Washington, DC

U.S. Office of Personnel Management
Compensation and Leave Claim Decision
Under section 3702 of title 31, United States Code

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Robert D. Hendler
Classification and Pay Claims
Program Manager
Agency Compliance and Evaluation
Merit System Accountability and Compliance



03/07/2016

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Date

The claimant is a Federal civilian employee of the Pacific Air Forces (PAF), Department of the Air Force (AF), at Misawa Air Base, Japan.  He requests the U.S. Office of Personnel Management (OPM) reconsider the agency’s denial of his request for living quarters allowance (LQA) and other associated overseas benefits.  We received the claim on December 23, 2014, from his duly appointed representative, the agency administrative report (AAR) on March 1, 2015, and the claimant’s comments on the report dated March 25, 2015.  For the reasons discussed herein, the claim is denied.

The claimant retired from active duty with the AF on May 31, 2014, while stationed at Misawa Air Base.  While residing in Japan on terminal military leave, he applied for, was offered, and accepted his current Personnel Security Specialist, GS-080-12, position effective May 5, 2014.

LQA

The Department of State Standardized Regulations (DSSR) contain the governing regulations for allowances, differentials, and defraying of official residence expenses in foreign areas.  Within the scope of these regulations, the head of an agency may issue further implementing instructions for the guidance of the agency with regard to the granting of and accounting for these payments.  Thus, Department of Defense Instruction (DoDI) 1400.25-V1250 implements the provisions of the DSSR but may not exceed their scope; i.e., extend benefits that are not otherwise permitted under the DSSR.  Therefore, an LQA applicant must fully meet the relevant provisions of the DSSR before the supplemental requirements of the DoDI or the PAF’s April 13, 2000, LQA Memo 00-1, and other agency implementing guidance may be applied.

The Misawa Air Base’s Civilian Personnel Office (CPO) denied the claimant’s request for LQA based on the DoDI 1400.25-M and the PAF’s LQA Memo, determining that he applied for the position while residing in Japan.  The agency explains in its AAR to OPM:

These documents clearly state that:  “overseas allowances and differentials (except post allowance) are not automatic salary supplements, nor are they entitlements.  They are specifically intended to be recruitment incentives for U.S. citizen employees living in the United States to accept Federal employment in a foreign area.  If a person is already living in the foreign area, that inducement is normally unnecessary.”

Prior to his appointment, the CPO advised the claimant that LQA would not be granted, explaining to him in its March 14, 2014, notice of LQA denial:

A determination has been made that you are not entitled to government-owned and operated quarters or to a [LQA], in accordance with the provisions of the DSSR, as implemented by DoDI 1400.25-V1250.  LQA is determined as not a necessary recruitment incentive [in accordance with] DoDI 1400.25-V1250 as you have a current residence in Misawa, Japan.

The claimant disagrees with the decision to deny LQA to him, asserting the agency failed to follow procedures described by PAF’s LQA Memo, which instructs:

The [Civilian Personnel Flight] determines whether the granting of LQA is necessary as a recruitment or retention incentive for the position being filled.  If this incentive is not necessary, no further determination is made.

The claimant explains his rationale in his claim request to OPM:

Every person hired at Misawa from the Continental United States receives a 36-month Transportation Agreement, [LQA], Post Allowance, Advance Salary, Home Leave, 360 Max Carry-over Annual Leave, Return Agreement Travel, Student Dependent Travel.  Exhibit 22, 35^th Fighter Wing New Civilian Employer Orientation, slides 6 and 7.  To the extent these benefits are provided without regard to whether they are necessary as a recruitment or retention incentive, this policy is arbitrary and capricious.

Based on the claimant’s statements, we conclude he is asserting the decision to deny LQA in his situation is arbitrary and capricious based on the agency’s differing treatment of U.S. versus local hires.  He asserts the agency grants LQA and other overseas benefits to all U.S. hires regardless of the necessity of the incentive whereas local hires are denied LQA when the incentive is considered unnecessary.  The claimant contends the agency’s application of different standards to U.S. hires in comparison to individuals already living in the foreign area is contrary to the PAF’s LQA Memo stating the necessity of the incentive should be determined prior to its grant regardless of the type of hire.

The claimant also provided a copy of the slides prepared for a new civilian employee orientation, wherein LQA is identified as a salary and overseas allowance for “overseas self-sponsored employees.”  We note that the intended purpose of the slides is educational or informational and they do not confer any obligation on the part of the agency to offer LQA and other overseas allowances to all “overseas self-sponsored employees.”  The document only identifies LQA as a salary and overseas allowance, eschewing language expressly identifying it as a certain benefit extended to such employees.  The briefing charts thus do not serve as confirmation of the claimant’s assertions that all U.S. hires are granted LQA, or that the agency provides LQA to all U.S. hires without prior determination of the necessity of such an incentive.  In any case, orientation documents do not confer eligibility or entitlement to LQA benefits.  Such benefits are governed by statute and implementing regulations, as further discussed below. 

The DSSR are the governing regulations for allowances, differentials, and defraying of official residence expenses in foreign areas.  However, under section 013, they allow agencies to issue implementing regulations as follows:

When authorized by law, the head of an agency may defray official residence expenses for, and grant post differential, difficult to staff incentive differential, danger pay allowances, quarters, cost-of-living, representation allowances, compensatory time off at certain posts and advances of pay to an employee of his/her agency and require an accounting thereof, subject to the provisions of these regulations and the availability of funds.  Within the scope of these regulations, the head of an agency may issue such further implementing regulations as he/she may deem necessary for the guidance of his/her agency with regard to the granting and accounting for these payments.

The use of the permissive term “may” in this section as opposed to the mandatory terms “shall” or “will” identifies these allowances as discretionary on the part of the agency.  Further, DoDI 1400.25-M, which articulates the Department of Defense policy on the granting of LQA, provides the following guidance:

Overseas allowances and differentials (except the post allowance) are not automatic salary supplements, nor are they entitlements.  They are specifically intended to be recruitment incentives for U.S. citizen civilian employees living in the United States to accept Federal employment in a foreign area.  If a person is already living in the foreign area, that inducement is normally unnecessary.  Individuals shall not automatically be granted these benefits simply because they meet eligibility requirements.  [Emphases added.]

We conclude the manner of distinguishing LQA eligibility of U.S. hires from local hires under the PAF’s LQA Memo is consistent with the DoDI 1400.25 description of LQA as “specifically intended to be recruitment incentives for U.S. citizen civilian employees living in the United States.”  Therefore, even if the agency applies different standards in the granting of LQA to U.S. versus local hires as the claimant contends, we cannot say that the agency’s application of the PAF’s LQA Memo would be considered arbitrary or capricious.  Moreover, in view of the permissive rather than mandatory language in the applicable regulations as noted above, the degree of discretion that heads of agencies have in determining whether to authorize these allowances, and the facts of this claim, we cannot say the agency’s application of the implementing guidance in this case was arbitrary or capricious.

In addition, the claimant appears to disagree with the agency’s characterization of his selection as a “local hire.”  He asserts he has a permanent residence in the United States, not Japan, stating in his AAR comments to OPM:

Because [the claimant] owns a home in Arizona and his [AF] transportation entitlement allows him to move anywhere that does not exceed the cost of moving back to the home of record, [the claimant] used the Arizona address as the location he was going to after retirement.  When the job offer was made, [the claimant] was on active duty and was required to be in Japan due to active duty orders.  He was not living in Japan voluntarily.

DSSR section 031.11 states LQA may be granted to employees recruited in the United States:

Quarters allowance prescribed in Chapter 100 may be granted to employees who were recruited by the employing government agency in the United States, the Commonwealth of Puerto Rico, the Commonwealth of the Northern Mariana Islands, and the possessions of the United States.

The plain language of “recruited by the employing government agency in the United States” clearly connotes physical presence in the U.S. at the time of recruitment.  Whether an employee is deemed to be recruited in or outside the U.S. is dependent solely on the geographic location of the employee when recruited, not on the existence of a residence at some place other than where the employee is actually located at that time.  See OPM File Numbers 08-0098, 10-0037, 12-0019, and 13-0040. 

Relative to these criteria, DoDI 1400.25, Volume 1250, defines “U.S. hire” as follows:

U.S. Hire.  A person who resided permanently in the United States or the Northern Mariana Islands, from the time he or she applied for employment until and including the date he or she accepted a formal offer of employment.

An employee’s status as a “U.S. hire” is thus based on physical residency at the time of recruitment for the position in question.  The record shows the claimant’s Federal service position was open for recruitment from December 12, 2013, to December 18, 2013; he was subsequently offered the position on February 12, 2014.  The claimant acknowledges he was physically residing in Japan during the entire recruitment period.  For example, on his March 19, 2014, Information to Determine Eligibility for Transportation Agreement and Allowances, he identifies an Armed Forces in the Pacific address as where he was “presently living” and a Gilbert, Arizona, address as where he considers his “place of actual residence to be,” further stating that the Arizona-based residence was purchased in April 2013 in “preparation for retirement.”  In an April 1, 2014, email to the agency, the claimant explains his presence in Japan while on terminal military leave as follows:

Being that I have already accepted this job offer with the incentives that should be approved for an eligible person, I would decline this offer if I am eligible for LQA and the position did not come with that incentive.  I left my stuff in place at Misawa during my permissive/terminal leave to save the government cost savings of having to PCS me in to Misawa…I am currently back in the states trying to square away my home and do not want to be stuck without making a proper decision.

We conclude the claimant was residing in Japan when he was recruited for his current Federal service position, thus he was not residing in the United States or one of its enumerated territories or possessions as required under DSSR section 031.11.  We further note his resume shows he has resided overseas since November 1996 and almost exclusively, with the exception of a few year-long assignments to the Republic of Korea and Greenland, at Misawa Air Base since November 1997.  Although he attempts to establish his actual residence as the Arizona-based residence identified on his LQA questionnaire, the determining factor for LQA eligibility under DSSR section 031.11 is the geographic location at the time of recruitment, not the place considered by the employee as his “actual residence.”  In this case, the record shows he was residing in Japan during the recruitment period, thus he was not permanently or physically residing in the United States from the time he applied for employment until and including the date he accepted the formal job offer.  Therefore, the claimant may not be considered a “U.S. hire” for LQA eligibility purposes under DSSR section 031.11.

The claimant raised a concern to his agency that his designation as a “local hire” for LQA purposes conflicts with his standing under the Status of Forces Agreement (SOFA) between the United States and Japan, asserting that he may be in the foreign country illegally if he is considered a “local hire.”  His SOFA status has no bearing on this determination.  The SOFA is a diplomatic instrument that establishes the legal treatment of U.S. Armed Forces and support personnel stationed in Japan.  Its primary purpose is to shield U.S. service members and Department of Defense civilians from certain aspects of the Japanese legal and taxation systems while they are resident in Japan.  The terms of the SOFA are not applicable for interpreting the provisions of the DSSR.  SOFA status confers neither entitlement nor eligibility for LQA and SOFA provisions may not be substituted for the plain language of the DSSR in determining LQA eligibility.

The agency, although determining him ineligible for LQA under DSSR section 031.11 as a U.S. hire, acknowledges the claimant as eligible for LQA as a locally-separated military member under the applicable provisions of DSSR section 031.12.[1]  LQA, however, was not offered for the position in question.  In its June 5, 2014, determination on his eligibility for transportation agreement and allowances, the CPO states:

Although [the claimant] may meet the [sic] some of the eligibility requirements to receive LQA, per [Department of Defense] guidance LQA should not be granted simply because an employee is eligible.  An additional consideration is whether the position to which they are assigned meets the requirement of “hard-to-fill” and in this case it does not.  “Hard to fill” positions require unique skills, knowledge, or abilities and a documented recruitment history showing difficulties in finding qualified candidates within a broad area of consideration.

The record includes an October 31, 2014, statement from the selecting official for the claimant’s Federal service position, disagreeing with the agency’s conclusion that the Personnel Security Specialist, GS-080-12, position was not hard-to-fill.  According to the selecting official, he advertised twice for the position after the first five selections from the first announcement failed to meet eligibility requirements; that on the second announcement, only two out of the 50 applicants resided in Japan and one of the local candidates subsequently asked to be removed from consideration; and the claimant was on a short list of eight applicants he considered qualified for the position.

DSSR section 031.12, which applies to employees recruited outside the United States, provides that “[q]uarters allowances…may be granted to employees recruited outside the United States…” (emphasis added).  The DSSR does not state that an agency shall or must grant LQA once an employee meets the prescribed eligibility requirements.  The DSSR establishes only basic LQA eligibility parameters and bestows considerable discretion on agency heads to decide under what circumstances they will actually grant LQA to eligible individuals.  See Mark Roberts v. United States, 104 Fed. Cl. 598 (2012).  DSSR section 013 authorizes agency heads to issue further implementing regulations for their own agencies.

DoDI 1400.25-V1250 further specifies that overseas allowances are not automatic salary supplements, nor are they entitlements.  They are specifically intended as recruitment incentives for U.S. citizen civilian employees living in the United States to accept Federal employment in a foreign area.  If a person is already living in a foreign area, that inducement is normally unnecessary.  Furthermore, the statutory and regulatory languages are permissive and give agency heads considerable discretion in determining whether to grant LQAs to agency employees.  Wesley L. Goecker, 58 Comp. Gen. 738 (1979).  Thus, an agency may withhold LQA payments from an employee when it finds that the circumstances justify such action, and the agency’s action will not be questioned unless it is determined that the agency’s action was arbitrary, capricious, or unreasonable.  Under CFR 178.105, the burden is upon the claimant to establish the liability of the United States and the claimant’s right to payment.  Joseph P. Carrigan, 60 Comp. Gen. 243, 247 (1981); Wesley L. Goecker, 58 Comp. Gen. 738 (1979).

In light of the fact that LQA is a discretionary allowance, the agency exercised its authority under DoDI 1400.25 to determine the necessity of LQA as a recruitment incentive in this instance.  The DoDI 1400.25 does not specify the conditions under which LQA may or may not be considered a necessary inducement for a person already living in the foreign area, thus the agency’s decision that the claimant’s position was not hard-to-fill is not subject to our review.  When the agency’s factual determination is reasonable, we will not substitute our judgment for that of the agency.  See e.g., Jimmie D. Brewer, B-205452, March 15, 1982.  Since an agency decision made in accordance with established regulations, as is evident in the present case, cannot be considered arbitrary, capricious, or unreasonable, there is no basis upon which to reverse the decision.

Furthermore, payments of money from the Federal Treasury are limited to those authorized by law, and erroneous advice or information provided by a Government employee cannot bar the Government from denying benefits which are not otherwise permitted by law.  See Office of Personnel Management v. Richmond, 496 U.S. 414, rehearing denied, 497 U.S. 1046, 111 S. Ct. 5 (1990).  Therefore, that the agency initially considered the claimant to be residing in the United States and offered associated overseas benefits does not confer eligibility not otherwise permitted by statute or its implementing regulations.

Home Leave

The claimant also requests reconsideration of the agency’s denial for home leave.  As provided in section 630.602 of title 5, Code of Federal Regulations (CFR), an employee who meets the requirements of 5 U.S.C. 6304(b) for the accumulation of a maximum of 45 days of annual leave earns and may be granted home leave.  Eligibility criteria for 45-day annual leave accumulation are set forth in 5 U.S.C. 6304:

(b)  Annual leave not used by an employee of the Government of the United States in one of the following classes of employees stationed outside the United States accumulates for use in succeeding years until it totals not more than 45 days at the beginning of the first full biweekly pay period, or corresponding period for an employee who is not paid on the basis of biweekly pay periods, occurring in a year:

(1)     Individuals directly recruited or transferred by the Government of the United States from the United States or its territories or possessions including the Commonwealth of Puerto Rico for employment outside the area of recruitment or from which transferred.

(2)     Individuals employed locally but –

(A) (i)  who were originally recruited from the United States or its territories or possessions including the Commonwealth of Puerto Rico but outside the area of employment;

(ii)  who have been in substantially continuous employment by other agencies of the United States, United States firms, interests, or organizations, international organizations in which the United States participates, or foreign governments; and

(iii)  whose conditions of employment provide for their return transportation to the United States or its territories or possessions including the Commonwealth of Puerto Rico; or

(B)  (i)  who were at the time of employment temporarily absent, for the purpose of travel or formal study, from the United States, or from their respective places of residence in its territories or possessions including the Commonwealth of Puerto Rico; and

(ii)  who, during the temporary absence, have maintained residence in the United States or its territories or possessions including the Commonwealth of Puerto Rico but outside the area of employment.

(3)     Individuals who are not normally residents of the area concerned and who are discharged from service in the armed forces to accept employment with an agency of the Government of the United States.

The claimant does not meet 6304(b)(1) because he was not directly recruited or transferred by the Government from the United States for employment in Japan.  Rather, the claimant was already physically residing in Japan when he was recruited by the agency.

The claimant does not meet 6304(b)(2)(A) because he does not meet the three separate requirements under (b)(2)(A)(i)-(iii) as required by law.  He was appointed to the GS-12 position while on military terminal leave pending his retirement from active duty military service and, as addressed in a previous compensation claim decision issued by OPM, OPM File Number 1996-01102 (See at http://www.opm.gov/policy-data-oversight/pay-leave/claim-decisions/decisions/1996/60110300/), the term “employment” is restricted to civilian employment:

The “substantially continuous employment” test in (b)(2) applies only when an individual is moving from one civilian (or private sector) position to a civilian position in the federal sector.  However, members of the armed forces are not “employees,” nor is their tenure in the armed services considered “employment.”  Through the definitions in section in [sic] 5 U.S.C. 6301(2), the term “employee,” as used in section 6304, incorporates the definition of employee in 5 U.S.C. 2105, which expressly applies to persons appointed into the civil service.  By contrast, subsection (b)(3) expressly provides [sic] applies to persons discharged from the armed forces.  Therefore, if a civilian employee hired overseas claims entitlement to home leave based on prior military service, the applicable subsection is (b)(3).

The claimant does not meet 6304(b)(2)(B) because at the time of employment he was not temporarily absent from the United States for travel or formal study; he was in Japan performing active military service.

The claimant does not meet 6304(b)(3) because he was not discharged from service in the armed forces to accept Federal civilian employment but rather retired from such service.  See OPM File Number 11-0021.

The controlling regulations for home leave are contained in 5 CFR 630.602, which states:

An employee who meets the requirements of section 6304(b) of title 5, United States Code, for the accumulation of a maximum of 45 days of annual leave earns and may be granted home leave in accordance with section 6305(a) of that title and this subpart.

Thus, the receipt of home leave is dependent on eligibility for 45-day annual leave accumulation under section 6304(b).  Since the claimant was not eligible for 45-day annual leave accumulation, he was also not eligible for home leave.

Other Requests

The claimant requests reconsideration of the agency’s denial of a transportation agreement and other associated overseas benefits.[2]  OPM’s claims adjudication authority under 31 U.S.C. 3702(a)(2) is narrow and limited in the case of overseas allowance claims to determining whether a claimant is eligible for certain allowances and, if so, whether the claimant has received them in accordance with agency policies and procedures.  Agency decisions regarding transportation agreement negotiations are at the discretion of the agency and are not subject to review under 31 U.S.C. 3702(a)(2).[3]

The claimant asserts that “locally hired” employees have been, unlike him, granted LQA.  Since he forwarded to OPM two letters notifying unidentified individuals of their eligibility for LQA, we noted the letters, one for a GS-081-11 Supervisory Security Specialist and another for an undisclosed position, are dated 2005.  Implicit in his contention is that the ten-year old letters have the effect of obligating the agency to continue granting LQA to other positions in perpetuity regardless of the merits of any particular situation.  OPM has no authority to authorize payment based solely on consideration of equity.  We note LQA is designed exclusively as a recruitment incentive and is not an entitlement.  The agency has the authority to offer LQA in those instances where they feel it necessary to attract qualified candidates and the fiduciary responsibility to limit it to those instances.  Therefore, the claimant’s assertion he has not been treated equitably has neither merit nor applicability to our claim settlement determination.

This settlement is final.  No further administrative review is available within OPM.  Nothing in this settlement limits the claimant’s right to bring an action in an appropriate United States court.

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