In the Matter of the                            )
Petitions by                                        )
                                                          )
ALLEN HAZEN                                  )
GERALD MARKEY                            )
KEVIN A. ROSE                                 )
SCOTT J. ARMSTRONG                    )
DANIEL J. MOLITOR                          )
BRENT C. ANDERSON                       )
PAUL DICE                                         )
ROBERT G. MOELTER                       )
MARTIN VOPAVA                             )
JOEL P. FOSTER                               ) P. S. Docket Nos. DCA 94-174
LEONARD E. AMBROE                      ) through DCA 94-180, DCA 94-183
                                                          ) through DCA 94-185, DCA 94-193

APPEARANCE FOR PETITIONERS:    Gerald Markey
                                                          3948 West 49 & 1/2 Street
                                                          Edina, MN 55410-9998

APPEARANCE FOR RESPONDENT:   Robert P. Sindermann, Jr., Esq.
                                                          United States Postal Service Legislative
                                                          Division - Law Department
                                                          475 L'Enfant Plaza, S.W. Washington,
                                                          DC 20260-1114

Petitioners, members of a collective bargaining unit, were issued,Notices of Involuntary Administrative Salary Offsets notifying them that the Postal Service, Respondent, intended to make deductions from their pay to recover debts allegedly due Respondent. The Notices offered each petitioner an opportunity for a hearing as provided by Postal Service regulations appearing at 39 C.F.R. Part 961, which describe the rules of procedure applicable to hearings conducted pursuant to Section 5 of the Debt Collection Act of 1982, 5 U.S.C. § 5514. Each petitioner filed a timely petition requesting a hearing. Respondent has filed a motion to dismiss each of the petitions for lack of jurisdiction.

1. Section 5 of the Debt Collection Act of 1982, 5 U.S.C. § 5514, provided employees against whom the Postal Service asserts a claim with certain procedural rights before the Postal Service collects the debt by making an involuntary deduction from their current pay. Those procedures include written notice, access to Postal Service records relating to the debt, and an opportunity for a hearing. 5 U.S.C. § 5514 (a)(2). The Act required the Postal Service to "prescribe regulations, subject to the approval of the President^1/, to carry out" the requirements of Section 5 of the Act. 5 U.S.C. § 5514 (a)(4), (b)(1).

2. On January 10, 1986, the Judicial Officer, acting in accordance with authority delegated to him by Postal Service regulations (39 C.F.R. 224.1 (c)(4)(ii)), issued rules of procedure governing the conduct of hearings under Section 5 of the Debt Collection Act as new Part 961 of Title 39, Code of Federal Regulations. 51 Federal Register 1251-1 253, January 10, 1986. The regulations authorized hearing officials designated by the Judicial Officer to consider an employee's petition for a hearing under the Debt Collection Act. 39 C.F.R. §§ 961.3 (c), 961.8.

3. On May 29, 1986, Respondent published in the Postal Bulletin a revision to the Postal Service Employee and Labor Relations Manual ("ELM"), adding subchapters 450 and 460 that established Respondent's debt collection procedures and Identifying those employees entitled to a hearing under 39 C.F.R. Part 961 (PB 21568, 5-29-86, pp. 3-12).

4. In July of 1994, the American Postal Workers Union, the National Association of Letter Carriers and Respondent entered into a Memorandum of Understanding ("MOU") that addressed Respondent's collection of debts from bargaining unit employees .^2/ The MOU's introductory paragraph provided,

"The parties agree that bargaining unit employees will be provided an opportunity to petition for a hearing regarding monies demanded by the Employer pursuant to the Debt Collection Act as promulgated in postal regulations found in the Employee and Labor Relations Manual and in other handbooks, manuals, and published regulations of the Postal Service. The following procedures embody our agreement and outline this process and its relationship to the grievance-arbitration procedures in Article 15 of the National Agreement:"

The first five numbered paragraphs described circumstances under which Respondent would issue an employee a "Notice of Involuntary Administrative Salary Offsets Under the Debt Collection Act"^3/ and the relationship between the existing collective bargaining agreement grievance process and the Debt Collection Act process. Paragraphs 6 and 7 provided limits on withholding from a bargaining unit employee's pay, and pursuant to paragraph 8, the provisions of the MOU were to be added to the 1994 National Agreement. The ninth, and final, paragraph, provided:

"An administrative hearing under the Debt Collection Act may be conducted by any individual not under the supervision or control of the Postmaster General, but may include a hearing official designated by the Judicial Officer."

5. In a September 2, 1994 memorandum to all Managers, Human Resources, throughout the Postal Service, Mr. Anthony Vegliante, the Manager, Grievance & Arbitration at Postal Service Headquarters, advised as follows:

"We have received several calls from the field concerning the Memorandum of Understanding (MOU) signed by the U.S. Postal Service, the American Postal Workers' Union, AFL-CIO and the National Association of Letter Carriers, AFL-CIO wherein it was agreed to extend the opportunity to petition for a hearing concerning any letter of demand issued to bargaining unit employees. As information, the attached MOU outlines the agreement reached. However, postal regulations contained in Part 460, Collection of Postal Debts From Bargaining Unit Employees, of the Employee and Labor Relations Manual (ELM), and other applicable handbooks and manuals, do not yet reflect the changes necessary to implement these revised collection procedures.

While the applicable handbook and manual regulations are in the process of being revised, the MOU cannot be Implemented until those regulations are published. Therefore, the provisions of the MOU cannot yet be utilized. Once the applicable regulations have been cleared for publication, you will be promptly notified."

6. On various dates in late September and early October, 1994, the Accounting Service Coordinator for Respondent's Northland District issued to each petitioner a Notice of Involuntary Administrative Salary Offsets Under the Debt Collection Act regarding an alleged overpayment of expenses to the employee for use of his car in the performance of Postal Service business. Each Notice stated the Postal Service's intention to make deductions from the employee's pay to collect the debt and advised,

"You have the right to petition for a hearing regarding this demand pursuant to the Debt Collection Act. To request a hearing you must file a written petition for a hearing in accordance with the requirements of 39 C.F.R. 961.4. (copy of Part 961 of 39 C.F.R. is enclosed) Your petition must be filed with the Recorder, Judicial Officer Department, United States Postal Service, 475 L'Enfant Plaza, S.W., Washington D.C., 20260-6101, on or before the fifteenth calendar day following your receipt of this notice. A timely request for a hearing will stay the commencement of the collection of the debt."^4/

7. Within 15 days after receiving the Notice, each petitioner filed a petition with the Recorder of the Judicial Officer Department seeking a hearing under the Debt Collection Act procedures established in 39 C.F.R. Part 961.

8. The petitioners are members of the National Association of Letter Carriers, AFL-CIO.

9. On November 8, 1994, the Grievance & Arbitration Division of the Labor Relations Department began circulating for comment within the Postal Service draft changes to subchapters 450 and 460 of the ELM intended to implement the terms of the MOU. Those changes have not been finalized and issued as revisions to the ELM.

Respondent contends that the 39 C.F.R. Part 961 procedures are not available to bargaining unit employees such as petitioners and will only become available when Respondent issues the final regulations to implement the policy agreements in the MOU. It argues that the Notices of Involuntary Administrative Salary Offsets petitioners received were issued in error and contrary to instructions from Postal Service Headquarters that field offices were not to use the new procedures until implementing regulations had been issued.

Petitioners argue that the July, 1994 MOU affords bargaining unit employees the same hearing procedures available to nonbargaining unit employees, and that Respondent's issuance of Notices of Involuntary Administrative Salary Offsets to each petitioner confirms that Part 961 hearings are available to them. Petitioners argue that they accepted the offer of a hearing in good faith and that Respondent should not be allowed to deny them the hearing promised.

Respondent also argues that the MOU is enforceable only under the grievance-arbitration procedures of the National Agreement, and that only after that process has been completed may a party proceed to another forum, and that forum is federal court. Respondent contends there is no jurisdiction under the Debt Collection Act procedures to resolve a dispute between the parties to the MOU regarding its interpretation.

Finally, Respondent argues that petitioners have not shown that they meet the conditions set out in the MOU for access to the hearing procedures. It asserts that one of the conditions in the MOU is that a grievance not be pending regarding the debt and that each petitioner has initiated a pre-grievance process that is still pending. Therefore, according to Respondent, applicability of the MOU is academic because it would not entitle petitioners to a hearing in any event. Petitioners argue that they meet the requirements of the MOU because the pre-grievance process has been terminated by management.

As an alternative, Respondent has suggested that further proceedings on the petitions be stayed until Respondent issues the regulations implementing the provisions of the MOU and the grievance process regarding each petitioner's claim has been exhausted.

Under ELM subchapters 450 and 460, the hearing procedures of 39 C.F.R. Part 961 are available only to nonbargaining unit employees. Subchapter 450, which incorporates Part 961, provides that nonbargaining unit employees can petition for a hearing within 15 days after receiving a Notice of Involuntary Administrative Salary Offsets Under the Debt Collection Act. ELM 452.336. Respondent is to collect debts from those in collective bargaining units by following the procedural requirements specified by the applicable collective bargaining agreement. The Part 961 procedures are not available to bargaining unit employees. ELM 460, 462.3.^5/ The regulations do not authorize Respondent's officials to issue a Notice of Involuntary Administrative Salary Offsets Under the Debt Collection Act to bargaining unit employees. By providing a hearing only to nonbargaining unit employees, the ELM circumscribed the authority of hearing officials under Part 961. Hearing officials may not consider on their merits the petitions of bargaining unit employees.

Revisions to the ELM that would, under certain circumstances, afford collective bargaining unit employees the hearing procedures of Part 961 have not been finalized. Consequently, under existing Postal Service rules, bargaining unit employees are not entitled to a Part 961 hearing. Therefore, petitioners may proceed under Part 961 only if the MOU, in and of itself, makes those procedures available to them and authorizes hearing officials assigned by the Judicial Officer to consider the substance of their petitions. I conclude that it does not.^6/

First, the MOU is written prospectively and generally. The parties to the MOU agree that bargaining unit employees will be provided an opportunity to petition for a Debt Collection Act hearing. The introductory paragraph provides that the sections that follow "embody our agreement and outline this process." While the MOU does not specifically state that a hearing will be afforded bargaining unit employees only after implementing regulations have been issued, it does not purport to address the details of procedures to be followed, to amend the existing ELM provisions that are contradicted by the MOU or to describe the nature of the hearing to be afforded the employee by incorporating the procedural hearing rules of Part 961 or otherwise. The actions of the Postal Service in issuing draft revisions to the ELM to implement the procedures of the MOU and Mr. Vegliante's letter to the field are consistent with this interpretation of the MOU as urged by Respondent in this proceeding. Petitioners have presented no evidence of any contrary intention by the parties to the MOU.

Second, paragraph 9 of the MOU providing that an administrative hearing may be conducted by a hearing official designated by the Judicial Officer has not been shown to be a delegation of authority to hearing officials by the Postal Service sufficient to overcome the limits in the existing ELM provisions. See 39 C.F.R. § 222.2(a).

Petitioners' receipt of Notices of Involuntary Administrative Salary Offsets does not provide a basis for considering their petitions. Issuance of the Notices by the Northland District Accounting Service Coordinator was not authorized by the ELM and contradicted Mr. Vegliante's specific instructions to field installations. Respondent is not bound by the unauthorized acts of its employees, Federal Crop Insurance Corp. v. Merrill, 332 U.S. 380 (1947), and, therefore, the issuance of Notices of Involuntary Administrative Salary Offsets referring to the availability of a Part 961 hearing does not establish a right to a hearing that is otherwise not available to petitioners under Postal Service regulations.

Respondent's motions are granted. The petitions are dismissed.

Norman D. Menegat
Administrative Judge

1/ The authority of the President to approve such regulations was subsequently delegated to the Office of Personnel Management. See Sec. 8(l), Executive Order 11 609, as amended, reprinted in 3 U.S.C. § 301 app. at 406 (1988).

2/ The MOU was executed on behalf of Respondent by Anthony J. Vegliante, Manager, Grievance & Arbitration, Labor Relations, April 21, 1993, but the union representatives did not sign until July 15, 1994, and July 20, 1994.

3/ The Notice of Involuntary Administrative Salary Offsets is the written notice to an employee against whom Respondent asserts a claim that advises the employee of the procedural avenues available to pay or challenge the debt. The Notice must be issued before involuntary deductions may be made from an employee's pay. See ELM 452.321; 39 C.F.R. § 961.3 (e).

4/ Although each petition recited receipt of a Notice of Involuntary Administrative Salary Offsets, not every petitioner filed a copy with his petition. The text of the Notices that were filed is identical, and I assume, for purposes of deciding these motions, that each petitioner received a Notice of Involuntary Administrative Salary Offsets which included the quoted language. Respondent has not contended that any petitioner did not receive a Notice of Involuntary Administrative Salary Offsets.

5/ The issue in this proceeding is whether the Postal Service has authorized hearing officials under Part 961 to consider on their merits Debt Collection Act pre-offset petitions by bargaining unit employees. This decision does not address whether the grievance procedure afforded bargaining unit employees satisfies the notice and hearing requirements of Section 5 of the Debt Collection Act.

6/ The issues before me do not involve a dispute between the signatories to the MOU, and, therefore, Respondent's argument that their remedies, should a dispute exist between them, are exclusively as provided by the National Agreement need not be addressed. Respondent has not demonstrated that a hearing official may not review the MOU to ascertain the extent of jurisdiction, if any, the MOU affords over petitions of bargaining unit employees filed pursuant to Section 5 of the Debt Collection Act.