Richard E. LUBOW, et al., Appellants v. UNITED STATES DEPARTMENT OF STATE, et al., Appellees.
No. 13-5057.
United States Court of Appeals, District of Columbia Circuit.
Argued Sept. 12, 2014. Decided April 17, 2015.
783 F.3d 877
Alan Burch, Assistant U.S. Attorney, argued the cause for appellees. With him on the brief were Ronald C. Machen Jr., U.S. Attorney, and R. Craig Lawrence, Assistant U.S. Attorney. Mercedeh Momeni, Assistant U.S. Attorney, entered an appearance.
Before: GARLAND, Chief Judge, SRINIVASAN, Circuit Judge, and SENTELLE, Senior Circuit Judge.
Opinion for the Court filed by Circuit Judge SRINIVASAN.
Concurring opinion filed by Senior Circuit Judge SENTELLE.
SRINIVASAN, Circuit Judge:
I.
At the time of the events in this case, the five plaintiffs—Frank Benevento, David Bennett, Joseph Bopp, James Landis, and Richard Lubow—worked in the State Department as Diplomatic Security Special Agents. In late 2003 or early 2004, each of them responded to a call for volunteers to serve one-year assignments in Iraq under the Coalition Provisional Authority. They arrived in Iraq in February 2004.
Initially, the plaintiffs were assigned to Iraq on temporary duty status; their permanent duty station was in Washington, D.C. Consequently, the plaintiffs received “locality pay“—pay in addition to base salary intended to equalize federal employees’ compensation with that of non-federal workers in the same geographic area—as if they were working in Washington, D.C. See
While in Iraq, the plaintiffs worked, and received compensation for, a significant number of overtime hours. In early 2005, the plaintiffs completed their assignments in Iraq and returned to the United States.
A.
Federal law limits the amount of “premium pay” a federal employee may receive. See
[N]o employee referred to in [
§ 5547(b)(1) ] may be paid premium pay . . . if, or to the extent that, the aggregate of the basic pay and premium pay . . . for such employee would, in any calendar year, exceed the greater of—(A) the maximum rate of basic pay payable for GS-15 in effect at the end of such calendar year (including any applicable locality-based comparability payment . . .); or
(B) the rate payable for level V of the Executive Schedule in effect at the end of such calendar year.
The statute therefore caps compensation for work in connection with an emergency based on the annual maximum basic pay rate for GS-15 or the annual pay rate for Executive Schedule level V, whichever is greater. At the end of 2004, the annual maximum GS-15 pay rate for employees receiving no locality pay was $113,674. For employees assigned to work in Washington, D.C., the annual maximum GS-15 pay rate, including the applicable locality-pay adjustment, was $130,305. At that time, the annual Executive Schedule level V rate was $128,200.
With regard to the plaintiffs in this case, if
B.
In September 2004, the Office of Personnel Management issued final regulations implementing
In any calendar year during which an employee has been determined to be performing emergency or mission-critical work . . . , the employee may receive premium pay under this subpart . . . only to the extent that the payment does not cause the total of his or her basic pay and premium pay for the calendar year to exceed the greater of—
(1) The maximum annual rate of basic pay payable for GS-15 (including any applicable locality-based comparability payment . . .) in effect on the last day of the calendar year; or
(2) The annual rate payable for level V of the Executive Schedule in effect on the last day of the calendar year.
OPM also published a statement in the Federal Register elaborating on the operation of the annual cap. See Premium Pay Limitations, 69 Fed. Reg. at 55,941. The statement responded to an agency‘s question about the application of the cap in the circumstances of this case: when an employee is stationed in multiple locality-pay areas during the course of a year. OPM explained that the statute “expressly provides that the annual premium pay cap must be applied to an entire calendar year and that it is based on the applicable rates in effect at the end of the calendar year.”
C.
On November 24, 2004, shortly after OPM‘s new regulations took effect, the five plaintiffs received email messages from the State Department notifying them that the Department was “conducting a review of premium pay earnings involving employees supporting the effort in Iraq.” J.A. 179. “Because you are assigned overseas,” the message explained, “the rate of the annual premium pay cap that applies to you is $128,200 (the rate for Level V of the Executive Schedule).”
As the email message forewarned, each plaintiff received a letter from the Department in April 2005 requiring repayment of premium pay received in excess of
The Department gave the plaintiffs the option to dispute their debts through either internal or external administrative re-
Each plaintiff also requested that the Department forgive the entirety of his debt pursuant to
The plaintiffs filed grievances with the State Department‘s Foreign Service Grievance Board. The FSGB agreed with DAS Millette and the Board of Contract Appeals that the $128,200 cap applied to govern the whole year. But the FSGB determined that DAS Millette erred in holding the plaintiffs partially responsible for the overpayments, agreeing with the plaintiffs that it was unlikely that an employee could have anticipated how the annual cap would apply. “Nor is it clear,” the FSGB‘s opinion continued, “what [the plaintiffs] could have done to avoid overpayments once [they were] notified on November 24 that [they were] nearing the pay cap.” J.A. 839. The FSGB sent the plaintiffs’ waiver requests back to DAS Millette for a determination of whether collection of the overpayments “would be against equity and good conscience and not in the best interests of the United States.”
DAS Millette invited the plaintiffs to submit additional information. He asked them to address in particular the factors that agency officials are instructed to consider under
- Whether collection of the claim would cause serious financial hardship to the employee from whom collection is sought.
- Whether, because of the erroneous payment, the employee either has relinquished a valuable right or changed positions for the worse, regardless of the employee‘s financial circumstances.
- The time elapsed between the erroneous payment and discovery of the error and notification of the employee;
- Whether failure to make restitution would result in unfair gain to the employee;
Whether recovery of the claim would be unconscionable under the circumstances.
DAS Millette again denied the waiver requests. He emphasized the plaintiffs’ refusal specifically to address any of the
The plaintiffs appealed to the FSGB again, and this time, it upheld the waiver denials. The FSGB stressed the plaintiffs’ failure to address any of the
D.
The plaintiffs sought judicial review in federal district court. The district court initially remanded the case to the Department based on an “intervening event.” Lubow v. U.S. Dep‘t of State (Lubow I), 730 F.Supp.2d. 73, 76 (D.D.C. 2010). The court noted that, in 2005, Congress enacted the Emergency Supplemental Appropriations Act for Defense, the Global War on Terror, and Tsunami Relief, 2005 (Emergency Supplemental Appropriations Act),
The district court then granted summary judgment to the defendants. Lubow v. U.S. Dep‘t of State (Lubow II), 923 F.Supp.2d 28, 30 (D.D.C. 2013). First, the court addressed whether the Department properly determined that the $128,200 cap governed the whole year. Because the issue turned on the validity of OPM‘s interpretation of
II.
The plaintiffs seek review of four final agency actions under the Administrative Procedure Act: (i) the FSGB‘s determination that the Department properly applied
A.
We first address the plaintiffs’ challenge to the FSGB‘s and Board of Contract Appeals’ decisions that their compensation for overtime work performed in Iraq exceeded
The plaintiffs dispute OPM‘s understanding of the statute. They maintain that the statutory references to the GS-15 and Executive Schedule rates “in effect at the end of such calendar year” intend only to reference the rates generally in force at the end of the year. Under that view, the statutory phrase aims merely to address a situation in which those rates change during the course of the year. For instance, if Congress had raised the base GS rates by 2% and made that increase effective on September 1, 2004,
The district court assumed, in accordance with the parties’ presentations, that Chevron‘s two-step framework governed the court‘s review of OPM‘s interpretation of
Under the Chevron framework, if “Congress has directly spoken to the precise question at issue,” then “the court, as well the agency, must give effect to the unambiguously expressed intent of Congress.” 467 U.S. at 842-43. But “if the statute is silent or ambiguous with respect to the specific issue,” we examine “whether the agency‘s answer is based on a permissible construction of the statute.” Id. at 843. Here, the district court resolved the issue in favor of OPM‘s interpretation at the first step. The court reasoned that
We find it unnecessary to decide the question of
As explained, OPM reads
Moreover, it is eminently sensible for OPM to apply
The plaintiffs object to what they see as the statute‘s “retroactive” operation under OPM‘s interpretation. They argue that it is unreasonable—even absurd—to imagine that Congress wrote a statute under which it could turn out that, at the end of the year, certain employees become subject to a different cap on premium pay than they had anticipated. But the statute would be “retroactive” even under the plaintiffs’ reading of
The merits of OPM‘s interpretation become all the more apparent when compared with the uncertainty of the alternative approach offered by the plaintiffs. Because the plaintiffs believe that
For instance, during oral argument, the plaintiffs suggested that, as long as an employee does not exceed the applicable cap during the time period that the cap applies—i.e., resetting the aggregate of the employee‘s basic and premium pay to zero each time the employee becomes subject to a new cap—the employee could
Because OPM‘s resolution of the disputed question “is based on a permissible construction of the statute,” Chevron, 467 U.S. at 843, we defer to OPM‘s interpretation of
B.
The plaintiffs argue in the alternative that the Department acted arbitrarily and capriciously in concluding that the August 2005 waiver had no bearing on the amount of overpayments they received in 2004. The plaintiffs are incorrect.
In May 2005, Congress, in the Emergency Supplemental Appropriations Act, gave executive agencies the authority to “waive”
The plaintiffs do not dispute that compensation paid on January 6, 2005, was excluded from their respective repayment obligations. They nonetheless argue that the “higher pay cap was indisputably ‘in effect’ on the last day of the calendar year, . . . a fact that should be dispositive, even under the Department‘s construction of Section 5547.” Appellants’ Br. 40. But that argument is a non sequitur. The plaintiffs apparently seek to invoke the language from
C.
The plaintiffs’ final challenge concerns the Department‘s denial of their requests for discretionary waivers pursuant to
We are mindful that the plaintiffs volunteered for what was presumably a considerably difficult and dangerous assignment to assist the United States’ operations in Iraq in 2004. And as the FSGB itself acknowledged, “it seems unfair” for the government to require the plaintiffs “to refund payments for overtime work they actually performed, when they had no real option but to perform such work, and when those in similar positions in 2005 and subsequent years were paid” in full for their overtime work. J.A. 898. But under the APA‘s standard of review, “a court is not to substitute its judgment for that of the agency.” Motor Vehicle Mfrs. Ass‘n of U.S., Inc. v. State Farm Mut. Auto. Ins. Co., 463 U.S. 29, 43 (1983). Instead, we ask whether the agency‘s decision “was based on a consideration of the relevant factors” and whether “there has been a clear error of judgment.” Id. We conclude that the FSGB adequately grounded its decision in the relevant factors.
First, the plaintiffs’ failure to submit evidence addressing any but the last of the
In the context of the record before it, the FSGB‘s primary rationale—that DAS Millette had already denied waivers to other employees in “the exact same situation“—suffices to justify its decision. The plaintiffs argue that DAS Millette‘s and the FSGB‘s consideration of other employees was itself arbitrary. To the contrary, the regulation instructs the deciding agency official to consider whether “failure to make restitution would result in unfair gain to the employee.”
The plaintiffs also object to the FSGB‘s consideration of the notice they received in November 2004 advising them that they had already received, or might soon receive, pay exceeding the statutory cap. The FSGB‘s decision, however, stated only that DAS Millette‘s decision was “in line with Comptroller General Decisions which have discouraged the approval of waivers when the employee had reasonably prompt notice that payments were or may have been erroneous, even if the employee was not ‘at fault. ‘” J.A. 900 (emphasis added). And the FSGB further explained that, “[w]hile our earlier decision found that [the plaintiffs] were not at fault in accepting or failing to prevent excess premium payments in 2004, we note that [the plaintiffs] were put on notice in November of the year that the overpayment took place that they were approaching or had already exceeded the pay cap.”
To the extent the plaintiffs mean to argue that the FSGB arbitrarily reversed its earlier determination that the plaintiffs were not to blame for the overpayments, the italicized language refutes that characterization of the FSGB‘s reasoning. To the extent the plaintiffs instead dispute the FSGB‘s premise—that the Department‘s November 2004 email constituted “reasonably prompt notice” of the possibility of overpayments—we fail to see how that would meaningfully support their case for a waiver. The plaintiffs offered no evidence of detrimental reliance on any belief that they would be able to keep their overtime pay. And the plaintiffs have consistently argued that they had no choice about working significant overtime hours due to the nature of their security positions and the realities of the United States’ mission in Iraq in 2004. It therefore would seem that the issue of notice is largely irrelevant to an assessment of the equities of their case. Thus, even if the FSGB mistakenly assumed that the November 2004 email messages gave adequate notice that the plaintiffs were in danger of exceeding the cap—a determination we do not reach—a contrary finding would do little to advance the plaintiffs’ case for a waiver.
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We affirm the district court‘s grant of summary judgment to the defendants.
So ordered.
SENTELLE, Senior Circuit Judge, concurring:
I fully concur with the court‘s judgment and much of the explanation and reasoning leading to the same. However, one critical step of the analysis gives me pause. The court applies the reasoning of Chevron step two, Chevron, U.S.A., Inc. v. Natural Resources Defense Council, Inc., 467 U.S. 837, 843 (1984), to the Office of Personnel Management (“OPM“) interpretation of
As we have previously stated: “[W]e recently affirmed a line of circuit decisions which hold that ‘deference to an agency‘s interpretation of a statute is not appropriate when the agency wrongly believes that interpretation is compelled by Congress. ‘” Peter Pan Bus Lines, Inc. v. Fed. Motor Carrier Safety Admin., 471 F.3d 1350, 1354 (D.C. Cir. 2006) (quoting PDK Laboratories, Inc. v. DEA, 362 F.3d 786, 798 (D.C. Cir. 2004) (other citations omitted)). In the matter before us, the OPM has expressed its conclusion that Congress spoke clearly to the matter at issue and therefore exercised no resolution of ambiguity. Chevron step two deference is thus inappropriate.
Specifically, the OPM stated: “While we understand the agency‘s concerns about administrative burdens, the law expressly provides that the annual premium pay cap must be applied to an entire calendar year and that it is based on the applicable rates in effect at the end of the calendar year.” Premium Pay Limitations, 69 Fed. Reg. 55941, 55941 (Sept. 17, 2004). More explicitly, the OPM stated: “Agencies cannot avoid certain administrative burdens based on the express statutory language in
Nonetheless, I concur fully in the result, as it appears to me that the agency followed the plain meaning of the statute as required by Chevron step one. Chevron, 467 U.S. at 842-43.
As the majority rightly observes, courts have at times assumed without deciding the applicability of the Chevron framework. Maj. Op. at 884; see, e.g., Humane Soc‘y of U.S. v. Locke, 626 F.3d 1040, 1054 n. 8 (9th Cir. 2010). Nonetheless, I am not convinced that the majority‘s reasoning today is consistent with our own precedent in the Peter Pan Bus Lines line of cases. In this case, however, because I believe the OPM interpretation is consistent with the plain language of the statute at Chevron step one, I concur in the judgment affirming the district court‘s grant of summary judgment to the defendants.