 Applicability of EEOC Proposed Final Rule to the Department
                      of Veterans Affairs

The Veterans’ Benefits Act is not inconsistent with the proposed Equal Employment Opportunity
   Commission final rule on hearings for federal employees’ EEO complaints, and therefore the
   Department of Veterans Affairs would b e subject to the rule to the same extent as other executive
   branch agencies.

                                                                                           September 28, 1999

                     M e m o r a n d u m O p in io n f o r t h e G e n e r a l C o u n s e l
                                D e p a r t m e n t o f V e t e r a n s A f f a ir s


   This memorandum responds to your request for our opinion whether, in light
of the Veterans’ Benefits Act of 1997, Pub. L. No. 105-114, 111 Stat. 2277 (codi­
fied as amended in scattered sections of 38 U.S.C.) ( “ VBA” ), the Department
of Veterans Affairs ( “ VA” or “ Department” ) would be subject to a proposed
final rule promulgated by the Equal Employment Opportunity Commission
(“ EEOC” or “ Commission” ) concerning the procedures to be followed in
employment discrimination cases against federal sector employers in which the
complainant requests a hearing. See Letter for Randolph D. Moss, Acting Assistant
Attorney General, Office of Legal Counsel, from Leigh A. Bradley, General
Counsel, Department o f Veterans Affairs, Re: Request f o r an Opinion on Whether
the Departm ent o f Veterans Affairs is Subject to E E O C ’s Proposed Final Rule
Revising 29 C.F.R. P art 1614 Insofar as Proposed Sections 29 C.F.R.
§ I614.109(i) and § 1614.110(a) Abrogate the Statutory Authority o f V A ’s Office
o f Employment Discrimination Complaint Adjudication to Make Final, Dispositive
D ecisions as to the M erits of Employment Discrimination Complaints (Apr. 5,
1999) (“ VA Request” ). For the reasons discussed below, we conclude that the
provisions o f the VBA are not inconsistent with the EEOC’s proposed final rule
and that VA would therefore be subject to the proposed final rule to the same
extent as other executive branch agencies.

                                                Background

   A. Title VII and the Proposed Regulation

  Title VII of the Civil Rights A ct of 1964, as amended (codified at 42 U.S.C.A.
§§2000e to 2000e-17 (West 1994 & Supp. 1999)) ( “ Title VII” ), protects most
federal employees against employment discrimination on the basis of race, color,
religion, sex, or national origin. See Equal Employment Opportunity Act of 1972,
Pub. L. No. 92-261, sec. 11, § 717(a), 86 Stat.103, 111 (codified as amended
at 42 U.S.C.A. § 2000e-16(a)) ( “ section 717” ). The statute authorizes aggrieved

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federal employees to sue for relief under certain circumstances. In particular, sec­
tion 717(c) of Title VII provides:

          Within 90 days of receipt of notice of final action taken by a
        department, agency, or unit referred to in subsection (a) of this sec­
       tion, or by the Equal Employment Opportunity Commission upon
       an appeal from a decision or order of such department, agency,
       or unit on a complaint of discrimination based on race, color, reli­
       gion, sex or national origin, brought pursuant to subsection (a) of
       this section, Executive Order 11478 or any succeeding Executive
       orders, or after one hundred and eighty days from the filing of the
       initial charge with the department, agency, or unit or with the Equal
       Employment Opportunity Commission on appeal from a decision
       or order of such department, agency, or unit until such time as final
       action may be taken by a department, agency, or unit, an employee
       or applicant for employment, if aggrieved by the final disposition
       of his complaint, or by the failure to take final action on his com­
       plaint, may file a civil action as provided in section 2000e-5 of
       this title, in which civil action the head of the department, agency,
       or unit, as appropriate, shall be the defendant.

 42 U.S.C. §2000e-16(c) (1994) (emphasis added). This provision’s reference to
 “ final action” by an agency arguably assumes that the agency has a definitive
decisional role regarding administrative complaints apart from the role played by
the EEOC.
    Under current regulations, once an EEOC administrative judge (“ A J” ) has ren­
dered a decision on an EEO complaint, the respondent agency may then reject
or modify the AJ’s decision, including by substituting the agency’s preferred
remedy, see 29 C.F.R. §§ 1614.109-110 (1998), subject to the complainant’s right
to administrative appeal, see 29 C.F.R. §§ 1614.401, 1614.403 (1998). According
to the EEOC, the current system has engendered dissatisfaction based on a concern
that federal agencies are allowed to judge their own behavior. See Proposed Final
Rule (attachment to VA Request) at 21 ( “ The Commission strongly believes that
allowing agencies to reject or modify an administrative judge’s findings of fact
and conclusions of law and to substitute their own decisions leads to an unavoid­
able conflict of interest and creates a perception of unfairness in the federal EEO
system.” ).
   The EEOC has issued a Proposed Final Rule (“ PFR” ) that, among other provi­
sions, would change the current system by limiting the discretion of an agency
to take a “ final action” that modifies the A J’s determination. In the Commission’s
view, the proposed new regulations preserve the opportunity for final agency
action contemplated by section 717(c) of Title VII:

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             Administrative judges will issue decisions on all complaints
          referred to them for hearings. Agencies will have the opportunity
          to take final action on the complaint by issuing a final order within
          15 days of receipt of the administrative judge’s decision. The final
          order will notify the complainant whether or not the agency will
          fully implement the decision of the administrative judge and will
          contain notice of the complainant’s right to appeal to EEOC. If
          the agency’s final order does not fully implement the decision of
          the administrative judge, the agency must simultaneously file an
          appeal of the decision with EEOC. In this way, agencies will take
          final action on complaints referred to administrative judges by
          issuing a final order, but they will not introduce new evidence or
          write a new decision in the case.

PFR at 2 1 -2 2 .1

  B.    The Veterans’ Benefits Act of 1997 and VA’s Objection to the Proposed
Regulation

  Unlike other executive branch departments and agencies, VA’s system for the
processing of employment discrimination complaints is governed by an agency-
specific statute, the Veterans’ Benefits Act of 1997. The question here is whether
EEOC’s proposed regulation conflicts, not with the “ final action” reference in
Title VII itself, but with a provision of the VBA that creates a new office within
the Department of Veterans Affairs and authorizes it to make the “ final agency
decision within the Department on the merits of any employment discrimination
complaint.” VBA, Sec. 102(a)(1), §319(b)(l), 111 Stat. at 2280. You contend
that the EEOC lacks authority to limit VA’s latitude in taking final action on
complaints because the VBA uniquely reserves to VA’s Office of Employment
Discrimination Complaint Adjudication the authority to make final decisions on
EEO complaints involving VA. V A Request at 3.
  Congress enacted the VBA in response to complaints that VA’s complaint adju­
dication system did not adequately protect victims of sexual harassment.2 The

   ‘ W e offer no opinion whether the EEOC’s PFR is consistent with Title v n and otherwise lawful, and instead
consider only whether, assum ing the PFR is lawful under Title VII, VA alone is exempt from its provisions by
virtue of the VBA. The EE O C ’s current proposal modifies an earlier one that the EEOC has since abandoned.
See PFR at 20-21 A num ber o f executive branch agencies objected to the earlier proposal on several grounds,
including that it would be inconsistent with the references in section 717(c) of Title VII to a “ final action” by
the agency as a prerequisite to a civil suit. See id. at 20 The Commission, without agreeing to the objecting agencies’
interpretation o f section 717(c) and without seeking a legal opinion from this Office, ‘‘decided to revise the proposal
in order to make needed improvements in the procedures while recognizing the concerns expressed by the agencies ”
Id. at 21.
   2 See, e g , H.R Rep. No 105-292, at 5 (1997) (reporting conclusion ‘‘that a culture of tolerance of sexual harass­
ment and abusive behavior exists at certain V A facilities, and that the policy of ‘zero tolerance’ of sexual harassment
is insufficient to address these problems” ), see also David Dahl, VA M ust Get Tough on Harassment, St Petersburg


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Act generally directs the Secretary of Veterans Affairs to “ take steps to ensure
that the [complaint resolution] system is administered in an objective, fair, and
effective manner and in a manner that is perceived by employees and other
interested parties as being objective, fair, and effective.” VBA, sec. 101(a)(1),
§ 5 16(a), 111 Stat. at 2278. To further that goal, Congress created a new office
within VA, the Office of Employment Discrimination Complaint Adjudication
(“ OEDCA” ), to act as a quasi-independent adjudicator of employment discrimina­
tion complaints against the Department. Id. sec. 102(a)(1), § 319, 111 Stat. at 2280.
The VBA provides that the Director of OEDCA “ reports directly to the Secretary
or the Deputy Secretary concerning matters within the responsibility of the
Office,” and “ is responsible for making the fin al agency decision within the
Department on the merits of any employment discrimination complaint filed by
an employee, or an applicant for employment, with the Department.” Id. sec.
102(a)(1), § 319(a)(3), (b)(1) (emphasis added).3
   You argue that the EEOC lacks authority to limit VA’s latitude in taking final
agency action on complaints because the VBA uniquely reserves to VA’s OEDCA
the authority to make final decisions on EEO complaints involving VA. You assert
that the provisions of the VBA that make the director of OEDCA “ responsible

Times, Nov II, 1997, at 3A, available in 1997 WL 14076191 (“ Alarmed by the case o f a sexual harasser .
Congress on Monday passed a bill lhat forces the Department o f Veterans Affairs to set up some of the strictest
anti-harassment measures in the government The legislation, approved over the objections of the VA, creates an
office to hear employee complaints and empowers Congress and an outstde auditor to oversee the department’s
performance in policing harassers. Congress acted after learning that [a] North Carolina VA hospital director
was transferred to [another facility], with a six-figure salary, even though a VA investigation found he sexually
harassed an employee and spoke offensively to two others.” ).
   3 The full text o f the provision establishing the OEDCA follows'
Office of Em ploym ent D iscrim ination C om plaint A djudication
      (a)(1) There is in the Department an Office o f Employment Discrimination Complaint Adjudication. There
      is at the head o f the Office a Director.
       (2) The Director shall be a career appointee in the Senior Executive Service.
        (3) The Director reports directly to the Secretary or the Deputy Secretary concerning matters within
     the responsibility o f the Office.
    (b)(1) The Director is responsible for making the final agency decision within the Department on the merits
    of any employment discrimination complaint filed by an employee, or an applicant for employment, with
    the Department. The Director shall make such decisions in an impartial and objective manner.
      (2) No person may make any ex parte communication to the Director or to any employee of the Office
    with respect to a matter on which the Director has responsibility for making a final agency decision
    (c) Whenever the Director has reason to believe lhat there has been retaliation against an employee by
    reason o f the employee asserting nghts under an equal employment opportunity law, the Director shall
    report the suspected retaliatory action directly to the Secretary or Deputy Secretary, who shall take appro­
    priate action thereon
    (d)(1) The Office shall employ a sufficient number of attorneys and other personnel as are necessary to
    carry out the functions o f the Office Attorneys shall be compensated at a level commensurate with attorneys
    employed by the Office o f the General Counsel.
      (2) The Secretary shall ensure that the Director is furnished sufficient resources in addition to personnel
    under paragraph (1) to enable the Director to carry out the functions of the Office in a timely manner
        (3) The Secretary shall ensure that any performance appraisal o f the Director of the Office of Employment
    Discrimination Complaint Adjudication or o f any employee of the Office does not take into consideration
    the record o f the Director or employee in deciding cases for or against the Department
38 U S .C §319 (Supp ill 1997).


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for making the final agency decision within the Department on the merits of any
employment discrimination complaint” would exempt VA from the operation of
the EEOC’s proposed new procedural rules even if those rules lawfully bind other
federal agencies. In your view, “ the adjudication authority granted to the
[OEDCA] Director in Section 102 [of the VBA] cannot be limited in any way
by EEOC regulations!,] which m ay be inconsistent with the statutory grant of
dispositive authority provided to the Director of OEDCA.” VA Request at 3. For
the reasons set forth below, we conclude that the proposed EEOC rule is not
inconsistent with section 102 of the VBA.

                                       Discussion

  Assuming as you do for purposes of your request that the Proposed Final Rule
permits agencies in general to take sufficient final action to comply with section
717(c) o f Title VII, there is no reason to conclude that such opportunity for final
action would be insufficient under the VBA. Put differently, nothing in the VBA’s
reference to a “ final agency decision” suggests that the VBA reserves to VA
broader or more inviolate decisional authority than other agencies are assumed
to have by virtue of Title VII’s references to agencies’ “ final action.”
   W e have found nothing in the statute or legislative history to suggest that Con­
gress intended the Director of OEDCA to be more independent of EEOC regula­
tion than the officials of other executive branch agencies responsible for taking
final agency action on employment discrimination complaints. To the contrary,
the House Report explicitly stated that “ [t]he OEDCA is expected to enjoy a
level o f independence comparable to that of administrative law judges employed
by other federal agencies.” H.R. Rep. No. 105-292, at 8. That statement indicates
that the enactment of the VBA was intended as a remedial measure to address
a particular problem in VA’s employment discrimination complaint resolution
system by reallocating and insulating EEO functions within the agency; the VBA
was not meant to shield that system against regulation by the EEOC on the same
basis as the Commission regulates the systems within other executive branch agen­
cies.
  It is consistent with the general intent of Congress to read the VBA as providing
OEDCA with independence within VA, and not as carving out an exception to
procedures mandated by the EEOC. It appears that both the VBA and the EEOC’s
Proposed Final Rule are motivated to some extent by the same concern: an
employment discrimination complaint resolution system that allows an entity to
judge its own actions is likely to be perceived as biased against complaining
employees. In its report on the VBA, the House Committee on Veterans’ Affairs
described the fundamental problem that prompted the remedial legislation:

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          The [Veterans’ Affairs Oversight and Investigations] Sub­
       committee has concluded that a culture of tolerance of sexual
       harassment and abusive behavior exists at certain VA facilities, and
       that the policy of “ zero tolerance” of sexual harassment is insuffi­
       cient to address these problems. Consequently, the Committee
       believes it is critical for VA to establish and maintain an EEO com­
       plaint resolution and adjudication system that is both in fact and
       in the perception of VA employees fair, impartial and objective.
       The complaint process should be completely free and independent
       of undue influence, and the appearance thereof, from supervisors,
       line managers or directors. Objectivity and fairness should permeate
       the complaint process, from its initial informal stages through the
       Department’s final agency decisions. Accordingly, the Committee
       has concluded that the processing of unlawful discrimination com­
       plaints should occur outside the particular facility where the alleged
       discriminatory conduct was said to have arisen, and that final
       agency decisions on the merits of a complaint should be made by
       a quasi-independent entity, the Office of Employment Discrimina­
       tion Complaint Adjudication (OEDCA). The OEDCA would be
       headed by a Director who would report directly to the Secretary
       of Veterans Affairs or the Deputy Secretary. In addition, the Sec­
       retary should provide a work place free of harassment and discrimi­
       nation by ensuring that employees and managers alike receive the
       education and training necessary for proper behavior in the work­
       place. The Secretary should be held responsible for ensuring that
       employees and managers are accountable for their conduct and
       behavior.

H.R. Rep. No. 105-292, at 5.
  Part of the specific problem revealed at the hearings on the bill was that VA
employees perceived the VA employment discrimination complaint resolution
system as unfair. VA employees feared that their directors, who were also their
EEO officers, would not impartially evaluate EEO complaints, and would use their
supervisory authority to retaliate against employees for complaining. The House
Report explains:

      The Committee believes that removing the facility director from
      [EEO] duties would address the concern among VA employees that
      an employee who files an EEO complaint is, in effect, making a
      claim against the facility director. Some VA employees who have
      been discriminated against believe that it would be futile to file
      an EEO claim because the facility director would oppose the claim

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         as reflecting poorly on management. Consequently, too many VA
         employees fear that if they file an EEO claim, not only is it unlikely
         to be resolved in their favor, but they might be punished by the
         facility management via transfer, demotion or other forms of
         retaliation.

H.R. Rep. No. 105-292, at 6.
   Congress in the VBA responded to those problems by separating the function
of VA review of EEO complaints from the chain of supervisory authority over
VA employees. In describing “ [t]he operating independence of the OEDCA” as
“ its most important feature,” H.R. Rep. No. 105-292, at 8, the House Committee
on Veterans’ Affairs referred exclusively to the OEDCA’s independence from
VA’s Office of General Counsel ( “ OGC” ) and made no reference to independ­
ence from regulation by the EEOC. The division of responsibility between the
OEDCA and the OGC that the VBA established could continue under the
Commission’s PFR.
   You base your argument in favor of VA independence from EEOC procedures
on the fact that, whereas section 101 of the VBA explicitly provides that “ [t]he
provisions of this section shall be implemented in a manner consistent with proce­
dures applicable under regulations prescribed by the Equal Employment Oppor­
tunity Commission,” VBA sec. 101(a)(1), § 516(h), 111 Stat. at 2279, nothing
in section 102 of the VBA, which established OEDCA, similarly refers to EEOC
regulations, VBA sec. 102(a)(1), §319, 111 Stat. at 2280. See VA Request at
2-3. We draw a different conclusion from that text and the related legislative
history.
   Section 101 of the VBA addresses VA’s system for handling employment
discrimination complaints in general terms; section 102 addresses a particular
aspect of that system. One of the “ provisions” that section 101 directs be “ imple­
mented in a manner consistent with procedures applicable under regulations pre­
scribed by the Equal Employment Opportunity Commission” is a general require­
ment that the Secretary establish and administer an EEO complaint resolution
system that is, and is perceived to be, “ objective, fair and effective.” 4
   The best interpretation of section 101 ’s reference to “ the employment discrimi­
nation complaint resolution system within the Department’’ includes the functions
of the OEDCA established by section 102. Thus, despite the fact that section 102
of the VBA does not reiterate the requirement that OEDCA employ procedures
consistent with EEOC regulations, section 101 effectively requires the Secretary

 4 The pertinent VBA provision states.
    The Secretary shall provide that the employment discrimination complaint resolution system within the
    Department be established and administered so as to encourage timely and fair resolution o f concerns
    and complaints. The Secretary shall take steps to ensure that the system is administered in an objective,
    fair, and effective manner and in a m anner that is perceived by employees and other interested parties
    as being objective, fair, and effecuve
VBA, sec. 101(a)(1), § 516(a), 111 Stat. at 2278.


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        Applicability o f EEOC Proposed Final Rule to the Department o f Veterans Affairs


to ensure that OEDCA, as an important component of the Department’s employ­
ment discrimination complaint resolution system, discharges its responsibilities
“ in a manner consistent with procedures applicable under regulations prescribed
by the Equal Employment Opportunity Commission.”
   This interpretation is consistent with the overall intent of the VBA’s drafters.
Congress, presented with the problem that VA’s system for resolving employment
discrimination complaints was perceived as unfair due to bias or a perception of
bias by Department EEO officials, sought to amend VA’s system to better ensure
impartiality. Nothing in the legislative history of the VBA suggests that Congress
was seeking to give VA a unique exemption from the otherwise applicable regula­
tions of the EEOC.

                                         Conclusion

  For the reasons discussed above, we conclude that the Veterans’ Benefits Act
of 1997 does not exempt VA from the EEOC’s proposed final rule.

                                                          CORNELIA T.L. PILLARD
                                                      Deputy Assistant Attorney General
                                                          Office o f Legal Counsel




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