JULY 22 (legislative day, JULY 12), 1982.-Ordered to be printed

Mr. JEPSEN, from the Committee on Armed Services,
submitted the following

REPORT

[To accompany S. 1814]

The Committee on Armed Services, to which was referred the bill (S. 1814) to amend title 10, United States Code, to require the Secretary concerned to comply with the terms of certain court orders in connection with the divorce, dissolution, annulment, or legal separation of a member or former member of a uniformed service and which affect the retired or retainer pay of such a member or former member, and for other purposes, reports favorably thereon with an amendment in the nature of a substitute to the text of the bill and recommends that the bill as amended do pass.

COMMITTEE AMENDMENT IN THE FORM OF A SUBSTITUTE

The committee amended the bill by striking out all after the enacting clause and substituting a new bill reflecting changes as recommended by the Committee on Armed Services.

PURPOSE OF THE BILL

The primary purpose of the bill is to remove the effect of the United States Supreme Court decision in McCarty v. McCarty, 453 U.S. 210 (1981). The bill would accomplish this objective by permitting Federal, State, and certain other courts, consistent with the appropriate laws, to once again consider military retired pay when fixing the property rights between the parties to a divorce, dissolution, annulment or legal separation. These courts may now apply such laws to the retired pay of Federal civil servants, Foreign Service personnel and private sector employees.

96-443 O

BACKGROUND AND DISCUSSION

Currently, eight States-Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, and Washington-apply community property principles. The concept of the pool of property available for division on divorce or other dissolution of a marriage (i.e., marital property) in these States is based on French and Spanish Civil Law, rather than on the English common law from which other State marital property laws are derived. In community property States, all property earned by either spouse during the marriage is considered "community property" in which each spouse has a onehalf interest. The general rule is that a pension earned by one party for work performed during the marriage becomes part of the marital property in which each spouse has an interest.

Forty other States and the District of Columbia apply common law principles to the determination and distribution of marital property. An increasing number of these States are now determining that retirement and pension benefits can be deemed part of the marital property in divorce. However, in these juridictions, the concept of an equal interest created by law in marital property does not exist. These States apply a concept known as "equitable distribution" in dividing marital property. Under this approach, the court weighs the equities of each case and divides the property accordingly, not necessarily on a 50/50 basis, but however seems fair under all of the circumstances. Courts in five of the eight community property States also have the discretion to distribute marital property on this basis.

The two remaining States-Mississippi and West Virginia-are presently the only strict "title" States, in which title controls the distribution of marital assets. Upon divorce, pensions in these States remain the property of those who earn them.

In the vast majority of divorce cases, domestic relations courts do not become involved in the financial aspects of divorce. Usually, a privately negotiated property settlement is entered into by the parties and incorporated in the divorce decree. For this reason, there is little information available on the precise extent to which military retired pay has been considered and divided during the divorce process. What information exists, however, indicates that pensions are seldom divided between the parties to a divorce. Instead, the pensioner generally retains current or future annuity benefits and the non-working spouse receives an offsetting award of cash or other property.

However, there is a growing body of State laws and precedents in the area of dividing pensions and retired pay. As of June 26, 1981, case decisions in virtually all community property States, and a number of common law property States employing equitable distribution principles, specifically permitted military retired pay to be considered as an asset of the marriage and subject to division. At least six other States had specifically ruled that military retired pay could not be so considered.

THE MCCARTY U. MCCARTY DECISION

On June 26, 1981, the United States Supreme Court decided the case of McCarty v. McCarty, 453 U.S. 210 (1981), holding that

absent a Federal statute permitting such action, a State court may not order a division of non-disability military retired pay as part of a distribution of community property incident to a divorce proceeding. The Supreme Court examined the military retirement scheme and concluded that the application of State community property laws conflicted with that scheme. According to the Court, the Congress intended military retired pay to be the personal entitlement of the retiree. Thus, the Court reasoned that the application of State community property laws " 'interfere(s) directly with a legitimate exercise of the power of the Federal Government' " reflected in the military retirement scheme. However, the Court left it to the Congress to change the policy reflected by that scheme. Writing for the majority, Justice Blackmun stated:

We recognize that the plight of an ex-spouse of a retired service member is often a serious one . . . Congress may well decide, as it has in the Civil Service and Foreign Service contexts, that more protection should be afforded a former spouse of a retired service member. This decision, however, is for Congress alone. We very recently have reemphasized that in no area has the Court accorded Congress greater deference than in the conduct and control of military affairs. 453 U.S. at 235-236.

PRIOR LEGISLATION SIMILAR TO S. 1814

Until 1975, the Federal Government had refrained from involvement in the circumstances surrounding the divorce of a present or former Government employee or military member. However, in 1975, Public Law 93-647 authorized the Federal Government to recognize a valid State court order garnishing or attaching the salary or retired pay of a present or former military member or Government employee when the individual failed to keep up with alimony or child support payments required by a court ordered divorce settlement. See 42 U.S.C. § 659. The 95th Congress passed Public Law 95-30 which limited the amount of salary or retired pay that can be garnished or attached. A present or former military member or Government employee who is supporting a spouse or dependent can have up to 55 percent of disposable earnings garnished or attached; a person without a spouse or dependents can have up to 65 percent of disposable earnings attached. See 15 U.S.C. § 1673(b); 5 CFR Part 581 (1982).

In 1978, the 96th Congress enacted a separate law, 5 U.S.C. § 8354(j), which is applicable to the retired pay of Federal civil service employees. This law requires the Office of Personnel Management to comply with the terms of a court decree, order, or property settlement in connection with a divorce, annulment or legal separation of a Federal employee. No limitation was imposed on the percentage of retired pay that could be paid out pursuant to such decrees and orders. This law does not apply to military personnel. Finally, the Foreign Service Act of 1980 (Public Law 96-405) entitles the former spouse of a Foreign Service employee to receive up to 50 percent of the employee's retired pay, provided that the former spouse was married for at least 10 years of the employee's Foreign Service career. See 22 U.S.C. §§ 4044 et seq. This right can