B-211388, JANUARY 17, 1984, 63 COMP.GEN. 170

B-211388, JANUARY 17, 1984, 63 COMP.GEN. 170

COMPENSATION - REMOVALS, SUSPENSIONS, ETC. - DEDUCTIONS FROM BACKPAY - OUTSIDE EARNINGS - TRAVEL EXPENSES FROM OUTSIDE EARNINGS EMPLOYEE OF DEPARTMENT OF LABOR WHO SUCCESSFULLY APPEALED HIS REMOVAL BEFORE MERIT SYSTEMS PROTECTION BOARD (MSPB) CONTESTS THE RESULTING BACKPAY AWARD. HE CONTENDS HE IS ENTITLED TO INTEREST ON THE BACKPAY, DEDUCTION OF EMPLOYMENT EXPENSES FROM WAGES EARNED DURING PERIOD OF REMOVAL, AND THAT THE AGENCY'S COMPUTATION RESULTS IN DOUBLE TAXATION. NEITHER THE BACK PAY ACT, 5 U.S.C. 5596 (SUPP. III, 1979), NOR ANY OTHER AUTHORITY PROVIDES FOR PAYMENT OF INTEREST OR DEDUCTION OF EMPLOYEE'S PERSONAL EXPENSES. WE FIND NO EVIDENCE IN THE RECORD OF DOUBLE TAXATION OR OTHER OBJECTIONABLE COMPUTATION BY AGENCY. OFFICERS AND EMPLOYEES - BACK PAY ACT - ATTORNEY FEES EMPLOYEE OF DEPARTMENT OF LABOR WHO PREVAILED ON APPEAL BEFORE MSPB WAS AWARDED ATTORNEY FEES BY THE BOARD UNDER 5 U.S.C. 7701(G)(1) (SUPP. III, 1979). HOWEVER, BOARD REFUSED TO CONSIDER PORTION OF ATTORNEY FEES RELATING TO THE NEGOTIATION OF THE AMOUNT OF THE BACKPAY AWARD, AND THAT SINGLE ISSUE IS BEFORE THIS OFFICE UNDER 5 U.S.C. 5596 WHICH ALSO PROVIDES AUTHORITY FOR THE AWARD OF ATTORNEY FEES. WE HOLD THAT EMPLOYEE IS NOT ENTITLED TO ATTORNEY FEES IN CONNECTION WITH APPEALING AGENCY'S COMPUTATION OF BACKPAY SINCE HE WAS NOT THE "PREVAILING PARTY" ON THIS ISSUE WITHIN THE MEANING OF 5 U.S.C. 7701(G) AND 5 C.F.R. 550.806(C)(1) (1983).

MATTER OF: JACK M. HANING - BACKPAY COMPUTATION - ATTORNEY FEES, JANUARY 17, 1984:

MR. JACK M. HANING, THROUGH HIS ATTORNEY, REQUESTS AN OPINION ON A SERIES OF ISSUES IN CONNECTION WITH THE DEPARTMENT OF LABOR'S COMPUTATION OF HIS BACKPAY AWARD. UNDER THE FOLLOWING ANALYSIS WE ARE SUSTAINING THE DEPARTMENT OF LABOR'S ACTIONS IN COMPUTING THE AMOUNT OF MR. HANING'S BACKPAY AWARD AND REJECTING A CLAIM FOR ATTORNEY FEES RELATING TO THE NEGOTIATION OF MR. HANING'S BACKPAY.

BACKGROUND

ON MAY 22, 1981, MR. HANING WAS REMOVED AS AN EMPLOYEE OF THE DEPARTMENT OF LABOR, OCCUPATIONAL SAFETY AND HEALTH ADMINISTRATION (AGENCY). IN A SUBSEQUENT APPEAL, THE MERIT SYSTEMS PROTECTION BOARD (MSPB) ISSUED A FINAL DECISION AND ORDER DATED JULY 30, 1982, MITIGATING THE REMOVAL TO A 7-DAY SUSPENSION. IN COMPLIANCE WITH THE FINAL MSPB ORDER, THE AGENCY RESTORED MR. HANING TO DUTY ON SEPTEMBER 7, 1982, MAKING THE RESTORATION RETROACTIVE TO MAY 29, 1981.

IT IS THE COMPUTATION OF THE BACKPAY AWARD DUE TO MR. HANING FOR THE PERIOD MAY 29, 1981, THROUGH SEPTEMBER 6, 1982, THAT IS PLACED IN ISSUE HERE. ACTING UPON INFORMATION SUPPLIED BY MR. HANING AND HIS ATTORNEY CONCERNING HIS OUTSIDE EARNINGS DURING THE PERIOD OF THE SEPARATION, THE AGENCY'S PERSONNEL OFFICER ISSUED A DECISION ON JANUARY 13, 1983, DETAILING THE COMPUTATION OF MR. HANING'S BACKPAY AWARD. MR. HANING APPEALED THIS DECISION TO THE AGENCY'S ASSISTANT SECRETARY FOR ADMINISTRATION AND MANAGEMENT-- WHOSE FINAL DECISION ON MR. HANING'S BACKPAY AWARD WAS ISSUED ON MAY 16, 1983. EXPRESSING DISSATISFACTION WITH THE AGENCY'S ACTIONS IN COMPUTING HIS BACKPAY ENTITLEMENT MR. HANING PRESENTED HIS CLAIM TO THIS OFFICE ON MARCH 25, 1983, AND INSTITUTED THE REQUEST FOR ATTORNEYS FEES BY ADDITIONAL CORRESPONDENCE DATED MAY 19, 1983.

BACKPAY COMPUTATION

THE BACK PAY ACT (5 U.S.C. 5596) PROVIDES, GENERALLY, THAT AN EMPLOYEE WHO IS FOUND BY AN APPROPRIATE AUTHORITY TO HAVE UNDERGONE AN UNJUSTIFIED OR UNWARRANTED PERSONNEL ACTION WHICH RESULTS IN THE WITHDRAWAL OR REDUCTION OF ALL OR PART OF HIS PAY, ALLOWANCES, OR DIFFERENTIALS IS ENTITLED TO RECEIVE AN AMOUNT EQUAL TO THE PAY, ALLOWANCES, OR DIFFERENTIALS HE NORMALLY WOULD HAVE RECEIVED, LESS AMOUNTS EARNED BY HIM ELSEWHERE DURING THE PERIOD.

REGULATIONS IMPLEMENTING THE BACK PAY ACT HAVE BEEN PROMULGATED BY THE OFFICE OF PERSONNEL MANAGEMENT IN TITLE 5, PART 550, SUBPART H, OF THE CODE OF FEDERAL REGULATIONS. THESE REGULATIONS PROVIDE THAT AN AGENCY SHALL COMPUTE FOR THE PERIOD COVERED BY THE CORRECTIVE ACTION THE PAY, ALLOWANCES, AND DIFFERENTIALS OF THE EMPLOYEE AS IF THE UNJUSTIFIED OR UNWARRANTED PERSONNEL ACTION HAS NOT OCCURRED, BUT IN NO CASE WILL THE EMPLOYEE BE GRANTED MORE PAY, ALLOWANCES, AND DIFFERENTIALS THAN HE OR SHE WOULD HAVE BEEN ENTITLED TO IF THE UNJUSTIFIED OR UNWARRANTED PERSONNEL ACTION HAD NOT OCCURRED. 5 C.F.R. 550.805(A, B) (1982).

FIRST, MR. HANING POINTS OUT THAT DESPITE THE FACT THAT THE GOVERNMENT AGENCY DID NOT PAY HIM ANY WAGES DURING THE PERIOD OF HIS WRONGFUL SEPARATION, THEY HAVE REFUSED TO AWARD HIM ANY INTEREST ON HIS BACKPAY. WITH REGARD TO THE PAYMENT OF INTEREST ON BACKPAY AWARDS, IT IS A WELL- SETTLED RULE OF LAW THAT INTEREST MAY BE ASSESSED AGAINST THE GOVERNMENT ONLY UNDER AN EXPRESS STATUTORY OR CONTRACTUAL AUTHORITY. SEE FITZGERALD V. STAATS, 578 F.2D 435 (D.C. CIR. 1978); GENE A. ALBARADO, 58 COMP.GEN. 5 (1978); 54 ID. 760 (1975); AND 45 ID. 169 (1965). NEITHER THE BACK PAY ACT NOR ANY OTHER APPLICABLE STATUTE SPECIFICALLY PROVIDES FOR THE PAYMENT OF INTEREST ON RETROACTIVE AWARDS OF BACKPAY RESULTING FROM AN UNJUSTIFIED OR UNWARRANTED PERSONNEL ACTION. SEE FITZGERALD AND VAN WINKLE V. MCLUCAS, 537 F.2D 246 (6TH CIR. 1976), CERT. DENIED, 429 U.S. 1093 (1977). THEREFORE, MR. HANING IS NOT ENTITLED TO RECEIVE INTEREST ON HIS BACKPAY AWARD. SEE ALSO JOHN H. KERR, 61 COMP.GEN. 578 (1982).

SECONDLY, MR. HANING CONTENDS THAT HE SHOULD BE GIVEN CREDIT FOR EXPENSES HE INCURRED IN MITIGATING HIS LOSSES AND OBTAINING SUBSTITUTE EMPLOYMENT BEFORE THE WAGES EARNED DURING THE PERIOD OF REMOVAL ARE OFFSET FROM THE BACKPAY AWARD. MR. HANING REPORTS THAT TO OBTAIN EMPLOYMENT DURING THE INTERIM PERIOD HE TRAVELED TO REMOTE JOB LOCATIONS IN UTAH AND COLORADO. HE ASSUMED TEMPORARY POSITIONS WITHOUT CHANGING HIS PERMANENT RESIDENCE THEREBY INCURRING EXPENSES FOR TRAVEL, LODGING AND MEALS, WHICH, IF SUBTRACTED FROM HIS WAGES, WOULD RESULT IN A SUBSTANTIALLY SMALLER INCOME TO HIM. CONTENDING THAT HIS POSITION IN THIS REGARD WAS ANALOGOUS TO AN INDIVIDUAL ENGAGED IN AN INDEPENDENT BUSINESS ENTERPRISE DURING THE PERIOD OF REMOVAL, MR. HANING CLAIMS THAT SUCH BUSINESS EXPENSES ARE LEGITIMATE DEDUCTIONS FROM HIS WAGES BEFORE MAKING AN OFFSET FROM THE BACKPAY AWARD.

MR. HANING IS NOT ENTITLED TO RECEIVE DIRECT REIMBURSEMENT FOR TRAVEL, LODGINGS AND MEALS, SINCE THERE IS NO PROVISION IN THE BACK PAY ACT OR ITS IMPLEMENTING REGULATIONS FOR THE PAYMENT OF INCIDENTAL EXPENSES INCURRED BY AN EMPLOYEE AS A CONSEQUENCE OF AN UNJUSTIFIED OR UNWARRANTED PERSONNEL ACTION. IT IS CLEAR THAT THE ACT AUTHORIZES ONLY PAYMENT OF AN AMOUNT THE EMPLOYEE WOULD HAVE RECEIVED IF THE ERRONEOUS PERSONNEL ACTION HAD NOT OCCURRED. THEREFORE, ALTHOUGH THE EXPENSES FOR WHICH MR. HANING CLAIMS REIMBURSEMENT MAY HAVE BEEN DUE TO HIS SEPARATION AND SUBSEQUENT REINSTATEMENT, THEY ARE NOT ALLOWANCES MR. HANING WOULD HAVE RECEIVED IF HE HAD NOT UNDERGONE THE ERRONEOUS PERSONNEL ACTIONS. SEE ERNEST F. GONZALES, B-184200, APRIL 13, 1976, AND DAVID C. CORSON, B-182282, MAY 28, 1975.

NOR IS MR. HANING ENTITLED TO DEDUCT THESE PERSONAL EXPENSES FROM HIS INTERIM EARNINGS DURING THE PERIOD OF REMOVAL. THE FEDERAL PERSONNEL MANUAL SUPPLEMENT 990-2, BOOK 550, SECTION S8-6EA)(1), PROVIDES THAT ANY LOSSES SUSTAINED IN A BUSINESS WHICH WAS ESTABLISHED DURING A PERIOD OF SEPARATION MAY BE DEDUCTED FROM OUTSIDE EARNINGS. WE DO NOT FIND THAT MR. HANING'S PERIODS OF EMPLOYMENT DURING THE INTERIM PERIOD CONSTITUTED THE ESTABLISHMENT OF A "BUSINESS" WITHIN THE MEANING OF THE FEDERAL PERSONNEL MANUAL PROVISION. RATHER, WE CONCUR WITH THE AGENCY'S INTERPRETATION THAT THIS PROVISION DEALS WITH THE DEDUCTION OF EXPENSES INCURRED IN THE ESTABLISHMENT OF A BUSINESS BY THE EMPLOYEE DURING THE PERIOD OF SEPARATION, NOT WITH EXPENSES INCURRED DURING EMPLOYMENT BY OTHERS. MOREOVER, IN OUR DECISION 40 COMP.GEN. 479, 481 (1961), WE STATED THAT ALLOWANCES FOR HOTEL, RESTAURANT, TRAVEL, AND OTHER EXPENSES INCURRED IN CONNECTION WITH THE SUCCESSFUL APPEAL OF A SEPARATION, AS WELL AS THE EXCESS COST OF LIVING AT THE PLACE OF INTERIM EMPLOYMENT OVER WHAT THE COST WOULD HAVE BEEN AT THE FORMER EMPLOYMENT PLACE, ARE NEITHER EXPRESSLY NOR IMPLIEDLY AUTHORIZED TO BE CONSIDERED EITHER AS CREDITS TO COMPENSATION OR AS DEBITS AGAINST EARNINGS FROM INTERIM EMPLOYMENT. ACCORDINGLY, MR. HANING'S CLAIM FOR THE DEDUCTION OF EXPENSES FROM HIS INTERIM EARNINGS IS DENIED. WE SHOULD ADD HERE THAT OUR OFFICE HAS NO JURISDICTION TO ISSUE REVENUE RULINGS, AND THE INCOME TAX CONSEQUENCES OF MR. HANING'S ACTION TAKEN DURING THE INTERIM PERIOD TO PRODUCE INCOME ARE MATTERS FOR CONSIDERATION AND DETERMINATION BY THE INTERNAL REVENUE SERVICE.

IN ADDITION TO THESE POINTS, MR. HANING THROUGH HIS ATTORNEY, PRESENTS THE FOLLOWING CONTENTIONS:

THIRDLY, IF YOU WILL READ OUR PRIOR SUBMISSIONS VERY CLOSELY, YOU WILL NOTE THAT THE CALCULATIONS ENGAGED IN BY THE U.S. DEPT. OF LABOR RESULT IN A DOUBLE TAXATION OF MR. HANING'S WAGES IN A NUMBER OF RESPECTS. PROPER CALCULATION, WE SUBMIT, SHOULD NOT ALLOW THIS TO OCCUR, RESULTING IN A LARGER BACK PAY AWARD TO MR. HANING.

THERE ARE OTHER, PERHAPS SIZEABLE, ISSUES (FROM A MONETARY STANDPOINT) RAISED IN OUR PRIOR SUBMISSIONS UPON WHICH WE WOULD ALSO REQUEST YOUR RULING. HOWEVER, MR. HANING'S ONLY PRIOR SUBMISSION TO THIS OFFICE WAS A LETTER OF MARCH 25, 1983, IN WHICH HE STATED HIS INTENTION TO APPEAL THE AGENCY'S COMPUTATION BUT MADE NO LEGAL ARGUMENTS ON ANY BACKPAY COMPUTATIONAL ISSUES. THE ADMINISTRATIVE RECORD DOES SHOW THAT MR. HANING SUBMITTED ARGUMENTS TO THE DEPARTMENT OF LABOR AS LATE AS FEBRUARY 17, 1983, BUT THAT BY LETTER DETERMINATION DATED MARCH 16, 1983, THE AGENCY REJECTED MR. HANING'S CONTENTIONS REGARDING (1) INTEREST, (2) EMPLOYEE EXPENSES, (3) ANNUAL LEAVE AND COMPENSATORY TIME, AS WELL AS (4) MEDICARE, (5) FEDERAL AND STATE TAXES, AND (6) COMPUTATION OF NET BACKPAY. REGARD TO THE TAX ISSUES THE AGENCY, IN THAT LETTER, RESPONDED AS FOLLOWS:

4. MEDICARE

SECTION 278 OF PUBLIC LAW 97-248, THE TAX EQUITY AND FISCAL RESPONSIBILITY ACT OF 1982, EXTENDED MEDICARE COVERAGE TO FEDERAL EMPLOYEES AND REQUIRED THEM TO PAY THE HOSPITAL INSURANCE PORTION OF THE F.I.C.A. TAX ON ALL WAGES PAID AFTER DECEMBER 31, 1982, EVEN THOUGH THE EMPLOYEE EARNED THE PAY PRIOR TO JANUARY 1, 1983. THEREFORE, THE DEDUCTION OF THE MEDICARE TAX FROM MR. HANING'S BACK PAY IS CORRECT.

5. COMPUTATION OF FEDERAL AND STATE TAXES

YOU STATE IN YOUR LETTER THAT MR. HANING'S RETIREMENT, LUMP SUM REIMBURSEMENTS, AND MEDICARE TAX SHOULD BE SUBTRACTED FROM THE TOTAL BACK PAY DUE MR. HANING BEFORE INSTEAD OF AFTER TAXES ARE COMPUTED. PLEASE SEE BELOW THE RECOMPUTATION DONE BY THE OFFICE OF ACCOUNTING, IN WHICH THE LUMP SUM REIMBURSEMENT WAS SUBTRACTED TOGETHER WITH INTERIM NET EARNINGS BEFORE TAX WAS COMPUTED. THE RETIREMENT REFUND AND CONTRIBUTIONS AND THE MEDICARE TAX ARE DEDUCTIONS, NOT INCOME. THEREFORE, THEY ARE NOT SUBTRACTED FROM TOTAL WAGES ON WHICH TAX DEDUCTIONS ARE COMPUTED.

THE AGENCY'S RESPONSIVE EXPLANATION OF MARCH 16, 1983, IS NOT FURTHER CHALLENGED IN THE RECORD BEFORE US. WE FIND NO EVIDENCE OF "DOUBLE TAXATION" OR OTHER OBJECTIONABLE COMPUTATION IN THE AGENCY'S CALCULATIONS, AND WE CONCUR WITH THE ORDER IN WHICH DEDUCTIONS ARE TAKEN AND TAXES ARE COMPUTED. ACCORDINGLY, SINCE THE BURDEN OF PROOF IS ON THE CLAIMANT TO ESTABLISH THE LIABILITY OF THE UNITED STATES AND THE CLAIMANT'S RIGHT TO PAYMENT (4 C.F.R. 31.7 (1983)), WE MUST DENY AND DISMISS THESE GENERALIZED ALLEGATIONS AS UNSUBSTANTIATED.

ATTORNEY'S FEES

FINALLY, MR. HANING CLAIMS "ATTORNEY FEES AND COSTS FOR ALL HOURS CLAIMED BETWEEN THE DATES SEPTEMBER 23, 1982, THROUGH FEBRUARY 10, 1983" RELATING TO THE NEGOTIATION OF MR. HANING'S BACKPAY.

BY DECISION OF MAY 31, 1983, THE MSPB AWARDED ATTORNEY FEES AND COSTS TO MR. HANING IN THE REDUCED AMOUNT OF $6,070.80 IN CONNECTION WITH HIS APPEAL OF HIS REMOVAL. HOWEVER, THE MSPB REFUSED TO CONSIDER THAT PORTION OF MR. HANING'S REQUEST FOR FEES AND COSTS IN THE AMOUNT OF $1,930 WHICH RELATED TO NEGOTIATING THE AMOUNT OF THE BACKPAY AWARD. THE MSPB REASONED THAT:

* * * ALTHOUGH NEGOTIATIONS OVER THE APPROPRIATE BACK PAY AWARD ARE IN SOME SENSE "RELATED" TO THE ORIGINAL APPEAL, THEY ARE MORE PROPERLY THOUGHT OF AS A SEPARATE ACTION PURSUANT TO 5 U.S.C. 5596 AND, ASSUMEDLY, IF APPELLANT PREVAILS ON THIS MATTER, HE MAY REQUEST ATTORNEY FEES IN THE PROPER FORUM PURSUANT TO THAT STATUTE. * * *

UNDER THE PROVISIONS OF 5 U.S.C. 7701(G)(1), THE MERIT SYSTEMS PROTECTION BOARD MAY AWARD ATTORNEY FEES TO EMPLOYEES WHO PREVAIL ON APPEAL WHERE PAYMENT BY THE AGENCY IS DEEMED TO BE "WARRANTED IN THE INTEREST OF JUSTICE." THIS AUTHORITY IN SECTION 7701 IS LIMITED TO THE BOARD, AND REVIEW OR APPEAL OF BOARD DECISIONS IS LIMITED TO THE UNITED STATES COURT OF APPEALS FOR THE FEDERAL CIRCUIT. SEE 5 U.S.C. 7703. OUR OFFICE IS WITHOUT AUTHORITY TO REVIEW DECISIONS OF THE MERIT SYSTEMS PROTECTION BOARD ON EMPLOYEE APPEALS OR REQUESTS FOR ATTORNEY FEES.

THERE IS ADDITIONAL AUTHORITY FOR THE PAYMENT OF ATTORNEY FEES CONTAINED IN THE BACK PAY ACT, 5 U.S.C. 5596, AS AMENDED BY THE CIVIL SERVICE REFORM ACT OF 1978. UNDER THAT AUTHORITY, REASONABLE ATTORNEY FEES MAY BE PAID TO EMPLOYEES FOUND TO HAVE BEEN AFFECTED BY UNJUSTIFIED OR UNWARRANTED PERSONNEL ACTIONS. SEE 5 U.S.C. 5596(B)(1)(A)(II) (SUPP. III 1979). THE FINAL REGULATIONS FOR THE AMENDED BACK PAY ACT WERE ISSUED BY THE OFFICE OF PERSONNEL MANAGEMENT (OPM). 46 FED.REG. 58271, DECEMBER 1, 1981, AND APPEAR IN 5 C.F.R.PART 550, SUBPART H.

IN THE PRESENT CASE, CONSISTENT WITH THE MSPB ORDER OF MAY 31, 1983, WE ARE CONSIDERING THE ISSUE OF ATTORNEY FEES AND COSTS ONLY IN CONNECTION WITH MR. HANING'S APPEAL OF THE COMPUTATION OF HIS BACKPAY AWARD BY THE DEPARTMENT OF LABOR.

UNDER THE PROVISIONS OF 5 C.F.R. 550.805(C)(1) THE PAYMENT OF REASONABLE ATTORNEY FEES SHALL BE DEEMED TO BE WARRANTED ONLY IF SUCH PAYMENT IS IN THE INTEREST OF JUSTICE, AS DETERMINED BY THE APPROPRIATE AUTHORITY, "IN ACCORDANCE WITH STANDARDS ESTABLISHED BY THE MERIT SYSTEMS PROTECTION BOARD UNDER SECTION 7701(G) OF TITLE 5, UNITED STATES CODE.

THE BOARD'S REGULATIONS ISSUED PURSUANT TO 5 U.S.C. 7701(G) AND ESTABLISHING THE STANDARDS FOR AN AWARD OF REASONABLE ATTORNEY FEES ARE CONTAINED AT 5 C.F.R. 1201.37(A) WHICH PROVIDES FOR PAYMENT OF REASONABLE ATTORNEY FEES "IF THE APPELLANT IS THE PREVAILING PARTY AND PAYMENT IS WARRANTED IN THE INTERESTS OF JUSTICE." IN HODNICK V. FEDERAL MEDIATION AND CONCILIATION SERVICE, 4 MSPB 431, 434 (1980), THE BOARD HELD THAT EVEN THOUGH AN APPEAL IS NOT RESOLVED BY ADJUDICATION ON THE MERITS, AN APPELLANT IS THE "PREVAILING PARTY" IF HE OR SHE "OBTAINED ALL OR A SIGNIFICANT PART OF THE RELIEF SOUGHT IN PETITIONING FOR APPEAL" AND THE "RELIEF OBTAINED * * * (WAS) CASUALLY RELATED TO THE INITIATION OF THE APPEAL." IN OUR DECISION HERE WE HAVE DENIED OR DISMISSED EVERY CONTENTION MR. HANING HAS MADE IN APPEALING THE DEPARTMENT OF LABOR'S COMPUTATION OF HIS BACKPAY AWARD. ACCORDINGLY, THERE IS NO LEGAL BASIS UPON WHICH THIS OFFICE CAN AWARD ATTORNEY FEES FOR THE "NEGOTIATION" OF MR. HANING'S BACKPAY AWARD SINCE WE DO NOT FIND THAT HE WAS THE PREVAILING PARTY ON THIS APPEAL WITHIN THE MEANING OF 5 C.F.R. 550.806(C)(1).