21:0101(20)NG - NFFE Local 29 and Army Engineer District, Kansas City, MO; NFFE Local 1363, Republic Of Korea and Army Garrison, Yongsan, Korea -- 1986 FLRAdec NG
[ v21 p101 ]
21:0101(20)NG
The decision of the Authority follows:
21 FLRA No. 20 NATIONAL FEDERATION OF FEDERAL EMPLOYEES, LOCAL 29 Union and Case No. 0-NG-467 10 FLRA 550 U.S. ARMY ENGINEER DISTRICT, KANSAS CITY, MO. Agency NATIONAL FEDERATION OF FEDERAL EMPLOYEES, LOCAL 1363, REPUBLIC OF KOREA Union and Case No. 0-NG-450 10 FLRA 560 U.S. ARMY GARRISON, YONGSAN, KOREA Agency CONSOLIDATED DECISION ON RECONSIDERATION I. Statement of the Case These cases are before the Authority pursuant to the Authority's Order granting the Agency's motions for reconsideration of the Authority's December 3, 1982, decisions in National Federation of Federal Employees, Local 29 and U.S. Army Engineer District, Kansas City, Mo., 10 FLRA 550 (1982) and National Federation of Federal Employees, Local 1363, Republic of Korea and U.S. Army Garrison, Yongsan, korea, 10 FLRA 560 (1982). The sole question presented is the impact that the Debt Collection Act of 1982 has upon the negotiability of the proposals herein. In the previous decisions in these cases, the Authority found the following proposals to be within the duty to bargain: Union Proposal (0-NG-467) 1. That all employees be notified, on travel orders and annually of the requirement to file travel vouchers no later than 15 days after completion of travel; 2. That employees that do not comply with paragraph 1, or who are indebted to the U.S. Government be officially notified that payment be made within 15 days of the receipt of the notice; 3. That payment becomes delinquent after 30 days from the date of the notice and payroll deductions will be initiated; unless a waiver or payment arrangements have been made; 4. That no interest charge be made. (Interest charge for delinquent unused travel advances). (Only the underscored language is in dispute.) Union Proposal (0-NG-450) We propose that members of our bargaining units not be subject to late payment charges. The proposals concern the conditions under which employees will reimburse the Agency for monies they have received through advances where the work-related expenses actually incurred are less than the advance. The proposals were in dispute only insofar as they provided that interest and late payment charges would not be assessed. The original finding of negotiability was premised upon the conclusion that an agency has discretion under the Federal Claims Collection Standards (FCCS), 4 CFR Parts 101-105, /1/ and the Treasury Fiscal Requirements Manual (TFRM). Prior to the issuance of the Authority s decisions after the parties' submissions had been filed, Congress enacted the Debt Collection Act of 1982, Pub.L. No. 97-365, 96 Stat. 1749 (1982) (the Act). Accordingly, the Agency's motions for reconsideration were granted so that the Authority could consider the impact of the Act upon the negotiability of the Union's proposals. Upon careful consideration of the entire record, including the parties' contentions, the Authority makes the following determinations. II. Motion to Strike The Union moved that portions of the Agency's statement of position be struck because they exceeded the scope of the issue upon which the Authority granted reconsideration. The Authority's Order granting the Agency's motions for reconsideration requested the parties to submit statements of position addressing the "issue of the impact that the Debt Collection Act of 1982 has upon the negotiability of the proposals involved." The Authority finds that the Agency's statement raises issues in addition to that which the Authority's Order invited the parties to address. Accordingly, the Union's motion is granted, and the Authority will consider only those arguments which concern the impact of the Debt Collection Act upon the disputed proposals. III. Positions of the Parties The Agency contends that the Debt Collection Act of 1982 does not apply to these proposals. The Union contends that the proposals are within the duty to bargain because the Debt Collection Act authorizes an agency to waive the collection of interest and late payment charges. IV. Analysis A. Applicability of the Debt Collection Act The major purpose of the Debt Collection Act was to facilitate collection procedures in the federal government by expanding the debt collection tools available to federal agencies. /2/ The Agency contends that the Act covers only general debts owed the United States but does not apply to travel advances under 5 U.S.C. 5705, which preceded the Act and authorizes repayment of delinquent unused travel advances through setoff against an employee's pay. /3/ The legislative history of the Act shows that the Act's purpose was primarily to facilitate the collection of "general debts" owed the government, for example, by authorizing setoff against a federal employee's salary under 5 U.S.C. 5514 for general debts such as student loans or overpayment of Veterans Administration (VA) benefits. However, contrary to the Agency's contentions, the coverage of the Act was not intended to be limited solely to such "general debts," but also to include those debts such as unused travel advances for which salary offset was already authorized. The Senate Report accompanying the Act states: The type of indebtedness that may be deducted would include, but is not necessarily limited to, erroneous payments made to the employees, overpayments of benefits, salary or other allowances, travel allowances, federal loans or guaranteed or insured loans, or other indebtedness resulting from stolen property. /4/ Furthermore, while subsection (c) of section 5514 provides that the salary offset provisions of the Act do not modify existing statutes which provide for salary offset, that subsection does not prevent the remaining provisions of the Act from being applied to debts covered by the existing statutes. The Authority concludes that the Debt Collection Act applies to the repayment of unused travel allowances. B. Agency Discretion to Waive Interest Under the Act The section of the Act most relevant to the proposals in dispute, 31 U.S.C. 3717, requires an agency to charge interest and late payment penalties on outstanding debts owed to the United States Government. Subsections (a) and (e) of section 3717 provide in relevant part: (a)(1) The head of an executive or legislative agency shall charge a minimum annual rate of interest on an outstanding debt on a United States Government claim owed by a person(.) (e) The head of an executive or legislative agency shall assess on a claim owed by a person- (1) a charge to cover the cost of processing and handling a delinquent claim; and (2) a penalty charge of not more than 6 percent a year for failure to pay a part of a debt more than 90 days past due. The word "shall" in subsections (a) and (e) was intended by Congress to be mandatory and imperative, /5/ leaving agencies without discretion to waive interest and penalty charges absent express exception. The mandatory nature of the interest and penalty provisions is consistent with the numerous references in the legislative history of the Act concerning the importance of the interest provisions to the overall purpose of the Act. For example, the Senate Report accompanying the Act found the sizeable amount of delinquent debt owed the United States Government "disturbing." It cited the failure of agencies to regularly charge interest and assess late payment penalties among the reasons for this large delinquent debt. /6/ In discussing the requirement that agencies assess interest and late payment charges, the Report states that: Generally, there is either no assessment for interest and penalties on debts owed the government or, if there is, the assessment is at rates that are considerably below market rates. This is in spite of the joint GAO/Justice Department regulations issued in the Federal Claims Collection Standards in April 1979 and subsequent Treasury regulations which require agencies to charge debtors interest on overdue payments. These include Agriculture, Labor, HUD, Interior, Defense, Health and Human Services, Veterans, and Treasury (except IRS). Other departments and agencies, such as Energy, assess interest but lack uniform department policies and procedures for doing so. In the absence of interest charges for delinquent payments, debtors have little or no incentive to make timely payments. Also, debtors are likely to pay their private sector debts first and their government debts last. The Committee has concluded that this factor is a major contributor to the growing amount of delinquent debt owed the government. /7/ Thus, the legislative history of the Debt Collection Act indicates that Congress considered the uniform assessment of interest and Late payment charges by federal agencies to be a central feature of its program to improve the government's debt collection procedures. The Union contends that subsection (g) of section 3717, /8/ which provides that the interest requirement of the Act does not apply where a "contract" prohibits the charging of interest or assessment of late payment charges, authorizes an agency to enter into a collective bargaining agreement which contains a provision waiving the application of the required interest and penalty charges. The legislative history of the Debt Collection Act does not address the question of whether the term "contract" includes a collective bargaining agreement. Section 3717(g)(1) must, therefore, be read in light of the "provisions of the whole law, and ... its object and policy. Mastro Plastics Corp. v. NLRB, 350 U.S. 270, 285 (1956) (quoting United States v. Boisdore's Heirs, 8 How. 113, 122). In view of the importance attached by Congress to the interest and penalty requirements of the Act, any exceptions to section 3717 should be narrowly construed so as not to frustrate the Congressional purpose. If section 3717(g)(1) were read to authorize an agency to negotiate with an exclusive representative concerning the waiver of interest and penalty charges, this would result in the application of such charles on a bargaining unit-by-bargaining unit basis contrary to the Congressional intent that agencies uniformly assess interest and late payment charges on delinquent debts. Additionally, the legislative history indicates that Congress intended provisions such as 3717(g)(1) to apply where the waiver of interest and penalty charges would further the social objectives of government programs being administered by an agency. The Senate Report accompanying the Act states in its discussion of section 3717: These provisions will generate an incentive for the debtor to pay while protecting the debtor and the social objective of the government programs by allowing flexibility in the assessment of the interest and penalty charges. /9/ the types of government programs most often discussed in the legislative history of the Act are those involving loans administered by agencies such as the Department of Education, Veterans Administration, Small Business Administration, and Housing and Urban Development, /10/ in which the "contracts" executed by the agencies are specifically concerned with the terms governing the repayment of money to the United States. The Authority finds that the term "contract" in 31 U.S.C. 3717(g)(1) refers to those contracts which specifically concern the payment or repayment of money pursuant to a particular government program, and not to contracts in the general sense, such as collective bargaining agreements. /11/ Accordingly, the Authority concludes that 31 U.S.C. 3717(9)(1) does not authorize an agency to enter into a collective bargaining agreement which provides that the interest required by section 3717(a) and the late payment penalties required by section 3717(e) not be charged. Furthermore, neither is this type of waiver authorized bY 31 U.S.C. 3717(h), which provides: (h) In conformity with standards prescribed jointly by the Attorney General and the Comptroller General, the head of an executive or legislative agency may prescribe regulations identifying circumstances appropriate to waiving collection of interest and charges under subsections (a) and (e) of this section. A waiver under the regulations is deemed to be compliance with this section. The corresponding regulation, 4 CFR 102.13(9) of the revised FCCS, /12/ provides in relevant part: (A)n agency may waive, in whole or in part, the collection of interest, penalties, and/or administrative costs assessed under this section under the criteria specified in Part 103 of this chapter relating .to the compromise of claims (without regard to the amount of the debt), or if the agency determines that collection of these charges would be against equity and good conscience or not in the best interests of the United States. Waiver ... may be exercised only in accordance with regulations issued by the agency identifying the standards and appropriate circumstances for waiver. Examples of situations which agencies may consider including in their interest waiver regulations are: (1) Waiver of interest pending consideration of a request for reconsideration, administrative review, or waiver of the underlying debt under a permissive statute, and (2) waiver of interest where the agency has accepted an installment plan under 102.11 of this Part, there is no indication of fault or lack of good faith on the part of the debtor, and the amount of interest is large enough in relation to the size of the installments that the debtor can reasonably afford to pay that the debt will never be repaid. Thus, an agency may waive interest and penalty charges under this provision only if the collection of those amounts is against "equity and good conscience or not in the best interest of the United States." /13/ The comments accompanying the regulation state that "equity and good conscience' is generally satisfied where the indebtedness resulted from the agency's administrative error and there is no indication of fraud, misrepresentation, fault or lack of good faith on the part of the debtor." /14/ The Authority finds that section 3717(h) and the implementing regulation were intended to permit an agency to waive interest and penalty charges in individual cases where the agency deemed such waiver to be appropriate in light of the standards set forth in the regulation, but were not intended to authorize a blanket waiver of these charges as contended by the Union. Accordingly, the Authority concludes that the waiver of interest and penalty charges on the delinquent repayment of unused travel advances would not be consistent with the standards for waiver set forth in the regulation as they were intended to be interpreted and applied by their promulgators. Finally, when Congress did intend the provisions of the Debt Collection Act to interact with the collective bargaining process, it expressed that intent by making specific reference to the Federal Service Labor-Management Relations Statute (the Statute). For example, section 5514(b)(2) provides that no regulation prescribed to carry out subsection (a)(2) of that section, which establishes procedures to be followed by an agency seeking to collect a debt through deductions from an employee's salary, shall be considered a Government-wide rule or regulation for purposes of section 7117(a) of the Statute. No similar reference to the Statute appears in 31 U.S.C. 3717 that would indicate Congress' intent to allow the interest requirement of the Act to be subject to the collective bargaining process. V. Conclusion Based on the foregoing analysis, the Authority concludes that the proposals are inconsistent with the Debt Collection Act of 1982 and the implementing regulations in the revised FCCS. Since the Union proposals here are contrary to law and regulation, the Authority now finds it appropriate to vacate its prior decisions in U.S. Army Engineer District, Kansas City, 10 FLRA 550, and U.S. Army Garrison, Yongsan, Korea, 10 FLRA 560. VI. Order Accordingly, IT IS ORDERED that the petitions for review in 10 FLRA 550 and 10 FLRA 560 be now, and they hereby are, dismissed. Issued, Washington, D.C. March 20, 1986 (s)--- Jerry L. Calhoun, Chairman (s)--- Henry B. Frazier III, Member FEDERAL LABOR RELATIONS AUTHORITY --------------- FOOTNOTES$ --------------- /1/ The regulations in effect at the time U.S. Army Engineer District, kansas City and U.S. Army Garrison, Yongsan, Korea were decided have been superseded by the revised Federal Claims Collection Standards (hereinafter referred to as the revised FCCS) issued jointly by the General Accounting Office and the Department of Justice pursuant to the Debt Collection Act of 1982. The revised FCCS became effective April 9, 1984, and are codified at 4 CFR Parts 101-105. /2/ S. Rep. No. 378, 97th Cong., 2d Sess. 1-2, reprinted in 1982 U.S. Code Cong. & Ad. News 3377-78. /3/ 5 U.S.C. 5705 provides: 5705. Advancements and deductions An agency may advance, through the proper disbursing official, to an employee entitled to per diem or mileage allowances under this subchapter, a sum considered advisable with regard to the character and probable duration of the travel to be performed. A sum advanced and not used for allowable travel expenses is recoverable from the employee or his estate by-- (1) setoff against accrued pay, retirement credit, or other amount due the employee; (2) deduction from an amount due from the United States; and (3) such other method as is provided by law. /4/ S. Rep. No. 97-378 at 23, 1982 U.S. Code Cong. & Ad. News at 3399. /5/ Detailed Explanation Prepared by the Office of Law Revision Counsel, accompanying Revision of Title 31, U.S.C.A., Pub.L. No. 97-452, 96 Stat. 2467, 128 Cong. Rec. H9528 (1982), reprinted in 1982 U.S. Code Cong. & Ad. News 4301, 4302. /6/ S. Rep. No. 97-378 at 3, 1982 U.S. Code Cong. & Ad. News at 3379. /7/ S. Rep. 97-378 at 17, 1982 U.S. Code Cong. & Ad. News at 3393. In addition to the Report, testimony before Congress indicated that the government loses a substantial amount of revenue because of the failure of agencies to charge interest on delinquent debts. See, e.g., Debt Collection Act of 1981: Hearings on S. 1249 Before the Senate Comm. on Governmental Affairs, 97th Cong., 1st Sess. (1981) (hereinafter Debt Collection Act), at 50 (statement of David A. Stockman, Director, OMB), and 83-84 (statement of Milton J. Socolar, Acting Comptroller General, GAO); Statement of Charles A. Bowsher, Comptroller General, Concerning Federal Departments and Agencies Failure to Collect Audit-Related Debts, before the House Comm. on Governmental Operations, Subcomm. on Legislation and National Security, at 4-5 (Feb. 24, 1982). /8/ 31 U.S.C. 3717(g)(1) provides in relevant part: (g) This section does not apply-- (1) if a statute, regulation required by statute, loan agreement, or contract prohibits charging interest or assessing charges or explicitly fixes the interest or charges(.) /9/ Rep. No. 97-378 at 17, 1982 U.S. Code Cong. & Ad. News at 3393. /10/ See S. Rep. No. 97-378 at 3, U.S. Code Cong. & Ad. News at 3379; Debt Collection Act, supra note 9, at 40 (testimony of Hal Steinberg, OMB). /11/ Further support for this conclusion is found in the Congressional Budget Office's cost estimate with regard to the Senate till, which stated that "(s)ection 10 would revise procedures for interest calculations and require the assessment of other penalties on debt more than 90 days delinquent, unless specific ... contract provisions prohibit such charges." S. Rep. No. 287, 97th Cong., 1st Sess. 15. Additionally, in the legislative history, one example of the type of contract provision envisioned section 3717(9)(1) makes reference to such a "specific contract." Milton J. Socolar, Acting Comptroller General, stated in his testimony before the Senate Committee on Governmental Affairs that "we think (with respect to low interest rate loans) that some agencies should provide in the contracts that they execute for those loans, upon becoming delinquent, should revert at that point to an interest rate that is commensurate with the interest rate in the commercial market." Debt Collection Act, supra note 9, at 69. /12/ Since the revised FCCS specify criteria for the application and waiver of interest charges rather than incorporate the provisions of the TFRM as in the superseded regulations, the TFRM is no longer relevant to the negotiability of these proposals. /13/ Waiver in accordance with the criteria for the compromise of claims specified in 4 CFR Part 103 is not applicable to the dispute herein. /14/ 49 Fed.Reg. 8889, 8893 (1984).