ON PETITION FOR REVIEW MERIT SYSTEMS PROTECTION BOARD.
Gibbons, Maris and Garth, Circuit Judges.
This case comes before us on a petition for review of a final order of the Merit Systems Protection Board (MSPB) dismissing petitioner's appeal for lack of subject matter jurisdiction.*fn1 We set aside the MSPB's decision that it had no jurisdiction and remand to the MSPB for further proceedings.
The petitioner, Clifton L. Goodrich, is a Grounds Foreman at the Earle Naval Weapons Station in Colts Neck, New Jersey. On January 23, 1980, Goodrich received a memorandum notifying him that his position was being downgraded from Grade 5, Step 5 to Grade 2, with no step, effective January 27, 1980. Attached to the memorandum was a copy of Standard Form 50, Notification of Personnel Action, which described the classification change and notified Goodrich that he was entitled to grade and pay retention for a two year period until January 26, 1982. No reason for the reclassification was given in either the memo or Standard Form 50.
On February 8, 1980 Goodrich appealed his reclassification to the MSPB. On May 16, 1980, at a hearing limited to the issue of the MSPB's jurisdiction,*fn2 Goodrich argued first, that the action against him constituted an "adverse action" which was appealable under 5 U.S.C. § 7513(d);*fn3 second, that the agency had committed a prohibited personnel practice under 5 U.S.C. § 2302(b) by failing to provide him with either the procedural protections of § 7513 or the information relied on by the agency in making the reclassification decision; and third, that he was not given adequate notice as to the reasons for his reclassification and was thereby precluded from opposing it. See, Admin. Record at 42-43. The Department of the Navy (the agency) contended that it was ordered to undertake the reclassification, along with other classification actions, as a result of a directive from the agency's Personnel Management Evaluation Office. Goodrich was entitled to retained grade and pay, and the agency argued that the downgrading was therefore not an adverse action. The MSPB's Presiding Official on June 4, 1980 entered a decision dismissing the appeal for lack of jurisdiction on the ground that a reclassification with retained grade and pay is not an adverse action and is not appealable to the MSPB under 5 U.S.C. § 7513. The MSPB decision relied on section 5366(b), which provides:
For purposes of any appeal procedures . . . or any grievance procedure negotiated under the provisions of chapter 71 of this title --
(1) any action which is the basis of an individual's entitlement to benefits under this subchapter, and
(2) any termination of any such benefits under this subchapter,
shall not be treated as appealable under such appeals procedures or grievable under such grievance procedures.
5 U.S.C. § 5366(b).*fn4 Goodrich thereupon filed a petition for review with the MSPB's Office of Special Counsel, which on October 6, 1980 entered an order denying the petition.*fn5 On February 17, 1981 Goodrich wrote to the MSPB requesting that it reopen his case because the agency had denied him due process and had deliberately withheld information from the Presiding Official at Goodrich's hearing before the MSPB. App. 2. The MSPB responded by letter on May 13, 1981, informing Goodrich that its October 6, 1980 Order was final. App. 6. Thereafter, Goodrich on March 3, 1981 filed his petition for review in this court.*fn6
The critical issue involved in this appeal is whether the MSPB properly determined that it was without jurisdiction to consider an appeal from an agency decision to downgrade an employee, when the employee is entitled to retained grade and pay. Since a federal employee's procedural rights are governed in part by the nature of the agency action taken against him, we must examine the reasons behind the downgrade of Goodrich's position.
The classification of a position*fn7 is the standard by which an employee's compensation, benefits and other personnel decisions are made. Under the Civil Service Reform Act of 1978 (the Act), a Federal agency is allowed to change the Government service grade of positions within its administration. 5 U.S.C. § 5107. Where a position is lowered in grade through no fault of an employee, however, the Act permits the employee to retain the higher grade for a two year period for the purpose of determining compensation and fringe benefits. 5 U.S.C. § 5362.*fn8 In addition, at the end of the two year period, pursuant to 5 U.S.C. § 5363, the employee is entitled to retain the basic rate of pay of his former position.*fn9 Although the downgraded employee retains his basic rate of pay, he does forego periodic salary increases and other benefits enjoyed by employees at the former grade of his position.
In Atwell v. MSPB, 670 F.2d 272 (D.C. Cir. 1981), the District of Columbia Circuit held that Congress intended to preclude appeals to the MSPB of individual downgradings following reclassification where grade and pay retention are available to the employee. Id. at 282. The court, after conducting a thorough examination of the statutory scheme of the Act and its legislative history, concluded that the Act expanded the pay and grade retention benefits which were available prior to the Act, and as a quid pro quo for these rights, Congress intended to eliminate the right of downgraded employees to appeal the individual downgrading decision. Id. at 279.*fn10
The Atwell decision construed two arguably conflicting provisions of the Act. Section 7512 explicitly provides that reductions in grade are appealable actions. 5 U.S.C. § 7512. See note 3, supra. Section 5366(b), however, provides that "any action which is the basis of an individual's entitlement [to grade and pay retention benefits] . . ." is not an appealable action. The Atwell court reconciled these two provisions by reading section 5366 as a limitation on section 7512(3):
The effect of section 5366 is to preclude individual appeals of downgradings made pursuant to position classifications. We conclude that, where pay and grade retention are provided, the downgrades suffered by petitioners are not the sort of "reductions in grade" contemplated under section 7512(3). . . . We believe that the Congress intended that ...