[ v53 p625 ]
53:0625(61)NG
The decision of the Authority follows:
53 FLRA No. 61
FEDERAL LABOR RELATIONS AUTHORITY
WASHINGTON, D.C.
_____
PATENT OFFICE PROFESSIONAL ASSOCIATION
(Union)
and
U.S. DEPARTMENT OF COMMERCE
PATENT AND TRADEMARK OFFICE
(Agency)
0-NG-2220
_____
DECISION AND ORDER ON NEGOTIABILITY ISSUES
September 30, 1997
_____
Before the Authority: Phyllis N. Segal, Chair; and Donald S. Wasserman, Member.
I. Statement of the Case
This case is before the Authority on a negotiability appeal filed by the Union under section 7105(a)(2)(E) of the Federal Service Labor-Management Relations Statute (the Statute), and concerns the negotiability of 25 proposals.
For the reasons fully explained in sections III through VI of this decision, we reach the following conclusions with respect to the proposals examined herein. We dismiss, without prejudice, the petition for review as it pertains to Proposals 4, 5, 9(c), 10(b), 11, 13, 14, and 20, because the Agency does not contest these proposals. We also dismiss the petition for review as it pertains to Proposals 12, 15, 16, 18, 19, and 24, because the proposals are outside the Agency's duty to bargain. However, we find that Proposals 1, 2, 3, 6, 7, 8, 9(a), 9(b), 10(a), 17, 21, 22, 23, and 25 are within the Agency's duty to bargain.
More particularly, as to the proposals examined herein, we find the following:
Proposal 1, which defines the financial interests that will be presumed to constitute a conflict of interest, is within the duty to bargain. See Section IV. A.
Proposals 2 and 3, which provide the methods by which examiners may determine a company's industry sector so as to permit examiners to identify conflicting financial interests, are within the duty to bargain. See Section IV. B.
Proposal 6, which provides a method for resolving disputes over the industry codes assigned to an examiner's art unit or to a particular company, is within the duty to bargain. See Section V. B.
Proposal 7, which requires that examiners be told which financial holdings are barred because of their new or changed work assignments, and that management provide the information in the form specified in Proposal 3, is within the duty to bargain. See Section IV. B.
Proposal 8, which concerns situations when a preexisting financial interest becomes conflicting because the Agency transfers an examiner to a new art unit or changes the industry sectors assigned to the examiner's art unit, is within the duty to bargain. See Section IV. C.
Proposals 9(a) and 9(b), which specify the actions that the Agency is permitted to take when conflicts of interest arise because an examiner is assigned work that is either not typical of the work in the examiner's assigned industry sector, or the result of a temporary transfer of work, are within the duty to bargain. See Section V. E.
Proposal 10(a), which establishes certain time limits for accomplishing divestiture, is within the duty to bargain. See Section V. F.
Proposal 12, which specifies the actions that the Agency is permitted to take when conflicts of interest arise because of an examiner's vested interest in a pension or retirement fund, is not within the duty to bargain. See Section V. E.
Proposal 15, which would permit an examiner who asserts a Fifth Amendment right against self-incrimination to refuse to submit a financial disclosure statement until such time as immunity from criminal prosecution were granted, is not within the duty to bargain. See Section V. H.
Proposal 16, which would grant examiners a waiver of criminal liability based on information derived from a financial disclosure statement that was completed in good faith, is not within the duty to bargain. See Section V. H.
Proposal 17, which prohibits the Agency from removing an examiner based on particular conflicts of interest, is within the duty to bargain. See Section V. G.
Proposal 18, which provides a blanket waiver of conflicts of interest where the facts set forth in the proposal exist, is not within the duty to bargain. See Section V. D.
Proposal 19, which requires an automatic waiver of conflicts of interest when the requirements set forth in the proposal are met, is not within the duty to bargain. See Section V. C.
Proposal 21, which would exempt examiners at GS-12 level and lower from any requirement to file a financial disclosure statement, is within the duty to bargain. See Section V. I.
Proposal 22, which would establish a joint labor-management committee to address conflict of interest issues which are the result of currently employed examiners seeking employment outside the Agency, is within the duty to bargain. See Section VI. A.
Proposal 23, which requires the Agency to establish a code to enable examiners to identify on their time sheets the work time they spend fulfilling financial disclosure and conflict of interest requirements, is within the duty to bargain. See Section IV. D.
Proposal 24, which would exempt examiners from including in their financial disclosure statements information concerning the interests set forth in the proposal, is not within the duty to bargain. See Section V. J.
Proposal 25, which would require the Agency to seek OGE approval of an alternative financial disclosure procedure that satisfies the criteria of the proposal, and would require that a Union representative be included in the development and drafting of the alternative procedure, is within the duty to bargain. See Section V. K.
II. Background
This negotiability dispute results from mid-term negotiations over the Agency's policy implementing certain Office of Government Ethics (OGE) regulations. The dispute encompasses 25 proposals involving financial disclosure and ethics requirements applicable to patent examiners.
A. Organization of the Patent and Trademark Office
Patent examiners are responsible for reviewing applications for patents submitted by the general public. After examining an application to determine whether the proposed invention warrants a patent, the examiner drafts a written response to the applicant concerning the invention's patentability.
Patent examiners are assigned to work in 1 of 16 "groups," which are established in accordance with general areas of technology: for example, chemical, electrical, or mechanical. Statement of Position at 3 n.1. Within each group, examiners are assigned to smaller, more specialized "art units." Id. at n.2. Each group comprises from 4 to 13 art units, and each art unit typically comprises between 10 and 20 examiners who are assigned to specific industry sectors. Each art unit is supervised by a Supervisory Primary Examiner (SPE), who reports to an overall group director.
A "docket system" governs patent examiners' workloads. Id. at 4. In particular, each examiner has a docket that lists all the patent applications that have been assigned to that examiner. An examiner's SPE is responsible for ensuring that patent applications within the SPE's art unit are timely reviewed. The record does not disclose the size, or average size, of an examiner's docket.
B. OGE Financial Disclosure and Ethics Regulations
This dispute arises from the Agency's proposed policy implementing OGE regulations governing financial disclosure and ethics, codified at 5 C.F.R. parts 2634 and 2635.(1) As discussed in more detail infra, Part 2634 establishes requirements for financial disclosure by Federal employees in the Executive Branch and Part 2635 establishes standards of ethical conduct for such employees. Both parts implement 18 U.S.C. § 208, a Federal conflict of interest statute.(2)
The parties agree that, consistent with Authority precedent, the OGE ethics rules are Government-wide regulations, within the meaning of section 7117(a)(1) of the Statute. See, e.g., Overseas Education Association, Inc. and Department of Defense, Office of Dependents Schools, 22 FLRA 351, 354 (1986), aff'd sub nom. Overseas Education Association, Inc. v. FLRA, 827 F.2d 814 (D.C. Cir. 1987). Accordingly, proposals that conflict with the OGE regulations are outside the duty to bargain under that section of the Statute.
III. Proposals To Which The Agency Has Not Objected
Before filing this petition for review, the Union requested that the Agency provide written allegations concerning the proposals or parts of proposals believed to be outside the duty to bargain. The Agency did not timely respond to the Union's request, and the Union filed this petition for review with the Authority.(3)
The Union's petition for review contains 25 proposals. However, the Agency's statement of position addresses the negotiability of all or part of only 19 of the 25 proposals. The Union requests that the Authority determine whether there is a duty to bargain over all of the proposals in its petition for review, including those not addressed by the Agency in its statement of review.
Because the Agency did not timely respond to the Union's request for written allegations, its objections are presented for the first time in its statement of position. In such circumstances, the Authority will find that proposals that are not objected to are not in dispute, and will not consider them further. See, e.g., American Federation of Government Employees, Local 3172 and U.S. Department of Health and Human Services, Social Security Administration, Modesto, California, 48 FLRA 489 n.2 (1993) (Member Armendariz concurring as to other matters), decision and order on request for reconsideration, 49 FLRA 302 (1994). Accordingly, we dismiss the petition as to Proposals 4, 5, 9(c), 10(b), 11, 13, 14, and 20 without prejudice to the Union's right to file an appeal if the Agency alleges that the proposals are outside the duty to bargain because they are inconsistent with law, rule, or regulation and other conditions governing review are met. See, e.g., American Federation of Government Employees, Council 214 and U.S. Department of the Air Force, Headquarters, Air Force Materiel Command, Wright-Patterson Air Force Base, Ohio, 53 FLRA 131, 132 (1997).
IV. Proposals Alleged To Be Inconsistent Only With Management's Rights (4)
A. Proposal 1
An examiner, an examiner's spouse, dependent child, or general partner will not acquire or retain any financial interest in any company in an industry sector which is within the primary responsibility of the examiner and such other industry sector within the art unit for which there is a reasonable probability of assignment to the examiner. It is the examiner's responsibility to exercise reasonable due diligence to avoid a conflict between any of the examiner's financial interests and the examiner's assigned industry sector(s).
1. Positions of the Parties
a. Agency
The Agency views an examiner's entire art unit as the appropriate area for defining potential conflicts of interest, regardless of whether the examiner routinely examines all of the technologies encompassed by his or her art unit. The Agency asserts that the scope of "a potential conflict of interest" under Proposal 1 is "significantly narrower" and, as a result, Proposal 1 affects its right to assign work under section 7106(a)(2)(B) of the Statute. Statement of Position at 8. In particular, the Agency argues that, "[i]f the scope of the financial restrictions were to be less than the art unit, as the Union has proposed in Proposal 1, an SPE could conceivably be forced to not assign cases to members of his art unit in order to avoid conflicts." Id.
In addition, the Agency claims that Proposal 1 is not an appropriate arrangement under section 7106(b)(3) of the Statute, because "the art-unit scope of its ethics rules does not adversely affect examiners . . . ." Id. at 11. According to the Agency, "Proposal 1 places substantial restrictions -- or, in some circumstances, even outright prohibitions -- on the Agency's ability to . . . effect work assignments efficiently and without delay." Id. at 11-12. Under these circumstances, the Agency contends that the proposal excessively interferes with its ability to carry out its mission.
b. Union
The Union contends that the "art unit industry sector" proposed by the Agency is too broad, and would unnecessarily require examiners to divest, or not acquire, financial holdings. According to the Union, Proposal 1 reflects a "compromise between the past practice of limiting conflict of interest issues to the employee's own docket and the Agency's proposal to extend restrictions to all dockets within an art unit."(5) Reply Brief at 18.
In this regard, the Union states that its proposal "covers the industry sector actually assigned to the examiner plus a 'back-up docket' . . . not currently assigned . . . [that will have the] . . . most reasonable probability of future assignment to the examiner." Id. (emphases in original). The Union also states that, if the reasonable probability of future assignment changes, the back-up docket could be changed. In addition, the Union contends that it is "exceedingly doubtful that an examiner" experienced in one industrial area "would be competent to examine products" in another industrial area." Id. at 22.
The Union claims that Proposal 1 does not affect management's rights under the Statute because "[n]ot one of the rights reserved to management in [s]ection 7106(a) includes within its scope the substance of conflict of interest rules." Id. at 19. Moreover, the Union rejects the Agency's argument that the proposal conflicts with its right to assign work because of any potential delay in work assignments. According to the Union: (1) it is "highly speculative" whether an examiner will be assigned work outside his expertise but within his art unit; and (2) the time it usually takes an examiner to begin work on a case ("anywhere from 30 days up to a year") is "adequate time for the handling of any issues related to conflict of interest without delaying the time at which the work would otherwise have been done." Id. at 20.
The Union also claims that Proposal 1 is negotiable as a procedure under section 7106(b)(2) of the Statute (6) and/or as an appropriate arrangement under section 7106(b)(3) of the Statute. With regard to the former argument, the Union claims that the proposal does not "prevent, or merely restrain, the Agency from assigning any work at all, regardless of whether the work is in an area which the Agency did or didn't predict was likely to be assigned to the employee." Id. As for the latter argument, the Union argues that the Agency's proposed conflict of interest requirements has "adverse financial and social impact on [an] examiner with no benefit to the public trust." Id. at 23.
2. Meaning of the Proposal (7)
Proposal 1 defines the financial interests that an examiner, as well as an examiner's spouse, dependent child, or general partner (hereinafter referred to solely as the examiner), is prevented from acquiring and retaining, whether or not the examiner actually is assigned work that would result in a conflict of interest. That is, the proposal defines the financial interests that will be presumed to constitute a conflict of interest. Under Proposal 1, an examiner may not acquire or retain financial interests in either: (1) the industry sector that is within the examiner's primary responsibility; or (2) any other industry sector in the examiner's art unit in which there is a reasonable possibility of assignment.
An examiner is required by Proposal 1 to exercise "reasonable due diligence" to avoid conflicts regarding either sector. The proposal is silent with respect to the methodology for determining the sector in which there is a reasonable possibility of assignment. However, the Union states that it intends that sector, referred to by the Union as the "back-up docket," to be designated, and redesignated as necessary, by SPEs. Id. at 28. As the Union's statement is consistent with the wording of the proposal, it is adopted for the purposes of this decision. See National Education Association, Overseas Education Association, Laurel Bay Teachers Association and U.S. Department of Defense, Department of Defense Domestic Schools, Laurel Bay Dependents Schools, Elementary and Secondary Schools, Laurel Bay, South Carolina, 51 FLRA 733, 737 (1996).
3. Proposal 1 Does Not Affect the Exercise of Management's Right to Assign Work Under Section 7106(a)(2)(B) of the Statute
The right to assign work under section 7106(a)(2)(B) of the Statute encompasses the authority to require employees to perform particular duties. See, e.g., District No. 1, Marine Engineers Beneficial Association, (AFL-CIO), Panama Canal Area and Panama Canal Commission, 49 FLRA 461, 466 (1994). The right to assign work also encompasses the authority to determine when work will be performed. See, e.g., American Federation of Government Employees, Local 3392 and U.S. Government Printing Office, Public Documents Distribution Center, Pueblo, Colorado, 52 FLRA 141 (1996). See also American Federation of Government Employees, Local 1345 and U.S. Department of the Army, Headquarters, Fort Carson and Headquarters, 4th Infantry Division, Fort Carson, Colorado, 48 FLRA 168, 174 (1993)(Member Armendariz concurring in part and dissenting in part as to other matters) (Fort Carson).
At the outset, we note that Proposal 1 does not, on its face, address in any way the assignment of work. However, the Agency claims that Proposal 1 would have two effects on the right to assign work, either of which renders the proposal outside the duty to bargain.
First, the Agency makes the bare assertion that Proposal 1 would preclude the Agency from exercising its right to assign work because an SPE could "conceivably be forced to not assign cases . . . to avoid conflicts." Statement of Position at 8. Without any evidence to support this assertion, we are unable to conclude that the Agency would be precluded from exercising its right to assign work under the Statute. In any event, as interpreted by the Authority, under Proposal 1 the Agency can always modify or change the "back-up docket."
Moreover, OGE regulations provide, in addition to employee disqualification, for employee divestiture of conflicting financial interests.(8) It follows from these provisions that holding the financial interest at the time assignment is made does not necessarily preclude the employee from working on an assignment, since the employee may have divested the financial interest by the time work is begun.
Second, the Agency makes a general assertion that Proposal 1 would delay work assignments, a claim the Union construes as encompassing actual work on--participation in--a case. Authority precedent establishes in general that proposals that preclude an agency from exercising a management right, unless or until other events occur, affect the exercise of that right. See, e.g., National Association of Government Employees, Local R1-109 and Department of Veterans Affairs, Medical Center, Newington, Connecticut, 53 FLRA No. 47, slip op. at 16 (1997); National Weather Service Employees Organization (MEBA/NMU) and U.S. Department of Commerce, National Oceanic and Atmospheric Administration, National Weather Service, Silver Spring, Maryland, 46 FLRA 49 (1992).
Here, the record provides an insufficient basis on which to find that Proposal 1 interferes with the Agency's right to assign work because it would delay the assignment of work. In particular, the Agency fails to specify the delay to which it refers. Finding such delay would require assumptions that: (1) examiners will be assigned work outside both their primary area of responsibility and their "back-up area" as designated by their supervisors; (2) examiners will have conflicting interests; and (3) examiners would be ready to commence work prior to the time for divesture has elapsed.
In addition, the only argument in the record--the Union's--with regard to these assumptions is that: (1) "[t]he majority of employees who are in the situation in which there is at least one unrelated area of technology within the scope of the organizational unit to which they are assigned never examine that unrelated area during their entire lifetime career as a patent examiner"; and (2) the normal time necessary for processing a case is "adequate . . . for the handling of any issues related to [the] conflict of interest without delaying the time at which the work would otherwise have been done." Reply Brief at 19, 20.
Based on the foregoing, the delay asserted by the Agency is too speculative a basis on which to conclude that Proposal 1 affects management's right to assign work. See American Federation of Government Employees, Council of Locals No. 163 and U.S. Department of Defense, Defense Contract Audit Agency, 51 FLRA 1504, 1512 (1996) (Member Wasserman, dissenting) (Authority will not speculate over consequences of a proposal that are unsupported by the record). Accordingly, we find that Proposal 1 is within the Agency's duty to bargain.
B. Proposals 2, 3, and 7
Proposal 2:
Reasonable diligence means avoiding conflicts actually known to the examiner plus reviewing any one of:
a. Dun and Bradstreet,
b. Standard and Poor's,
c. Moody's, or
d. Value Line
to determine a company's industry sector.Proposal 3:
The Office shall define each industry sector in terminology consistent with industry areas identified by sources a-d in Section 2 above, and identify which source the terminology came from.
Proposal 7:
In the event the Office transfers an examiner to a new art unit or changes industry sector(s) examined in an examiner's existing art unit, the Office shall provide the examiner with a written statement defining the new industry sector(s) which has been assigned. The definition will be consistent with [Proposal] 3. It is the examiner's responsibility to review their [sic] financial holdings and inform management of any potential conflicts.
1. Positions of the Parties
a. Agency
The Agency argues that Proposals 2, 3, and 7 are "inextricably linked" to the scope of financial restrictions in Proposal 1 and, as such, are outside the duty to bargain for the same reasons as asserted in connection with Proposal 1. Statement of Position at 12, 13, 18.
b. Union
The Union asserts that Proposals 2, 3 and 7 are not inextricably linked to Proposal 1. According to the Union, the proposals would be "equally applicable" under the Agency's proposed scope of conflicts of interest. Reply Brief at 24, 26, 34.
The Union states that Proposal 2 is intended to "set a definition of what constitutes reasonable diligence in avoiding conflicts." Id. at 24. The Union describes Proposal 2 as a "procedure," requiring that employees "consult one of the standard reference publications of the listed publishers to determine the industry sector(s) to which the company belongs[]" and "apply actual personal knowledge of the economic activity of companies." Id. Proposal 3, according to the Union, "requires that the industry sector definitions be provided in terms that are commonly used in the published sources listed in Proposal 2." Id. at 26. According to the Union, the Agency's definitions make it "difficult to compare the sector definitions with the description of the financial activities of companies as listed in the financial literature." Id. at 27. The Union asserts that Proposal 7 requires only that reassigned examiners receive written notification of the changes in their industry sector in order to identify real or apparent conflicts of interest that may result from their financial holdings.
2. Meaning of the Proposals
Proposals 2 and 3 provide the methods by which examiners may determine a company's industry sector so as to permit examiners to identify conflicting financial interests. Proposal 2 requires an examiner to avoid conflicts that are known to an examiner and those uncovered by examining one of the four publications listed in the proposal. Proposal 3 requires the Agency to use terminology consistent with that in the four publications specified in Proposal 2, and to identify which publication was used. Proposal 7 obligates management to provide examiners with certain information either when their work assignments are changed because of their transfer to other art units or the work assigned to their current art units is modified. In particular, Proposal 7 requires that examiners be apprised of what financial holdings are barred because of their new or changed work assignments, and that management provide the information in the form specified in Proposal 3.
3. Proposals 2, 3 and 7 Are Within the Duty to Bargain
With regard to Proposals 2, 3, and 7, the Agency's sole arguments are that: (1) Proposals 2 and 3 are inextricably linked to Proposal 1 and are, therefore, outside the duty to bargain for the same reasons as Proposal 1; and (2) Proposal 7 is inextricably linked to Proposals 1 and 3 and is, for that reason, outside the obligation to bargain. Consistent with our conclusion with regard to Proposal 1, we find no basis on which to conclude that Proposals 2 and/or 3 are outside the duty to bargain. Similarly, as Proposals 1 and 3 are within the duty to bargain, we conclude that Proposal 7 is within the duty to bargain.
Moreover, even assuming arguendo that Proposal 1 was outside the duty to bargain, that would not render Proposals 2, 3, and 7 outside the duty to bargain. Proposals 2, 3, and 7 do not refer to Proposal 1. These proposals also do not refer to either the "industry sector which is within the primary responsibility of the examiner," proposed by the Union, or the "art unit industry sector," preferred by the Agency. Proposal 2 sets forth the references to be consulted by examiners to avoid financial conflicts of interest, without regard to how such conflicts are defined. Proposal 3 establishes the terminology to be used in defining industry sectors, also without regard to how the sectors that constitute a conflict of interest are defined. Proposal 7 requires the Agency to provide examiners with a written statement defining new or changed industry sectors assigned to examiners or art units in which they work. In these circumstances, Proposals 2, 3, and 7 are not inextricably linked to Proposal 1.
In addition, the Authority has found similar proposals within the duty to bargain because the purposes of such proposals are to "assure that employees are informed of what errors the [a]gency has determined appl[y] to jobs and ensure that [] employees understand what constitutes errors." American Federation of Government Employees, AFL-CIO, General Committee of AFGE for SSA Locals and Social Security Administration, 23 FLRA 329, 335 (1986); see also Patent Office Professional Association and U.S. Department of Commerce, Patent and Trademark Office, 48 FLRA 129, 142 (1993). For example, proposals that do no more than describe, in general, the conduct required of an employee without limiting management's actions are within the duty to bargain. See New York State Nurses Association and Veterans Administration, Bronx Medical Center, 30 FLRA 706, 764 (1987).
Accordingly, we conclude that Proposals 2, 3, and 7 are within the duty to bargain.
C. Proposal 8
Proposal 8
When a potential conflict arises under [Proposal] 7 above, the following procedure will be used to resolve the conflict:
(a) When an examiner has a compelling pre-existing financial interest that would be adversely affected, management shall not make the transfer or the change referred to in Section 7 above, unless there is no other qualified examiner available to do the work.
Typical examples of compelling financial interest are spousal employment, significant illiquid assets and significant interests in the business of a relative. To be considered compelling[,] the financial interest must rise to a level analogous to the examples above.
(b) When an examiner has a significant pre-existing financial interest that would be adversely affected, the examiner may appeal for reconsideration of the transfer or change referred to in Section 7 above. The appeal will balance the expertise of the examiners involved, management needs of balancing dockets and the degree of adverse financial impact on each examiner involved.
Typical examples of a significant pre-existing financial interest is an asset that exceeds 30% of the examiner's gross annual salary or an unpaid teaching position.
1. Positions of the Parties
a. Agency
The Agency argues that the proposal affects the exercise of its rights to assign employees and work. According to the Agency, under section (a) of the proposal, there are circumstances in which "management would be prohibited outright from effecting a transfer of examiners or a change in the art unit's industry sector." Statement of Position at 20. In addition, according to the Agency, section (b) of the proposal would "impermissibly limit[]" the Agency's discretion to make adjustments in staffing and work by permitting examiners to appeal staffing and work decisions and requiring the Agency to decide the appeals. Id. The Agency asserts that the technologies reviewed by examiners are constantly changing, and that it is "essential" in these circumstances that "the Agency be able to adapt to such changes and make the corresponding managerial decisions necessary to properly staff the various technological areas handled by the Agency's examiners." Id.
b. Union
The Union asserts that section (a) of Proposal 8 protects employees "from what amounts to a career ending management initiated transfer or reassignment" to an area with which employees have a preexisting conflicting financial interest. Reply Brief at 36. The Union claims that section (b) constitutes a "procedure for reevaluating a proposed management initiated transfer." Id. at 37.
The Union concedes that Proposal 8 "has a direct impact on management's exercise of its reserved rights[.]" Id. However, according to the Union, the proposal is negotiable as an appropriate arrangement. In the Union's view, where an examiner has a preexisting conflict, a management initiated change that would create a conflict "would adversely affect the examiner to the greatest extent possible because it would potentially be career ending to the examiner or his spouse." Id. According to the Union, section (a) of the proposal does not affect the Agency's rights because it would not preclude assignments when there are no other qualified examiners. In addition, the Union points out that the proposal would benefit both parties by facilitating the Agency's ability to retain qualified examiners.
The Union claims that section (b) of the proposal provides a review process for examiners who will be adversely affected by a change, and that the section does not prevent the Agency from making a change. According to the Union, alternatives to the Agency's decision to transfer "are to be evaluated in light of three factors to identify and balance the benefits to both management and the employees." Id.
2. Meaning of the Proposal
Proposal 8 concerns situations when the Agency transfers an examiner to a new art unit or changes the industry sectors assigned to the examiner's art unit so that a preexisting financial interest becomes conflicting. The proposal defines two levels of financial interest: "compelling" and "significant." Where the interest is "compelling," as defined in the proposal, management may not assign the examiner the work that causes the conflict unless there is no other qualified examiner available to replace the affected examiner. When the financial interest is "significant," an examiner may appeal the action. The appeal is resolved by balancing three factors: "the expertise of the examiners involved, management needs of balancing dockets and the degree of adverse financial impact on each examiner involved."
3. Proposal 8 Affects the Exercise of Management's Right to Assign Employees and Work
It is well-established that the right to assign work to employees under section 7106(a)(2)(B) of the Statute encompasses the right to determine the particular duties and work to be assigned, and the particular employees to whom or positions to which it will be assigned. See, e.g., National Treasury Employees Union and Department of the Treasury, Bureau of the Public Debt, 3 FLRA 769, 775 (1980), aff'd, 691 F.2d 553 (D.C. Cir. 1982). The right to assign work under section 7106(a)(2)(A) of the Statute also encompasses the assignments and reassignments of employees to positions. See, e.g., National Treasury Employees Union and U.S. Nuclear Regulatory Commission, Washington, D.C., 47 FLRA 370, 382 (1993). Here, the Union concedes that Proposal 8 affects the exercise of management's right to assign employees and work under section 7106(a)(2)(A) and (B) of the Statute. See Reply Brief at 36.
4. Proposal 8 Constitutes an Appropriate Arrangement Under Section 7106(b)(3) of the Statute
The approach for determining whether a proposal is within the duty to bargain under section 7106(b)(3) was first set out in National Association of Government Employees, Local R14-87 and Kansas Army National Guard, 21 FLRA 24 (1986) (KANG). The Authority initially determines whether the proposal is intended to be an "arrangement" for employees adversely affected by the exercise of a management right. An arrangement must seek to mitigate adverse effects "flowing from the exercise of a protected management right." United States Department of the Treasury, Office of the Chief Counsel, Internal Revenue Service v. FLRA, 960 F.2d 1068, 1073 (D.C. Cir. 1992) (IRS, Chief Counsel).
The alleged arrangement must be "tailored" to compensate employees suffering the adverse effects attributable to the exercise of management's rights(s). See, e.g., National Treasury Employees Union, Chapter 243 and U.S. Department of Commerce, Patent and Trademark Office, 49 FLRA 176, 184 (1994) (Member Armendariz concurring in part and dissenting in part) (Patent and Trademark Office). Section 7106(b)(3) brings within the duty to bargain proposals that provide "balm" to be administered "only to hurts arising from" the exercise of management rights. American Federation of Government Employees, National Border Patrol Council and U.S. Department of Justice, Immigration and Naturalization Service, 51 FLRA 1308, 1319 (1996) (relying on U.S. Department of the Interior, Minerals Management Service, New Orleans, Louisiana v. FLRA, 969 F.2d 1158, 1162 (D.C. Cir. 1992)). That section of the Statute does not bring within the duty to bargain proposals that are so broad in their sweep that the "balm" would be applied to employees indiscriminately without regard to whether the group as a whole is likely to suffer, or has suffered, adverse effects as a consequence of management action under section 7106. Id. See also Patent and Trademark Office, 49 FLRA at 184.
In determining whether a proposal would establish an arrangement that is appropriate, within the meaning of section 7106(b)(3), the Authority balances the respective interests of the agency and employees to determine whether the proposed arrangement excessively interferes with the relevant management rights. KANG, 21 FLRA at 31-33. In doing so, the Authority weighs the benefits afforded to employees under the arrangement against the intrusion on the exercise of management's rights. Id.
Proposal 8 prescribes the measures to be taken when management's actions -- reassigning an examiner or changing the work assigned to an art unit -- create conflicts of interest based on the examiner's preexisting financial interests. As discussed supra in connection with Proposal 1, such conflicts may, in some circumstances, result in the Agency directing the examiner to divest the conflicting interests. The Union claims correctly that those interests can include a spouse's job.(9)
We find that requiring an employee, including a spouse, to divest financial interests that become conflicting as a result of the Agency's exercise of its rights to assign employees and work constitutes an adverse effect resulting from the exercise of a management right. We also find that the proposal is tailored, in that it concerns only those employees whose financial interests would be adversely affected by the exercise of those management rights. Consistent with the foregoing, Proposal 8 is an arrangement for employees adversely affected by the exercise of management's rights within the meaning of section 7106(b)(3).
As to the burden imposed by the proposal on management's exercise of its rights, we note that management retains the discretion to permanently reassign an examiner or work even where the employee's "compelling" financial interest would be affected, when there is no other qualified examiner available to perform the work. Where the employee's "significant" financial interest would be affected, management could reassign an examiner or change the work assigned to an art unit when, on reconsideration of the reassignment, management finds that its decision is supported by the criteria specified in section (b). Thus, the proposal contemplates that management may reassign either work or an examiner when there is no available alternative for getting the work accomplished, or when a balancing of the competing interests favors management's action.
In balancing the burden the proposal imposes on management's right against the benefit to employees, it is relevant that the adverse effects are outside the examiners' control. See KANG, 21 FLRA at 32. In particular, the conflict arises because management's new work assignments or employee reassignments create conflicts with financial holdings that were previously authorized.
We conclude that the benefit to examiners of being assured that reassignments requiring divestiture of their financial interests, or resolution of a spouse's or dependent child's conflicting employment, can occur only when other alternatives are unavailable, outweighs the burden imposed on the Agency's rights to assign employees and work by requiring that the Agency adopt particular available alternatives to the reassignments. Therefore, the proposal does not excessively interfere with management's rights to assign employees and work under section 7106(a)(2)(A) and (B) of the Statute and is an appropriate arrangement under section 7106(b)(3). As such, it is within the duty to bargain.
D. Proposal 23
Proposal 23
Time necessary for fulfillment of financial disclosure and conflict of interest responsibilities by the examiner shall be separately accounted for. Time spent selecting investments shall not be included. Time accounting sheets shall include an identification of the appropriate time code.
1. Positions of the Parties
a. Agency
The Agency argues that Proposal 23 is outside the duty to bargain because it affects the exercise of its right to assign work under section 7106(a)(2)(A). The Agency asserts that requiring it to provide "'other time' for completion of financial disclosure requirements takes away from employees' examining time, and directly affects the SPE's ability to regulate workflow . . . ." Statement of Position at 39-40. The Agency maintains that meeting financial disclosure requirements, "like federal and state income tax requirements, is simply not a duty that management must permit during working hours." Id. at 40.
b. Union
The Union contends that Proposal 23 is intended to "document[] the time an employee spends meeting . . . financial disclosure responsibilities." Petition for Review at 14. The Union states that the proposal requires that:
the time used by the examiner to determine whether a conflict exists and the resolution of any real or apparent conflicts so found be separately accounted for and that [m]anagement provide a "time code" for such accounting on the biweekly time worksheet . . . .
Id.
According to the Union, Proposal 23 has no effect on the assignment of work because it "merely provides a mechanism to account for time." Reply Brief at 60. The Union asserts the proposal does not require either that the time spent fulfilling financial disclosure responsibilities be subtracted from examining time or that the Agency consider the time in appraising employees. If the proposal is found to affect management's right to assign work, then the Union asserts that the proposal constitutes an appropriate arrangement. The Union asserts:
The financial disclosure and conflict of interest requirement[] is a new job requirement that is unrelated to the examination of patent applications. The examiners['] patent examining production performance is measure[d] in 6 minute increments, and any time spent performing other functions required by management will have a potential adverse impact on their production performance rating.
Id. at 61.
2. Meaning of the Proposal
Proposal 23 requires the Agency to establish a code to enable examiners to identify on their time sheets the work time they spend fulfilling financial disclosure and conflict of interest requirements. Although not specified in the proposal, it is clear that the proposal would permit examiners to fulfill these requirements on duty time. In this regard, the Union does not counter the Agency's assertion that use of work time would be authorized for this purpose; the proposal also would be meaningless if such use of work time was not authorized.
The proposal does not prescribe how management will use this information. In particular, the proposal does not require management to consider the amount of time an examiner spends fulfilling these requirements in evaluating the examiner's productivity. Instead, consistent with the Union's statement of intent, the proposal "only requires that any time spent be separately accounted for, not that it would be subtracted from examining time." Id. at 61.
3. Proposal 23 Affects the Exercise of Management's Right to Assign Work Under Section 7106(a)(2)(B) of the Statute
A proposal affects management's right to assign work if the proposal requires management to assign duty time for a particular task. See, e.g., American Federation of Government Employees, Local 2077 and U.S. Department of Defense, Michigan Air National Guard, 127th Tactical Fighter Wing, 43 FLRA 344, 359 (1991) (proposal requiring an agency to permit employees to use duty time for physical fitness activities directly affects the agency's right to assign work); American Federation of Government Employees, Local 1513 and U.S. Department of the Navy, Naval Air Station, Whidbey Island, Oak Harbor, Washington, 41 FLRA 589, 594 (1991) (proposal requiring agency to dispatch an individual to obtain food for employees performing overtime directly affects management's right to assign work). However, the Authority will not find that a proposal affects management's rights when the use of time is merely incidental to the proposal. See American Federation of Government Employees, Local 3407 and U.S. Department of Defense, Defense Mapping Agency, Hydrographic-Topographic, Washington, D.C., 39 FLRA 557, 564-66 (1991) (a proposal will not be found outside the duty to bargain solely because its implementation results in the use of employees' time). The Authority also will not find that a proposal affects management's right to assign work when the proposal requires only that management maintain specific information, and does not dictate how management will use that information. See, e.g., American Federation of Government Employees, Local 2879 and U.S. Department of Health and Human Services, Social Security Administration, Chula Vista District, San Diego, California, 38 FLRA 244, 253-54 (1990) (finding that a provision requiring an agency's review procedures to reflect employee absences did not directly interfere with management's rights) (HHS, Chula Vista).
As described above, Proposal 23 would permit examiners to fulfill financial disclosure and conflict of interest requirements during duty time. In fact, there is no dispute between the parties that the use of duty time for this purpose is directly authorized under the proposal. Thus, the use of duty time is not incidental to the implementation of Proposal 23. In addition, Proposal 23 does not require only that a record of time spent fulfilling financial disclosure and conflict of interest requirements be maintained; it also permits the use of time to do so. Accordingly, HHS, Chula Vista and other similar decisions do not apply. As such, Proposal 23 affects management's right to assign work under section 7106(a) of the Statute.
4. Proposal 23 Constitutes an Appropriate Arrangement Under Section 7106(b)(3) of the Statute
We conclude that, consistent with the Union's argument, it is foreseeable that the time spent fulfilling disclosure and conflict requirements may have an adverse effect on examiners' performance ratings. It is undisputed, in this regard that examiners' work "performance is measure[d] in 6 minute increments[.]" Reply Brief at 61. Thus, the time required to prepare a disclosure statement could affect an examiner's ability to maintain required productivity. This adverse effect flows not only from the obligation to fulfill these requirements, which results from the Agency's application of OGE regulations to examiners, but also from the exercise of management's right to assign work and direct employees by establishing performance standards.
We also conclude that Proposal 23 is sufficiently tailored. In this regard, "[p]roposals that are prophylactic in nature, in that they are intended to eliminate the possibility of an adverse effect, may constitute appropriate arrangements negotiable under section 7106(b)(3)." Patent and Trademark Office, 49 FLRA at 191. As explained by the Union, Proposal 23 is intended to address the foreseeable adverse effect on performance evaluations resulting from the time spent fulfilling financial disclosure and conflict of interest requirements. Given the fact that performance evaluations are conducted annually, it cannot be predicted with accuracy at the time the disclosure forms are completed which particular examiners would be adversely affected by the failure to account for their time spent complying with disclosure requirements. Specifically, it cannot be predicted which examiners will not be able to maintain productivity over the course of the performance year unless the time they spend completing financial disclosure forms is taken into account. Thus, the proposal acts as a prophylactic in that it prevents any such adverse effect. See id. at 192-94. As such, Proposal 23 constitutes an arrangement within the meaning of section 7106(b)(3) of the Statute.
In balancing the burden the proposal imposes on management's right against the benefit to employees, it is relevant that all agencies are encouraged to provide Federal employees with duty time to fulfill their financial disclosure requirements. In this regard, the Director of OGE, in an official document intended to offer guidance regarding financial disclosure systems to Designated Agency Ethics Officials, stated that:
Some filers have complained that they are not permitted to prepare their financial disclosure reports on official time. While the regulation does not speak to this issue, [OGE] has advised them that, because completion of the [financial disclosure forms] is a requirement of their Government position, they should be allowed to use reasonable periods of official time, in amounts to be determined by their agency [to complete such forms].
Stephen D. Potts, Director, United States Office of Government Ethics, to Designated Agency Ethics Officials (Dec. 13, 1995). Thus, the burden placed on the Agency by the proposal is one that the Agency "should" already be shouldering. In contrast, the benefit to examiners of being assured that they will have the ability to rebut a poor performance rating stemming from the failure to maintain productivity, with information as to the time they were required to spend fulfilling financial disclosure requirements, is significant. As such, the burden Proposal 23 imposes on management's right is outweighed by the benefit to examiners.
Accordingly, Proposal 23 does not excessively interfere with management's right to assign work under section 7106(a)(2)(B) of the Statute. Therefore, we find that it is an appropriate arrangement and conclude that it is within the Agency's duty to bargain.
V. Proposals Alleged To Be Inconsistent With Government-Wide Regulation (10)
A. Framework for Resolving The Allegations That Proposals Are Inconsistent With Law or Government-wide Regulation
The Authority has recognized two distinct grounds for finding a bargaining proposal outside the duty to bargain because it conflicts with a law or Government-wide regulation. 5 U.S.C. 7117(a).
First, the Authority has consistently held that matters concerning conditions of employment are subject to collective bargaining when they are within the discretion of an agency and are not otherwise inconsistent with law or applicable rule or regulation. See, e.g., International Association of Machinists and Aerospace Workers, Franklin Lodge No. 2135 and U.S. Department of the Treasury, Bureau of Engraving and Printing, 50 FLRA 677, 681-82 (1995) (Bureau of Engraving and Printing), aff'd mem. sub. nom. Bureau of Engraving and Printing v. FLRA, No. 95-1499 (D.C. Cir. May 23, 1996). However, negotiation over the exercise of agency discretion has been found to be outside the duty to bargain where a law or regulation indicates that an agency's discretion is intended to be exercised only by the agency -- referred to by the Authority as "sole and exclusive" discretion. Id. at 682 n.8. See also Illinois National Guard v. FLRA, 854 F.2d 1396 (D.C. Cir. 1988) (National Guard). In the absence of an indication in the wording or in the legislative or regulatory history of a provision that the agency's discretion is sole and exclusive, the Authority has found that it is not. See Bureau of Engraving and Printing, 50 FLRA at 692; American Federation of Government Employees, Local 3295 and U.S. Department of the Treasury, Office of Thrift Supervision, 47 FLRA 884, 894-99 (1993), aff'd 46 F.3d 73 (D.C. Cir. 1995); U.S. Department of Defense, Office of Dependents Schools and Overseas Education Association, 40 FLRA 425, 441-43 (1991) (Overseas Education); Police Association of the District of Columbia and Department of the Interior, National Park Service, U.S. Park Police, 18 FLRA 348, 353 (1985).
Second, proposals have been found to be inconsistent with law or regulation and, thus, outside the duty to bargain, where they mandate that an agency apply a standard or procedure that is contrary to the law or regulation.(11) See Overseas Education Association, 40 FLRA at 441-43. The fact that an agency's discretion may be bargained does not necessarily mean that the discretion is unlimited. Id.
This second category of proposals found to conflict with law or regulation is illustrated by several principles established in Authority precedent.(12) For example, where a regulation calls for a case-by-case determination as to whether the standard it establishes has been met, the Authority has held that a proposal that, in effect, made a blanket determination that the standard had been met was outside the duty to bargain because it was inconsistent with the regulation. See e.g., National Treasury Employees Union and Department of the Treasury, U.S. Customs Service, 23 FLRA 681, 682-83 (1986) (Customs Service). Such a requirement for a case-by-case determination has been found explicitly in the regulation. Overseas Education, 40 FLRA at 428-31 (regulation may "be waived by the head of the agency upon determination that unusual circumstances in an individual case justify such action"). This requirement has also been found to be stated implicitly. In this regard, where a regulation requires consideration of specific criteria as applied to particular facts, the Authority has interpreted it to require a case-by-case determination. See Customs Service, 23 FLRA at 683 (finding regulation that prevents the disclosure of records where it may "create an unfair advantage" or "compromise the utility" of the selection process to incorporate a standard that must be applied to the particular circumstances presented on a case-by-case basis).(13) In determining whether a regulation requires a case-by-case determination, the Authority is guided by the provisions of the regulation itself, the legislative intent of the statutes that the regulation implements, and court decisions addressing the regulation and those statutes. Overseas Education, 40 FLRA at 428-31, 441-43.
In addition, the Authority has found proposals to be inconsistent with a regulation where the regulation states an express standard governing the exercise of an agency's authority, and the proposal either expanded or contracted that regulatory standard. See, e.g., American Federation of Government Employees, AFL-CIO, Local 1458 and U.S. Department of Justice, Office of the U.S. Attorney, Southern District of Florida, 29 FLRA 3, 4-5 (1987) (finding a proposal that contained a less rigorous standard -- "an immediate risk to the employees' health and safety" -- than regulation's "imminent risk of death or serious bodily harm" standard was outside the duty to bargain) (U.S. Attorney).(14)
Finally, the Authority has found a proposal inconsistent with regulation where the proposal precluded an agency from doing something it is required to do under the regulation. For example, the Authority held outside the duty to bargain a proposal precluding an agency from taking disciplinary actions against employees who were found to use illegal drugs, because the regulation provided that an agency is required to "initiate action to discipline any employee who is found to use illegal drugs[.]" American Federation of Government Employees, National Council of HUD Locals and U.S. Department of Housing and Urban Development, 43 FLRA 1405, 1409-13 (1992) (HUD).(15)
B. Proposal 6
(a) A committee will be established to hear appeals if an examiner disagrees with the designated SIC [Standard Industry Classification] codes for the examiner's assigned industry sector(s) or with a particular company's designation in an industry sector. The appeals committee will gather the information necessary to apply the standards set forth in subsections b and c below. Past practice in the art unit will not be precedential since any one examiner may not be concerned with this issue. The appeals committee shall issue a written decision which shall be precedential to the extent circumstances have not changed.
(b) The fact that a company's total patents classified in a particular class are less than 1% of its total patent portfolio and less than 1% of the total patents classified in that class will be prima facie evidence that such company is not within the industry sector defined by/encompassed by that class.
(c) A company shall be deemed to be within an industry sector if 10% or more of the company's revenue is generated by activities within the industry sector. Revenue of less than 10% will be prima facie evidence that such company is not within the industry sector.
1. Positions of the Parties
a. Agency
The Agency contends that all three subsections of Proposal 6 are inconsistent with 5 C.F.R. § 2635.403. According to the Agency, that regulation vests the Agency's designee (the Ethics Division of the Office of the General Counsel) with exclusive authority to determine whether financial conflicts of interest exist. The Agency argues that longstanding Authority precedent confirms that, where a Government regulation provides an agency with decision making authority, proposals that limit that authority are outside the duty to bargain.
The Agency also asserts that Proposal 6 would render 5 C.F.R. § 2635.403(b) "completely meaningless should the Agency be forced to follow a Union-imposed framework, with set percentages, for determining which companies pose financial conflicts of interest." Statement of Position at 17. In support of its contention the Agency cites to Authority decisions finding a proposal outside the duty to bargain because it modified a standard set forth in regulation, or created a blanket determination that a regulatory standard is met where the regulation calls for such determinations to be made on a case-by-case basis. Id. at 17-18.
In addition, the Agency contends that subsection (a) of Proposal 6 would delay assignments of work or require that the work be assigned to another examiner and, consequently, affects its right to assign work under section 7106(a)(2)(B) of the Statute. The Agency argues that, when an examiner appeals to the proposed committee, the examiner's supervisor "would have to either hold the cases for that examiner in abeyance until the panel reaches a decision, or attempt to find another examiner to handle the work." Id. at 14. The Agency further asserts that subsection (a) does not constitute an appropriate arrangement under section 7106(b)(3) of the Statute because "it excessively interferes with management's right to assign work." Id. at 15.
b. Union
The Union asserts that Proposal 6 is not inconsistent with 5 C.F.R. § 2635.403. In this regard, the Union claims that section 2635.403(a) -- not 2635.403(b) -- applies to Proposal 6 because subsection (b) relates only to Agency determinations of "substantial conflict." Reply Brief at 32. According to the Union, a substantial conflict "rarely arises in the patent examination process because . . . it is unlikely that an examiner's action could have a direct and predictable impact on his financial interests."(16) Id. The Union asserts that Proposal 6 "is intended to be a procedure pursuant to [section 2635.403(a)] in that it establishes and implements general rules for regulating financial interests . . . ." Id. However, the Union claims that the Agency's authority under either subsection (a) or (b) of the regulation is not "exclusive" and, as a result, may be exercised through collective bargaining. Id. The Union notes that subsection (c) of the proposal "was modeled on" the existing regulations of the Food and Drug Administration. Id.
In response to the Agency's management's rights claims, the Union asserts that Proposal 6 does not concern the assignment of work. According to the Union, the proposal "merely applies to the determination of what constitutes a correct description of the employee's assigned work and what companies fall within the scope of that description." Id. at 33. The Union asserts, in this regard, that proposals establishing joint labor-management committees are negotiable. In addition, the Union contends that the proposal is negotiable under section 7106(b)(3) as an appropriate arrangement for examiners who otherwise would be adversely affected by possible Agency errors in identifying industry codes.
2. Meaning of the Proposal
Proposal 6 provides a method for resolving disputes over the Standard Industry Classifications (SICs) that describe the types of companies included in an examiner's art unit. The same process would be used to resolve disputes over whether a particular company falls within a specific industry code. As these codes are used to identify those holdings which are subject to regulatory prohibition as potential conflicts of interest, the determination at issue does not relate to individual determinations of actual conflict of interest of a particular examiner with specific holdings and assignments. Consistent with the Union's statements, we construe subsection (a) of the proposal as establishing a joint labor management committee to resolve disputes arising from an examiner's disagreement with codes assigned to the examiner's unit or a particular company. The joint labor committee would be required to gather information necessary to apply the standards set forth in subsections (b) and (c), and to issue a written decision on the matter. Nothing in Proposal 6 indicates that committee decisions are final and binding on the Agency.
Subsections (b) and (c) provide, respectively, that prima facie evidence that a company is not within a particular industry sector will exist provided: (1) the company's total patents in a particular class are less than 1 percent of its total patent portfolio and less than 1 percent of the total patents classified in that class; and/or (2) less than 10 percent of the company's revenue is generated by activities within the industry sector. Thus, it creates two rebuttable presumptions to assist the committee in determining whether a company is within an industry sector.
3. Proposal 6 Is Not Inconsistent with 5 C.F.R. § 2635.403
a. 5 C.F.R. § 2635.403
Subsections (a) and (b) of 5 C.F.R. § 2635.403 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. By their plain terms, subsections 403(a) and (b) pertain to different prohibitions: subsection 403(a) pertains to regulatory prohibitions applicable to all or a class of agency employees; subsection 403(b) pertains to specific prohibitions applicable to individual employees.
In addition, different standards apply to the prohibitions under subsections 403(a) and (b). Under subsection 403(a), "an agency may" issue regulations that prohibit the acquisition or holding of financial interests "based on the agency's determination" that:
the acquisition or holding of such financial interests would cause a reasonable person to question the impartiality and objectivity with which agency programs are administered.
Under subsection 403(b), "an agency may" prohibit an individual employee from acquiring or holding financial interests based upon "the agency designee's determination" that such acquisition or holding will:
(1) require the employee's disqualification from matters so central or critical to the performance of his official duties that the employee's ability to perform the duties of his position would be materially impaired; or
(2) adversely affect the efficient accomplishment of the agency's mission because another employee cannot be readily assigned to perform work from which the employee would be disqualified by reason of the financial interest.
Thus, subsections 403(a) and (b) relate to different prohibitions resulting from the application of different standards.
c. The Agency's Authority Under § 2635.403(b) Is Not Sole and Exclusive
The Union asserts that Proposal 6 is intended to establish and implement "general rules" under 5 C.F.R. § 2534.403(a), rather than specific determinations under subsection 403(b). The Agency responds that the appeals panel and the presumptions, i.e., the prima facie evidence standards established in the proposal, are inconsistent with its exclusive authority to determine whether conflicts of interest exist. According to the Agency, subsection 403(b) "clearly states that the determination of whether a conflict exists rests exclusively with 'the agency designee.'" Statement of Position at 16-17 (emphasis in original).
Contrary to the Agency's statement, subsection 403(b) does not establish that the Agency's authority is "exclusive." Both subsections 403(a) and (b) state only that an "agency may" prohibit or restrict the acquisition or holding of financial interests. The fact that the agency "may," under subsection 403(b), prohibit or restrict financial interests based on the designee's determination, does not preclude compliance with whatever limits exist on the agency's discretion. This includes limits established through collective bargaining. See Bureau of Engraving and Printing, 50 FLRA at 691-92.
We note, in this regard, that other sections of the OGE regulations specify that certain authorities are to be exercised solely by one official. See, e.g., 5 C.F.R. § 2634.203 (an individual may be excluded from financial disclosure requirements "when the Director of the Office of Government Ethics determines, in his sole discretion, that such exclusion would not affect adversely the integrity of the Government or the public's confidence in the integrity of the Government"); 5 C.F.R. § 2634.406 (the term "independent trustee" means an entity that "is determined by the Director of the Office of Government Ethics and in the Director's sole discretion" to meet certain requirements); 5 C.F.R. § 2634.902(d) (section 107 of the Ethics in Government Act of 1978 "leaves no discretion" with agencies with respect to disclosure to the public of confidential reports). Because such exclusivity is made clear in other parts of the OGE regulations, we conclude that the authority in sections (a) and (b) of 5 C.F.R. § 2635.403 is not intended to be exclusive. Cf. Russello v. United States, 464 U.S. 16, 23 (1983) (Congress' inclusion of particular language in one section of a statute and omission of it from another implies an intent to deal with the two sections disparately).
Based on the foregoing, we conclude that the Agency's authority pursuant to 5 C.F.R. § 2635.403(b) is not sole and exclusive.
d. Proposal 6 Does Not Establish Standards Inconsistent With § 2635.403(b)
Our conclusion that the Agency's discretion under 5 C.F.R. § 2635.403 is not sole and exclusive does not mean that the discretion is unlimited under that regulation. See Bureau of Engraving and Printing, 50 FLRA at 691-92. For example, the Agency could not be required to bargain over a proposal that precluded it from prohibiting, through regulation, acquiring or holding a financial interest that would "cause a reasonable person to question the impartiality and objectivity with which agency program are administered." 5 C.F.R. § 2635.403(a). See IRS, 902 F.2d at 1001. Similarly, the Agency could not be required to bargain over a proposal that would preclude it from prohibiting a "substantial conflict," as set forth in 5 C.F.R. § 2635.403(b). Id.
Proposal 6, however, does not include any standard for determining conflicts of interest under either subsection 403(a) or subsection 403(b). Instead, it simply provides a procedure and standards for determining whether specific industries or companies fall within the scope of a unit's work. Nothing in the proposal releases the Agency from following the standards set by the regulations.
The Agency does not support its argument that the standards set forth in Proposal 6 are inconsistent with subsection 403(b).(17) There is nothing in the proposal that would interfere in any way with subsection 403(b)'s standards for the Agency to determine that there is a substantial conflict of interest in individual cases. The determination of what companies and SICs fall within an art unit is used to determine the zone of the regulatory restriction on all of the employees in the unit. The Agency's ability to prescribe the acquisition of broad categories of investments under subsection 403(a) is independent of its right to determine that a specific interest creates a conflict of interest for a particular individual employee under subsection 403(b). The fact that the aquisition or holding of a particular interest has not been prohibited in advance under 403(a) does not preclude the Agency from finding an individual conflict under 403(b). As we find that Proposal 6 has no bearing on individual determinations under subsection 403(b), it is not inconsistent with that subsection.
Thus, nothing in Proposal 6 would prevent the Agency from making the required determinations on a case-by-case basis. In this regard, the proposal does not create a blanket determination as to whether a substantial conflict will be found where the appeals committee determines an examiner's assigned industry code, a particular company's designation, or where the percentages in the proposal are met. The Agency retains its ability to review an individual examiner's holdings and apply the standards set forth in regulation on a case-by-case basis. As such, the appeals committee and the rebuttable presumptions in the proposal are simply methods to assist the Agency in making such determinations.
Further, the proposal does not prescribe a standard that is inconsistent with the standards set forth in the regulation. Specifically, the proposal does not expand or contract the standard of what constitutes a "substantial conflict" under 5 C.F.R. § 2635.403(b) because the Agency may still find that a substantial conflict of interest exists. Cf. U.S. Attorney, 29 FLRA at 4-5. In addition, the presumptions set forth in the proposal are rebuttable and the decision of the appeals committee is not final or binding. See Department of the Army, U.S. Army Aberdeen Proving Ground Installation Support Activity v. FLRA, 890 F.2d 467, 476 (D.C. Cir. 1989) (finding a proposal creating a rebuttable presumption consistent with regulation providing that agency is given sole and final authority to make the determination because it "affirm[ed] the parameters of the [agency's] inquiry set out therein"). Thus, the final decision making authority remains with the Agency.
Based on the foregoing, we conclude that Proposal 6 does not preclude the Agency from making a determination on a case-by-case basis that a substantial conflict of interest exists. Accordingly, Proposal 6 is not inconsistent with 5 C.F.R. § 2635.403(b).
4. Proposal 6, Subsection (a) Does Not Affect Management's Right to Assign Work
As a general rule, the establishment of a joint committee that identifies and resolves labor-management issues is within the duty to bargain. See, e.g., National Federation of Federal Employees, Local 1482 and U.S. Department of Defense, Defense Mapping Agency, Hydrographic/Topographic Center, Washington, D.C., 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, e.g., International Organization of Masters Mates and Pilots, Marine Division, Panama Canal Pilots Branch and Panama Canal Commission, 51 FLRA 333, 349 (1995). However, insofar as a joint committee is involved in discussions and deliberations involving the exercise of management's rights under section 7106 of the Statute, proposals that provide for union participation on the committee directly interfere with those rights. See American Federation of Government Employees, Local 1923 and U.S. Department of Health and Human Services, Health Care Financing Administration, Baltimore, Maryland, 44 FLRA 1405, 1442 (1992).
Contrary to the Agency's claims, the record reflects that the joint committee that would be created by Proposal 6 is intended to serve only as a forum for evaluating the correctness of the SIC codes. Nothing in the wording of Proposal 6, or the Union's statement of intent, directs the Agency to assign work to any particular individual or to refrain from assigning work to a particular individual. In addition, the Agency does not argue that the proposal has that effect. The proposal addresses only the description of the employee's work and the companies that fall within the scope of that description.
An appeal to the committee opens an investigative process in which the committee gathers facts to be submitted to the management official before the Agency determines whether a conflict exists. However, when a potential conflict of interest is identified, the Agency has the sole discretion to determine what action is to be taken to resolve the conflict. Therefore, contrary to the Agency's assertions, there is nothing in the proposal that requires the Agency to place work assignments in abeyance. Such a determination is left solely to the discretion of management consistent with the regulations.
Based on the foregoing, we conclude that Proposal 6 does not affect management's right to assign work under section 7106(a)(2)(B) of the Statute and, as Proposal 6 is not inconsistent with 5 C.F.R. § 2635.403, it is within the Agency's duty to bargain.
C. Proposal 19
Waiver of apparent conflicts of interest shall be granted when the value of a financial interest is so small it is extremely unlikely that the decision-making process will be compromised. The financial interest shall be considered sufficiently small to meet this criterion when:
(a) the anticipated financial impact of the examiner's decision will affect the examiner's personal wealth by less than 1% of the examiner's annual base salary; and/or
(b) the anticipated financial impact on the assignee [of the patent] represents less than one tenth of 1% of the greater of the assignee's assets or income.
1. Positions of the Parties
a. Agency
The Agency contends that, by requiring a "blanket waiver" of conflicts where the financial interests involved meet the specified criteria, the proposal is inconsistent with 5 C.F.R. § 2635.402(d)(2)(ii). Statement of Position at 36. The Agency claims that such determinations must be made on a case-by-case basis after considering the particular circumstances in each case. The Agency also argues that the determination of when such a waiver is appropriate "rests solely with the Agency official authorized to issue waivers . . . ." Id. at 35.
b. Union
The Union asserts that Proposal 19 provides for "automatic waiver of an apparent conflict of interest if the amount at interest is less than the amounts defined by subsections" (a) and (b). Reply Brief at 53. The Union states that, throughout negotiations, the Agency asserted that a financial interest "as small as 1 cent" would be too much to grant a waiver. Id. According to the Union, the Agency's position is "extreme" and is inconsistent with 5 C.F.R. § 2635.402(d)(2). Id. The Union claims that the regulation applies to financial interests that are directly affected by an examiner's actions and that, as Proposal 19 applies only to interests "which are so small that it would be extremely unlikely to compromise the decision-making process[,]" the proposal does not fall within the scope of the regulation. Id. at 54.
The Union also contends that 5 C.F.R. § 2635.402 "is intended to apply to 'disqualifying financial interests' which are the kinds of interests which, if they conflicted with the employee's duties could result in criminal prosecution." Id. The Union contends that, on the other hand, 5 C.F.R. § 2635.403 "is concerned with 'prohibited financial interests' which have a less direct relationship with the employee's duties[.]" Id. The Union claims that Proposal 19 is intended to constitute a procedure under 5 C.F.R. § 2635.403 "to expand the financial interests which an employee is prohibited from acquiring or holding." Id.
2. Meaning of the Proposal
Proposal 19 requires an automatic waiver of a conflict of interest when: (1) the anticipated impact of an examiner's decision will affect the examiner's wealth by less than 1 percent of the examiner's base salary; and/or (2) the impact on the owner of the patent application being examined is less than one-tenth of 1 percent of the owner's assets or income. The criteria establishes, in effect, the standards that, if met, would satisfy the requirements set forth in 5 C.F.R. § 2635.402(d)(2)(ii).(18) With respect to point (2), section (b) of the proposal refers to "the assignee." The Union asserts in its petition for review, and the Agency does not dispute, that the term "assignee" means the owner of the patent application being examined. We construe it accordingly.
3. Proposal 19 Is Inconsistent With 5 C.F.R. § 2635.402(d)(2)(ii)
a. 5 C.F.R. § 2635.402
5 C.F.R. § 2635.402 addresses "disqualifying financial interests." It provides, in section 402(a), that, an employee is prohibited from:
participating personally and substantially in an official capacity in any particular matter in which, to his knowledge, he or any person whose interests are imputed to him . . . has a financial interest, if the particular matter will have a direct and predictable effect on that interest.
The regulation states four requirements that must be met for an employee to be prohibited from participating in a matter: (1) the employee participation must be personal, substantial, and in an official capacity; (2) the participation must relate to a "particular" matter; (3) the particular matter must be one in which the employee or someone whose interests are imputed to the employee has a financial interest of which the employee has knowledge; and (4) the particular matter must be one that will have a direct and predictable effect on the financial interest.
Where these requirements are satisfied, then the employee "shall disqualify himself from participating" in the matter unless: (1) employee participation is authorized by virtue of a waiver; or (2) the financial interest has been divested. Waivers are addressed in 5 C.F.R. § 2635.402(d), which provides for two types of waivers: regulatory waivers of general applicability issued by the Office of Government Ethics; and individual waivers issued by a particular agency. With respect to individual waivers, 5 C.F.R. § 2635.402(d)(2) provides:
An individual waiver enabling the employee to participate in one or more particular matters may be issued . . . if, in advance of the employee's participation:
(i) The employee:
(A) Advises the Government official . . . about the nature . . . of the particular matter . . . ; and
(B) Makes full disclosure . . . of the nature . . . of the disqualifying financial interest; and
(ii) Such official determines . . . that the employee's financial interest in the particular matter . . . is not so substantial as to be deemed likely to affect the integrity of the services which the Government may expect from such employee.
We construe Proposal 19 to require the Agency to issue individual waivers under 5 C.F.R. § 2635.402(d)(2) of any conflict arising from financial interests meeting the criteria of the proposal.(19)
b. Proposal 19 Sets Standards For A Waiver Of Conflicts Of Interest That Are Inconsistent With § 2635.402
The Agency argues, as it does throughout this case, that its authority under 5 C.F.R. § 2635.402 "rests solely with the Agency official authorized to issue waivers . . . ." Statement of Position at 35. As discussed in regard to Proposal 6 and other sections of the OGE regulations, nothing in the plain wording of 5 C.F.R. § 2635.402 supports a conclusion that the authority to determine waivers is exclusive with the Agency. However, as we also discussed in connection with Proposal 6, our finding that the authority is not exclusive does not mean that it is unlimited.
The Agency argues that the blanket waiver of conflicts of interest set forth in Proposal 19 is inconsistent with 5 C.F.R. § 2635.402(d)(2)(ii). As explained above, that section provides that an individual waiver may be issued where an employee advises the Agency about the nature of the "particular matter," makes full disclosure of the nature of the disqualifying financial interest, and the Agency makes a determination "that the employee's financial interest in the particular matter . . . is not so substantial as to be deemed likely to affect the integrity of the services which the Government may expect from such employee." 5 C.F.R. § 2635.402(d)(2)(ii).
The regulatory requirement that the Agency make a determination based on the "particular matter" requires the Agency to scrutinize the examiner's particular financial interest, the particular patent application, the company, and the industry involved. We interpret this to require that a waiver be granted only on a case-by-case basis. See Department of Justice, 727 F.2d at 489-90.
Proposal 19 also provides in subsection (b), in effect, that the regulatory standard is met where "the anticipated financial impact on the assignee [of the patent] represents less than one tenth of 1% of the greater of the assignee's assets or income." Thus, the proposal requires that the Agency grant a waiver of a conflict of interest based solely on the assignee and without regard to the "particular matter" and its impact on the employee as required by 5 C.F.R. § 2635.402(d)(2)(ii). As such, we conclude that Proposal 19 is inconsistent with section 2635.402(d)(2)(ii). See HUD, 43 FLRA at 1409-13.
Based on the foregoing, we conclude that Proposal 19 sets standards for waiver of conflicts of interest that are inconsistent with 5 C.F.R. § 2635.402, and thus, is outside the Agency's duty to bargain.
D. Proposal 18
Whereas, it is Department of Commerce policy to construe a $25,000 or less interest in a specific company as small enough to warrant a waiver with respect to policy decisions for the industry for which the company is a member, examiners shall be allowed to own $25,000 total in industry specific mutual funds which fall within the scope of the examiner's assigned industry sectors. The impact on the industry as a whole would be the equivalent of the impact of a policy making decision on a specific company. Industry specific mutual funds which fall outside of the examiner's assigned industry sectors will not be subject to any monetary limitations.
1. Positions of the Parties
a. Agency
The Agency argues, as it did with respect to Proposal 6, that it has exclusive authority under 5 C.F.R. § 2635.403(b) to determine whether conflicts of interest exist. According to the Agency, Proposal 18 conflicts with that regulation because it would "flatly prohibit" the Agency from determining that a conflict exists based on an examiner's holding of the interests specified in the proposal: $25,000 or less of industry specific mutual funds involving industries which fall within the scope of an examiner's assigned industry sector; and an unlimited amount of industry specific mutual funds that do not fall within such scope. In addition, the Agency claims that:
industry-specific mutual funds can affect the industry as a whole. The grant of a patent can affect the stock of the company that receives the patent, as well as the stock of the company's competitors. Consequently, the Agency has determined that a financial interest in industry-specific mutual funds may constitute a conflict of interest, depending upon the circumstances of the case.
Statement of Position at 33-34 n.12.
The Agency also argues, as it did with respect to Proposal 6, that Proposal 18 would render 5 C.F.R. § 2635.403(b) "meaningless if the Agency were required to adhere to a Union-imposed amount for determining when industry specific mutual funds would pose a financial conflict of interest." Id. at 33. Further, the Agency asserts that because "industry-specific mutual funds can affect the industry as a whole[]" and because it has determined that such mutual funds "may constitute a conflict of interest, depending upon the circumstances of the case," a waiver of such conflict is inappropriate. Id. at 33-34 n.12 (emphasis in original). In support of its contention, the Agency cites Authority cases holding that a proposal is outside the duty to bargain if the proposal creates a blanket determination that a regulatory standard is met where regulation calls for such determinations to be made on a case-by-case basis. Id. at 34.
b. Union
The Union asserts that Proposal 18 is intended to permit examiners to own: (1) as much as $25,000 in any industry-specific "mutual fund falling within the scope of their assigned technology[]"; and (2) "any amount of industry specific sector mutual funds that fall outside of their assigned technology." Petition for Review at 12. According to the Union:
The Department of Commerce has granted a waiver to public filers for ownership of as much as $25,000 in a specific company because the decisions that the public filer makes would affect an entire industry and would have a minimal effect on any one company in the industry. The proposal seeks to provide confidential filers with an equivalent waiver.
Reply Brief at 52.
With respect to 5 C.F.R. § 2635.403, the Union makes the same argument it made in connection with Proposal 6. Specifically, the Union contends that Proposal 18 is intended to establish a procedure under section (a) of the regulation, and that section (b) of the regulation does not apply because that section of the regulation prohibits "the kind of interest that rarely arises in the patent examination process . . . ." Reply Brief at 51. In addition, according to the Union, even if section (b) applies, Proposal 18 is within the duty to bargain because the Agency's authority under section (b) is not exclusive.
2. Meaning of the Proposal
The proposal provides a blanket waiver of a conflict of interest where the conflict exists because an examiner owns up to $25,000 in an industry-specific mutual fund involving industries that fall within their assigned industry sectors, and where an examiner owns any amount of industry-specific mutual funds that do not fall within those sectors. The Union asserts, and the Agency does not dispute, that:
Industry specific mutual funds are those which invest substantially all of the fund's money in publicly traded shares of companies falling within a narrow segment of the economy, such as biotechnology, health care, automobiles, or heavy construction equipment.
Petition for Review at 12.
3. Proposal 18 Is Inconsistent With 5 C.F.R. § 2635.402(d)(2) Because It Creates a Blanket Standard For Waiver Of a Conflict Of Interest
For the reasons previously stated in connection with Proposal 6, we conclude that the Agency's authority is not exclusive under either section (a) or (b) of 5 C.F.R. § 2635.403. See supra Section V, B, 3, c.
As discussed above, Proposal 18 provides that the Agency will grant an individual waiver of conflicts of interest set forth in the proposal if and when they exist.(20) Thus, the language of the proposal specifically directs our inquiry of the legality of the proposal to the regulatory provision, 5 C.F.R. § 2635.402(d)(2). Although not expressly relied upon by the Agency in its discussion of Proposal 18, the Agency does address subsection 402(d)(2) elsewhere in its submission to the Authority, and it was necessary to analyze this regulation in determining the negotiability of Proposal 19. See supra Section V, C, 3. Because its applicability to Proposal 18 is beyond peradventure, we address subsection 402(d) in analyzing the negotiability of Proposal 18 as well.
5 C.F.R. § 2635.402(d)(2) authorizes an agency to issue an individual waiver of a conflict of interest. Such a waiver may be granted only where an employee has complied with certain disclosure requirements and the Agency determines "that the employee's financial interest in the particular matter . . . is not so substantial as to be deemed likely to affect the integrity of the services which the Government may expect from such employee." 5 C.F.R. § 2635.402(d)(2)(ii). As discussed in connection with Proposal 19, the regulatory requirement that the Agency make a determination based on the "particular matter" requires the Agency to examine all the facts concerning the specific conflict of interest, including among other things the examiner's interest and the particular patent application and the company or companies involved.
Proposal 18 would create a blanket determination that the standard set forth in section 2635.402(d)(2)(ii) is met where a conflict of interest is the result of a financial interest of $25,000 or less in an industry specific mutual fund. As such, the proposal requires that the Agency grant an individual waiver based solely on the amount and type of the interest held by an examiner without regard to other necessary considerations. Specifically, the proposal would require a waiver be granted without regard to the particular examiner, the particular patent application and particular company or companies involved. Thus, Proposal 18 is inconsistent with section 2635.402(d)(2)(ii) of the regulation.
Based on the foregoing, we conclude that Proposal 18 creates a blanket standard that is inconsistent with 5 C.F.R. § 2635.402(d)(2)(ii) and, as such, is outside the duty to bargain.(21)
E. Proposals 9 and 12
Proposal 9
(a) In the event that an application is assigned to an examiner that is not typical of those found in the assigned industry sector(s), recusal or waiver, at the sole discretion of management, will be the remedy for any possible conflicts of interest based on the examiner's pre-existing financial interests.
(b) In the event temporary transfers of work create a conflict of interest based on an examiner's pre-existing financial interests, recusal or waiver, at the sole discretion of management, will be the remedy for any possible conflicts of interest based on the examiner's pre-existing financial interests.
(c) In all other situations, the Office will normally require the examiner to divest the financial interest causing the conflict.
Proposal 12
In the event that a conflict of interest arises due to an examiner's or an examiner's spouse's vested interest in a company-sponsored retirement plan, and the examiner or their spouse is no longer employed by the company, waiver shall be the remedy, recognizing it is to the Office's benefit to recruit and retain examiners with technical experience in the arts in which they examine. Notwithstanding the prior sentence, when a company sponsored retirement plan contains investments over which the employee has control, the examiner shall be required to switch investments to the extent possible in order to avoid conflicts.
1. Positions of the Parties
a. Agency
The Agency asserts that Proposals 9 and 12 are inconsistent with 5 C.F.R. § 2634.605, which addresses Agency review of financial disclosure statements. According to the Agency, all of the "remedial actions" identified in the regulation must be available to remedy any conflicts identified on the statements.(22) Statement of Position at 23. The Agency claims that the official who reviews the statements has authority to determine that "any of the seven options" is appropriate. Id. (emphasis in original). According to the Agency, by limiting the available remedial options to waiver or recusal for the situations identified in Proposal 9, and to waiver for the situation in Proposal 12, the proposals are inconsistent with the regulation. The Agency also asserts that the proposals are inconsistent with regulation because the determination as to "what remedial action, if any, is necessary [because of a conflict of interest], [must be] based on a thorough consideration of all of the circumstances of each particular case." Id. (emphasis in original).
b. Union
The Union states that Proposal 9 is intended to apply to "unusual situation[s]" where conflicts with an examiner's preexisting financial interests arise because of atypical or temporary assignments of work. Reply Brief at 39. The Union asserts that, in those situations, the proposal provides that, "at management's discretion, the conflict will be resolved by either the examiner recusing himself from working on the application or by management granting a waiver so that the examiner may work on the application presenting the potential conflict." Id. The Union claims that "[t]he essence of [Proposal 9] is that the employee will not be required to divest the financial interests." Id.
According to the Union, Proposal 9 does not conflict with 5 C.F.R. § 2634.605. The Union claims, in this regard, that the remedial actions listed in 5 C.F.R. § 2634.605(b)(5) are available to "the agency reviewing official." Reply Brief at 39. In particular, the Union claims:
In the Department of Commerce, the reviewing official has been designated to be the Office of the General Counsel at the Department level. Proposal 9 is intended to be a procedure for resolving temporary conflicts of interest at the level of recognition of our bargaining unit. If the proposal is followed within the [Patent and Trademark Office], then there would be no conflict of interest which would require a remedy at the Department level.
Id.
The Union asserts that Proposal 12 addresses the situation "in which a company employee having knowledge of a particular 'art' . . . acquired in the course of that employment leaves that company and begins working" at the Agency while, at the same time, holds an interest in the stock of the former employer through a vested pension or retirement fund. Id. at 44. The Union claims that the Agency has "purposefully recruited examiners with skills in critical areas from among ex-employees of companies operating in these critical areas knowing full well that those employees had vested pension rights . . . ." Id. The Union claims that, by requiring the Agency to waive the conflict of interest resulting from the vested pension rights, Proposal 12 does not conflict with 5 C.F.R. § 2634.605 because "the only viable remedy in the[se] circumstances . . . is waiver." Reply Brief at 44.
2. Meaning of the Proposals
Proposals 9 and 12 specify the only actions that the Agency would be permitted to take when conflicts of interest arise in certain situations. The Union asserts, in this regard, that both proposals concern "potential" conflicts. Id. at 39, 44. However, it is clear from the wording of the proposals and the Union's statement of intent, that both proposals address apparent conflicts that arise as a result of actual assignments of work, and we so construe the proposals. In this regard, section (a) of Proposal 9 specifically applies after "an application is assigned to an examiner . . . ." Similarly, the Union's statement of intent regarding Proposal 12 references an employee who "begins working . . . as an examiner in the same technology" as that in a previous position. Id. at 40. Moreover, both the term "recusal," for which the synonym "disqualification" is given in 5 C.F.R. § 2634.605(b)(5)(ii)(F), and the term "waiver" appear more naturally to address apparent -- not potential -- conflicts.(23)
Proposal 9 addresses conflicts that arise because an examiner is assigned work that is either: (1) "not typical" of work in the examiner's assigned industry sector; or (2) the result of a temporary transfer of work. Proposal 9 would permit such conflicts to be resolved only by recusal or waiver. Proposal 12 addresses conflicts that arise because of an examiner's vested interest in a pension or retirement fund. Proposal 12 would permit such conflicts to be resolved only by waiver.
3. Proposal 9 Is Consistent With 5 C.F.R. § 2634.605 and Proposal 12 Is Inconsistent With 5 C.F.R. § 2634.605
The issue raised by the Agency's argument is whether Proposals 9 and 12, which specify the actions to be taken when conflicts of interest arise, are inconsistent with 5 C.F.R. § 2634.605.(24)
5 C.F.R. § 2634.605 addresses, by its terms, review of financial disclosure reports.(25) Under the regulation, if "the reviewing official" determines that the information disclosed in a statement reveals that the filer is not in compliance with applicable laws and regulations, the official must notify the filer "of the remedial action which is needed, and the date by which such action should be taken." 5 C.F.R. § 2634.605(a)(4)(D). As set forth at note 22, supra, those actions include, but are not limited to, waiver and recusal.
Section 2634.605 refers to the regulations pertaining to those specific remedies contained in Part 2635 and applies to all conflicts. See 5 C.F.R. §§§ 2635.402(c), 2635.402(d), 2635.403(b). Thus, it is neccessary to address the Part 2635 remedial sections in analyzing the proposals. These particular regulatory sections are addressed supra in resolving the negotiability of other proposals, and it would be inappropriate to ignore them here. See 5 C.F.R. § 2635.402(d)(2) (Proposal 19).
a. The Agency's Authority Under 5 C.F.R. § 2634.605 Is Not Sole and Exclusive
Nothing in the wording of 5 C.F.R. § 2634.605 refers to "exclusive authority" of the Agency or the reviewing official to determine which remedial action is appropriate in any individual situation. In addition, as noted supra in regard to Proposal 6, other sections of these regulations clearly indicate that other authorities are to be exercised at "the sole discretion" of the subject official. In particular, a different subsection of the same regulation involved here--5 C.F.R. § 2634.605--clearly provides that the responsibilities set forth in that subsection are "nondelegable." Compare 5 C.F.R. § 2634.605(b) with 5 C.F.R. § 2634.605(c) Note.(26)
Based on the foregoing we conclude, as we did above with respect to Proposals 6, 18, and 19, that the Agency's authority to determine what remedial action should be taken where a conflict of interest exists is not sole and exclusive and, as a result, may be exercised through collective bargaining provided the proposals are not otherwise outside the duty to bargain. See Bureau of Engraving, 50 FLRA at 691-92.
b. Proposal 12 Creates A Blanket Standard That Is Inconsistent With Regulation
i. 5 C.F.R. §§ 2634.605 and 2635.402 Require Case-By-Case Determinations
As discussed above, 5 C.F.R. § 2634.605(b)(5) provides seven remedial actions that an Agency "may" take where a conflict exists, and it includes both recusal and waiver. The regulation explicitly states that the remedial action taken by the Agency "may include, as appropriate" any of the seven actions. Thus, the Agency is given discretion to determine what an "appropriate" remedy is in a particular situation.
However, in determining what an "appropriate" remedy is, the Agency must establish that the criteria provided in section 2635.402 and section 2635.403, which set forth the standards for when actions such as disqualification, waiver or divestiture is appropriate, have been met. Thus, the "appropriate" remedy must be determined in conjunction with Part 2635. For example, an agency may order divestiture only where the standards set forth in 5 C.F.R. § 2635.403(b) are met. Similarly, an agency is not permitted to grant a waiver in a particular case unless the agency establishes that the standard set forth in 5 C.F.R. § 2635.402(d)(2) for granting an individual waiver has been met.
The standards for granting an individual waiver are set forth in 5 C.F.R. § 2635.402(d)(2). See supra Section V, B, 3. Under the regulation, the Agency may issue a waiver only where an employee has complied with certain disclosure requirements and the Agency determines "that the employee's financial interest in the particular matter or matters is not so substantial as to be deemed likely to affect the integrity of the services which the Government may expect from such employee." 5 C.F.R. § 2635.402(d)(2)(ii). In addition, the regulation provides that the individual employee must comply with particular requirements before a waiver can be granted. See 5 C.F.R. § 2635.402(d)(2)(i). Thus, this regulation provides for a case-by-case determination for when an individual waiver is appropriate.
ii. Proposal 12
Proposal 12 would require the Agency to grant a waiver in specified circumstances. As such, it is inconsistent with the case-by-case determination required by § 2635.402(d)(2). See Customs Service, 23 FLRA at 682-83. Moreover, Proposal 12 would require that an examiner be granted a waiver without regard to whether the examiner had complied with the reporting and disclosure requirements set forth in section 2635.402(d)(2)(i)(A) and (B). Thus, the proposal would dictate that a waiver be granted where regulation would prohibit granting the waiver. See IRS, 902 F.2d at 1001. In addition, the proposal is inconsistent with section 2634.605(b)(5) because that section incorporates the individual standards set forth in regard to each of the remedial action it authorizes.
Based on the foregoing, we conclude that Proposal 12 is inconsistent with 5 C.F.R. §§ 2634.605(b)(5) and 2635.402(d)(2) and, as such, is outside the duty to bargain.
c. Proposal 9 Creates A Standard That Is Not Inconsistent With Regulation
In contrast, Proposal 9 would not require that the Agency grant an individual waiver in situations where the standard set forth in 5 C.F.R. § 2635.402(d)(2) is not met. In circumstances where the regulatory waiver standard is not met, the Agency would have the option under Proposal 9 to order recusal. Therefore, the Agency would be permitted to review on a case-by-case basis the individual employee's conflict and, based upon that inquiry, determine whether waiver or recusal was appropriate.
In this regard, as discussed in regard to Proposal 18, we note that nothing in the regulation requires that the Agency must order a particular remedy. Specifically, section 2635.403(b) provides that an Agency "may" order divestiture, and section 2635.402(d) provides that an Agency "may" grant a waiver. Thus, where a waiver is not granted or divestiture does not occur, recusal is the result contemplated by the regulation. 5 C.F.R. § 2635.402(c). The Agency does not assert, and the regulation does not provide, that recusal is not always available as a remedy.
In sum, 5 C.F.R. parts 2634 and 2635 do not require an agency to order a particular remedy, and Proposal 9 does not require the Agency to take actions that the regulation does not authorize. The proposal also complies with the regulation to the extent that an examiner would not be permitted to work where a conflict of interest exists and waiver or divestiture has not occurred. Cf. HUD, 43 FLRA at 1409-13. Thus, we conclude that Proposal 9 is not inconsistent with 5 C.F.R. § 2634.605 and, as such, is within the duty to bargain.
F. Proposal 10
In the event that the Office directs an examiner to divest financial holdings as a result of a conflict created by an Office initiated action or through an inadvertent mistake on the part of the examiner, the Office shall provide such in writing and will allow 30 days for divestment, but not before a requested Certificate of Divestiture has been granted or denied. For assets not listed on an exchange, the Office shall allow 90 days for divestment.
1. Positions of the Parties
a. Agency
The Agency argues that the determination as to reasonable time for divestiture is within the Agency's exclusive authority under 5 C.F.R. § 2635.403(d). The Agency asserts that, to the extent that Proposal 10 restricts its authority under the regulation to determine reasonable time frames and "substitutes mandatory periods of time that conflict with the provisions of the regulation, the proposal is nonnegotiable." Statement of Position at 25. In this regard, the Agency claims that where a conflict of interest exists, individual circumstances govern what may constitute a reasonable period of time for divestment.
b. Union
The Union contends that Proposal 10 applies to situations where a conflict arises from an Agency-initiated action or through an inadvertent mistake by an examiner and the Agency requires the examiner to divest the conflicting interest. According to the Union, the proposal:
provides that management will provide the examiner with a written direction to [divest] . . . . If the examiner requests the Certificate, the examiner shall be given 30 days (90 days if the assets are not listed on an exchange) or until a reasonable time after the Certificate is granted or denied, whichever is later, to divest . . . the assets.
Reply Brief at 41.
The Union argues that, under 5 C.F.R. § 2635.403(d), the Agency has discretion to determine reasonable time periods for divestiture and that discretion may be exercised through negotiations. Therefore, the Union asserts, the proposal is not inconsistent with the regulation.
2. Meaning of the Proposal
Proposal 10 concerns directed divestiture of financial holdings when the conflict requiring the divestiture is attributable either to management-initiated action or an examiner's inadvertent error in acquiring a financial interest. The proposal establishes certain time limits for accomplishing divestiture. The specified time limits establish, in effect, what constitutes a "reasonable period of time" for divestment under the applicable regulation, 5 C.F.R. § 2635.403(d). Specifically, the proposal provides that, for financial interests listed on an exchange, the time period for divestiture will be 30 days or a reasonable time period after action is taken on a request for a Certificate of Divestiture, whichever is longer. For assets not listed on an exchange, the time period will be 90 days or a reasonable time period after action is taken on a request for a Certificate of Divestiture, whichever is longer.
3. Proposal 10 Is Not Inconsistent with 5 C.F.R. § 2635.403(d)
a. 5 C.F.R. § 2635.403(d)
Under 5 C.F.R. § 2635.403(d), an employee who is directed to divest conflicting financial interests:
shall be given a reasonable period of time, considering the nature of his particular duties and the nature and marketability of the interest, within which to comply with the agency's direction. Except 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. . . .
b. The Agency's Authority Is Not Sole and Exclusive Under 5 C.F.R. § 2635.403(d)
First, the Agency argues that the determination of a reasonable time period for divestiture is within the exclusive authority of the Agency. However, nothing in the plain wording of the regulation supports the Agency's claim. In particular, the phrase "as determined by the agency" in the portion of the regulation set forth above, which is relied on by the Agency to support its argument regarding exclusive authority, applies to determinations of unusual hardship, not determinations of time periods for divestiture. Thus, Proposal 10 is not inconsistent with 5 C.F.R. § 2635.403(d) to the extent that the Agency's authority is not sole and exclusive.
c. Proposal 10 Does Not Establish Standards Inconsistent With 5 C.F.R. § 2635.403(d)
Contrary to the Agency's claims, nothing in 5 C.F.R. § 2635.403(d) indicates that the decision as to what constitutes a "reasonable period of time" must be made on case-by-case basis. The factors to be considered in making that determination are general and the regulation does not call for any type of explicit determination. See Department of Justice, 727 F.2d at 489-90; Customs Service, 23 FLRA at 683.
In addition, it is not otherwise apparent that the time periods set forth in the proposal are incompatible or inconsistent with the regulation. See Overseas Education, 40 FLRA at 442. The regulation provides that divestitures must be achieved within 90 days except in cases of unusual hardship. Thus, the proposal's 30-day and 90-day time periods are consistent with the regulatory limit. Moreover, Proposal 10, which establishes different time periods depending on whether the interests to be divested are listed on an exchange, is consistent with the regulation's reference to marketability of interests.(27)
Based on the foregoing, we conclude that Proposal 10 is not inconsistent with 5 C.F.R. § 2635.403(d), and, as such, is within the Agency's duty to bargain.
G. Proposal 17
No examiner will be removed from the examining corps due to a conflict with a financial interest that existed prior to employment, or due to an Office initiated change of work assignment, unless the conflict was knowingly concealed by the examiner during an inquiry by the Office.
1. Positions of the Parties
a. Agency
The Agency argues that, by limiting management's authority to determine appropriate remedies for conflicts of interest, Proposal 17 is inconsistent with 5 C.F.R. § 2634.605. The Agency also argues that the proposal affects the exercise of its right to discipline under section 7106(a)(2)(A) of the Statute because it "precludes the Agency from choosing removal as a remedy for a conflict [of interest] resulting from a prior financial interest or from an Agency-initiated change of work assignment, unless the conflict was knowingly concealed by the examiner." Statement of Position at 30-31. According to the Agency, the determination whether discipline is justified and the "selection of the particular degree of discipline -- in this case, removal due to a conflict of interest -- rests exclusively with management." Id. at 31.
b. Union
The Union asserts that Proposal 17 is intended to protect employees from removal "because of a conflict based on a disclosure made to management prior to employment or prior to any change of work assignment[,] unless the conflict was knowingly concealed from management." Reply Brief at 48. According to the Union, the proposal does not affect management's right to discipline employees because it only applies "when there is no wrongdoing on the part of the employee." Id. at 49. Also according to the Union, if the proposal affects management's right, then it is negotiable as an appropriate arrangement under section 7106(b)(3) of the Statute. The Union argues, in this regard, that the proposal does not excessively interfere with management's right because it: (1) permits discipline other than removal in the situation covered by the proposal; and (2) permits removal if there are other reasons, including insubordination and knowing concealment of a financial interest, for the action. The Union asserts that the proposal would protect employees from managers who were "'out to get them[]'" by assigning work that caused a conflict with a preexisting financial interest in order to justify a removal action. Id. at 49-50.
The Union argues that Proposal 17 is not inconsistent with 5 C.F.R. § 2634.605 because removal of an employee is not listed as an available remedy under that section.
2. Meaning of the Proposal
The proposal prohibits the Agency from removing an examiner based on a conflict resulting from a financial interest held prior to employment with the Agency, or based on a management-initiated change in work assignment that results in a conflict with a pre-existing interest, except in circumstances where the examiner knowingly concealed the conflict.
3. Proposal 17 Is Not Inconsistent with 5 C.F.R. § 2634.605
As discussed above in connection with Proposals 9 and 12, 5 C.F.R. § 2634.605(b)(5)(ii) provides that remedial action for conflicts revealed from a reviewing official's examination of a financial disclosure statement "may include" the seven actions listed therein. See note 22, supra. Subsection 605(b)(5)(i) also provides that, except in unusual cases, the remedial action that is identified as necessary "shall be completed not later than three months from the date on which the filer received notice that the action is required." 5 C.F.R. § 2634.605(b)(5)(i). A failure to comply with a request for remedial action is subject to further action in accordance with "agency procedures." 5 C.F.R. § 2634.605(b)(6)(ii).
As the Union points out, although a "voluntary request by the filer for resignation[]" is listed in 5 C.F.R. § 2634.605(b)(5) as a remedial action, a removal action is not. Accordingly, we conclude that Proposal 17, which prohibits a removal action in certain situations, is not inconsistent with that regulation.(28)
4. Proposal 17 Affects the Exercise of Management's Right to Discipline Under Section 7106(a)(2)(A) of the Statute
Proposals that restrict the disciplinary penalty that can be imposed on an employee affect the exercise of management's right to discipline employees under section 7106(a)(2)(A) of the Statute. See, e.g., National Association of Government Employees, Local R4-45 and U.S. Department of the Navy, Naval Resale and Services Support Office, Norfolk, Virginia, 40 FLRA 56, 59 (1991) (Department of the Navy). Proposal 17 prevents removal of an examiner for a conflict of interest resulting from a financial interest that existed prior to employment or due to an Agency initiated change or work assignment, except when the examiner knowingly conceals the conflict. Because the proposal would preclude the Agency's choice of removal as the discipline to impose except as noted, it affects the exercise of the right to discipline. Id. at 61.
5. Proposal 17 Constitutes an Appropriate Arrangement Under Section 7106(b)(3) of the Statute and, Therefore, It Is Within the Duty to Bargain
It is clear that, as asserted by the Union, Proposal 17 would benefit employees who are adversely affected by the exercise of management's right to discipline because of conflicts created by the exercise of management's right to assign work. This benefit applies only to those examiners who would be discharged based on a conflict of interest that was not knowingly concealed. See Patent and Trademark Office, 49 FLRA at 184. As such, the "balm" applied by Proposal 17 is narrowly tailored. Consistent with the foregoing, we conclude that Proposal 17 is an arrangement for employees adversely affected by the exercise of management's rights within the meaning of section 7106(b)(3).
The benefit conferred on employees by Proposal 17 is the assurance that they will not be removed based on an existing financial interest that they did not knowingly conceal. As to the burden imposed by the proposal on management's right to discipline, the proposal would not preclude the Agency from taking any actions other than discharge, including reassigning the examiner, directing the examiner to divest, or waiving the conflict. Thus, the proposal would not prevent the Agency from taking action that remedies, or eliminates, the conflict of interest. Cf. Professional Airways Systems Specialists, Chapter 252 and U.S. Department of the Navy, Marine Corps Air Station, Cherry Point, North Carolina, 44 FLRA 434, 441 (1992) (finding a proposal outside the duty to bargain that restricted management from imposing penalties normally imposed for a specified offense). In addition, the Agency remains free under the proposal to impose discipline other than discharge for the conflicts encompassed by the proposal; to discharge employees in situations where there has been knowing concealment of the financial interest covered by the proposal; and to discharge employees based upon other reasons, such as insubordination.
In balancing the burden the proposal imposes on management's right against the benefit to employees, it is relevant, and the Agency does not dispute, that the proposal applies only when there is no wrongdoing on the part of the employee. That is, the conflicts of interest addressed by the proposal do not arise because of wrongdoing on the part of the examiner and management would not be precluded from removing an examiner who had engaged in wrongdoing by knowingly failing to report necessary information on his or her financial disclosure report, or by engaging in other improper actions, such as refusing to divest the conflicting financial interest. See Patent Office Professional Association and U.S. Department of Commerce, Patent and Trademark Office, Washington, D.C., 47 FLRA 10, 90 (1993), petition for review denied as to other matters sub nom. Patent Office Professional Association v. FLRA, 26 F.3d 1148 (D.C. Cir. 1994) (finding a provision prescribing performance-based disciplinary actions that would protect employees who had failed to meet performance requirements outside the duty to bargain); Department of the Navy, 40 FLRA at 57-60 (finding a proposal that prescribed disciplinary actions for infractions such as drug sales, disobedience to authorities, gambling, and unexcused or unauthorized absences outside the duty to bargain).
We conclude that the benefit to examiners of being assured that they will not be removed in a situation where they engaged in no wrongdoing, and in which the Agency is free to take a full range of other actions that remedy or eliminate the conflict of interest, outweighs the burden on the Agency's rights to discipline employees. Therefore, the proposal does not excessively interfere with management's right, is an appropriate arrangement under section 7106(b)(3) of the Statute, and is within the duty to bargain.
H. Proposals 15 and 16
Proposal 15
When an examiner asserts a Constitutional Fifth Amendment right against self incrimination by refusing to submit a financial disclosure statement, management shall not require the disclosure until immunity from criminal prosecution has been granted.
Proposal 16
The Office hereby grants a waiver of criminal prosecution based upon information derived from the employee's financial disclosure statement for any examiner who, in good faith, fills out the financial disclosure statement and fully complies with instruction from management regarding remedying conflicts of interest.
1. Positions of the Parties
a. Agency
The Agency asserts that Proposal 15 is inconsistent with 5 C.F.R. § 2634.905, which, according to the Agency, permits the Agency to "determine that certain employees should be excluded from filing requirements based on the nature of their positions and work duties -- not on the basis of their invocation of the Fifth Amendment." Statement of Position at 29 (emphasis in original). In addition, the Agency claims that both Proposal 15 and Proposal 16 are outside the duty to bargain because they require the Agency to take actions that the Agency does not have authority to take. The Agency states that as it does not have authority to engage in prosecution of criminal violations, it also lacks the authority to grant immunity from such prosecution.
b. Union
The Union asserts that Proposal 15 is intended to protect an examiner from "unnecessary waiver of constitutional protections afforded under the Fifth Amendment." Reply Brief at 47. The Union states, in this regard, that, by regulation, information contained in financial disclosure forms "may be shared with Federal, state, or local law enforcement officials[.]" Petition for Review at 11. The Union asserts that Proposal 16 is intended to constitute "a blanket waiver of criminal liability through the contract itself." Id.
According to the Union, Proposal 15 does not conflict with 5 C.F.R. § 2635.905 because if immunity from criminal prosecution were granted, then examiners would be required to fully comply with all disclosure requirements. In addition, according to the Union, the OGE regulations must be read in a manner that renders them Constitutional and, to do so, they must be read to permit employees to receive waivers from criminal prosecution.
The Union asserts that, with respect to both Proposal 15 and Proposal 16, "[s]ince the Agency has a duty to bargain over these proposed changes in working conditions, the Agency has a duty [to] seek and obtain the necessary authority from appropriate sources to do so." Reply Brief at 47. However, the Union does not dispute the Agency's assertion that it lacks the authority to grant immunity from criminal prosecution.
2. Meaning of the Proposals
Proposal 15 would permit an examiner who asserts a Fifth Amendment right against self-incrimination to refuse to submit a financial disclosure statement until such time as immunity from criminal prosecution were granted. Proposal 16 would grant examiners a waiver of criminal liability based on information derived from a financial disclosure statement that was completed in good faith.
3. Proposals 15 and 16 Are Outside the Duty To Bargain Because They Require the Exercise of Authority The Agency Does Not Possess
As set forth previously, an agency is required under the Statute to bargain to the extent of its discretion, provided that its discretion is not sole and exclusive. Bureau of Engraving and Printing, 50 FLRA at 691-92. In addition, Authority precedent confirms that, even where an agency lacks authority to take an action specified in a proposal, the Agency may be obligated to request that whatever entity that possesses such authority exercise it consistent with a proposal. Library of Congress v. FLRA, 699 F.2d 1280, 1285-86 (D.C. Cir. 1983).
The Agency claims, and the Union does not dispute, that the Agency lacks authority to either: (1) excuse examiners from filing requirements until such time as a waiver of criminal prosecution has been granted; or (2) waive criminal liability based on information disclosed in a financial disclosure statement.(29) Nevertheless, the Union does not argue that Proposals 15 and 16 merely require the Agency to ask the entity that possesses such authority to act consistent with the proposals. Instead, the Union claims that the Agency would be obligated to "seek and obtain the necessary authority from appropriate sources" to excuse examiners from filing requirements and grant waiver of criminal liability. Reply Brief at 47 (emphasis added). This statement confirms that the Union is proposing that the Agency itself act to both excuse examiners from filing disclosure statements in the situation encompassed by Proposal 15 and waive criminal liability. No basis is argued or apparent for concluding that the Agency has discretion to both "seek and obtain" such authority. As such, we conclude that the proposals are outside the duty to bargain because they would require the Agency to exercise authority it does not possess.
I. Proposal 21
The office hereby determines that the duties of positions which are below GS-13 are positions at such a low level of responsibility that the submission of a financial disclosure statement is unnecessary because of the substantial degree of supervision and review over these positions.
1. Positions of the Parties
a. Agency
The Agency contends that, by defining positions below the GS-13 level as at such a low level of responsibility that they are excluded from financial reporting requirements, Proposal 21 "would lead to conflicts over duties and responsibilities that management would choose to assign to these employees, but which the Union would dispute as exceeding their strict definition." Statement of Position at 36-37. According to the Agency, the proposal "places a significant limitation on the Agency's ability to determine the duties and responsibilities to assign its employees, and thus constitutes excessive interference with management's right to assign work." Id. at 37.
In addition, the Agency argues that Proposal 21 conflicts with 5 C.F.R. §§ 2634.904(a) and 2634.905 because, according to the Agency, those sections vest the Agency with sole and exclusive authority to determine those employees whose job duties require the filing of financial disclosure reports. The Agency also argues that the "blanket statement" that examiners below a GS-13 do not need to file disclosure statements is inconsistent with 5 C.F.R. § 2634.905 because the Agency is required by the regulation to make that determination based on an employee's particular job duties and responsibilities. Id. at 37-38.
b. Union
The Union asserts that the work of examiners at GS-12 level and lower is "closely reviewed and supervised" and, as such, "regardless of the financial interests of the assistant examiner, no apparent conflict of interest exists and hence there is no need for disclosure of this financial information." Petition for Review at 13. The Union also asserts that Proposal 21 does not affect management's right to assign work because the proposal concerns duties currently assigned to examiners and does not prevent the Agency from assigning different duties.
In addition, the Union contends that Proposal 21 is not inconsistent with 5 C.F.R. §§ 2634.904(a) and 2634.905. The Union asserts, in this regard, that the regulations "fail[] to contain any language which would give an indication that the agency head's discretion is to be exclusive and unfettered[.]" Reply Brief at 57. The Union also asserts that:
[T]he Agency has already determined that examiners in positions below GS-13 are at such a low level of responsibility that the submission of a financial disclosure statement is unnecessary because of the substantial degree of supervision and review over these positions. Up until recently, even GS-13s were exempted from the reporting requirements.
Id. at 56.
2. Meaning of the Proposal
Proposal 21 would exempt examiners at GS-12 level and lower from any requirement to file financial disclosure statement. According to the Union, the proposal "obviously applies to the current duties that have been assigned to examiners who are below the level of GS-13." Reply Brief at 58. The Union states that, "[s]hould management decide to assign different duties to those employees that would necessitate a financial disclosure report, there is nothing in the proposal that would prevent such an assignment." Id. The Union's assertions are consistent with the plain wording of Proposal 21 and, as such, are adopted for purposes of this decision. See Laurel Bay, 51 FLRA at 737.
3. Proposal 21 Does Not Affect Management's Right to Assign Work Under Section 7106(a)(2)(B) of the Statute
As construed above consistent with the Union's statement of the meaning of Proposal 21, nothing in the proposal would limit in any way the Agency's right to assign any type or grade level of work.(30) The Agency provides no support for its assertion to the contrary. Accordingly, we conclude that Proposal 21 does not affect management's right to assign work under section 7106(a)(2)(B) of the Statute.
4. Proposal 21 Is Not Inconsistent With 5 C.F.R. § 2634.905
a. The Agency's Authority Is Not Sole and Exclusive Under 5 C.F.R. § 2634.905
The Agency relies on both 5 C.F.R. §§ 2634.904(a) and 2634.905 to argue that its authority to exempt employees from reporting requirements is sole and exclusive.
5 C.F.R. § 2634.904 provides the standards agencies must apply when determining which employees are required to comply with reporting requirements. That regulation does not address the Agency's authority to exempt employees from reporting requirements. Thus, 5 C.F.R. § 2634.904 is inapplicable to Proposal 21, which addresses only the Agency's authority to exempt employees from reporting requirements.
Nothing in the plain wording of 5 C.F.R. § 2634.905 supports the Agency's argument that its authority under the regulation is sole and exclusive. In particular, as relevant here, section 2634.905 provides for exclusions from filing requirements for individuals or classes of individuals when "the agency head or designee determines" that the duties and responsibilities do not require such filing. As noted supra, in regard to Proposal 6, other sections of the OGE regulations clearly indicate that other authorities are to be exercised at the "sole discretion" of the subject official. See supra Section V, B, 3, c. Because such exclusivity is made clear in other sections and not here, we conclude that consistent with its plain wording, the authority granted to the Agency in 5 C.F.R. § 2634.905 is not sole and exclusive.
b. Proposal 21 Is Not Inconsistent With 5 C.F.R. § 2634.905
The Agency claims that a blanket exemption of a category of employees from filing financial disclosure reports is inconsistent with 5 C.F.R. § 2634.905. By exempting examiners at the GS-12 level and lower from any requirement to file financial disclosure statements, Proposal 21 operates, in effect, as a blanket determination that these examiners satisfy the standards set forth in 5 C.F.R. § 2634.905. 5 C.F.R. § 2634.905 provides, in relevant part, that:
[a]ny individual or class of individuals . . . may be excluded from all or a portion of the confidential reporting requirements . . . when [the Agency] determines that:
(a) The duties of a position make remote the possibility that the incumbent will be involved in a real or apparent conflict of interest;
(b) The duties of a position involve such a low level of responsibility that the submission of a confidential financial disclosure report is unnecessary because of:
(1) The substantial degree of supervision and review over the position; or
(2) The inconsequential effect of any potential conflict on the integrity of the Government;
. . . .
Nothing in 5 C.F.R. § 2634.905 indicates that determinations as to whether its standards have been met must be done on a case-by-case basis. Although the regulation specifies criteria that must be met, it explicitly states that the Agency can make determinations as to a "class of individuals" as well as to "any individual." Consistent with the plain wording of the regulation, a blanket determination that a category of individuals, in this case GS-12 and below examiners, are exempt from any reporting requirements is not inconsistent with 5 C.F.R. § 2634.905.
In addition, the "determinations" set forth in Proposal 21--that positions below GS-13 have a low level of responsibility, and have a substantial degree of supervision and review--are consistent with those required by the regulation. Thus, nothing in the proposal appears to be incompatible or inconsistent with 5 C.F.R. § 2634.905. See Overseas Education, 40 FLRA at 442. Accordingly, we conclude that Proposal 21 is within the duty to bargain.
J. Proposal 24
In accordance with 5 C.F.R. § 2634.905(a), the Agency head hereby determines that there is little likelihood that there would be an apparent or real conflict-of-interest with:
(a) a widely diversified excepted investment fund,
(b) residential realty of any kind,
(c) mortgages or other loans owed to financial institutions,
(d) financial interests and positions held in any company or organization in industries other than those defined by the two digit prefixes of the SIC codes provided to the examiner, and thus there is no need to include such information in a confidential financial report.
1. Positions of the Parties
a. Agency
The Agency asserts that Proposal 24 is inconsistent with 5 C.F.R. § 2634.905. According to the Agency, that regulation permits employees to be excluded from filing requirements "due to the nature of their duties, but does not permit exclusion of particular types of financial interest." Statement of Position at 41. In the alternative, the Agency contends that determinations under 5 C.F.R. § 2634.905 rest exclusively with the Agency head or designee.
b. Union
The Union contends that Proposal 24 "is intended to protect privacy of employees by limiting the amount of information which needs to be disclosed." Petition for Review at 14. According to the Union, the proposal: (1) "places limits in areas where there is no need for review because of the nature of the assets involved"; and (2) "preserves employee privacy with respect to financial interests in companies whose business is remote from the technology examined[]" by the examiner. Id. at 14-15.
The Union argues that 5 C.F.R. § 2634.905 "clearly provides authority for the agency head to exclude any individual or class of individuals from all or a portion of the confidential reporting requirements." Reply Brief at 62-63 (emphasis in original). According to the Union, the Agency's argument to the contrary has no basis. In addition, according to the Union, "there is no indication in the regulations that the discretion granted to the Agency head or designee is to be exclusive and unfettered." Id. at 63.
2. Meaning of the Proposal
Proposal 24 would exempt examiners from including in their financial disclosure statements information concerning specific types of interests: (1) widely diversified excepted investment funds;(31) (2) residential real estate; (3) mortgages and other loans owned to financial institutions; and (4) financial interests and positions in companies or organizations other than those defined by the two-digit SIC codes provided the examiner.
3. Proposal 24 Is Inconsistent With 5 C.F.R. § 2634.905
Under 5 C.F.R. § 2634.905, an individual or class of individuals may be excluded "from all or a portion" of the reporting requirements for confidential filers. The regulation provides that such individuals may be excluded where an agency head determines that the nature of the duties of the affected employees make the filing of disclosure reports unnecessary, or those employees have an alternative procedure, approved by the Office of Government Ethics, that adequately prevents conflicts. The parties disagree over whether the agency is permitted by the regulation to exclude from reporting requirements the four categories of information specified in Proposal 24.
The regulation does not specify whether, as the Union asserts, blanket exclusions of specific financial interests are permissible under section 2634.905(a). Moreover, neither the Union nor the Agency offers any support for their interpretation of the regulation. However, based on a reading of parts 2634 and 2635 as a whole, we conclude that the exclusions sought by Proposal 24 are inconsistent with the regulation for several reasons.
First, the bases stated in section 2634.905 for excluding individuals from "all of a portion" of the reporting requirements all involve either the duties performed by the individuals or the existence of an alternative procedure. The regulation contains no criteria by which the agency would determine whether to exclude financial interests from the reporting requirements. Specifically, the regulation involves categories of employees and not categories of interests.
Second, the three examples of exclusions in section 2634.905 all involve excluding an individual employee (based on the employee's duties or the existence of an alternative procedure) from filing a financial disclosure report. There is no example of excluding a financial interest or class of financial interests.
Third, the financial interests that must be reported on a disclosure statement are specified in subpart C of part 2634, which is made applicable to confidential filers by section 2634.907. Although section 2634.907 provides certain exceptions (which are not claimed to apply here) to these reporting requirements, the regulation makes no other provision for exclusion. To the contrary, section 2634.907 provides that reports by confidential filers "shall include . . . a full and complete statement of information required to reported according to the provisions of subpart C . . . ." 5 C.F.R. § 2634.907(a).
Based on the foregoing, we conclude that the agency head's or designee's authority under section 2634.905 does not extend to exempting examiners from including in financial disclosure statements the categories of financial interests that would be exempted under Proposal 24. Therefore, the proposal is inconsistent with section 2634.905. See American Federation of Government Employees, National Border Patrol Council and U.S. Department of Justice, Immigration and Naturalization Service, 51 FLRA 1308, 1330 (1996) (finding a provision inconsistent with regulation because the agency's discretion to grant an exception under that regulation was limited). Accordingly, we conclude that Proposal 24 is outside the duty to bargain.
K. Proposal 25
In accordance with 5 C.F.R. § 2634.905(c), the Office shall seek approval for an alternative reporting plan with the Office of Government Ethics consisting of the following:
(a) Require examiner to file confidential financial disclosure statements limited to:
(i) financial interests or positions held by an examiner, spouse, or dependent child in any company or organization in the industries defined by the two digit prefixes of S[tandard] I[ndustrial] C[lassification] codes provided to the examiner,
(ii) gifts, travel reimbursements from companies or organizations in the industries defined by the two digit prefixes of the SIC codes provided to the examiner, and
(iii) other financial interests as the Office may determine by adequate written justification to the examiner.
(b) The Office hereby determines that there is little likelihood that there would be an apparent or real conflict of interest with a widely diversified excepted investment fund and that there is no need to include such information in a confidential financial disclosure statement.
A POPA representative shall be included in the development and drafting of the alternative reporting plan and the presentation to the Office of Government Ethics.
1. Position of the Parties
a. Agency
The Agency claims that Proposal 25 is inconsistent with 5 C.F.R. § 2634.905(c) because, under that section, the discretion to decide whether to seek OGE approval of an alternative procedure is solely and exclusively the Agency's.
b. Union
The Union states that Proposal 25 is intended to require the Agency to "seek approval of an alternative financial reporting plan developed with [Union] input that reflects the nature of patent examination." Petition for Review at 16. The Union claims that "there is nothing in the regulations or their history that would create a record to conclude that the provisions of 5 C.F.R. § 2634.905 are the sole authority of the Agency." Reply Brief at 64.
2. Meaning of the Proposal
Proposal 25 would require the Agency to seek OGE approval of an alternative financial disclosure procedure that satisfies the criteria of the proposal. That procedure would limit the financial interests needed to be disclosed to those specified in section (a) of the proposal and would exempt examiners from disclosing interests in the "widely diversified excepted investment funds" specified in section (b).(32) The proposal also would require that a Union representative be included in the development and drafting of the alternative procedure.
3. Proposal 25 Is Not Inconsistent With 5 C.F.R. § 2634.905
a. The Agency's Authority Is Not Sole and Exclusive
The plain wording of 5 C.F.R. § 2634.905(c) indicates that the grant of discretion to the agency head or designee to seek an alternative reporting system is not sole and exclusive and, as a result, may be exercised through collective bargaining. Accordingly, consistent with previous conclusions and precedent cited supra at Section V, B, 3, c, we conclude that Proposal 25 is not inconsistent with 5 C.F.R. § 2634.905(c) on this ground.
b. Proposal 25 Creates a Standard That Is Not Inconsistent With 5 C.F.R. § 2634.905
Nothing in 5 C.F.R. § 2634.905 indicates that determinations as to whether an alternative procedure is adequate to prevent possible conflicts of interests must be made on an individual case-by-case basis. As explained above in our analysis of Proposal 21, 5 C.F.R. § 2634.905 explicitly states that determinations made pursuant to that regulation can made as to a "class of individuals." As such, it is not inconsistent with the regulation for the Agency to seek an alternative reporting procedure for an entire class of examiners.
Moreover, to the extent that the Agency believes that the criteria in Proposal 25 are not adequate to prevent a possible conflict of interest, that issue addresses the proposal's merits, not its negotiability, and can be addressed during bargaining, mediation, or, if necessary, proceedings before the Federal Service Impasses Panel.
Based on the foregoing, we conclude that Proposal 25 is not inconsistent with 5 C.F.R. § 2634.905(c) and, as such, that it is within the duty to bargain.
VI. Proposal Alleged To Be Outside the Duty To Bargain Because It Does Not Concern a Condition of Employment
A. Proposal 22
A joint committee shall be formed to address conflict of interest issues which are the result of seeking employment outside the Office. If the committee reaches no agreement within one year of its inception, negotiations on this topic will be reopened.
B. Positions of the Parties
1. Agency
The Agency argues that Proposal 22 is outside the duty to bargain because it "concerns an issue -- conflicts resulting from subsequent employment outside the Agency -- that is not a condition of employment with the Agency[.]" Statement of Position at 38.
2. Union
According to the Union, a "real or apparent conflict of interest may exist between an examiner's official duties and his interest in securing employment outside the [Agency][.]" Petition for Review at 14. The Union states that Proposal 22 is intended to create "a separate joint committee to address the prospective employment problem apart from other conflicts of financial interest such as stock ownership." Id. The Union contends that Proposal 22 concerns conditions of employment because:
As the plain language of the proposal makes clear, the committee would address real and apparent conflicts that are the result of current employees seeking employment outside the [Agency]. The real and apparent issues addressed by the committee would be the result of the employee looking for another job while an employee of the Agency.
Reply Brief at 59.
C. Meaning of the Proposal
The proposal would establish a joint labor-management committee "to address conflict of interest issues which are the result" of currently employed examiners seeking employment outside the Agency.
D. Proposal 22 Is Within the Duty to Bargain Because It Concerns a Condition of Employment
Section 7103(a)(12) of the Statute defines "collective bargaining," as relevant here, as the parties' mutual obligation to bargain "with respect to . . . conditions of employment . . . ." "Conditions of employment" are defined in section 7103(a)(14), with exclusions not relevant here, as "personnel policies, practices, and matters, whether established by rule, regulation, or otherwise, affecting working conditions[.]"
In determining whether a proposal concerns a condition of employment, the Authority applies a two-prong test. In particular, the Authority determines whether: (1) the proposal pertains to bargaining unit employees; and (2) the record establishes that there is a direct connection between the proposal and the work situation or employment relationship of unit employees. E.g., Antilles Consolidated Education Association and Antilles Consolidated School System, 22 FLRA 235, 237 (1986).
With regard to the first prong of the test, it is clear that the proposal pertains to current unit employees. With regard to the second prong of the test, it is equally clear that there is a direct connection between the proposal and the work situation of unit employees. The proposal would establish a joint labor management committee to address conflict of interest issues. It is undisputed that, as the Union asserts, the conflicts arise in connection with an employee's current job duties. Although the committee's charge encompasses conflicts involving efforts to secure outside employment, the conflicts themselves would implicate employees' positions and job duties in the Agency. Indeed, seeking outside employment can itself create conflicts with employees' jobs and duties. In recognition of this, an entire subpart--subpart F-- of Part 2635 is devoted to regulations governing requirements applicable to employees when they are "seeking other employment." Among other things, the "overview" to these regulations provides, in pertinent part:
This subpart contains a disqualification requirement that applies to employees when seeking employment with persons who otherwise would be affected by the performance or nonperformance of the employees' official duties.
5 C.F.R. § 2635.601.
In these circumstances, there is a direct connection between the proposal and employees' work situation or employment relationship. Consequently, we conclude that the proposal concerns a condition of employment of unit employees and is within the duty to bargain.
XI. Order
The petition for review, as it pertains to Proposals 4, 5, 9(c), 10(b), 11, 13, 14, and 20 is dismissed without prejudice to the Union's right to file a negotiability appeal if the Agency alleges that the proposals are outside the duty to bargain and the other conditions governing review are satisfied. The petition for review, as it pertains to Proposals 12, 15, 18, 19, and 24 is dismissed because the proposals are outside the Agency's duty to bargain. Proposals 1, 2, 3, 6, 7, 8, 9(a), 9(b), 10(a), 17, 21, 22, 23, and 25 are within the Agency's duty to bargain. Accordingly, the Agency shall upon request, or as otherwise agreed to by the parties, negotiate over Proposals 1, 2, 3, 6, 7, 8, 9(a), 9(b), 10(a), 17, 21, 22, 23, and 25.
FOOTNOTES:
(If blank, the decision does not
have footnotes.)
1. Because of the length of 5 C.F.R. parts 2634 and 2635, we have not reproduced the entire text of either regulation in an appendix. However, relevant portions of both regulations are provided in the decision.
2. 18 U.S.C. § 208, entitled "Acts affecting a personal financial interest," provides criminal sanctions for employees of the Executive Branch who:
participate[] personally and substantially as a Government officer or employee, through decision, approval, disapproval, recommendation, the rendering of advice, investigation, or otherwise, in a judicial or other proceeding . . . in which, to his knowledge, he . . . has a financial interest . . . .
18 U.S.C. § 208(a) (1996).
3. Following the filing of the petition for review, the Agency provided the Union with written allegations.
4. We do not discuss each proposal in the order in which they were numbered by the Union. Instead, the proposals are grouped in this decision according to the issues that are pertinent to their analysis. The proposals addressed in this section are alleged by the Agency to be inconsistent only with management's rights. Those proposals are 1, 2, 3, 7, 8, and 23.
5. The Union states the following regarding past practice:
The past practice regarding conflict of interests precludes a patent examiner from having a financial interest in companies that file patent applications in the technology that the examiner himself actually examines, that is, only within his own docket. The specifics of the existing practice has not been written down in any policy document of which we are aware; the practice has only been communicated orally.
Reply Brief at 3. The Agency does not address past practice.
6. The Union requests the Authority to consider the negotiability of the first and second sentences of Proposal 1 separately.
7. The meanings that we adopt for the proposals in this case would apply in resolving other disputes, such as arbitration proceedings, where the construction of these proposals is at issue. See National Education Association, Overseas Education Association, Laurel Bay Teachers Association and U.S. Department of Defense, Department of Defense Domestic Schools, Laurel Bay Dependents Schools, Elementary and Secondary Schools, Laurel Bay, South Carolina, 51 FLRA 733, 741-42 n.8 (1996).
8. Employee divestitures of conflicting interests are addressed in 5 C.F.R. § 2635.402(e). Divestitures may be "voluntary" or "directed." 5 C.F.R. § 2635.403(e)(1) and (2). After divestiture, applicable statutory and regulatory provisions "will no longer prohibit the employee's participation in the matter." Id.
9. 5 C.F.R. § 2635.403(c)(2) provides that the term "financial interest" includes:
service, with or without compensation, as an officer, director, trustee, general partner or employee of any person, including a nonprofit entity, whose financial interests are imputed to the employee . . . .
This section also confirms, by the example offered in it, that the Agency may require employees or spouses to resign positions as a condition of their participation in matters that otherwise would be prohibited because of conflict.
10. The proposals addressed in this section of the decision are those alleged by the Agency to be inconsistent with Government-wide regulation: Proposals are 6, 9, 10, 12, 15, 16, 17, 18, 19, 21, 23, 24, and 25. This section also addresses the Agency's additional allegations that Proposals 6, 17 and 21 are inconsistent with management's rights under section 7106 of the Statute.
11. Prior to the Authority's decision in Bureau of Engraving and Printing, the Authority's analysis of claims under section 7117(c) did not always distinguish clearly between these two types of allegations. That is, the Authority would treat an argument that a proposal was inconsistent with an agency's sole and exclusive discretion as one raising both that issue and the issue whether the proposal was otherwise substantively inconsistent with the law granting the discretion. See, e.g., Overseas Education, 40 FLRA at 441-43.
12. The types of proposals discussed herein are intended merely to illustrate--not define--the scope of this category.
13. See also United States Department of Justice v. FLRA, 727 F.2d 481, 489-90 (5th Cir. 1984) (finding that specificity of the factors set forth to determine "greatest advantage to the Government" in choosing mode of travel mandates case-by-case determination) (Department of Justice).
14. See also National Treasury Employees Union and U.S. Department of the Treasury, Office of Chief Counsel, Internal Revenue Service, 39 FLRA 27, 35-36 (1991), decision and order on request for reconsideration as to other matters, 40 FLRA 849 (1991), enforced in part, vacated in part, and remanded in part as to other matters, 960 F.2d 1068 (D.C. Cir. 1992), decision and order on remand as to other matters, 45 FLRA 1256 (1992))(proposal that precluded an agency from denying an employee's request for leave unless the employee's presence was "absolutely essential and there [was] no suitable replacement" available, conflicted with the standard set forth in regulation that an agency grant compensation time "[t]o the extent that such modifications in work schedules do not interfere with the efficient accomplishment of an agency's mission.") (Office of Chief Counsel); Service and Hospital Employees International Union, Local 150 and Veterans Administration Medical Center, Milwaukee, Wisconsin, 35 FLRA 521, 530 (1990) (finding a proposal permitting an agency to change work schedules only in "unanticipated emergency situation[s]" outside the duty to bargain because regulation contemplated other situations where agency could change schedules).
15. See also Internal Revenue Service, Los Angeles v. FLRA, 902 F.2d 998 (D.C. Cir. 1990) (finding a proposal outside the duty to bargain because it permitted an employee to designate a smoking area irrespective of regulatory requirements, effectively taking the authority to make such a determination away from the agency head) (IRS).
16. The concept of a "direct and predictable" effect or impact is involved in several proposals. It derives from 5 C.F.R. § 2635.402(a), where the statutory prohibition provided in 18 U.S.C. § 208(a) is restated. "Direct and predictable effect" is defined in 5 C.F.R. § 2635.402(b)(1) as:
(I) A particular matter will have a direct effect on a financial interest if there is a close causal link between any decision or action to be taken in the matter and any expected effect of the matter on the financial interest. An effect may be direct even though it does not occur immediately. A particular matter will not have a direct effect on a financial interest, however, if the chain of causation is attenuated or is contingent upon the occurrence of events that are speculative or that are independent of, and unrelated to, the matter. . . .
(ii) A particular matter will have a predictable effect if there is a real, as opposed to a speculative possibility that the matter will affect the financial interest. It is not necessary, however, that the magnitude of the gain or loss be known, and the dollar amount of the gain or loss is immaterial.
17. The Agency also makes the general claim that the proposal conflicts with 5 C.F.R. part 2634. However, no specific section of that part is cited and it is not otherwise apparent that the proposal conflict with that Part.
18. We note, in this regard, that there is no contention that the Union is seeking a regulatory waiver from the Office of Government Ethics.
19. We note that the Union argues that 5 C.F.R. § 2635.402 does not apply to Proposal 19 and that, instead, 5 C.F.R. § 2635.403 applies. However, it is clear that both sections may apply. In this regard, 5 C.F.R. § 2635.401 provides that the regulation contains a disqualification requirement and a prohibition on acquiring or continuing to hold specific financial interests where a conflict of interest exists. Consistent with this provision, an employee may be prohibited from acquiring or holding certain financial interests under 5 C.F.R. § 2635.403 -- through either a regulatory prohibition of general applicability under section (a) or an individual prohibition under section (b). However, even if a particular interest has not been prohibited, employees must disqualify themselves from participating in particular matters under 5 C.F.R. § 2635.402 unless a waiver has been granted or the conflicting interest has been divested. A proposal seeking to define permissible interests, therefore, may involve both regulatory provisions because it would: (1) define those matters for which waivers would be required under 5 C.F.R. § 2635.402 if the interests otherwise satisfied the requirements for disqualification; and (2) preclude the Agency from prohibiting the acquisition or holding of the interests under 5 C.F.R. § 2635.403.
20. We note, in this regard, as we did with Proposal 19 that there is no contention that the Union is seeking a regulatory waiver from the Office of Government Ethics.
21. In view of our determination, we do not address the Agency's claim that Proposal 18 is inconsistent with 5 C.F.R. § 2635.403(b).
22. 5 C.F.R. § 2634.605(b)(5)(ii) provides that remedial action "may include, as appropriate:" (1) divestiture; (2) resignation from non-Federal position; (3) restitution; (4) establishment of certain trusts; (5) waiver; (6) recusal; and (7) voluntary request for transfer, reassignment, limitation or duties, or resignation.
23. The terms "recusal," "disqualification," and "waiver" are not defined in 5 C.F.R. part 2634. However, the term "disqualification" is defined in 5 C.F.R. § 2635.402(c) as an employee "not participating in the particular matter." "Waiver of disqualification" is addressed in 5 C.F.R. § 2635.402(d) as:
An employee who would otherwise be disqualified . . . may be permitted to participate in a particular matter where the otherwise disqualifying financial interest is the subject of a regulatory or individual waiver . . . .
It is not disputed that a "waiver" as provided for in Proposals 9 and 12 means that the Agency would grant the examiner an individual waiver pursuant to 5 C.F.R. § 2653.402(d)(2).
24. Part 2634 generally sets forth the uniform procedures and requirements for financial disclosure and for the certification and use of qualified blind and diversified trusts. Additionally, that part establishes procedures for executive branch personnel to obtain Certificates of Divestiture. Section 2634.605, Review of reports, and subsection 2634.605(b)(5), Remedial action, addresses the responsibilities of the official reviewing financial disclosure reports and the remedial actions that official may take where a report reveals a violation of applicable laws or regulations.
25. It is our understanding from the parties' submissions that the examiners involved in this case are required to file financial disclosure statements by virtue of Agency determinations under 5 C.F.R. § 2634.904(a)(1)(iv) and (a)(2). See Statement of Position at 27-28, 37.
26. Section (c) of 5 C.F.R. § 2634.605, which sets forth an expedited procedure to review financial disclosure statements of individuals nominated by the President for appointment to positions requiring the advice and consent of the Senate, states that:
The designated agency ethics official's certification responsibilities in § 2634.605(c) are nondelegable and must be accomplished by him personally, or by the agency's alternate designated agency ethics official, in his absence.
5 C.F.R. § 2634.605(c) Note.
27. The Agency also contends that, in certain circumstances, "a reasonable time for divestment would be less than the 30-day period mandated by the Union's proposal." Statement of Position at 25. However, this contention addresses the proposal's merits, not its negotiability, and can be addressed during bargaining.
28. We note, in this regard, that the fact that a removal action is not identified as a remedial action in the regulation does not mean that a removal action would not be available under "[A]gency procedures" in the event an examiner failed to comply with a requested remedial action. It also does not mean that a removal is not available as an exercise of management's right to discipline, as discussed in the next section.
29. We note 5 C.F.R. § 2635.107(b), which provides, in pertinent part:
Where the employee's conduct violates a criminal statute, reliance on the advice of an agency ethics official cannot ensure that the employee will not be prosecuted under that statute. . . . An agency ethics official is required by 28 U.S.C. 535 to report any information he receives relating to a violation of the criminal code, title 18 of the United States Code.
This confirms that the Agency has no authority to grant immunity from criminal prosecution based on information contained in an employee's financial disclosure statement.
30. There is nothing in the record that even suggests that the proposal was intended to link the Agency's assignment of duties to an examiner's grade level. However, even assuming arguendo that the proposal was intended to tie the examiners' work assignments to their grade level, Authority precedent establishes that such a proposal could be found within the duty to bargain. See, e.g., Laborers' International Union of North America, AFL-CIO-CLC, Local 1267 and Defense Logistics Agency, Defense Depot Tracy, Tracy, California, 14 FLRA 686, 694 (1984) (proposal providing that employees could expect assignments to be made consistent with their grade level was within the duty to bargain); American Federation of Government Employees, AFL-CIO, Local 1858 and Department of the Army, U.S. Army Missile Command, Redstone Arsenal, Alabama, 10 FLRA 440 (1982) (proposals requiring that work assignments be made in a manner reflective of the grade level and performance requirements of an employee are within the duty to bargain).
31. The Union states, and the Agency does not dispute, that the "widely diversified excepted investment fund[s]" referred to in section (a) of the proposal are defined in 5 C.F.R. § 2634.310(b).
32. The Union states, and the Agency does not dispute, that the investment funds referred to in section (b) of the proposal are, like the funds referenced in Proposal 24, those described in 5 C.F.R. § 2634.310(b).