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The decision of the Authority follows:
37 FLRA No. 12
FEDERAL LABOR RELATIONS AUTHORITY
U.S. DEPARTMENT OF THE ARMY
FORT CAMPBELL DISTRICT, THIRD REGION
FORT CAMPBELL, KENTUCKY
AMERICAN FEDERATION OF GOVERNMENT EMPLOYEES
September 13, 1990
Before Chairman McKee and Members Talkin and Armendariz.
I. Statement of the Case
This matter is before the Authority on exceptions to the award of Arbitrator Henry B. Welch. The Activity withheld $418.80 from the grievant's paycheck after it determined that a portion of the claimed expenses submitted by the grievant on his travel voucher were fraudulent. The Arbitrator directed that the Activity repay $418.80 to the grievant.
The Agency filed exceptions under section 7122(a) of the Federal Service Labor-Management Relations Statute (the Statute) and part 2425 of the Authority's Rules and Regulations. The Union filed an opposition to the exceptions.
We conclude that the award is deficient because it is contrary to an agency regulation. We will remand the case to the parties for further processing consistent with this decision.
II. Background and Arbitrator's Award
The grievant performed a temporary duty assignment for 2 weeks for which he was entitled to a per diem allowance and a mileage allowance for traveling by means of his own car. Prior to departing for the assignment, the grievant was advanced travel expense money in the amount of $450.00. After returning from the assignment, the grievant submitted a travel voucher and claimed reimbursement for the following expenses:
LODGING, $241.00; LAUNDRY, $81.00; AUTO MILEAGE, $38.00; and TIPS (Maids and bellboys) $72.00; TOTAL: $432.00. Meals: $25.00 per day . . . .
Award at 4.
The Activity determined that the claims for laundry and tips were false and fraudulent. The Activity notified the grievant that, except for mileage allowance in the amount of $46.20, payment of his travel expense voucher was denied. The Activity also demanded recoupment of the balance of the advance travel expense money paid to the grievant in the amount of $403.80. When the grievant failed to pay, this amount, plus a service charge of $15.00, was deducted from the grievant's pay check for the period ending May 21, 1988.
The grievant filed a grievance disputing the withholding of the $418.80 from his pay. The grievance was not resolved and was submitted to arbitration on the stipulated issues of whether the grievance was arbitrable and whether the grievant had filed a false claim.
The Arbitrator first determined that the grievance was grievable and arbitrable.
On the issue of whether the grievant had filed a false claim, the Arbitrator noted that the Activity's denial of the grievant's travel expense voucher, except for mileage, must have been based on provisions of the Department of Defense Civilian Personnel, Volume 2, Joint Travel Regulations (JTR). The Arbitrator quoted the following provision of the JTR:
PART H: INDEBTEDNESS AND COLLECTION.
C 4352. HANDLING OF FALSIFIED TRAVEL CLAIMS.
Where there is reasonable cause to suspect that an employee has falsified one or more claimed expenses on a travel voucher (other than the cost of lodging, meals, or incidentals), the suspect expense(s) will not be allowed. When there is reasonable cause to suspect that an employee has falsified a claimed expense for lodging, meals, or incidentals, per diem or actual expense allowance (as applicable) will be denied for the entire day on which the suspect expense is claimed[.]
Id. at 5 (emphasis added by the Arbitrator).
The Arbitrator concluded that the two sentences of Part H.C4352 are contradictory: "The first sentence says that only the suspected expense will be denied. The second sentence says that expenses for the entire day will be denied." Id. at 5-6 (emphasis original). The Arbitrator ruled that the contradiction is to be resolved against the Activity and that, consequently, "it is only the suspected expenses, LAUNDRY and TIPS, which may or can be disallowed." Id. at 6. The Arbitrator determined that his conclusion that only the suspected expenses may or can be disallowed was supported by the Comptroller General's decision in 57 Comp. Gen. 664 (1978).
The Arbitrator decided and awarded as follows:
Without belaboring this opinion, need I say more? [The Activity] is directed forthwith to repay Grievant . . . the amount of the recoupment, $418.80. Grievant's other claims are hereby denied.
Id. at 7.
III. Positions of the Parties
A. The Agency's Exceptions
In its exceptions, the Agency contends that the award is deficient because it: (1) is contrary to an agency travel regulation for which there is a compelling need; (2) violates 31 U.S.C. §§ 3711 and 3528 relating, respectively, to the collection of money owed to an agency and the personal liability of an agency official for improper payments; and (3) contravenes pertinent decisions of the Comptroller General pertaining to fraudulent claims for per diem.
With respect to its first exception, the Agency first argues that conflict with an agency regulation is a ground on which an arbitration award can be found deficient under section 7122(a)(1) of the Statute.(1) The Agency maintains that the term "regulation" in section 7122(a) includes agency regulations because nothing in the Statute, the legislative history, or the Authority's rules limits the definition of "regulation."
The Agency notes that under Executive Order 11491, as amended (the Order), the Federal Labor Relations Council (the Council) held in American Federation of Government Employees, Local 2612 and Department of the Air Force, Headquarters 416th Combat Support Group (SAC), Griffiss Air Force Base, 3 FLRC 822 (1975)(Griffiss), that agency regulations did not provide a basis on which the Council would grant a petition for review of an arbitration award. However, the Agency argues that the Council's ruling was superseded by the terms of the Statute and no longer applies.
In support of its contention that the award conflicts with Part H.C4352 of the JTR, the Agency asserts that the Arbitrator misinterpreted the regulation. The Agency claims that the Arbitrator erroneously concluded that the two sentences of the provision are contradictory. The Agency explains that the first sentence applies to falsified expenses other than the cost of lodging, meals, or incidentals while the second sentence applies to falsified expenses for lodging, meals, or incidentals. The Agency further explains that as defined in JTR, Appendix D, the incidentals encompassed by the per diem allowance include laundry and tips for maids and bellhops. Therefore, the Agency asserts that because the grievant falsified claims for incidental expenses, the Activity properly disallowed the grievant's per diem allowance. The Agency argues that because the Arbitrator held that "the grievant falsified the travel voucher," the award conflicts with JTR, Part H.C4352. Exceptions at 2.
In support of its second exception, the Agency contends that "the grievant undoubtedly falsified the per diem claimed on the travel voucher[.]" Id. at 5. Therefore, the Agency asserts that by directing repayment of the falsified claim, the award violates 31 U.S.C. § 3711, which precludes an agency from compromising a false claim, and 31 U.S.C. § 3528, which requires a certifying officer to deny fraudulent claims.
In support of its third exception, the Agency contends that the Arbitrator incorrectly applied 57 Comp. Gen. 664. The Agency asserts that the decision supports the Activity's action of disallowing the grievant's entire per diem allowance because of the false incidental expenses claim.
B. The Union's Opposition
The Union disputes the Agency's statement that the Arbitrator found that the grievant falsified his travel voucher. The Union claims that the Arbitrator never made such a finding. The Union also claims that the award is not violative of agency regulations because the Arbitrator correctly interpreted and applied those regulations. The Union cites Griffiss to support this contention.
IV. Analysis and Conclusions
This case provides us with an opportunity to clearly set forth the approach we will take in resolving exceptions to arbitration awards where it is contended that the award is deficient because it is contrary to an agency rule or regulation. For the reasons set forth below, we will find an award deficient under section 7122(a)(1) when the award conflicts with an agency rule or regulation so long as the rule or regulation governs the matter in dispute; that is, the rule or regulation applies to the matter in dispute and does not conflict with similarly applicable provisions of the collective bargaining agreement. We hold that the contrary policy established by the Council under the Order has been superseded by the Statute.
A. The Policy Under the Order Has Been Superseded
We agree with the Agency that the policy under the Order of refusing to grant a petition for review of an arbitration award based on a violation of an agency regulation does not remain in effect under section 7135(b) of the Statute.
Section 4 of the Order provided that the Council would consider exceptions to arbitration awards subject to its regulations. In section 2411.32 of its rules of procedure, the Council provided that review of an arbitration award would be granted on the ground, among others, that the award violates "appropriate regulation." In its decisions issued under section 2411.32, the Council refused to find that an agency regulation constituted an "appropriate regulation" that would provide a basis on which to grant review of an arbitration award.
The provisions of the Statute differ materially from those of the Order. In contrast to the policy established under the Order, the Statute in section 7122(a) sets forth the specific grounds on which the Authority will find an arbitration award deficient. Section 7122(a)(1) provides that an award will be found deficient on the grounds that the award is "contrary to any law, rule, or regulation." As discussed below, we view the terms "rule" and "regulation" as encompassing agency rules and regulations. Consequently, we find that the policy of the Order is no longer effective because it has been superseded by specific provisions of the Statute within the meaning of section 7135(b). See Interpretation and Guidance, 2 FLRA 273, 277 (1979) (provisions of section 7121, relating to the scope of the grievance procedure, superseded the materially different policies of section 13 of the Order).
B. Rules and Regulations Within the Meaning of Section 7122(a)(1) of the Statute
The Authority has clearly indicated that the terms "rule, or regulation" as used in section 7122(a)(1) include any enforceable Government-wide rule or regulation. Therefore, when the party excepting to an arbitration award has established that the award is contrary to an enforceable Government-wide rule or regulation, the Authority has found the award deficient under section 7122(a)(1) of the Statute. For example, U.S. Department of Health and Human Services, Social Security Administration, Chicago, Illinois and American Federation of Government Employees, Local 1395, 34 FLRA 1107 (1990) (award contrary to 41 C.F.R. § 101-18.101).
The Authority has not established such a clear approach concerning the effect of agency rules or regulations under section 7122(a)(1). In a number of cases, the Authority denied exceptions contending that the award was deficient because it was contrary to an agency regulation. However, in those cases, the Authority denied the exceptions because the excepting party failed to establish that the award was contrary to the agency regulation; the Authority expressly noted that it was not deciding whether the agency regulation constituted a "rule, or regulation" within the meaning of section 7122(a)(1) of the Statute. For example, American Federation of Government Employees, San Francisco Region and Office of Program Operations, Field Operations, Social Security Administration, San Francisco Region, 7 FLRA 622, 625 & n.6. (1982).
Without any discussion of the meaning of the terms "rule" and "regulation" under section 7122(a)(1), the Authority, in Department of the Treasury, Bureau of Alcohol, Tobacco and Firearms and National Treasury Employees Union, 32 FLRA 934, 939 (1988), denied an exception contending that the award conflicted with an agency directive because the directive did not constitute a Government-wide rule or regulation. Also without discussion, the Authority, in Lexington-Blue Grass Army Depot, Lexington, Kentucky and American Federation of Government Employees, AFL-CIO, Local 894, 24 FLRA 50, 54-55 (1986), denied an exception contending that the award conflicted with an agency regulation because the agency regulation was not a regulation for which there was a compelling need under the Authority's rules.
We now specifically hold, for the reasons which follow, that we will find an award deficient under section 7122(a)(1) when the award conflicts with a governing agency rule or regulation. We reach this conclusion after examining the language of section 7122(a)(1) and the statutory framework with respect to the provisions concerning rules, regulations, and collective bargaining agreements that govern the disposition and resolution of grievances. To the extent that Authority decisions have taken a different approach to these cases, they will no longer be followed.
Section 7122(a) of the Statute sets forth the grounds on which the Authority will find an arbitration award deficient, one of which is that the award is "contrary to any . . . rule, or regulation[.]" Based on the plain wording of the Statute, we conclude that the term "any rule or regulation" encompasses agency, as well as Government-wide, rules or regulations and that, therefore, an agency rule or regulation may provide a basis for finding an arbitration award deficient. We further hold, however, that only an arbitration award that conflicts with a rule or regulation that governs the matter in dispute will be found to be deficient under section 7122(a)(1).
The determination of whether a rule or regulation governs a matter in dispute requires consideration of the regulatory framework that applies to many aspects of the employment relationship between Federal employees and their employing agencies. That framework includes both Government-wide rules and regulations and agency rules and regulations. The determination of whether a rule or regulation governs a matter in dispute also requires consideration of the application and enforcement of collective bargaining agreements under the Statute in relation to these rules and regulations.
Government-wide rules or regulations are rules, regulations, or official declarations of policy that are generally applicable throughout the Federal Government and are binding on the Federal agencies and Federal officials to which they apply. National Treasury Employees Union, Chapter 6 and Internal Revenue Service, New Orleans District, 3 FLRA 747, 754-55 (1980). Under section 7117 of the Statute, Government-wide rules and regulations bar the negotiation of, and agreement on, union proposals that conflict with them. Accordingly, Government-wide rules and regulations govern a matter in dispute to which they apply, even if the same matter is covered by a collective bargaining agreement under the Statute. The only limitation on the supremacy of Government-wide rules or regulations is set forth in section 7116(a)(7) of the Statute, which makes it an unfair labor practice for an agency "to enforce any rule or regulation (other than a rule or regulation implementing section 2302 of this title) which is in conflict with any applicable collective bargaining agreement if the agreement was in effect before the date the rule or regulation was prescribed[.]" Thus, under section 7116(a)(7), a Government-wide rule or regulation, which does not implement 5 U.S.C. § 2302, is not controlling with respect to a conflicting provision of a collective bargaining agreement that was in effect before the date the rule or regulation was prescribed. Therefore, we will not find an arbitration award deficient under section 7122(a)(1) as contrary to a Government-wide rule or regulation (other than one implementing section 2302) when the award is consistent with an applicable collective bargaining agreement that was in effect before the date the rule or regulation was prescribed. Otherwise, we will continue to apply section 7122(a)(1) to find all arbitration awards that conflict with a Government-wide rule or regulation to be deficient.
In addition to such generally applicable Government-wide rules and regulations, each Federal agency prescribes rules, regulations, and official declarations of policy to govern and control the resolution of matters to which they apply within the agency. For example, in Local 2855, AFGE v. U.S., 602 F.2d 574, 581 (3d Cir. 1979), the court noted that, under 5 U.S.C. § 301, Congress has invested the heads of every executive and military department with general authority to prescribe regulations for the governing of their departments and the conduct of their employees and that, under 5 U.S.C. § 302, the heads of departments are permitted to delegate to subordinate officials the authority invested in them to take final action on matters pertaining to employment, direction, and general administration of personnel of their agencies. Furthermore, the dominance of agency rules and regulations was acknowledged by the U.S. Supreme Court in Fort Stewart Schools v. FLRA, 110 S.Ct. 2043, 2051 (1990), when the Court noted the "familiar rule of administrative law that an agency must abide by its own regulations." The Court also recognized, however, that the Statute, in the circumstances set forth in section 7117(a)(2), permits the parties to bargain over matters covered by those regulations.
In our view, under the statutory framework, collective bargaining agreements, and not agency rules and regulations, govern the disposition of matters to which they both apply when there is a conflict between the agreement and the rule or regulation. We reach this conclusion on the basis of the scope of bargaining prescribed under the Statute. Consistent with section 7117, duly authorized representatives of an agency may agree to provisions in a collective bargaining agreement, notwithstanding the existence of conflicting agency rules or regulations. As discussed above, they may not do so in face of conflicting Government-wide rules or regulations. Only agency rules and regulations for which there is a compelling need within the meaning of section 7117(a)(2) of the Statute and section 2424.11 of the Authority rules may bar negotiation of conflicting union proposals. We deem it critical to our analysis of this issue that nothing in the Statute prevents an agency from agreeing to collective bargaining agreement provisions that alter or modify the policies established by an agency rule or regulation, even one for which a compelling need has been established. As the U.S. Supreme Court held in FLRA v. Aberdeen Proving Ground, 108 S. Ct. 1261, 1262 (1988), compelling need determinations can be made only in negotiability proceedings and a negotiability proceeding cannot arise until an agency alleges a matter to be nonnegotiable. For this reason, we conclude that provisions that become part of a collective bargaining agreement take precedence over agency rules and regulations with respect to matters to which they both apply.
In sum, for purposes of section 7122(a)(1) of the Statute, the term "rule or regulation" must be defined to include agency rules and regulations that are mandatory and prescriptive in their application. A conflict with agency rules and regulations will provide a basis for finding an award deficient under section 7122(a)(1) when such rules or regulations govern the disposition of the matter resolved by the arbitration award. Agency rules and regulations may only govern the disposition of matters to which they apply, however, when the rules and regulations do not conflict with provisions of an applicable collective bargaining agreement. Accordingly, we will apply section 7122(a)(1) to find an arbitration award deficient when the award is contrary to an agency rule or regulation unless the award enforces a conflicting provision of an applicable collective bargaining agreement that governs the matter in dispute.(2)
C. Application of the Approach in this Case
Applying section 7122(a)(1) of the Statute and this approach to the present case, we conclude that the award is deficient. We find that the Arbitrator's reversal of the Activity's recoupment action is based on a misinterpretation of JTR Part H.C4352 that resulted in the Arbitrator incorrectly sustaining the grievance without resolving the stipulated issue of whether the grievant had filed a false claim. Accordingly, we will set aside the portion of the award reversing the recoupment, and we will remand the matter to the parties.
First, under the approach described above, we note that Part H.C4352 prescribes the treatment of fraudulent travel claims as part of the JTR that implements the Federal Travel Regulations in the Department of Defense. It is not apparent that Part H.C4352 conflicts with any provision of the parties' collective bargaining agreement. The record reflects that the Arbitrator and the parties viewed Part H.C4352 as the controlling provision for purposes of resolving the grievance. Accordingly, we find that JTR Part H.C4352 governs the disposition of the grievance.
We also find that the Arbitrator misinterpreted Part H.C4352 in reversing the recoupment. The Arbitrator ruled that under Part H.C4352, only the grievant's suspected laundry and tip expenses "may or can be disallowed." Award at 6. Part H.C4352 clearly prescribes that the per diem allowance must be disallowed for any day concerning which an employee has falsified a claimed expense for any of the following: lodging, meals, or incidentals encompassed by the per diem allowance, which incidentals specifically include laundry and tips for maids and bellhops. Consequently, the award is deficient because it sustains the grievance based solely on an incorrect interpretation of Part H.C4352. In view of the governing provisions of Part H.C4352, the grievance could not properly be resolved without determining the stipulated issue of whether the grievant filed a false claim, which the Arbitrator failed to do. Because the award is contrary to Part H.C4352 in this respect, we will set aside that portion of the award that reverses the recoupment.
In order that the submitted issue of whether the grievant filed a false claim may be properly resolved, we remand this case to the parties with the direction that, absent settlement, they resubmit the merits of the grievance to arbitration for further proceedings consistent with this decision. Because the issue of whether the grievant filed a false claim was not resolved by the Arbitrator, we will not limit the parties' selection of an arbitrator for any further proceedings that are necessary. See Panama Canal Commission and International Organization of Masters, Mates and Pilots Marine Division ILA, AFL-CIO, Panama Canal Pilots Branch, 34 FLRA 740 (1990) (advising that the parties' choice of an arbitrator on remand was not limited). On receipt of an award, either party may file exceptions with the Authority to that award.(3)
This matter is remanded to the parties for further proceedings consistent with this decision.
(If blank, the decision does not have footnotes.)
1. Section 7122(a) of the Statute provides, in pertinent part: "If upon review the Authority finds that the award is deficient--(1) because it is contrary to any law, rule, or regulation . . . the Authority may take such action and make such recommendations concerning the award as it considers necessary, consistent with applicable laws, rules, or regulations."
2. A party contending before the Authority that an award is deficient because it is contrary to an agency rule or regulation bears the burden of ensuring that the record contains sufficient information for the Authority to render a decision on that issue. The party should specifically address whether provisions of an applicable collective bargaining agreement conflict with the agency rule or regulation.
3. Because the issue of whether the grievant filed a false claim has not been determined, the Agency's other exceptions are not appropriate for resolution at this time.