Calculating Rate of Pay of Department of Justice Employees
    for Purposes of “ Covered Persons” Determination Under
                    Independent Counsel Act
The term “ rate o f p a y ” in the section of th e Independent C ounsel Act that indicates w hich D epartm ent
   o f Ju stice em p lo y ees are “ covered p erso n s” does not include “ locality-based com parability pay­
   m e n ts” under 5 U S.C §5 3 0 4 .

                                                                                                           April 2, 1997

            M   em orandum       O p in io n   fo r t h e   A c t in g D e p u t y A t t o r n e y G e n e r a l


   Under 28 U.S.C. § 591(b)(4) (1994), the class of “ covered persons” subject
to investigation by an Independent Counsel includes “ any individual working in
the Department of Justice who is compensated at a rate of pay at or above level
III of the Executive Schedule under section 5314 of title 5.” You have asked
whether the term “ rate of pay” in this section includes “ [l]ocality-based com­
parability paym ents” under 5 U.S.C. §5304 (1994). We conclude that it does
not.
   Under provisions in the Ethics in Government Act of 1978, Pub. L. No. 95-
521, §601, 92 Stat. 1824, 1867 (codified as amended at 28 U.S.C. §§591-599
(1994 & Supp. II 1996)) ( “ Act” or “ Independent Counsel Act” ), an Independent
Counsel may be appointed to investigate alleged crimes by certain high-level offi­
cials of the government.1 In some instances, the officials subject to such investiga­
tions are identified by their level o f pay. The Act reflects the judgment that, in
the Department of Justice, officials whose rate of pay equals or exceeds Level
III of the Executive Schedule “ are those . . . closest to the Attorney General
and the President and would, therefore, present the most serious conflict of interest
of an institutional nature if the Department of Justice were to have to investigate
and prosecute serious criminal allegations against any of these individuals.” S.
Rep. No. 95-170, at 53 (1977). The “ covered persons” include the Deputy
Attorney General, the Associate Attorney General, and the Solicitor General. See
5 U.S.C. §5313 (1994 & Supp. II 1996); 

Act also specifies that
the Assistant Attorneys General are “ covered persons,” even though they are paid
less than the amount for Level III. See 28 U.S.C. § 591(b)(4); 5 U.S.C. §5315.
   The Act, however, does not make clear whether the “ rate of pay” that identifies
officials subject to investigation by an Independent Counsel refers to (1) total
pay, including locality-based adjustments, or (2) “ basic pay,” exclusive o f such

   'T he application of the Act to high-level officials is sometimes called the “ mandatory coverage” of the Act
See, e.g , S Rep. No 103-101, at 19 (1993), reprinted m 1994 U S C C A N 748, 763 (“ Senate Report” ) The
Act also allows the Attorney General to seek appointment of an Independent Counsel where she “ determines that
an investigation or prosecution of a person by the Department of Justice may result in a personal, financial, or
political conflict of interest,” 28 U S C § 591(c)(1) (1994), or where the allegation is against a member of Congress,
id § 591(c)(2)

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   Calculating Rate o f Pay o f Department o f Justice Employees fo r Purposes o f “Covered P ersons"
                             Determination Under Independent Counsel Act

adjustments. If locality-based adjustments are excluded, officials in the Senior
Executive Service are not “ covered persons.” The rate of pay for such officials,
excluding locality-based adjustments, can be no higher than $115,700 a year, but
the benchmark for coverage — Level III of the Executive Schedule — is a yearly
pay rate of $123,100. See Exec. Order No. 13033, 61 Fed. Reg. 68,987, 68,992
(1996). On the other hand, if locality-based adjustments are included, officials
in the top three levels of the Senior Executive Service (ES-4, ES-5, and E S -
6) could become “ covered persons,” depending on the area of the country where
they work.2
   We believe that locality-based adjustments do not count as part of the “ rate
of pay” under 28 U.S.C. §591. When Congress provided for locality-based pay
in the Federal Employees Pay Comparability Act of 1990, 5 U.S.C.
§ 5304(d)(1)(A), it aimed at “ pay parity, between Federal employees and their
nonfederal counterparts on a locality-by-locality basis.” H.R. Conf. Rep. No. 101—
906, at 87 (1990) (calling for comparison with the “ rates of pay generally paid
to non-Federal workers for the same levels of work within each pay locality” ).
A locality-based adjustment, therefore, corresponds to the supply-and-demand
conditions in the particular location, rather than the importance of the official
receiving the adjustment or his or her closeness to the Attorney General. As a
consequence, interpreting “ rate of pay” to include locality-based adjustments
would distort the design of the Act. Persons otherwise not covered by the Act
would become “ covered persons” as a result of the location where they work,
rather than the position they occupy. Such a result would not only fail to serve
the purposes of the Act, but would actually be contrary to them as well. A higher-
level official, paid as an E S-6 and working in an area to which a specific locality-
based adjustment would not be applicable, would not be a “ covered person,”
while a lower -level official, paid as an ES-4 and (for example) working in
Houston, would be “ covered.” 3
   Inclusion of locality-based adjustments is also inconsistent with Congress’s
apparent intent, insofar as it can be discerned from the legislative history. When
Congress most recently reauthorized the Independent Counsel Act in 1994, it
assumed that approximately fifty officials would come within the mandatory cov­
erage of the Act. Senate Report at 19, reprinted in 1994 U.S.C.C.A.N. at 764.
If locality-based adjustments were included in the “ rate of pay” under 28 U.S.C.
§ 591, the number of additional “ covered persons” in the Federal Bureau of Inves­
tigation alone would double the total in the government as a whole otherwise
reached by the Act. See Memorandum for Michael R. Stiles, United States

   2 For example, an official paid as an ES-4 who lived m the area of Houston-Galveston-Brazona, Texas, would
receive a locality-based increase of 11 52 percent, which would bring his or her salary to approximately $124,790.
This amount would exceed the $123,100 benchmark Exec Order No 13033,61 Fed Reg. at 68,996
   3 At present, there is a locality-based comparability adjustment of 4.81 percent for all parts of the United States
not covered by specific adjustments. See Exec Order No 13033, 61 Fed. Reg at 68,996 However, an official
paid at the ES-6 level who benefits from this general adjustment would still be making less than the Level 111
benchmark.

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                          Opinions o f the Office o f Legal Counsel in Volume 21


 Attorney, and H. Marshall Jarrett, Chief, Criminal Division, from Steven W. Pelak
 and Carol Fortine, Assistant United States Attorneys, Re: Additional Information
 Regarding the Scope o f the Independent Counsel Statute at 3 (Mar. 18, 1997).
 Such a broad sweep would be inconsistent with Congress’s understanding.
   We appreciate that there is a reasonable argument on the other side. Congress
 adopted the phrase “ rate of pay,” rather than “ rate of basic pay,” a term of
 art specifically meaning “ the rate o f pay . . . before any deductions and exclusive
of additional pay of any other kind, such as locality-based comparability pay­
ments.” 5 C.F.R. § 534.401(b)(3) (1996). Elsewhere, Congress has distinguished
between “ rate of basic pay” and “ total” pay, including comparability payments,
see 5 U.S.C. § 5304(g)(1), or, where it has wanted to include locality-based adjust­
 ments as part of “ basic pay” for specific purposes, such as retirement and insur­
ance, has done so expressly, see 

By not employing the term “ rate
of basic pay,” but using “ rate o f pay” instead, Congress arguably meant to
include comparability payments in determining the coverage of the Act. Indeed,
when Congress set up the current system of locality-based comparability adjust­
ments, it expressly provided that the post-employment restrictions dictating a one-
year “ cooling o f f ’ period would apply to (among others) persons “ employed
in a position . . . for which the basic rate o f pay, exclusive of any locality-based
pay adjustment,” is above a specified level. 18 U.S.C. § 207(c)(2)(A)(ii) (1994
& Supp. II 1996). It enacted no such amendment to the Independent Counsel
Act. Furthermore, the Act uses “ rate of pay” as a proxy for closeness to the
Attorney General, and because salary does not necessarily reflect this closeness,
the fit between the statute’s standard and its purpose already is imprecise. There­
fore, although inclusion of locality-based pay might make the fit even less precise,
this difference would be a matter o f degree, rather than kind.
   We nevertheless believe that, on the better view, locality-based pay should be
excluded. The Act has contained the “ rate of pay” language since its original
passage in 1978. At that time, the provisions establishing a “ pay comparability
system,” see 5 U.S.C. §§5301-5308 (1976), stated that “ [p]ay may not be paid,
by reason of any provision of this subchapter, at a rate in excess of the rate of
basic pay for level V of the Executive Schedule,” 

also Legislative
Branch Appropriation Act, 1979, Pub. L. No. 95-391, §304, 92 Stat. 763, 788-
89 (1978). Under those provisions, therefore, an official’s salary could not rise
to the level at which the Act would apply. Although Congress could have clarified
the issue by using the “ rate of basic pay” formulation in the 1994 reauthorization
(or earlier in the statute creating the current system of locality-based comparability
adjustments), it does not appear to have focused on this matter,4 and the legislative
history (as discussed above) shows an understanding of the Act’s coverage that

   4 The only consideration of locality-based adjustments dunng the passage of the 1994 reauthonzation appears
in connection with an amendment to the section on the pay of staff in an Independent Counsel’s office. 28 U S C
§ 594(c).

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   Calculating Rate o f Pay o f Department o f Justice Employees fo r Purposes o f ‘'Covered Persons ’'
                             Determination Under Independent Counsel Act

is more consistent with the interpretation we adopt than with the contrary one.
We therefore do not believe that much weight can rest on the failure to use the
“ rate of basic pay” language5 or that any fair inference against our conclusion
can be drawn from amendments of other statutes making clear that locality-based
comparability adjustments are, for particular purposes, to be disregarded. Further­
more, although the use of pay as a measure of closeness to the Attorney General
is necessarily inexact, inclusion of locality-based pay in the “ rate of pay” would
greatly magnify the imprecision. An additional extraneous factor— geography —
 would become relevant, and officials at lower pay grades would come within
the Act while others at higher grades would remain outside it. We thus believe
that the argument for including locality-based pay, while reasonable, is ultimately
less than persuasive.

                                                                   RICHARD L. SHIFFRIN
                                                             Deputy Assistant Attorney General
                                                                 Office o f Legal Counsel




  *See also Treasury, Posial Service and General Government Appropriations Act, 1991, Pub L No 101-509,
§ 101(c)(1)(B), 104 Stat 1389, 1442 (using “ rate of pay” to refer to pay under the General Schedule excluding
locality-based adjustments)

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