dissenting:
The appellants, hereinafter referred to as plaintiffs, are two unions and two individuals representing a class of about 100,000 federal blue-collar workers employed in organizations such as Defense Department commissaries and post exchanges and Veterans Administration canteens. These workers are not paid with funds appropriated by Congress, but rather with funds received from other sources, mainly income generated by the organizations employing them. They are known as “prevailing rate employees”, and like blue-collar workers paid with appropriated funds are covered by 5 U.S.C. § 5341, et seq., the prevailing rate statute.
The prevailing rate statute provides:
It is the policy of Congress, that rates of pay of prevailing rate employees be fixed and adjusted from time to time as nearly as is consistent with the public interest in accordance with prevailing rates and be based on principles that—
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(3) The level of rates of pay will be maintained in line with prevailing levels for comparable work within a local wage area; ....
5 U.S.C. § 5341.
Section -5343 of the statute requires that “The pay of prevailing rate employees shall be fixed and adjusted from time to time as nearly as is consistent with the public interest in accordance with prevailing rates.” A procedure for determining prevailing rates is set out in detail.
Applying the mechanism specified by 5 U.S.C. § 5343 the Department of Defense conducted a wage survey and established for the plaintiffs’ class wage schedules based upon prevailing rates. The schedule so established provided for increases ranging from 6.5 per cent to 8.9 per cent in the pay rates for various groups in the plaintiffs’ class. The effective date of the proposed increases was October 22, 1978.
In April 1978 President Carter announced that to combat inflation he would propose in fiscal year 1979 (October 1, 1978 to September 30, 1979) a 5.5 per cent limit on pay increases for federal executives or “white-collar employees.” (14 Weekly Comp, of Pres. Doc. 714). The proposal was transmitted to Congress on October 31, 1978 (14 Weekly Comp, of Pres. Doc. 1480), and neither House having objected, went into effect in October 1978, pursuant to 5 U.S.C. § 5305(c).
Meanwhile, in June 1978, the Senate amended an appropriations bill so as to impose the 5.5 per cent limitation on increases for federal blue-collar workers paid from appropriated funds. This appropriations bill passed the Senate and the House on October 4, 1978 and was signed by the President October 10, 1978. It provided that no funds appropriated for the fiscal year October 1, 1978 — September 30, 1979, “may be used to pay ... any individual in an amount which exceeds the rate ... payable ... on September 30, 1978, by more than 5.5 percent, as a result of any adjustments which take effect during such fiscal year under ... (3) section 5343 of title 5 ... if such' adjustment is granted pursuant to a wage survey (but only with respect to prevailing rate employees described in section 5342(a)(2)(A) of [title 5]).” (P.L. 95-429, 92 Stat. 1001) The last clause of sub*102section (3) excluded the plaintiffs who are not paid from appropriated funds and whose rates of pay are therefore not germane to an appropriations bill.
On January 4,1979 the President issued a “MEMORANDUM FOR THE HEADS OF EXECUTIVE DEPARTMENTS AND AGENCIES” on the subject “Federal Pay and the Anti-inflation Program”. The memorandum stated:
The success of our anti-inflation effort is critical to the economic well-being of the nation. To achieve this success, it is vital that the Government, in managing its own affairs, join with the rest of the nation in a positive commitment to reducing inflationary pressures. Accordingly, I have determined that it would be inconsistent with the public interest for any category of Federal pay rates to be increased by more than 5.5 percent during fiscal year 1979.
To this end, this Administration and the Congress have frozen Federal executive pay altogether, and have placed a 5.5 percent ceiling on pay increases for most Federal workers — those under the General Schedule and related pay systems, the members of the uniformed services, and most Federal wage employees.
However, there are substantial numbers of nonappropriated fund employees and other workers employed by entities of the Federal Government who are not covered by these Government-wide actions, since they are under a variety of relatively small pay systems over which you have pay setting authority. In order to ensure that proposed pay increases for other pay systems do not exceed the máximums for Federal pay that the Congress and I have set, the policy of this Administration is:
In the public interest to control inflation, each officer or employee in the executive branch who has administrative authority to set rates of pay for any Federal officers or employees should exercise such authority, to the extent permissible under law, treaty, or international agreement, in such a way as to ensure that no rate of pay for any category of officers or employees is increased more than 5.5 percent during fiscal year 1979.
In accordance with the President’s memorandum of January 4, 1979 increases in the plaintiffs’ pay were limited to 5.5 per cent, a reduction from the 6.5 to 8.9 per cent increases proposed by the wage survey.
The plaintiffs argued in the District Court and contend on this appeal that once wage schedules reflecting local prevailing rates had been developed the Secretary of Defense had “a nondiscretionary duty to implement the wage schedule figures.” (Br., p. 18) The defendants say the prevailing rate statute, 5 U.S.C. § 5343, “is mandatory in nature” and does not “authorize, permit or in any fashion grant defendant the discretion to refuse to fully implement wage rates established pursuant to an appropriate wage survey. The law permits no discretion, no latitude.” (Br., p. 24) The District Court rejected this argument, saying:
The plain language of both statutes cited by plaintiff states that adjustments to increase wage schedules of prevailing rate government workers are to be made “as nearly as is consistent with the public interest.” 5 U.S.C. §§ 5341, 5343(a) (1976). The inclusion of these words in the statutes indicates that Congress did not intend that prevailing rate government workers automatically receive whatever the labor market in the private sector will bear, but rather that executive branch officials exercise discretion and make policy judgments to determine precisely what rates of wage increase would be wise in light of all relevant factors.
National Federation of Federal Employees, Local 1622 v. Brown, 481 F.Supp. 704, 707, 708 (D.C.1979).
I think the District Court was right. In my judgment the prevailing rate statute means what it says: the executive has discretion, in the public interest, to deviate from wage schedule figures. So long as he does not abuse his discretion I think he does not exceed his authority. In this case I cannot say the President abused his discre*103tion; on the contrary I believe all would agree that his effort to halt the inflationary spiral of wages was a sound reason for exercising discretion to reduce wage schedule rates. He reasonably and properly concluded that the wage schedule rates were inflationary and therefore not “consistent with the public interest.”
The majority holds that “the wage surveys made pursuant to § 5343 are nonbinding to this extent: executives may exercise discretion, ‘consistent with the public interest,’ to alter the rates suggested by the survey, provided that they do so within the confines of the principles of wage' policy Congress established in § 5341.” Given this holding I suppose the majority would conclude that the President properly exercised executive discretion if in his memorandum of January 4,1979 he had recited the principles of 5 U.S.C. § 5341 and then stated that after considering these principles he had determined that a 5.5 per cent raise was all the public interest would permit. I would hold however that the President’s memorandum justified his discretionary action. It explained that in the circumstances this action was necessary “[i]n order to ensure that proposed pay increases for other pay systems do not exceed the máximums for Federal pay that the Congress and I have set,” and “[i]n the public interest to control inflation”. In the circumstances of this case I think this was enough, that the President’s order was within the scope of the “public interest” provisions of sections 5341 and 5343 and that ritualistic citation of those sections was unnecessary.
I do not agree that SEC v. Chenery, 318 U.S. 80, 63 S.Ct. 454, 87 L.Ed. 626 (1943) is apposite, as suggested by the majority. In the Chenery ease the SEC explicitly based its order on “broad equitable principles”. Id., p. 87, 63 S.Ct. at 459. The Supreme Court held that broad equitable principles did not sustain the Commission’s action, and that although the order might have been supported on statutory grounds it must be judged on the basis of the grounds relied upon by the Commission. In our case the President’s action was explicitly based on “the public interest”. This language, which I deem sufficient to invoke the authority of 5 U.S.C. § 5341 and 5343, provides an adequate basis upon which to sustain the Executive Order. Accordingly, the record before this court, unlike that in SEC v. Chenery, shows that the challenged action was based on statutory grounds. Furthermore, no party in this case suggested that the President’s order was not based on the public interest provisions of 5 U.S.C. §§ 5341 and 5343; the question argued was whether the order was within the scope of those provisions.
I would affirm the judgment of the District Court.