there is a remedy within the judicial system. I assure you, with greatest respect, that the retroactive feature of the bill suffers from several legal disabilities and doubts in that it would violate vested property and contractual rights, deny due process and equal protection of the law and be discriminatory against a small class of people. But, no one working for the Government could be sure that his annuity would be available at the end of the road of active service if this principle of retroactivity is put into effect by H.R. 11738.

The Judicial Department seeks no constitutional confrontation with the Legislative Department, and we trust you seek none with us. Throughout the history of this Nation men of good will, when faced with the possibility of such confrontation, have usually been able to resolve it amicably, and we sincerely believe that to be possible here. As I say, I hope that to be the CSC position as well. Permit me to suggest for your respectful consideration that on line 6, page 2 of the bill, a new sentence be added to read as follows: "Nothing in this section, however, shall bar payment of any annuity to an employee or former member whose entitlement to same has vested before the date of enactment of this amendment.”

I turn now to the second and closely related proposition—that if the bill is to be considered favorably, it also be amended to be prospective only. That is to say, it should affect only those who accept judgeships after it becomes law. This would seem to be dictated by fair play. There are judges whose rights have not entirely vested by reason of the required age, although they have the required service and have made the contributions in good faith on the promise of the statute that they will be entitled to an annuity in due course. The CSC is holding those contributions without payment of interest, ro in some cases has refunded them on the mistaken notion that it should. The resulting chaos is not the fault of the judges who hy this bill are being asked to pay for the CSC error. I must say to you in all candor that I can see no legal impediment to enacting this bill if it is made to apply to those who, in the future, accept judgeships with eyes wide open to the fact that in so doing they will forfeit payment of annuities while they live, but that their survivors will be protected by their contributions after they are gone.

I think that most of the problems which have arisen under this controversial bill really come to a head under this proposition of whether or not it should affect the rights of judges already in office, especially those who are senior judges and those whose rights vested before senior status. I conceded that a plausible case can be made for the concept that annuities should not be paid to reemployed annuitants, if it is done prospectively. Of course, reemployed annuitants do get their annuities now. But, they are offset against their salaries. This cannot be done to judges because of the clause in the Constitution which prohibits reduction of a judge's salary. The bill would get around that by authorizing suspension of the annuity itself. While there are difficulties with this concept, which reflect the position of the Judicial Conference, which I shall address presently, it cannot be said that from the standpoint of pure equity as opposed to other considerations, it would not be fair to make such a ssupension of payment for judges who take office after the rules have been changed, and provided of course that the rights of their survivors are not affected in any way. Absent such prospective application, there are obvious legal difficulties. These can be avoided by a clarifying amendment to follow the one I have already suggested for page 2, line 6, of the bill, and reading : “This amendment shall be effective only as to justices and judges who assume their offices after the effective date hereof."

The same result can be accomplished by the following amendment: On page 3, line 2, strike the period and insert "and to justices or judges taking office after the latter of such dates."

The Committee will recall that in the 93d Congress a new law was enacted (Pub. L. 93-406, 88 Stat. 829, The Employee Retirement Security Act of 1974) whereby workers in the private sector who move from one job to another will not lose their accumulated annuity rights. It would be strange indeed if people who have long worked for the Government should be discriminated against by being accorded less protection. The Committee has been vigilant in recent years in seeing to it that the Government worker has comparability of treatment with privately employed workers. This being so, there is no apparent viable reason to submit some government workers to a different standard because they heed the call to work in a different and constitutionally separate department of Government under a different retirement system.

Third, what about the idea that it is permissible, notwithstanding all the foregoing, to strip such a worker of his vested rights but restore them when he reaches some magic age beyond normal life expectance-such as when he may qualify for senior-judge status? I fear that this makes a mockery of equal justice. It is playing statistical roulette with the mortality table as the gun. It ignores the fact that a handful of judges by reason of early and long Government service have already earned annuities, payment of which is mandated by the law. There has never been any legal basis for payment of a civil service annuity to a senior judge if it could not be paid to an active judge. The Commission now knows this and admits it. Further, payment of Member annuities is prohibited to judges, active or retired, under existing law. 5 U.S.C. $ 8344(B) (1970). This is an unsupportable discrimination. Finally, the principle against dual payment of salary and annuity is the same for an active as for a retired judge because his salary continues in retirement or senior-judge status. The judges really cannot approach this problem severally. The simple and legal answer is to pay them whatever their annuity vests. That is a legally enforceable right. If the right is to be modified by legislation, then it must be done prospectively to all to be legally and morally right.

My remarks have to this point been confined to suggested modifications to the bill to clarify it and assure its legality should the Committee elect to report it. But, I turn now to the basic position of the Judicial Department that the hill should be rejected in toto. The federal judges strongly believe, and sincerely urge you not to renort this bill at all for the following principal reasons:

(1) This bill would discourage individuals experienced in government affairs from going into the Judiciary by requiring a forfeiture of their earned annuities if they do so. Whatever money this will anpear to save, and there is really no way to project it, will be more than offset by the disadvantage to the Nation in depriving it of judges who have accumulated wisdom and expertise in the com

plexities of Government. Some of these judges have gained that experience as Members of Congress. Others have gained it as district attorneys or elsewhere in the Government. In my own case, if I may illustrate the point by personal reference, I have 3212 years of service subject to the CSC retirement system. I would never have taken a judgeship had I thought this commitment to public service on my part would be vitiated after the service was rendered by repeal of the law which was an important inducement for my service. The Nation has an investment, a resource in individuals with such service, and it should not lightly be discounted. There are many lawyers who want to be judges. But, is it wise to restrict such appointments to the independently wealthy or to those with private pension plans and to deny them to experienced government servants by levying a financial penalty upon them if they accept appointment? We find this proposal incredibly discriminatory.

(2) The bill is also unfairly discriminatory and punitive in nature in that it pertains only to civil service annuities of judges. There are thousands of people working full time for the Government who are permitted to draw the social security that they have earned or military retired pay they have earned. Why single out civil service annuities of judges for different treatment? Perhaps no one should be permitted an annuity if he also works. But, such a reform, if that is what it is, should not be accomplished piecemeal. Such dual payments are explicitly permitted by statute. Judges who have contributed to the civil service retirement fund no longer do so when they become judges because they are no longer subject to the civil service retirement law, having moved over into an entirely different department of the Government. Whatever rights they have earned for their contribution and prior service are spelled out in existing law. They only ask that the Government keep its promises, without discrimination. Some decided cases have likened a civil service annuity to an insurance endowment policy. It is bought and paid for and when it matures, payment is due. It makes no difference what other activities the insured may engage in. He has a contract. He has bought the rights under that contract by sweat and tears, if not blood, and certainly with many dollars subtracted from his income, taxed, and turned over to the retirement fund.

(3) The inducement of a civil service annuity is a major factor for a career of government service. The salaries of top government positions are inadequate to the responsibilities, always have been, and probably always will be. But, the retirement system is generous and may really be considered as a part of the compensation. It keeps people in the service because Title 5 of the United States Code (88 8336, 8338) promises that if they remain and make their contributions of time and money they will be paid these annuities. Any breach of that solemn commitment of the Government, written into the law, a breach after the fact, and after the consideration has passed, would be unworthy of a great National. We do not believe you will countenance it and urge you not to do so. The possible consequences of such temptation must be very carefully considered for the longrun effects.

(4) This bill if enacted will not only dissuade experienced government officials from becoming judges, it will encourage resignations which already are at the highest rate in history because of inadequate compensation, now far behind what it was in 1969 in purchasing power. The U.S. Court of Claims has lost three trial judges on this account. There are some judges who, if this bill becomes law, will have to consider carefully whether or not they want to remain on the bench. By resigning and going into the private sector they can draw their annuities. Then other judges will have to be appointed to the vacancies—so where will any public money have been saved ? If government servants pass up judgeships because such appointments will cause them to lose their earned annuities, the Government will save nothing. It is an illusion that this bill will save money. All that will have been accomplished is the loss of judges experienced in government affairs either by resignation or refusal to serve. I will add that the judge most certainly will not be able to keep all of his earned annuity, even if paid. There is the income tax, State and Federal, which will get most of it.

(5) Finally, the relations between Congress and the Judiciary have historically been good. The courts have never been singled out for punitive treatment. We do not wish to see any standing statute which will prove to be a continuing irritant between us. The Constitution does not require a financial forfeiture of any kind as the price of becoming or remaining a judge. We think that now that you have heard our side of this question, Congress will keep its word and pay the annuities that the law it wrote said would be paid to those who, in good faith and by their labors and contributions, earned them. I thank you.

69-540 0-76-3

PREPARED STATEMENT OF JUDGE HOMER THORNBERRY, U.S. COURT OF APPEALS,

FIFTH CIRCUIT

Mr. Chairman and members of the committee, my name is Homer Thornberry. I am presently serving as Judge of the United States Court of Appeals, Fifth Cii uit, and I reside in Austin, Texas.

I thank you for the privilege of appearing before this distinguished Subcommittee of the Committee, one which I once had the honor to serve as a member.

I must say in all deference that I had never contemplated I would appear before the Committee to testify on a proposal which if enacted into law would have such a drastic effect on me and on what I had considered to be my entitlement to retirement benefits as a result of my contributions to the Civil Service Retirement Fund during my fifteen years' service as a Member of the United States House of Representatives.

The letter dated January 28, 1976, to Mr. Kirks, Director of the Administrative Office for the United States Courts, from the Chairman of this Subcommittee advised that these hearings would be held on “H.R. 11299 (also known as H.R. 11738).”

H.R. 11299 was introduced on December 19, 1975. In my opinion, this proposal is much more drastic than the one contained in H.R. 11738, which was not introduced until February 5, 1976. H.R. 11299, the earlier bill, not only would bar the payment of an annuity to any judge or justice of the United States on active service and after retirement or resignation, but by its provision that "No annuity . . . shall accure for any period during which an annuitant is entitled to receive the salary for service” as a judge has been interpreted as barring an annuity to a surviving wife of a judge.

I cannot believe that this Committee would want to enact such a drastic proposal insofar as a surviving wife is concerned.

I now turn to a discussion of H.R. 11738 which I unedrstand is the latest proposal on the subject pending before this Committee.

As I read H.R. 11738, it will bar as of October 1, 1976, or the date of enactment, whichever date is later, any payments of an annuity during any period for which a federal judge is entitled to receive compensation for service as a judge, either active or retired. I am unable to find any provision in H.R. 11738 which contains the prohibition against accrual of survivor benefits as is contained in H.R. 11299. I fervently hope that such a cruel prohibition will not be enacted into law.

H.R. 11738 as now drawn, if enacted, will, of course, prohibit me from drawing an annuity which I have believed I was entitled to receive since the day I began to make contributions to the Civil Service Retirement Fund as a Member of Congress.

And certainly that belief has been unequivocally reinforced by the assurances I have received from those persons responsible for the administration of the Civil Service Retirement Fund.

Mr. Chairman, when I first knew there was a possibility of my being appointed a United States District Judge, I made every effort to ascertain what effect service as a federal judge would have on my entitlement to a Civil Service annuity and that of my wife to a survivor's annuity. I discussed this question with Mr. Zeke W. Johnson, then Sergeant-at-Arms of the House of Representatives, whose office was responsible for handling the contributions by Members to the Civil Service Retirement Fund and their problems concerning it. I felt I should make a determination as to wbether I should leave my contributions to the retirement fund or withdraw them if I should be appointed a judge, in order to invest the funds or purchase insurance or annuity.

After consultation with the Bureau of Retirement and Insurance, United States Civil Service Commission, Mr. Johnson strongly advised me that it would be to my interest to leave my contributions into the Civil Service Retirement Fund intact since I would be eligible for an annuity when I reached the age of 60, reduced of course by an annuity for my surviving wife. Emphasis was placed on the fact that my wife would be protected should I die before reaching age 60 or after retirement. Unfortunately, this was an oral discussion and I do not have a written document to support this advice.

Later, after having been appointed a judge and before my leaving the Congress, I was still concerned about this matter. Therefore, I consulted Mr. Charles Johnson, then counsel to this Committee. On November 21, 1963, Mr. Charles Johnson received a memorandum from Mr. Andrew Ruddock, Director of the Bureau of Retirement and Insurance, confirming the above assurance.

In the interest of time, I will not read the entire memorandum to the Committee, but I furnish a copy as Exhibit A for your information.

In accordance with Mr. Ruddock's November 21, 1963 memorandum, on January 9, 1969, my 60th birthday, at my request the Administrative Office of the United States Courts made inquiry of the Civil Service Commission as to whether I should make application for an annuity as suggested in Mr. Ruddock's memorandum just referred to. By memorandum dated March 10, 1969, Mr. Ruddock, Director of the Bureau of Retirement and Insurance, made the following statement about my right to benefits:

"As pointed out in prior correspondence, the only annuity benefit payable is one effective from January 9, 1969, the Judge's 60th birthday."

Both memoranda from Mr. Ruddock refer to the fact that I could apply for an annuity after my 60th birthday and the Commission would "suspend payment for the benefit until he ‘retires' under the judicial retirement provisions or otherwise separates from his office as judge. If his death should occur prior to filing his annuity application and he is survived by his present wife, she will be entitled to survivor annuity.” I am furnishing the Committee a copy of that memorandum as Exhibit B.

As a result of this last device from the Civil Service Commission, after con. sultation with the Chief of Business Administration, Mr. Darwin H. Anderson, of the Administrative Office of the United States Courts, I decided it would not be advantageous to apply for Civil Service annuity at that time in order to afford my widow maximum benefits. I file with you a copy of the letter from Mr. Anderson, dated May 14, 1969, as Exhibit C. As can be seen from his letter, the Administrative Office of the United States Courts also relied on the assurance from the Civil Service Commission that I would in time be entitled to benefits from the Civil Service Retirement Fund.

Again, on March 8, 1971, the Civil Service Commission responded to further inquiries made by me through the Administrative Office which again substan.. tiated my right and the right of my surviving widow to benefits from the Civil Service Benefit Fund.

After I learned of the introduction of this proposed legislation, I came to the conclusion that for the protection of my rights and those of my wife to benefits from the Civil Service Retirement Fund, I should file my application for annuity based on the second sentence of 5 U.S. Code $ 8338 (b). I did this after discussing the matter on February 6, 1976, with Honorable Robert E. Hampton, Chairman of the United States Civil Service Commission. This discussion concerned this proposed legislation. During the discussion, I asked Chairman Hampton if I should not file the application. His response was that I should file the application and that the application would be approved.

I will not burden the Committee by listing all of the other documents in my file, including one entitled Certificate of Congressional Membership in the United States Civil Service Retirement System—whatever significance it may haveshowing that throughout the last thirteen years I have received continued assurances that I am entitled to an annuity from the Civil Service Retirement Fund and that my wife would be protected. Nowhere is there the slightest hint that accepting appointment as a federal judge would in any way take away that I consider to be vested, contractual rights.

Mr. Chairman and Members of the Committee, I realize that comparisons are not always fair. However, I do believe that I am entitled to suggest to you that it is not fair to aim this discrimination at those who are serving as federal judges alone.

In and out of this City, there are not only former Members of Congress but Civil Service annuitants who are privately employed and drawing private compensation equal to or much greater than you and I receive and who are also receiving an annuity from the Civil Service Retirement Fund. And I would not have it otherwise, since they likewise made contributions to the Fund and were assured they would receive an annuity as provided by law.

Throughout this Government there are retired military personnel who in civilian capacities are receiving government civilian compensation in addition to certain military retirement pay for which they were not required to make monetary contribution.

There are judges who because of prior service as state judges are entitled to receive state retirement benefits in addition to compensation as federal judges.

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