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B-206219 L/M, NOV 22, 1982, OFFICE OF GENERAL COUNSEL

B-206219 L/M Nov 22, 1982
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CONTENDS THAT THE FAA IS ACTING IMPROPERLY IN ITS EXPRESSED INTENT TO CHARGE INTEREST ON A DEBT WHICH MR. GORDON WAS REMOVED FROM HIS POSITION AS AN AIR TRAFFIC CONTROLLER ON AUGUST 25. THAT APPEAL IS STILL PENDING. THE INDEBTEDNESS WAS APPEALED BY MR. GORDON RECEIVED A NOTICE FROM FAA ACCOUNTING STATING THAT THE INDEBTEDNESS HAD BEEN RECALCULATED AND THAT THE AMOUNT NOW OWED WAS $7. AS YOU ARE AWARE. LEIGHTON ASKED THE COMPTROLLER GENERAL TO ORDER A CESSATION OF DEBT COLLECTION ACTIVITIES UNTIL SUCH TIME AS THE INDIVIDUALS AFFECTED HAVE A MEANINGFUL OPPORTUNITY TO DISPUTE THE ALLEGATIONS AGAINST THEM AT AN EVIDENTIARY HEARING AND AS OTHERWISE PROVIDED BY DUE PROCESS PROTECTIONS. STATING IN PART AS FOLLOWS: "IT IS CLEAR FROM YOUR LETTER THAT THE QUESTION OF LAW WHICH ATTENDS THE VALIDITY OF THE FAA'S TERMINATION OF MR.

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B-206219 L/M, NOV 22, 1982, OFFICE OF GENERAL COUNSEL

PRECIS-UNAVAILABLE

LARRY PHILLIPS, PROFESSIONAL AIR TRAFFIC CONTROLLERS ORGANIZATION:

YOUR LETTER OF APRIL 19, 1982, ON BEHALF OF MR. DALE E. GORDON, A FORMER EMPLOYEE OF THE FEDERAL AVIATION ADMINISTRATION (FAA OR AGENCY), CONTENDS THAT THE FAA IS ACTING IMPROPERLY IN ITS EXPRESSED INTENT TO CHARGE INTEREST ON A DEBT WHICH MR. GORDON OWES TO THE UNITED STATES.

YOU INDICATE THAT MR. GORDON EXECUTED A TRAVEL AND TRANSPORTATION AGREEMENT IN CONNECTION WITH HIS TRANSFER TO TOLEDO, OHIO, ON SEPTEMBER 23, 1980. MR. GORDON WAS REMOVED FROM HIS POSITION AS AN AIR TRAFFIC CONTROLLER ON AUGUST 25, 1981, PRIOR TO COMPLETING THE REQUIRED 12 MONTH TOUR OF DUTY. ON OR ABOUT SEPTEMBER 5, 1981, MR. GORDON FILED AN APPEAL WITH THE MERIT SYSTEMS PROTECTION BOARD (MSPB) CONTESTING HIS REMOVAL BY THE AGENCY, AND THAT APPEAL IS STILL PENDING. BY NOTICE DATED OCTOBER 9, 1981, FAA ACCOUNTING ADVISED MR. GORDON THAT HE OWED THE SUM OF $8,894.36 FOR, "REIMBURSEMENT OF RELOCATION EXPENSES DUE TO FAILURE TO COMPLETE THE SERVICE AGREEMENT SIGNED AT THE TIME OF A PERMANENT CHANGE OF STATION." THE INDEBTEDNESS WAS APPEALED BY MR. GORDON BOTH VIA ORAL REPLY AND WRITTEN BRIEF ON NOVEMBER 19, 1981, AND DECEMBER 18, 1981, RESPECTIVELY. ON JANUARY 4, 1982, THE FAA ACCOUNTING DIVISION ISSUED A DECISION DENYING MR. GORDON'S APPEAL. SUBSEQUENTLY, ON APRIL 19, 1982, MR. GORDON RECEIVED A NOTICE FROM FAA ACCOUNTING STATING THAT THE INDEBTEDNESS HAD BEEN RECALCULATED AND THAT THE AMOUNT NOW OWED WAS $7,439.33. THE NOTICE PROVIDED 30 DAYS IN WHICH TO PAY THE DEBT OR ELSE THE AMOUNT WOULD BE SUBJECT TO INTEREST CHARGES AS PROVIDED BY TREASURY REGULATIONS.

AS YOU ARE AWARE, ON JANUARY 11, 1982, MR. RICHARD J. LEIGHTON FILED AN APPEAL WITH THE COMPTROLLER GENERAL OF THE UNITED STATES ON BEHALF OF MR. JEFFERY P. CARDINAL AND ALL SIMILARLY SITUATED (INCLUDING MR. GORDON) FORMER EMPLOYEES OF THE FAA CONCERNING THE VALIDITY OF THE DEBTS WHICH THESE INDIVIDUALS OWE TO THE UNITED STATES INVOLVING RELOCATION EXPENSES. MR. LEIGHTON ASKED THE COMPTROLLER GENERAL TO ORDER A CESSATION OF DEBT COLLECTION ACTIVITIES UNTIL SUCH TIME AS THE INDIVIDUALS AFFECTED HAVE A MEANINGFUL OPPORTUNITY TO DISPUTE THE ALLEGATIONS AGAINST THEM AT AN EVIDENTIARY HEARING AND AS OTHERWISE PROVIDED BY DUE PROCESS PROTECTIONS.

IN OUR RESPONSE TO MR. LEIGHTON, B-206219, MARCH 15, 1982, WE REFUSED TO TAKE THE REQUESTED ACTION, STATING IN PART AS FOLLOWS:

"IT IS CLEAR FROM YOUR LETTER THAT THE QUESTION OF LAW WHICH ATTENDS THE VALIDITY OF THE FAA'S TERMINATION OF MR. CARDINAL HAS ALREADY BEEN BROUGHT BEFORE THE MERIT SYSTEMS PROTECTION BOARD. IT IS EQUALLY CLEAR THAT SECTION 1205(A)(1) OF TITLE 5, U.S.C. PROVIDES THAT THE BOARD WILL HEAR AND ADJUDICATE ALL MATTERS WITHIN ITS JURISDICTION AND TAKE FINAL ACTION ON SUCH MATTERS, AND THAT SECTION 7703 OF TITLE 5, UNITED STATES CODE, PROVIDES FOR DIRECT JUDICIAL REVIEW OF DECISIONS OF THE BOARD.

"SINCE MR. CARDINAL'S RELOCATION EXPENSE ENTITLEMENT REQUIRES A DETERMINATION OF THE LEGAL STATUS AND EFFECT OF HIS TERMINATION ACTION, AND SINCE THAT SAME DETERMINATION IS NOW BEFORE THE MERIT SYSTEMS PROTECTION BOARD, WE ARE WITHHOLDING CONSIDERATION OF MR. CARDINAL'S CLAIM CONSISTENT WITH THE POLICY OF OUR OFFICE TO DECLINE CONSIDERATION OF MATTERS WHICH ARE PENDING BEFORE COURTS OR APPELLATE BOARDS."

YOU CONTEND NOW THAT IT IS UNJUST FOR THE AGENCY TO IMPOSE AN INTEREST CHARGE ON THE OUTSTANDING DEBT AMOUNT OWED BY MR. GORDON BECAUSE HIS APPEAL IS STILL PENDING BEFORE THE MSPB AND THIS OFFICE WILL NOT INTERCEDE TO SUSPEND GOVERNMENT COLLECTION EFFORTS. NOTING THE ADVERSE ECONOMIC IMPACT ON MR. GORDON AND CONCLUDING THAT "THE COLLECTION OF AN INTEREST PENALTY IS TOTALLY UNWARRANTED AND UNNECESSARY," YOU ASK THE COMPTROLLER GENERAL TO ORDER FAA AND THE OFFICE OF PERSONNEL MANAGEMENT TO CEASE AND DESIST FROM THE COLLECTION OF INTEREST ON ANY ALLEGED INDEBTEDNESS FROM MR. GORDON AND OTHER INDIVIDUALS SIMILARLY AFFECTED UNTIL SUCH TIME AS THE TERMINATION OF EMPLOYMENT APPEALS HAVE BEEN ADJUDICATED BY MSPB, THE COMPTROLLER GENERAL ISSUES A FINAL DECISION ON THE APPEAL FILED BY MR. LEIGHTON, OR THE TERMINATION OF EMPLOYMENT ISSUE HAS BEEN OTHERWISE RESOLVED, WHICHEVER IS APPLICABLE.

UNDER SECTION 5724(I) OF TITLE 5, U.S.C. (1976), AND PARAGRAPH 2 1.5A(1) OF THE FEDERAL TRAVEL REGULATIONS, FPMR 101-7 (MAY 1973), THE RULE IS THAT AN AGENCY MAY PAY AN EMPLOYEE'S TRAVEL, TRANSPORTATION AND RELOCATION EXPENSES ONLY AFTER THE EMPLOYEE HAS AGREED IN WRITING TO REMAIN IN GOVERNMENT SERVICE FOR 12 MONTHS AFTER HIS TRANSFER, UNLESS SEPARATED FOR REASONS BEYOND HIS CONTROL WHICH ARE ACCEPTABLE TO THE AGENCY CONCERNED. IF A SERVICE AGREEMENT IS VIOLATED, THE AGENCY MUST RECOVER ANY AMOUNTS EXPENDED AS A DEBT, UNLESS THE EMPLOYEE IS SEPARATED FOR REASONS BEYOND HIS CONTROL AND ACCEPTABLE TO THE AGENCY. DR. WILLIAM POST, JR., B-196795, JUNE 5, 1980. IT SHOULD ALSO BE NOTED THAT IN SUCH AREAS WHERE THE AUTHORITY FOR A DECISION IS VESTED PRIMARILY IN THE EMPLOYING AGENCY, WE WILL NOT SUBSTITUTE OUR JUDGMENT FOR THAT OF AGENCY OFFICIALS WHO ARE IN A BETTER POSITION TO INVESTIGATE AND RESOLVE THE MATTER, UNLESS THERE IS CLEAR AND CONVINCING EVIDENCE THAT THE AGENCY'S DECISION WAS ARBITRARY OR CAPRICIOUS. SEE LEROY J. PLETTEN, B-197978(1), JUNE 5, 1980. THIS IS ESPECIALLY TRUE IN THE CASE WHERE, AS HERE, THE AGENCY'S DETERMINATIONS CONCERNING THE SEPARATION ACTIONS HAVE BEEN PLACED IN ISSUE BEFORE THE MERIT SYSTEMS PROTECTION BOARD.

THEREFORE, SINCE THE SEPARATION ACTIONS HAVE BEEN BROUGHT BEFORE THE MERIT SYSTEMS PROTECTION BOARD, WE HAVE NO REASON AT THIS TIME TO CHALLENGE THE AGENCY'S DETERMINATION THAT MR. GORDON VIOLATED HIS 12 MONTH GOVERNMENT SERVICE AGREEMENT OR TO CHALLENGE THE AGENCY'S COLLECTION OF AMOUNTS ADVANCED TO MR. GORDON AS A DEBT UNDER 5 U.S.C. SEC. 5724(I) AND REGULATIONS OF THIS OFFICE SET OUT AT PART 102, TITLE 4, CODE OF FEDERAL REGULATIONS (1982).

AS TO THE AGENCY'S EXPRESSED INTENT TO IMPOSE INTEREST ON THE OUTSTANDING DEBT BALANCE, ALTHOUGH THERE IS NO GENERAL STATUTORY PROVISION AUTHORIZING AGENCIES TO ASSESS INTEREST ON DELINQUENT ACCOUNTS, THE COURTS HAVE RECOGNIZED THE RIGHT TO ASSESS INTEREST AS A MEASURE OF DAMAGES FOR DELAY IN PAYMENT OF AN OBLIGATION. ACCORDINGLY, WE HAVE HELD THAT AGENCIES MAY CHARGE INTEREST ON OVERDUE ACCOUNTS. INDEED, 4 C.F.R. SEC. 102.12 PROVIDES THAT:

"IN THE ABSENCE OF A DIFFERENT RULE PRESCRIBED BY STATUTE, CONTRACT, OR REGULATION, INTEREST SHOULD BE CHARGED ON DELINQUENT DEBTS AND DEBTS BEING PAID IN INSTALLMENTS IN CONFORMITY WITH THE TREASURY FISCAL REQUIREMENTS MANUAL."

WE HAVE HELD INTEREST MAY ONLY BE CHARGED, HOWEVER, WHEN (1) THE RATE OF INTEREST IS NOT SO HIGH AS TO CONSTITUTE A PENALTY, (2) THE INTEREST IS ASSESSED ONLY AFTER PROPER NOTICE OF THE DEBT (INCLUDING INTENT TO CHARGE INTEREST) IS GIVEN, AND (3) THE DEBT ITSELF IS LIQUIDATED. 59 COMP.GEN. 359 (1980).

WITH REGARD TO THE RATE OF INTEREST WHICH SHOULD BE CHARGED, PARAGRAPH 8020.20C OF THE DEPARTMENT OF THE TREASURY CASH MANAGEMENT REGULATION (TREASURY FISCAL REQUIREMENTS MANUAL) PROVIDES AS FOLLOWS:

"AUTHORIZED SCHEDULED PAYMENT OF DELINQUENT ACCOUNTS. AGREEMENTS WHEREBY DEBTORS PAY OVERDUE AMOUNTS OVER A PERIOD OF TIME SHOULD BE REVIEWED ON AN INDIVIDUAL BASIS GIVEN AN AGENCY'S AUTHORITY TO EXTEND CREDIT AND IN CONSIDERATION OF THE INTENT OF AN AGENCY'S OPERATIONS AND PROGRAMS. AGENCIES SHOULD APPLY LATE CHARGES FOR THESE ARRANGEMENTS, AND MAY UTILIZE A RATE FOR SUCH CHARGES EQUIVALENT TO A BORROWING RATE OF A TREASURY DEBT INSTRUMENT WITH THE SAME DURATION PERIOD ISSUED AT THE TIME THE ARRANGEMENT IS CONSUMMATED."

WE UNDERSTAND THAT INFORMATION CONCERNING THE CURRENT RATE MAY BE OBTAINED FROM THE BUREAU OF GOVERNMENT FINANCIAL OPERATIONS, DIVISION OF GOVERNMENT ACCOUNTS AND REPORTS, APPROPRIATION AND INVESTMENT BRANCH, DEPARTMENT OF THE TREASURY. SEE PHILIP A. JARMACK, B-206258, JUNE 16, 1982.

ACCORDINGLY, SINCE MR. GORDON'S APPEAL OF HIS SEPARATION ON AUGUST 25, 1981, IS STILL PENDING BEFORE THE MSPB, WE HAVE NO PRESENT REASON TO CHALLENGE THE VALIDITY OF THE LIQUIDATED DEBT AMOUNT ESTABLISHED BY THE AGENCY. WE ALSO HAVE NO LEGAL BASIS TO OBJECT TO THE AGENCY IMPOSING A REASONABLE RATE OF INTEREST ON THE DEBT AFTER FIRST GIVING NOTICE TO MR. GORDON OF ITS INTENT TO CHARGE INTEREST.

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