File 2: Opinion of Member Pope
[ v59 p364 ]
Member Pope concurring in part and dissenting in part:
I agree, for the reasons set forth by the majority, that Provisions 1 and 11 are inconsistent with 5 C.F.R. §§ 2634.903(d) and 2634.1002, respectively, and that Provision 4 is not inconsistent with law. [n1] I write separately because I disagree with the majority's conclusions with respect to Provisions 2 and 5. In addition, although I agree with the majority's conclusions with respect to Provisions 3, 6, 7, 8, 9, 10, and 12, I reach my conclusions for reasons that differ from the majority's.
To begin, I believe that the majority makes a serious error in analyzing the provisions. In particular, the majority takes an all-or-nothing approach to the issue of whether the Agency has sole and exclusive discretion under OGE regulations. That is, the majority makes a blanket finding that the Agency's discretion under all OGE's regulations is sole and exclusive and finds contrary to law every provision about which the Agency makes a sole and exclusive claim. In so doing, the majority fails to determine whether the regulatory wording at issue actually grants discretion and whether the provisions are inconsistent with that discretion.
The principle that a matter is not subject to bargaining where an agency has "sole and exclusive" discretion over that matter is sweeping and results in taking entire subject matters off the bargaining table. See, e.g., Int'l Assoc. of Machinists and Aerospace Workers, Franklin Lodge No. 2135, 50 FLRA 677, 681-82 (1995) (IAMAW), aff'd mem. sub nom. Bureau of Engraving and Printing v. FLRA, 88 F.3d 1279 (D.C. Cir. 1996). As such, I believe care should be taken in applying the principle so that agencies are not excused from bargaining over all matters related to a particular subject matter unless the scope of their discretion includes all matters. To that end, I believe it is necessary to examine the wording of each regulatory section at issue, determine the nature and scope of any discretion afforded under that section, and resolve whether the wording of each disputed provision is inconsistent with whatever discretion is afforded under the regulation. The majority's failure to do essentially relinquishes to the Agency and OGE the Authority's decision making function.
A. Provision 2
I do not agree that Provision 2 is inconsistent with 28 U.S.C. § 535, 5 C.F.R. § 2638.501(b)(1) and (c), and § 2638.603. As an initial matter, the Agency argues only that the provision is inconsistent with 28 U.S.C. § 535 and 5 C.F.R. § 2638.501; the Agency does not argue that the provision is inconsistent with § 2638.603. Unlike the majority, I limit my inquiry to the regulatory sections relied on by the Agency. [n2]
With respect to the meaning of the provision, there is no basis for finding -- as the majority does -- that the Union's explanation of the meaning of the provision is inconsistent with the provision's plain wording. Majority Opinion at 13. The Union explains that the provision "places no restrictions on collateral actions by the Agency such as reporting potential criminal violations to the attorney general," and that the provision governs only the relationship between the DAEO and the employee. Record of Post-Petition Conference(Record) at 3; Response at 30. Nothing in the plain wording of the provision is inconsistent with this explanation. As such, I would find that the provision is limited to the Agency's internal processing of a conflict, and that the provision would not interfere in any way with the Agency's obligation under 28 U.S.C. § 535 and 5 C.F.R. § 2638.501 to make an expeditious external referral or report certain matters to the Attorney General. See NTEU, 53 FLRA 539, 542-43 (1997) ("[w]here a provision is silent as to a particular matter, a union's statement clarifying the matter will be adopted if it is otherwise consistent with the wording of the provision"). Accordingly, I would order the Agency to rescind its disapproval of Provision 2.
B. Provision 3
I agree with the majority that Provision 3 was properly disapproved. I reach this conclusion based solely on finding the provision inconsistent with 5 C.F.R. § 2434.906. [n3] [ v59 p365 ]
Provision 3 defines positions that would not be subject to financial disclosure requirements -- i.e., it exempts certain employees from any requirement to file a financial disclosure statement. Record at 4. Under the provision, disputes over whether an employee is exempt from filing a financial disclosure statement would be subject to resolution under the negotiated grievance procedure.
The Authority has consistently held that negotiated grievance and arbitration proceedings are the exclusive procedures for resolving disputes unless another "statutory or internal agency appeal procedure involved was intended to be the exclusive procedure." AFGE, Local 3258, 53 FLRA 1320, 1325 (1998). The necessary intent has been found where there is a "clear, specific indication that [other] statutory procedures were intended to be exclusive." Id. In this regard, the Authority found that an "appeals procedure" stating that it applied "notwithstanding any other law" evidenced such clear indication, as did an appeals procedure where intent to make it exempt from the Statute was "unmistakable." Id. at 1326. Where there is a clear indication that a matter is subject to resolution only through such an appeals procedure, a provision subjecting disputes over that matter to a negotiated grievance procedure is contrary to law. See AFGE, Local 1345, 48 FLRA 168, 206 (1993); Police Ass'n of the Dist. of Columbia, 18 FLRA 348, 354-56 (1985); see also New Jersey Air Nat'l Guard v. FLRA, 677 F.2d 276, 280 (3d Cir. 1982).
OGE amended the wording of § 2634.906 to provide agency heads "sole and exclusive" discretion to review and resolve complaints made by an individual claiming that he or she has been improperly determined by the agency to be required to file a financial disclosure statement. Section 2634.906 further provides that the agency head or designee's decision resolving the complaint is "final and conclusive . . . notwithstanding any other provision of law or regulation." In addition, in a note accompanying the regulation, OGE explains that:
The provision in this section for a final decision by the agency head or designee is intended to preclude administrative or negotiated grievances, arbitration procedures, and any other review or appeal, either within or outside the agency.
Applying the foregoing precedent, I would find that § 2634.906 provides a "a clear, specific indication" that the procedure set forth in the regulation for the resolution of complaints regarding an employee's obligation to file a financial disclosure statement is "intended to be . . . exclusive." AFGE, Local 3258, 53 FLRA at 1325. [n4] As Provision 3 would permit the parties to resolve disputes over the exemption of employees from the requirement to file a financial disclosure statement, the provision is inconsistent with 5 C.F.R. § 2634.906. Accordingly, I would dismiss the petition for review as to Provision 3.
C. Provision 5
I disagree that Provision 5 is inconsistent with 5 C.F.R. § 2635.403.
Provision 5 provides a method to assist in the resolution of disputes over: (1) the definition of an employee's technology area; and (2) whether a particular company falls within the definition of a particular technology area. These definitions of technology areas are used to identify those holdings which are subject to prohibition as a potential conflict of interest. The provision addresses only definitions of technology areas, not individual determinations of conflicts of interest.
Subsection (I) provides that a written decision regarding a dispute as to the definition of an employee's technology area will occur only after a recommendation has been made by a joint committee to the office issuing the decision. Subsections (ii), (iii), and (iv) set forth specific facts that would constitute prima facie evidence that a company or an employee's work does not fall within the definition of a particular technology area. As agreed to by the parties, the joint committee would make "recommendations to management" concerning disagreements, and the specified "prima facie evidence create[s] a rebuttable presumption." Record at 4.
The regulatory section relied on by the Agency, § 2635.403, provides that "[a]n employee shall not [ v59 p366 ] acquire or hold any financial interest that he is prohibited from acquiring or holding by statute, by agency regulation issued in accordance with paragraph (a) of this section or by reason of an agency determination of substantial conflict under paragraph (b) of this section." Subsections (a) and (b) set forth, respectively, requirements applicable to: (a) the issuance of agency regulations prohibiting the acquisition or holding of financial interests by all or a class of agency employees; and (b) agency determinations to prohibit individual employees from acquiring or holding financial interests. Under subsection (a), an agency has discretion to "prohibit or restrict the acquisition or holding of a financial interest . . . ." Under subsection (b), an agency has discretion to "prohibit or restrict an individual employee from acquiring or holding a financial interest . . . ."
The plain wording of § 2635.403 provides agencies discretion to determine that conflicts exist and to prohibit individual employees and groups of employees from acquiring or holding particular financial interests. Although nothing in the wording of § 2635.403 specifically provides that agency discretion is "exclusive," OGE expressly interprets the regulation as vesting agency heads with sole and exclusive authority. See OGE Brief, Attachment D at 2. I agree with the majority that OGE's interpretation is persuasive and, as such, is entitled to deference.
Based on deferring to OGE's interpretation of § 2635.403, I agree that the Agency's discretion to determine that a conflict exists and to prohibit employees from acquiring or holding particular financial interests is sole and exclusive. Nevertheless, I do not agree that this renders Provision 5 contrary to law. In this regard, nothing in Provision 5 impinges on the Agency's discretion to determine whether a conflict of interest exists and/or to prohibit the acquisition or holding of financial interests. Instead, the Provision 5 would result only in recommendations concerning definitions of technology areas and the Agency would be free to accept or reject any and all of the recommendations. Put simply, with or without the provision, Agency officials retain sole and exclusive discretion to determine whether there is a conflict and/or to prohibit employees from acquiring or holding particular financial interests. [n5]
Based on the foregoing, I would find that Provision 5 is not inconsistent with the Agency's sole and exclusive discretion under § 2635.403. I note, in this connection, that unlike its claim regarding Provision 10, OGE makes no claim that Provision 5 is inconsistent with "the process the regulations establish." OGE Brief at 43-44 (emphasis added). I would also find that the provision does not affect management's right to assign work under § 7106(a)(2)(B) of the Statute. In this regard, provisions establishing joint labor-management committees that identify and resolve labor-management issues generally are within the duty to bargain. See POPA, 53 FLRA at 658; NFFE, Local 1482, 44 FLRA 637, 674 (1992). In particular, proposals that establish joint labor-management committees to make recommendations concerning conditions of employment have been found to be within the duty to bargain. See Int'l Org. of Masters Mates and Pilots, Marine Div., Panama Canal Pilots Branch, 51 FLRA 333, 348-49 (1995). No basis to reach a contrary conclusion is provided in this case. Accordingly, I would order the Agency to rescind its disapproval of Provision 5.
D. Provisions 6, 7, 8 and 9
I agree with the majority that Provisions 6, 7, 8, and 9 are inconsistent with §§ 2634.605 and 2635.403(b). However, I reach my conclusions for reasons that differ from the majority's. In particular, as set forth above, I believe it is necessary to examine the wording of each regulatory section at issue, determine the nature and scope of any discretion afforded thereunder, and resolve whether the wording of each disputed provision is inconsistent with whatever discretion is afforded under the regulation.
As set forth in the majority opinion, Provisions 6, 7, 8, and 9 each concern restrictions on management actions in the face of various conflicts of interest. As relevant here, Provision 6 applies in situations where management changes in employee work assignments result in various conflicts or potential conflicts; the provision discourages the Agency from making transfers or changes when certain conflicts are involved by providing that "management shall not generally make the transfer or the change . . . unless there is no other qualified examiner available to do the work" and permits employees "to appeal . . . for reconsideration" of such changes when other conflicts are involved. Provision 7 applies in situations involving atypical or temporary assignments and limits the Agency to "recusal or [ v59 p367 ] waiver, at the sole discretion of management" of certain pre-existing financial interests. Provisions 8 and 9 apply in situations involving "intractable" conflicts and conflicts arising from employment of an employee's spouse or child, respectively. Provision 8 provides that "recusal or waiver, at the sole discretion of management, will normally be the remedy." Provision 9 provides that "recusal, waiver, or transfer, at the sole discretion of management, will normally be the remedy."
The Agency asserts that the provisions are inconsistent with its sole and exclusive discretion under §§ 2634.605 and 2635.403. As set forth in more detail above in connection with Provision 5: (1) the plain wording of § 2635.403 provides agencies discretion to determine that conflicts exist and to prohibit individual employees and groups of employees from acquiring or holding particular financial interests; and (2) OGE's interpretation of § 2635.403 as affording agencies sole and exclusive discretion to make such determinations and take such actions is entitled to deference.
OGE also interprets § 2634.605 as affording agencies sole and exclusive discretion. Under that section, Agency officials have discretion to review financial reports, determine whether filers are in compliance with law and regulation and, if a report is not in compliance, to then "[d]etermine what remedial action . . . should be taken." 5 C.F.R. § 2634.605(a)(4)(C)&(D). Remedial action "may include, as appropriate:" (1) divestiture; (2) resignation from non-Federal position; (3) restitution; (4) establishment of trusts; (5) waiver; (6) recusal; and (7) request for transfer, reassignment, limitation or duties, or resignation. 5 C.F.R. § 2634.605(b)(5)(ii).
Like § 2635.403, nothing in the wording of § 2634.605 specifically provides that agency discretion thereunder is "exclusive." However, I agree with the majority that OGE's express interpretation of the regulation as vesting agency heads with sole and exclusive authority is persuasive and, as such, is entitled to deference. [n6]
I also agree that Provisions 6, 7, 8, and 9 are inconsistent with the Agency's sole and exclusive discretion under §§ 2634.605 and 2635.403 to determine that conflicts exist, to prohibit employees from acquiring or holding particular financial interests, and to decide remedies for conflicts. As set forth above, and by the majority, the provisions either: (1) limit the Agency to specific remedies, as in the case of Provision 7, which limits management to recusal or waiver at its discretion, or (2) specify what actions the Agency "generally" will take to prevent conflicts and what remedies "normally" will be imposed, as in the case of Provisions 6, 8, and 9. As such, the provisions would require the Agency to exercise its sole and exclusive discretion under §§ 2634.605 and 2635.403 in specified ways. With regard to Provision 6, I would reject the Union's argument that the provision is not inconsistent with §§ 2634.605 and 2635.403 because the regulatory sections address situations where conflicts exists while the provision prevents the existence of conflicts. In this regard, the regulatory sections also prevent the existence of conflicts by, among other things, permitting an agency to recuse an employee from certain work, and to transfer, reassign, or limit employees' duties. See § 2634.605(b)(5)(ii)(F) and (G).
Based on the foregoing, I would find that Provisions 6, 7, 8, and 9 are inconsistent with §§ 2634.605 and 2635.403, and would dismiss the petition for review as to them. [n7]
E. Provision 10
I would find that Provision 10 is inconsistent with § 2634.605(b)(3).
Provision 10 requires the DAEO to contact an employee and verify the employee's primary technological area before issuing a final order to divest to the employee. The parties agree that Provision 10 applies only in circumstances where the Agency has determined that an employee must divest a financial interest. Record at 5.
As discussed above with respect to Provisions 6, 7, 8, and 9, § 2634.605 addresses review of financial disclosure reports. Under § 2634.605(b)(3), if the reviewing [ v59 p368 ] official determines that "additional information is required" for the review, then the official "shall request that it be submitted by a specified date." 5 C.F.R. § 2634.605(b)(3). The reviewing official's discretion to request additional information is not limited to any particular point in the review process.
Nothing in the wording of § 2634.605(b)(3) specifically provides that agency discretion to request additional information is "exclusive." However, I agree with the majority that OGE's express interpretation of the regulation as vesting agency officials with sole and exclusive discretion is persuasive and, as such, is entitled to deference.
I also agree that Provision 10 is inconsistent with the Agency's sole and exclusive discretion. In this regard, the parties agree that the provision requires the DAEO to contact an employee and verify certain information. Record at 5. As interpreted by OGE, however, § 2634.605(b)(3) confers sole and exclusive discretion on Agency officials to determine "what information it will consider in making its determination[.]" OGE Brief at 43. I note, in this regard, that unlike Provision 5, OGE expressly interprets § 2634.605(b)(3), in the context of Provision 10, as encompassing discretion over the "process" used to review reports. Id. at 43-44. In these circumstances, I would find that the provision is inconsistent with § 2634.605(b)(3), and would dismiss the petition for review as to Provision 10. [n8]
F. Provision 12
I agree with the majority that Provision 12 is contrary to law. I reach this conclusion based solely on finding the provision inconsistent with § 2635.403(d), which provides that employees who are directed to divest financial interests must be given a "reasonable period" to divest. The regulation specifies that "[e]xcept in cases of unusual hardship, as determined by the agency, a reasonable period shall not exceed 90 days from the date divestiture is first directed." Id.
Provision 12, on the other hand, requires the Agency to provide employees "30 days for divestiture, but not before a requested COD has been granted or denied." As stated by the majority, Provision 12 would provide employees with 30 days to divest after the COD was granted or denied.
There is no dispute that Provision 12 would, in some circumstances, result in a period of time for divestiture exceeding the 90-day period provided in § 2635.403(d). Moreover, this period of time would be available whether or not "unusual hardship" existed, within the meaning of the regulation. As such, I would find that the provision is inconsistent with the regulation. [n9]
For the reasons set forth above, I would find that Provisions 2, 4, 5 are not inconsistent with law and I would order the Agency to rescind its disapproval of the provisions. I would find that Provisions 1, 3, 6, 7, 8, 9, 10, 11, and 12 are inconsistent with law and dismiss the petition for review as to the provisions.
File 1: Authority's Decision in 59 FLRA No. 50
File 2: Opinion of Member Pope
Footnote # 1 for 59 FLRA No. 50 - Opinion of Member Pope
Footnote # 2 for 59 FLRA No. 50 - Opinion of Member Pope
The Authority has addressed regulatory sections not relied on by a party in only limited circumstances: where a regulatory section was expressly argued and addressed with respect to another proposal at issue in the same case, where the wording of the proposal specifically directed the Authority to the regulatory section, and where the applicability of the regulation to the proposal was "beyond peradventure." POPA, 53 FLRA 625, 666 (1997) (POPA II).
Footnote # 3 for 59 FLRA No. 50 - Opinion of Member Pope
Footnote # 4 for 59 FLRA No. 50 - Opinion of Member Pope
I note that AFGE, Local 3258 involved the same regulation and the same issue. However, AFGE, Local 3258 involved § 2634.906 before it was amended by OGE to provide that the agency head or his designee's discretion under that section is "sole and exclusive" and that a decision by the agency head or designee is "final and conclusive for all purposes, notwithstanding any other provision of law or regulation." I also note the Union's claim that Provision 3 is virtually identical to Proposal 21 in POPA II, which the Authority found within the duty to bargain. Although Provision 3 is similar to Proposal 21 in POPA II, the Agency did not argue there that Proposal 21 was inconsistent with § 2634.906. See POPA II, 53 FLRA at 683-87. In any event, POPA II addressed § 2634.906 before it was amended by OGE.
Footnote # 5 for 59 FLRA No. 50 - Opinion of Member Pope
OGE concedes that "[n]either the term `techn[ology] area' nor the concept it describes is addressed in OGE's regulations[,]" and that the Agency's use of technology areas "has no particular effect on the ethics regulations." OGE Brief at 39.
Footnote # 6 for 59 FLRA No. 50 - Opinion of Member Pope
The conclusion that the Agency has sole and exclusive discretion under §§ 2635.403 and 2634.605 differs from the Authority's conclusions in POPA II regarding analogous proposals. This is because, at the time POPA II issued, OGE had not issued an express interpretation of the regulations. I note, in this connection, that the Panel's decision directing the parties to adopt these provisions was expressly based on the Authority's decision in POPA II. See Dep't of Commerce, PTO, Arlington, Va., 00 FSIP 55, at 26 n.6, 7 (stating t