B-152183, AUG. 20, 1963, 43 COMP. GEN. 174

B-152183, AUG. 20, 1963, 43 COMP. GEN. 174

STATES - FEDERAL AID, GRANTS, ETC. - FEDERAL STATUTORY RESTRICTIONS - STATE LAW EFFECT THE REQUIREMENT IN SECTION 331 (C) OF THE TRADE EXPANSION ACT OF 1962, 19 U.S.C. 1971 (C), THAT AGREEMENTS WITH STATE EMPLOYMENT SECURITY AGENCIES PROVIDE THAT UNEMPLOYMENT INSURANCE PAYMENTS WILL NOT BE DENIED OR REDUCED AS A RESULT OF TRADE READJUSTMENT PAYMENTS IS A CONDITION PRECEDENT TO THE STATE AGENCY'S PARTICIPATION IN THE PROGRAM AND, EVEN THOUGH CERTAIN STATES HAVE UNEMPLOYMENT INSURANCE LAWS PRECLUDING AGREEMENTS WITH SUCH A CONDITION, IT MAY NOT BE OMITTED FROM THE AGREEMENTS, AND EXCEPTIONS TO ANY PAYMENTS MADE UNDER AGREEMENTS WHICH DO NOT CONTAIN THE PROVISIONS OF SECTION 331 (C) WOULD BE REQUIRED; HOWEVER, IN THOSE CASES WHERE STATES HAVE HIGHER UNEMPLOYMENT BENEFITS THAN THE TRADE READJUSTMENT BENEFITS THEY WOULD BE FULLY REIMBURSED FOR THE AMOUNT OF THE UNEMPLOYMENT INSURANCE BENEFITS PAID SO THAT PARTICIPATION IN THE TRADE READJUSTMENT PROGRAM WOULD NOT ADVERSELY AFFECT SUCH STATES.

TO THE SECRETARY OF LABOR, AUGUST 20, 1963:

REFERENCE IS MADE TO YOUR LETTER OF JULY 31, 1963, CONCERNING THE ADMINISTRATION OF THE PROGRAM FOR THE PAYMENT OF TRADE READJUSTMENT ALLOWANCES TO WORKERS ADVERSELY AFFECTED BY ACTION TAKEN BY THE GOVERNMENT PURSUANT TO THE TRADE EXPANSION ACT OF 1962, APPROVED OCTOBER 11, 1962, PUBLIC LAW 87-794, 76 STAT. 872, 19 U.S.C. 1801 NOTE.

SECTION 331 (A) OF THAT ACT, 19 U.S.C. 1971 (A), AUTHORIZES THE SECRETARY OF LABOR TO ENTER INTO AGREEMENTS WITH STATE EMPLOYMENT SECURITY AGENCIES WHEREBY THOSE AGENCIES WILL ACT AS AGENTS OF THE UNITED STATES IN THE PAYMENT OF TRADE READJUSTMENT ALLOWANCES TO PERSONS ELIGIBLE THEREFOR. SECTION 331 (C), 19 U.S.C. 1971 (C), REQUIRES THAT EACH SUCH AGREEMENT SHALL PROVIDE ,THAT UNEMPLOYMENT INSURANCE OTHERWISE PAYABLE TO ANY ADVERSELY AFFECTED WORKER WILL NOT BE DENIED OR REDUCED FOR ANY WEEK BY REASON OF ANY RIGHT TO ALLOWANCES UNDER THIS CHAPTER.' PURSUANT TO SUCH REQUIREMENT THE PROPOSED AGREEMENT CONTAINS A PROVISION, DESIGNATED THEREIN AS ARTICLE IV, WHICH READS AS FOLLOWS:

THE AGENCY WILL NOT DENY OR REDUCE UNEMPLOYMENT COMPENSATION OTHERWISE PAYABLE TO AN INDIVIDUAL UNDER THE UNEMPLOYMENT COMPENSATION LAW OF THE STATE OR TITLE IV OF THE SOCIAL SECURITY ACT FOR ANY WEEK BY REASON OF ANY RIGHTS TO ANY ALLOWANCES UNDER THE ACT.

IT IS STATED THAT SOME STATE AGENCIES BELIEVE THAT BECAUSE OF CERTAIN PROVISIONS CONTAINED IN THE LAWS OF THEIR STATES RELATING TO UNEMPLOYMENT INSURANCE THEY ARE UNABLE TO ENTER INTO AN AGREEMENT WHICH CONTAINS THE ABOVE PROVISIONS OF ARTICLE IV. IN VIEW OF SUCH OBJECTIONS, YOU ASK WHETHER YOUR DEPARTMENT MAY DELETE ARTICLE IV FROM THE PROPOSED AGREEMENT AND WHETHER WE WOULD TAKE EXCEPTION TO ANY PAYMENTS TO A STATE PURSUANT TO AN AGREEMENT THAT DID NOT CONTAIN ARTICLE IV.

H.R. 11970, 87TH CONGRESS, WHICH ULTIMATELY WAS ENACTED AS THE TRADE EXPANSION ACT OF 1962, PROVIDED, IN THE FORM APPROVED BY THE HOUSE OF REPRESENTATIVES, THAT THE TRADE READJUSTMENT ALLOWANCES WOULD SUPPLEMENT STATE UNEMPLOYMENT INSURANCE PAYMENTS. IN ACCORDANCE WITH A FORMULA PRESCRIBED THEREIN THE GOVERNMENT WOULD PROVIDE TRADE READJUSTMENT ALLOWANCES WHICH, WHEN ADDED TO THE STATE UNEMPLOYMENT INSURANCE PAYMENTS, THE TOTAL THEREOF WOULD EQUAL THE MAXIMUM AMOUNT AUTHORIZED IN THE BILL.

DURING THE HEARINGS ON THE BILL BEFORE THE SENATE COMMITTEE ON FINANCE A NUMBER OF STATE AGENCIES REGISTERED OPPOSITION TO THE SUPPLEMENTAL PAYMENT ASPECT OF THE BILL. SPOKESMEN FOR THOSE AGENCIES POINTED OUT THAT MANY STATE AGENCIES COULD NOT PARTICIPATE IN THE PROGRAM BECAUSE THE LAWS OF THOSE STATES PROHIBITED THE PAYMENT OF UNEMPLOYMENT INSURANCE TO WORKERS RECEIVING OR SEEKING UNEMPLOYMENT INSURANCE UNDER THE LAW OF ANOTHER STATE OR OF THE UNITED STATES. SEE, FOR EXAMPLE, PAGES 1466 AND 1482 OF THE HEARINGS REFERRED TO ABOVE.

AS A RESULT OF THIS OPPOSITION OR OTHER REASON, THE SENATE COMMITTEE ON FINANCE RECOMMENDED THAT THE BILL BE AMENDED TO CHANGE THE CHARACTER OF THE TRADE ADJUSTMENT ALLOWANCE FROM A FEDERAL SUPPLEMENT TO A FULL FEDERAL PAYMENT. CONCERNING THIS RECOMMENDED CHANGE THE SENATE COMMITTEE STATED THAT---

THE COMMITTEE AMENDED SECTION 323 (G) OF THE BILL IN ORDER TO PROVIDE THAT TRADE READJUSTMENT ALLOWANCES (TRA), INSTEAD OF BEING SUPPLEMENTARY TO STATE UNEMPLOYMENT INSURANCE, WOULD REPLACE SUCH INSURANCE. THE AMENDMENT WOULD PROVIDE FOR THE PAYMENT OF TRA FOR WORKERS ENTIRELY OUT OF FEDERAL FUNDS. TO THE EXTENT THAT A WORKER WHO IS ENTITLED TO TRA FOR A WEEK OF UNEMPLOYMENT IS PAID STATE UNEMPLOYMENT INSURANCE FOR THE SAME WEEK, THE STATE AGENCY WILL BE REIMBURSED THE AMOUNT OF STATE UNEMPLOYMENT INSURANCE IT HAS PAID THE WORKER, BUT NOT MORE THAN THE AMOUNT OF TRA THE WORKER COULD HAVE RECEIVED.

A STATE, HAVING BEEN REIMBURSED, WOULD BE AUTHORIZED TO DISREGARD ANY PAYMENTS AND THE PERIODS OF UNEMPLOYMENT FOR WHICH THEY WERE MADE IN DETERMINING THE EMPLOYER'S RATE OF CONTRIBUTION UNDER THE EXPERIENCE RATING PROVISIONS OF THE STATE LAW, IF THE STATE LAW PROVIDES THAT THE WORKER'S RIGHTS TO UNEMPLOYMENT INSURANCE FOR WHICH REIMBURSEMENT WAS MADE ARE REINSTATED TO HIM. THE LANGUAGE OF THE AMENDMENT ASSURES THAT AFTER TERMINATION OF THE PERIOD OF ELIGIBILITY FOR TRA THE WORKER CANNOT CLAIM,FOR A PERIOD OF UNEMPLOYMENT WITHIN THAT PERIOD OF ELIGIBILITY, STATE UNEMPLOYMENT INSURANCE.

THE EFFECT OF THIS AMENDMENT IS TO SEPARATE THE BENEFITS UNDER THE STATE PROGRAMS FROM THE TRADE READJUSTMENT ALLOWANCES UNDER THE FEDERAL PROGRAM. IN INSTANCES IN WHICH THE STATE PROGRAM HAS BEEN DRAWN UPON BUT A WORKER APPLYING FOR A FEDERAL BENEFIT IS DEMONSTRATED TO HAVE BEEN ELIGIBLE FOR THE FEDERAL PAYMENT, THE STATE WILL BE REIMBURSED AND THE SITUATION RETURNED TO THAT WHICH WOULD HAVE EXISTED HAD THE FEDERAL RATHER THAN THE STATE PROGRAM BEEN DRAWN UP INITIALLY.

SEE PAGE 7 OF S.REPT. NO. 2059, 87TH CONGRESS.

THE AMENDMENT RECOMMENDED BY THE SENATE COMMITTEE WAS APPROVED BY THE SENATE AND WAS ACCEPTED BY THE COMMITTEE ON CONFERENCE AND SUBSEQUENTLY WAS ENACTED INTO LAW.

WITH THIS CHANGE IN THE BILL IT MIGHT APPEAR AT FIRST GLANCE THAT THE REQUIREMENT OF SECTION 331 (C) IS UNNECESSARY AND PERHAPS IN CONFLICT WITH THE CHANGED FEDERAL PAYMENT CONCEPT. HOWEVER, UPON CLOSER EXAMINATION THEREOF, IT IS EVIDENT THAT THE PROVISION CONTAINED IN SECTION 331 (C) IS NECESSARY TO PROTECT THE WORKER WHOSE STATE UNEMPLOYMENT BENEFITS ARE HIGHER IN AMOUNT THAN HIS TRADE READJUSTMENT ALLOWANCES. AS STATED IN A MEMORANDUM ENCLOSED WITH YOUR LETTER, WITHOUT SUCH PROVISION, A STATE COULD DENY AN INDIVIDUAL OTHERWISE ENTITLED TO SUCH HIGHER WEEKLY PAYMENT THE EXCESS OF THE UNEMPLOYMENT INSURANCE OVER THE TRADE READJUSTMENT ALLOWANCE MERELY BECAUSE HE IS SEEKING THE TRADE READJUSTMENT ALLOWANCE.

WHILE IT IS, OF COURSE, THE RIGHT OF EACH STATE TO DETERMINE WHETHER ITS OWN LAWS PERMIT IT TO PARTICIPATE IN THIS PROGRAM, IT WOULD SEEM THAT, AT LEAST IN THOSE CASES WHERE A STATE WOULD BE FULLY REIMBURSED FOR THE AMOUNT OF STATE UNEMPLOYMENT INSURANCE BENEFITS PAID, PARTICIPATION IN THE PROGRAM WOULD NOT ADVERSELY AFFECT THE STATE. FURTHERMORE, THE HOUSE COMMITTEE ON WAYS AND MEANS IN ITS REPORT ON H.R. 11970 STATED THAT:

THIS WORKER ASSISTANCE IS, THEREFORE, IN THE NATURE OF AN ADJUSTMENT TO CONDITIONS BROUGHT ABOUT BY REMOVAL OF THE PRIOR JOB PROTECTION AND IS NOT UNEMPLOYMENT INSURANCE.

SEE PAGE 30 OF H.REPT. NO. 1818, 87TH CONGRESS.

IN ANY EVENT, SINCE THE CONGRESS IN CLEAR AND UNAMBIGUOUS TERMS HAS REQUIRED THE EXECUTION OF AN AGREEMENT SUCH AS THAT CONTAINED IN THE PROPOSED ARTICLE IV AS A CONDITION PRECEDENT TO THE STATE AGENCY'S PARTICIPATION IN THE PROGRAM, WE KNOW OF NO LEGAL BASIS FOR OMISSION OF THE PROPOSED ARTICLE IV FROM AGREEMENTS ENTERED INTO WITH THE STATES PURSUANT TO SECTION 331, 19 U.S.C. 1971. CONSEQUENTLY, WE WOULD BE REQUIRED TO TAKE EXCEPTION TO ANY PAYMENTS MADE PURSUANT TO AN AGREEMENT WHICH DID NOT MEET THE REQUIREMENTS OF SECTION 331 (C).