B-175781(2), JUL 24, 1972

B-175781(2): Jul 24, 1972

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SO LONG AS HE DETERMINED THAT A PARTICULAR RESIDENCE TRANSACTION IS REASONABLY RELATED TO TRANSFER OF OFFICIAL STATIONS. SAMPSON: WE ARE CONCERNED ABOUT A CERTAIN PROVISION OF THE REGULATIONS COVERING RELOCATION EXPENSES OF EMPLOYEES TRANSFERRING FROM ONE OFFICIAL STATION TO ANOTHER CONTAINED IN CIRCULAR NO. THE AUTHORITY TO PROMULGATE SUCH REGULATIONS WAS TRANSFERRED FROM THE DIRECTOR. THE PARTICULAR PROVISION OF THE REGULATIONS IS SECTION 4.1E OF CIRCULAR NO. THE SETTLEMENT DATES FOR THE SALE AND PURCHASE OR LEASE TERMINATION TRANSACTIONS FOR WHICH REIMBURSEMENT IS REQUESTED ARE NOT LATER THAN ONE (INITIAL) YEAR AFTER THE DATE ON WHICH THE EMPLOYEE REPORTED FOR DUTY AT THE NEW OFFICIAL STATION.

B-175781(2), JUL 24, 1972

PURCHASE OR SALE OF RESIDENCE - EXTENSION OF TIME IN SETTLEMENT - SEC. 4.1E OF OMB CIR. A-56 - RECOMMENDATION FOR REVISION RECOMMENDING AN AMENDMENT TO OMB CIR. A-56 WHICH WOULD PERMIT AN EXTENSION OF INITIAL ONE-YEAR PERIOD FOR SALE OF RESIDENCE BY THE HEAD OF AN AGENCY REGARDLESS OF THE REASON, THEREFORE, SO LONG AS HE DETERMINED THAT A PARTICULAR RESIDENCE TRANSACTION IS REASONABLY RELATED TO TRANSFER OF OFFICIAL STATIONS.

TO MR. ARTHUR F. SAMPSON:

WE ARE CONCERNED ABOUT A CERTAIN PROVISION OF THE REGULATIONS COVERING RELOCATION EXPENSES OF EMPLOYEES TRANSFERRING FROM ONE OFFICIAL STATION TO ANOTHER CONTAINED IN CIRCULAR NO. A-56, ISSUED BY THE OFFICE OF MANAGEMENT AND BUDGET. THE AUTHORITY TO PROMULGATE SUCH REGULATIONS WAS TRANSFERRED FROM THE DIRECTOR, OFFICE OF MANAGEMENT AND BUDGET TO YOU BY EXECUTIVE ORDER NO. 11609, DATED JULY 22, 1971 (EFFECTIVE SEPTEMBER 1, 1971).

THE PARTICULAR PROVISION OF THE REGULATIONS IS SECTION 4.1E OF CIRCULAR NO. A-56 DEALING WITH RESIDENCE TRANSACTIONS WHICH READS AS FOLLOWS:

"TIME LIMITATION. THE SETTLEMENT DATES FOR THE SALE AND PURCHASE OR LEASE TERMINATION TRANSACTIONS FOR WHICH REIMBURSEMENT IS REQUESTED ARE NOT LATER THAN ONE (INITIAL) YEAR AFTER THE DATE ON WHICH THE EMPLOYEE REPORTED FOR DUTY AT THE NEW OFFICIAL STATION, EXCEPT THAT (1) AN APPROPRIATE EXTENSION OF TIME MAY BE AUTHORIZED OR APPROVED BY THE HEAD OF THE AGENCY OR HIS DESIGNEE WHEN SETTLEMENT IS NECESSARILY DELAYED BECAUSE OF LITIGATION, OR (2) AN ADDITIONAL PERIOD OF TIME NOT IN EXCESS OF ONE YEAR MAY BE AUTHORIZED OR APPROVED BY THE HEAD OF THE AGENCY OR HIS DESIGNEE WHEN HE DETERMINES THAT CIRCUMSTANCES JUSTIFYING THE EXCEPTION EXIST WHICH PRECLUDED SETTLEMENT WITHIN THE INITIAL ONE YEAR PERIOD OF THE SALE/PURCHASE CONTRACTS OR LEASE TERMINATION ARRANGEMENT ENTERED INTO IN GOOD FAITH BY THE EMPLOYEE WITHIN THE INITIAL ONE-YEAR PERIOD. THE CIRCUMSTANCES WHICH ARE DETERMINED BY THE HEAD OF THE AGENCY OR HIS DESIGNEE TO JUSTIFY THE EXCEPTION UNDER (2) ABOVE SHALL BE SET FORTH IN WRITING."

THE REGULATIONS CONTAINED IN CIRCULAR NO. A-56 WHEN ORIGINALLY PROMULGATED IN OCTOBER 1966 PERMITTED ONLY ONE EXCEPTION TO THE TIME LIMITATION OF ONE YEAR FOR COMPLETION OF THE SALE OR PURCHASE OF A RESIDENCE. THIS EXCEPTION AUTHORIZED AN EXTENSION OF TIME WHERE THE SETTLEMENT WAS DELAYED BECAUSE OF LITIGATION. IN JUNE 1969 THE REGULATIONS WERE AMENDED TO AUTHORIZE AN EXTENSION OF TIME FOR SETTLEMENT FOR REASONS OTHER THAN LITIGATION IN THE MANNER SET FORTH IN (2) OF THE ABOVE-QUOTED REGULATIONS.

WE UNDERSTAND THE 1969 AMENDMENT WAS PROMPTED BY THE MANY CASES IN WHICH SETTLEMENT COULD NOT BE EFFECTED IN ONE YEAR DUE TO CIRCUMSTANCES ENTIRELY BEYOND THE CONTROL OF AN EMPLOYEE. HOWEVER, IN MAKING THE CHANGE IT IS TO BE NOTED THAT THE CIRCUMSTANCES UNDER WHICH THE EXTENSION COULD BE GRANTED (FOR REASONS OTHER THAN LITIGATION) WERE RESTRICTED TO SITUATIONS WHERE CONTRACTS OF SALE OR PURCHASE OF RESIDENCES ARE EXECUTED WITHIN THE INITIAL ONE-YEAR PERIOD FROM THE TIME AN EMPLOYEE REPORTED TO HIS NEW DUTY STATION. APPARENTLY THE BASIS FOR THE REQUIREMENT THAT A CONTRACT OF SALE OR PURCHASE BE ENTERED INTO DURING THE INITIAL ONE-YEAR PERIOD BEFORE AN EXTENSION BE GRANTED WAS TO ENSURE TIMELY ACTION IN RESIDENCE TRANSACTIONS AND TO SHOW A REASONABLE CONNECTION BETWEEN SUCH TRANSACTIONS AND THE TRANSFER OF OFFICIAL STATION. HOWEVER, OUR EXPERIENCE WITH THE APPLICATION OF THE REGULATIONS SINCE 1969 INDICATES THAT THERE ARE NUMEROUS CASES WHERE EMPLOYEES THROUGH NO FAULT OF THEIR OWN ARE UNABLE TO OBTAIN CONTRACTS TO PURCHASE OR SELL THEIR RESIDENCES WITHIN THE INITIAL ONE YEAR. THIS MAY BE DUE TO MARKET CONDITIONS OR OTHERWISE. WE BELIEVE THE DISALLOWANCE OF EXPENSES IN THESE CASES IS INEQUITABLE AND NOT INTENDED BY THE LAW. THEN THERE ARE OTHER SITUATIONS WHERE CONTRACTS HAVE BEEN EXECUTED IN THE INITIAL YEAR BUT CANCELLED BEFORE EXPIRATION OF SUCH YEAR, AND OUR DECISIONS HAVE HELD THAT UNLESS A VALID CONTRACT IS IN EXISTENCE AT THE END OF THE YEAR NO BASIS EXISTS FOR GRANTING AN EXTENSION OF TIME. BY DECISION OF TODAY, B-175781, WE ARE MODIFYING THAT RULE TO RECOGNIZE THAT A BASIS EXISTS FOR GRANTING AN EXTENSION IN ANY CASE WHEN A CONTRACT HAS BEEN EXECUTED DURING THE INITIAL ONE-YEAR PERIOD REGARDLESS OF WHETHER CANCELLED BEFORE THE EXPIRATION THEREOF.

IRRESPECTIVE OF OUR ACTION ABOVE, WE BELIEVE THE INTENTION OF THE LAW WOULD BEST BE SERVED BY AN AMENDMENT TO THE REGULATIONS WHICH WOULD PERMIT AN EXTENSION OF THE INITIAL PERIOD (NOT IN EXCESS OF AN ADDITIONAL YEAR) BY THE HEAD OF AN AGENCY REGARDLESS OF REASONS THEREFOR SO LONG AS HE DETERMINES THAT A PARTICULAR RESIDENCE TRANSACTION IS REASONABLY RELATED TO A TRANSFER OF OFFICIAL STATION. IF THE HEAD OF AN AGENCY FINDS THAT AN EMPLOYEE HAD PURPOSELY DELAYED THE SALE OR PURCHASE OF A HOUSE FOR REASONS UNRELATED TO HIS TRANSFER, HE COULD REFUSE TO GRANT THE EXTENSION.

ACCORDINGLY, THE MATTER IS REFERRED FOR YOUR CONSIDERATION. WE ENCLOSE COPIES OF SEVERAL OF OUR DECISIONS WHICH REFLECT THE SITUATIONS HERE DISCUSSED.