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The decision of the Authority follows:
24 FLRA No. 6 LEXINGTON-BLUE GRASS ARMY DEPOT, LEXINGTON, KENTUCKY Activity and AMERICAN FEDERATION OF GOVERNMENT EMPLOYEES, AFL-CIO, LOCAL 894 Union Case No. 0-AR-1156 DECISION I. STATEMENT OF THE CASE This case is before the Authority on an exception to the award of Arbitrator W. Scott Thomson filed on behalf of the Activity by the Department of the Army (Agency) under section 7122(a) of the Federal Service Labor-Management Relations Statute and part 2425 of the Authority's Rules and Regulations. II. BACKGROUND AND ARBITRATOR'S AWARD The dispute in this matter resulted from the partial closure of the Lexington-Blue Grass Army Depot (Activity) on July 5, 1985, in order to conserve energy. All employees, except emergency employees and employees with personal hardships, were charged with either annual leave or leave without pay. The Union filed a grievance requesting (1) restoration of annual leave for those employees who were on annual leave or leave without pay, and (2) holiday pay for those employees who had worked. The grievance was denied on the basis that Agency regulations specifically authorized management to close installations and place employees in leave or leave without pay status as part of the overall right to manage its operation and its energy conservation program. The Arbitrator framed the issue to be resolved as whether the partial closure was in accordance with applicable rules and regulations. The Arbitrator analyzed the pertinent provisions of the agreement and the regulations and determined that while closing an activity for managerial reasons is within the administrative authority of an agency, the authority is limited by applicable law and regulation. He interpreted Agency regulations as prohibiting the closing of an activity for the purpose of creating a holiday and, in the case of a closure to conserve energy, as requiring management to consider implementation of flex-time schedules and any other means available to avoid the need for closure. He concluded that since the Activity in this case had not considered any means of conserving energy other than closure and its decision was based in part on anticipated excessive absenteeism, the Activity had unfairly and partially treated employees and had violated applicable rules and regulations. Accordingly, as his award, the Arbitrator ordered that those employees on annual leave were to have their leave restored, and those employees on leave without pay were to receive 8 hours pay. The Arbitrator did not order compensation for those employees who worked because they were not adversely affected by the closure. III. EXCEPTION The Agency contends that the award is contrary to Agency regulations for which there is a compelling need. In support, the Agency cites the Authority's decision in National Association of Government Employees, Local R14-62 and U.S. Army Dugway Proving Ground, Dugway, Utah, 18 FLRA No. 38 (1985), petition for review filed sub nom. National Association of Government Employees, Local R14-62 v. FLRA, No. 85-2098 (10th Cir., July 23, 1985) (Authority motion for remand filed Nov. 11, 1986). There, the Authority found a compelling need for the same Agency-wide regulations at issue in this case: Army Civilian Personnel Regulation 990-2 (C11), subchapter 610.S3, paragraph 3C, and Department of Defense Civilian Personnel Manual Supplement 990-2, Book 610, subchapter S3, paragraph 1(a). These regulations require employees to take annual leave during periods when Agency facilities are partially closed. The Agency contends that since the same regulations are involved, the Arbitrator's award, which essentially prohibits the Agency from requiring employees to take annual leave during the periods of partial closure, is deficient under section 7122(a) of the Statute. IV. ANALYSIS AND CONCLUSION The Agency's exception does not establish a basis for finding the award deficient. In Aberdeen Proving Ground, Department of the Army, 21 FLRA No. 100 (1986), petition for review filed sub nom. Department of the Army, Aberdeen Proving Ground v. FLRA, No. 86-2577 (4th Cir. June 26, 1986), in the context of an unfair labor practice complaint, the Authority held that the Respondent, Department of the Army, had not established a compelling need for regulations which are to the same effect as those here, prohibiting administrative leave during periods of partial closure. The Authority made this determination because operations were curtailed in order to conserve energy, and operations would be curtailed and energy conserved to the same extent whether the affected employees were on annual leave or administrative leave during the period of partial closure. In this case, the dispute also resulted from a partial closure in order to conserve energy. The Agency has failed to demonstrate how its regulations would be essential or even helpful in achieving its objective in curtailing operations. Therefore, the Arbitrator's award does not interfere with an Agency-wide regulation for which there is a compelling need. As to its decision in Dugway Proving Ground, the Authority found that an agency's decision to shut down or curtail operations is an aspect of management's right to layoff under section 7106(a)(1) of the Statute. Thus, we note that on occasion, financial considerations will lead management to conclude that it must exercise its authority to layoff employees. For example, if an agency is without appropriated funds, a decision to cease operations and furlough employees is clearly within management's authority to layoff employees. Moreover, if an agency receives an appropriation which is below that required to maintain a workforce at its existing level, a decision to furlough employees or to conduct a reduction-in-force is within management's authority to layoff employees. Here, the Agency does not claim, nor does it appear, that anything in the Arbitrator's award would prevent the Agency from deciding to shut down its facilities. The Agency relies on a different aspect of the Authority's Dugway decision. In addition to the Authority's discussion of management's right to layoff, the Authority also found a compelling need for the Agency's regulations because the Agency had demonstrated, under section 2424.11(a) of the Authority's Rules and Regulations, that its regulations were a critical component in its objective of saving money by curtailing operations so as to insure the Agency's performance of its mission in an effective and efficient manner. We now reconsider and overrule the Authority's determination in Dugway Proving Ground that a demonstration of monetary savings alone is sufficient to establish that a regulation is essential, as distinguished from helpful and desirable, to the accomplishment of the mission or the execution of the functions of an agency in a manner which is consistent with the requirements of an efficient and effective Government. We do not believe that effectiveness and efficiency are to be measured solely in monetary terms. Financial considerations, of course, can be relevant to a determination whether an agency regulation satisfies the compelling need criterior set forth in section 2424.11(a) of the Authority's regulations. See National Treasury Employees Union, Chapter 207 and FDIC, Washington, D.C., 21 FLRA No. 36 (1986) (finding a compelling need under section 2424.11(a) for agency regulations establishing a uniform system for determining employee salaries). However, in determining whether an agency's regulation is essential, as distinguished from helpful or desirable to effective and efficient agency operations, other considerations are also pertinent. Compare, for example, American Federation of Government Employees, AFL-CIO and Air Force Logistics Command, Wright-Patterson Air Force Base, Ohio, 2 FLRA 604, 608 (1980), aff'd on other grounds, 659 F.2d 1140 (D.C. Cir. 1981), cert. denied, 455 U.S. 945 (1982) ("Only where an agency makes a substantial demonstration that an increase in costs is significant and unavoidable and is not offset by compensating benefits can an otherwise negotiable proposal be found to violate the agency's right to determine its budget under section 7106(a) of the Statute."). The language and legislative history of the Statute supports our conclusion that a broad balancing of factors is appropriate in evaluating compelling need assertions such as the Agency makes here. In enacting the Statute, Congress found that collective bargaining in the Federal sector is in the public interest because, among other things, it facilitates and improves employees' performance and the efficient accomplishment of the operations of the Government. See section 7101(a) of the Statute. Moreover, with respect to compelling need, it is clear from the legislative history of the Statute that Congress intended a regulation to bar negotiations only on narrow grounds. In this regard, Congressman Ford, addressing this section of the Statute, stated: The compromise position in section 7117 was accepted with the understanding that the . . . compelling need test will be permitted to be raised in only a limited number of cases. /*/ Our conclusion is also consistent with a recent holding of the U.S. Court of Appeals for the District of Columbia Circuit, affirming a decision by the General Counsel in the context of an unfair labor practice case that an informal settlement agreement effectuated the purposes of the Statute. The Court stated: (E)conomic hardship is a fact of life in employment, for the public sector as well as the private. Such monetary considerations often necessitate substantial changes. If an employer was released from its duty to bargain whenever it had suffered economic hardship, the employer's duty to bargain would practically be non-existent in a large proportion of cases. American Federation of Government Employees v. FLRA, 785 F.2d 333 at 338 (D.C. Cir. 1986). To the extent that our decisions in Dugway Proving Ground, 18 FLRA No. 38 (1985), and National Association of Government Employees, Local R14-9 and U.S. Army Dugway Proving Ground, Dugway, Utah, 18 FLRA No. 45 (1985), are inconsistent with our decision here, they will no longer be followed. In this case, the Agency has failed to establish any facts concerning financial and other pertinent factors sufficient to provide a basis for finding a compelling need for its regulations under section 2424.11(a) of the Authority's Rules. Therefore, the Agency has failed to establish that the Arbitrator's award is contrary to section 7122(a) of the Statute as alleged. V. DECISION Accordingly, for the above reasons, the Agency's exception is denied. Issued, Washington, D.C., November 17, 1986. /s/ Jerry L. Calhoun, Chairman /s/ Henry B. Frazier III, Member /s/ Jean McKee, Member FEDERAL LABOR RELATIONS AUTHORITY --------------- FOOTNOTES$ --------------- (1) 124 Cong. Rec. 29199 (1978) (statement of Rep. Ford), reprinted in Sub-comm. on Postal Personnel and Modernization of the House Comm. on Post Office and Civil Service, 96th Cong., 1st Sess., Legislative History of the Federal Service Labor-Management Relations Statute, Title VII of the Civil Service Reform Act of 1978, at 956 (Comm. print No. 96-7).