Washington, DC
U.S. Office of Personnel Management
Compensation Claim Decision
Under section 3702 of title 31, United States Code
Department of the Army
Stuttgart, Germany
Damon B. Ford
Compensation and Leave Claims
Program Manager
Agency Compliance and Evaluation
Merit System Accountability and Compliance
01/07/2022
Date
The claimant is a Federal civilian employee of the U.S. European Command (EUCOM), Department of the Army (DA), in Stuttgart, Germany. He requests the U.S. Office of Personnel Management (OPM) reconsider the agency’s denial of his request to include the rental portion in the amount of living quarters allowance (LQA) he was granted for his personally owned quarters (POQ). We received the claim on May 3, 2021, and the agency administrative report (AAR) and the claimant’s comments on the report on July 14, 2021. For reasons discussed herein, the claim is denied.
The record shows the claimant separated from active duty military service in Stuttgart on July 1, 1991, and he continued to reside overseas in Germany and, at other times, in the United States. While employed as a Federal civilian employee with DA in the United States, he applied for and was subsequently selected and appointed to a Federal civilian position with DA’s 21st Theater Sustainment Command in Kaiserslautern, Germany on August 18, 2019. Although he met LQA eligibility criteria as a U.S. hire under section 031.11 of the Department of State Standardized Regulations (DSSR), the agency determined he was ineligible for LQA under the provisions of Army in Europe Regulation (AER) 690-500.592, paragraph 7a(2), which requires employees who previously occupied a Department of Defense civilian position outside the continental United States to have physically resided permanently in the United States for at least two years immediately before accepting the formal offer of employment. The claimant became eligible for LQA upon the agency’s May 10, 2020, approval to waive the two-year stateside residence requirement, and he applied the grant to rent an apartment in the Kaiserslautern area. When he was subsequently reassigned through a non-competitive action to his current position with EUCOM on February 14, 2021, the claimant requested full LQA under provisions of DSSR section 136a in connection with his POQ, which the record shows he had built and completed in 2008 on land he originally purchased in 2005.
The DSSR set forth the basic criteria for the granting and payment of LQA. 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 and AER 690-500.592, dated September 6, 2018, implement the provisions of the DSSR, but may not exceed their scope; i.e., extend benefits that are not otherwise permitted by the DSSR.
The claimant requests the agency include the rental portion in determining his LQA for POQ as provided for by DSSR section 136a, which states:
When quarters occupied by an employee are owned by the employee or the spouse, or both, or by the employee or the domestic partner, or both, an amount up to 10 percent of original purchase price (converted to U.S. dollars at original exchange rate) of such quarters shall be considered the annual rate of his/her estimated expenses for rent. Only the expenses for heat, light, fuel, (including gas and electricity), water, garbage and trash disposal and in rare cases land rent, may be added to determine the amount of the employee’s quarters allowance in accordance with Section 134. The amount of the rental portion of the allowance (up to 10 percent of purchase price) is limited to a period not to exceed ten years at which time the employee will be entitled only to above utility expenses, garbage and trash disposal, plus land rent. [emphasis added]
In its AAR to OPM, the agency explains the reasons for denying the claimant’s request for the rental portion, although granting expenses for utilities, of the LQA applied towards his POQ based on AER 690-500.592, citing paragraphs 11e(1) and 11e(6). Paragraph 11e(1) authorizes LQA for POQ under the following condition:
LQA for POQ may be paid for existing structures only. LQA will not be authorized for the construction, in whole or in part, of POQ. LQA is intended to substantially offset the costs of quarters that exist at the time of the employee’s assignment oversees. In cases involving extraordinary circumstances, employees may request that the [Civilian Personnel Directorate] grant an exception to this policy.
Paragraph 11e(6) authorizes LQA for POQ under the following condition:
POQ is limited to actual cost based on the employee’s original purchase price. (OPM decision 12-0037, 22 April 2013). The purchase price will not subsequently be increased or extended (for example, due to refinancing, exchange rate fluctuations, additional mortgage situations). The DSSR 10-year period for POQ is cumulative and will not exceed the actual cost remaining at the time of application or reapplication for LQA…
The agency explains in its AAR:
[The claimant] requests LQA for his two-family home that he built in 2006/2007 on land that he purchased in 2005. With the revision of the AER 690-500.592 in October 2017 and again in September 2018, the agency generally only allows LQA under the provision of the DSSR § 136 (POQ) for existing structures and not for quarters that are being specifically build by the employee, in whole or in part…
Since the implementation of the AER 690-500.592 revisions in 2017 and 2018, the agency notes that no LQAs for constructed POQs have been authorized. Although acknowledging that the claimant’s house has been completed and considered an “existing structure” at the time of his eligibility for LQA, the agency however asserts that “[i]t is problematic…to authorize LQA (rental portion) to employees who seek reimbursement of their expenses for quarters that they either purchased or even constructed so far in the distant past.”
DoDI 1400.25-V1250 specifies that overseas allowances are not automatic salary supplements, nor are they entitlements. 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). This is reinforced in AER 690-500.592, paragraph 11e, which describes the conditions when LQA for POQ “may” be authorized. The use of the permissive term “may” as opposed to the mandatory terms “will” or “shall” indicate that LQA for POQ is a discretionary allowance on the part of the agency. 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. In view of the permissive rather than mandatory language in the applicable statutes and regulations, 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 regulations in this case was arbitrary, capricious, or unreasonable. Because there is no basis upon which to reverse the decision, the claim is denied.
As a further matter, the DSSR limits the granting of LQA for POQ to a 10-year period under section 136a. The record shows that after separating from military service in July 1991, the claimant was employed in a non-appropriated fund instrumentality position in Stuttgart. In January 1992, he accepted Federal civilian employment with the Department of the Air Force’s 6th Area Support Group in Stuttgart. Because he was determined eligible at that time for LQA as a local hire under section 031.12 of the DSSR, the agency asserts in its AAR to OPM that the claimant received LQA for POQ at least from July 1997 to October 2005. The agency explains that LQA records maintained by the Defense Finance Accounting Service only go back to July 1997, but suggests that “he already received a large portion, if not its entirety, of the DSSR-136 prescribed 10-year period.” The agency further explains in its AAR:
Regrettably, given the fact that over 30 years past since the time he received initial LQA payments and the writing of this report, comprehensive records are no longer available that could support this circumstance. However; independent financial records do go back as far as 1997, which show that [claimant] changed the LQA grant for rental quarters to a POQ, with an effective date of December 01, 1997 at [address] near Stuttgart…[claimant] received the LQA for that POQ for at least a total of 7 years, 10 months and 15 days (or 2,876 days) until his departure for a stateside assignment at Fort Carson, Colorado, effective October 16, 2005.
The claimant disagrees with the agency’s assertions that he has, or nearly has, exhausted the 10-year period prescribed by DSSR section 136a. He states in his AAR comments to OPM, “From point that I have at some point over the years owned POQ’s, I MUST have expended any possible entitlement. I assure you this is not the cast. [sic] If we have to go to court, we can support this point.” However, he provided no further details, dates, or documentation in order to ascertain the time remaining, if any, of the 10-year period prescribed by DSSR section 136a. Under section 178.105 of title 5, Code of Federal Regulations, 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). He has not met the burden of proof that he is entitled to the full LQA in connection with a POQ, and the agency has the discretion and fiduciary responsibility to ensure unwarranted costs are not being incurred in the disbursement of public funds. 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. Thus, we find no reason to disturb the agency’s decision, and the claimant’s request for additional monies is denied.
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.