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Rule2025-14006

Appeal Procedures for Recoupment of Awards, Bonuses, or Relocation Expenses Awarded or Approved for All Employees of the Department of Veterans Affairs

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Published

July 25, 2025

Effective

August 25, 2025

Issuing agencies

Personnel Management Office

Abstract

The Office of Personnel Management (OPM) is issuing a final rule to implement provisions of the Department of Veterans Affairs Accountability and Whistleblower Protection Act of 2017 that permit current and former employees of the Department of Veterans Affairs (VA) to appeal the recoupment of awards, bonuses, or relocation expenses awarded or approved for these individuals. This regulation prescribes general procedures applicable to appeals to the Director of OPM regarding an order by the Secretary of the VA, or designee, directing the employee or former employee to repay the amount, or a portion of the amount, of any award, bonus, or relocation expenses paid to the employee.

Full Text

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<title>Federal Register, Volume 90 Issue 141 (Friday, July 25, 2025)</title>
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[Federal Register Volume 90, Number 141 (Friday, July 25, 2025)]
[Rules and Regulations]
[Pages 35223-35234]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2025-14006]

========================================================================
Rules and Regulations
Federal Register
________________________________________________________________________

This section of the FEDERAL REGISTER contains regulatory documents
having general applicability and legal effect, most of which are keyed
to and codified in the Code of Federal Regulations, which is published
under 50 titles pursuant to 44 U.S.C. 1510.

The Code of Federal Regulations is sold by the Superintendent of Documents.

========================================================================

Federal Register / Vol. 90, No. 141 / Friday, July 25, 2025 / Rules
and Regulations

[[Page 35223]]

OFFICE OF PERSONNEL MANAGEMENT

5 CFR Part 755

RIN 3206-AO71

Appeal Procedures for Recoupment of Awards, Bonuses, or
Relocation Expenses Awarded or Approved for All Employees of the
Department of Veterans Affairs

AGENCY: Office of Personnel Management.

ACTION: Final rule.

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SUMMARY: The Office of Personnel Management (OPM) is issuing a final
rule to implement provisions of the Department of Veterans Affairs
Accountability and Whistleblower Protection Act of 2017 that permit
current and former employees of the Department of Veterans Affairs (VA)
to appeal the recoupment of awards, bonuses, or relocation expenses
awarded or approved for these individuals. This regulation prescribes
general procedures applicable to appeals to the Director of OPM
regarding an order by the Secretary of the VA, or designee, directing
the employee or former employee to repay the amount, or a portion of
the amount, of any award, bonus, or relocation expenses paid to the
employee.

DATES: Effective August 25, 2025.

FOR FURTHER INFORMATION CONTACT: Allen Brooks by email at
<a href="/cdn-cgi/l/email-protection#95f0f8e5f9faecf0f0f4f6f6fae0fbe1f4f7fcf9fce1ecd5fae5f8bbf2fae3"><span class="__cf_email__" data-cfemail="1a7f776a7675637f7f7b7979756f746e7b787376736e635a756a77347d756c">[email&#160;protected]</span></a> or by telephone at (202) 606-2930.

SUPPLEMENTARY INFORMATION:

Background

The Department of Veterans Affairs (VA) Accountability and
Whistleblower Protection Act of 2017, Public Law 115-41 (June 23, 2017)
(``Accountability Act'' hereafter), authorizes the Secretary of the VA
to issue an order directing a VA employee to repay, in whole or in
part, any award or bonus paid on or after June 23, 2017, to an employee
under title 5, United States Code, including chapters 45 or 53, or
title 38, United States Code, if it is determined the employee engaged
in misconduct or poor performance prior to the payment of the award or
bonus, and the award or bonus would not have been paid, in whole or in
part, had the misconduct or poor performance been known prior to
payment. Furthermore, the law authorizes the Secretary of the VA to
issue an order to an employee to repay the amount, or a portion of the
amount, paid to or on behalf of an employee under title 5 for
relocation expenses, including 5 U.S.C. 5724 and 5724a, or title 38, if
it is determined the relocation expenses were paid on or after June 23,
2017, following an act of fraud or malfeasance that influenced the
authorization of the relocation expenses. Finally, the law authorizes
the Secretary of the VA to reduce retirement benefits of employees
convicted of certain crimes and removed for performance or misconduct.
In all cases, the law provides that, upon issuance of an order by the
Secretary, the individual has the right to appeal the order to the
Director of the Office of Personnel Management (OPM). However, this
rulemaking only addresses appeals to the Director of OPM regarding
recoupment of awards, bonuses, and relocation expenses. Appeals of
orders regarding reduction of retirement benefits of employees
convicted of certain crimes will be addressed in a future rulemaking.

Legislative Requirements

Section 204 of Public Law 115-41 amended subchapter I of chapter 7
of title 38, United States Code, by adding a new section 721.
Specifically, 38 U.S.C. 721 outlines procedural requirements for
recoupment of awards or bonuses paid to VA employees. If the Secretary
determines an individual has engaged in misconduct or poor performance
prior to payment of the award or bonus and that such award or bonus
would not have been paid, in whole or in part, had the misconduct or
poor performance been known prior to payment, the Secretary must
provide certain procedural protections before issuing an order for
repayment. Before such repayment, the employee is afforded (A) notice
of the proposed order; and (B) an opportunity to respond to the
proposed order by not later than 10 business days after the receipt of
such notice. If the individual responds to the proposed order, the
Secretary will issue an order not later than five business days after
receiving the individual's response. If the individual does not respond
to the proposed order, the Secretary will issue an order not later than
15 business days after the Secretary provides notice to the individual.
These procedures are outlined in VA policies \1\ and are not part of
this rulemaking. It is important to note that neither the law nor VA
policies require the VA to have taken a disciplinary action, adverse
action, or performance-based action for the Secretary to seek
recoupment of any awards or bonuses, nor do they prohibit recouping an
award or bonus in addition to taking a disciplinary, adverse, or
performance-based action. The order by the Secretary only needs to show
that the Secretary has determined the employee has engaged in
misconduct or poor performance and that the award or bonus would not
have been paid had the misconduct or poor performance been known at the
time of the award. Upon the issuance of an order by the Secretary, the
individual may appeal the order to the Director of OPM within seven
business days after the date of such issuance. This final rule
establishes the appeal procedures to OPM.
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\1\ See VA Handbook 5017/20, January 29, 2024, Procedures for
Recoupment of Award or Bonus, p. VI-3, available at <a href="https://www.va.gov/vapubs/viewPublication.asp?Pub_ID=1483">https://www.va.gov/vapubs/viewPublication.asp?Pub_ID=1483</a>.
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Section 205 of Public Law 115-41 amended subchapter I of chapter 7
of title 38, United States Code, by adding a new section 723.
Specifically, 38 U.S.C. 723 outlines procedural requirements for
recoupment of relocation expenses paid to or on behalf of VA employees.
If the Secretary determines that relocation expenses were paid
following an act of fraud or malfeasance that influenced the
authorization of the relocation expenses, the Secretary must provide
certain procedural protections before the Secretary decides to issue an
order directing an individual to repay the amount, or a portion of the
amount, paid to or on behalf of the individual for relocation expenses.
Before such repayment, the employee is afforded (A) notice of the
proposed order; and (B) an opportunity to respond to the proposed

[[Page 35224]]

order by not later than 10 business days after the receipt of such
notice. If the individual responds to the proposed order, the Secretary
will issue an order not later than five business days after receiving
the individual's response. If the individual does not respond to the
proposed order, the Secretary will issue an order not later than 15
business days after the Secretary provides notice to the individual.
These procedures are also outlined in VA policies \2\ and are not part
of this rulemaking. It is important to note that neither the law nor VA
policies require the VA to have taken a disciplinary action or adverse
action for the Secretary to seek recoupment of relocation expenses, nor
do they prohibit recouping relocation expenses in addition to taking a
disciplinary, adverse, or performance-based action. The order by the
Secretary only needs to show that the Secretary has determined the
employee has engaged in an act of fraud or malfeasance that influenced
the authorization of the relocation expenses. Upon the issuance of an
order by the Secretary, the individual may appeal the order to the
Director of OPM within seven business days after the date of such
issuance. As noted earlier, this final rule addresses the appeal
procedures to OPM.
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\2\ See id., Procedures for Recoupment of Relocation Expenses,
p. VI-6.
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Interim Final Rule With Request for Comments

OPM issued an interim final rule with request for comments,
published at 90 FR 3601 on January 15, 2025, to establish a new part in
the Code of Federal Regulations at 5 CFR part 755 with subparts A and
B. Subpart A outlines appeal procedures for recoupment of awards and
bonuses for all employees of the VA. Subpart B outlines appeal
procedures for recoupment of relocation expenses for all employees of
the VA. In addition to the statutory requirements guiding OPM in the
development of the interim final rule, OPM was informed by the
procedures established by the VA regarding recoupment of awards,
bonuses, or relocation expenses outlined in VA Handbook 5017/20,
Employee Recognition and Awards.
OPM received submissions from two individuals, one organization,
and one national union during the 60-day public comment period for the
interim final rule. At the conclusion of the comment period, OPM
reviewed and analyzed the comments and responses provided to OPM's
questions. In general, the comments express concern about OPM's
rulemaking process and appeal procedures. The comments also demonstrate
an interest in ensuring that VA employees have a fair opportunity for
meaningful review of a VA recoupment order.
The next sections provide a brief description of new part 755
followed by a summary of the comments received and a discussion of the
suggestions for revision that were considered and either adopted,
adopted in part, or declined, and the rationale therefor.

5 CFR Part 755: Appeal Procedures for Recoupment of Awards, Bonuses, or
Relocation Expenses Awarded or Approved for All Employees of the
Department of Veterans Affairs

The interim final rule adding a new 5 CFR part 755 implemented the
appeals procedures for recoupment of awards, bonuses, and relocation
expenses for employees of the VA. Part 755 is entitled ``Appeal
Procedures for Recoupment of Awards, Bonuses, or Relocation Expenses
Awarded or Approved for All Employees of the Department of Veterans
Affairs.'' Subpart A outlines appeal procedures for recoupment of
awards and bonuses for all employees of the VA. Subpart B outlines
appeal procedures for recoupment of relocation expenses for all
employees of the VA. OPM invited comments on the interim final rule and
on additional topics for consideration for this final rule.

General Comment

An individual questioned why VA employees should be allowed an
appeals process and urged ``[n]o appeals of any shape or form.'' The
individual alleged that there are VA employees who take advantage of
their positions and authority and poor policy enforcement while the VA
``unduly den[ies] benefits'' to veterans.
OPM will not make any revisions based on this comment. The
Accountability Act authorizes an appeal process for VA employees
subject to the recoupment of an award, bonus, or relocation expenses
under the statute. The law provides that, upon issuance of such a
recoupment order by the VA Secretary, the individual has the right to
appeal the order to the Director of the OPM. Thus, it is the law, not
OPM's rulemaking, that provides appeal rights to VA employees. While
the law does not require OPM to issue a regulation regarding the
appeals process, OPM believes that doing so will help employees and the
VA avoid confusion about how OPM will administer the appeals process.
Providing clarity to the appeals process will also aide OPM in meeting
its statutory deadline for issuing a decision within 30 business days
after receiving an appeal.

Comments Related to Procedures for Submitting Appeals

Sections 755.102 and 755.202 describe the procedures for VA
employees to follow when submitting an appeal regarding, respectively,
a VA order for recoupment of an award or bonus under 38 U.S.C. 721 or
recoupment of relocation expenses under 38 U.S.C. 723. The regulations
also require that VA provide OPM a copy of the evidence file relied
upon in proposing and deciding its recoupment order. The interim final
rule specified that, if OPM requests that the VA provide information in
addition to the evidence file, VA must also furnish to the employee a
copy of any additional information requested by and provided to OPM.
An organization recommended that OPM revise Sec. Sec. 755.102(a)
and 755.202(a) to ``clearly state that `good cause shown' for untimely
filing of an appeal includes evidence that a delay occurred in the
employee's receipt of notice from OPM.'' The organization is concerned
that, if VA opts to transmit a recoupment order through the U.S. Postal
Service, postal delay in receipt of the order could prevent an employee
from making a timely appeal. The organization thinks that OPM's appeals
process could thus run afoul of Congress' due process intent.
OPM will not revise the rule based on this comment. OPM notes that
the employee will receive notice of a recoupment order from VA, not
OPM. OPM believes that it is unnecessary to detail in the regulatory
text the circumstances that could excuse an untimely filing but meets
the good cause standard. As stated in the interim final rule, OPM will
apply the approach taken by the Merit Systems Protection Board in
Alonzo v. Department of the Air Force, 4 MSPB 262, 4 M.S.P.R. 180
(1980). In Alonzo, the Board established a non-exhaustive set of
factors for determining whether an employee establishes good cause for
the untimely filing of an appeal. These factors will allow OPM to
consider a variety of circumstances using well-established law without
enumerating each exception in regulation, including delays attributed
to the U.S. Postal Service.
The organization also recommended that OPM revise the regulations
to provide employees a right of reply to the VA evidence file
submissions required under Sec. Sec. 755.102(c) and 755.202(c). The
organization expressed concern that the VA may try to ``unfairly game
the OPM

[[Page 35225]]

appeal mechanism'' by raising new facts or arguments not previously
presented to the employee in prior proceedings.
For consistency in the treatment of VA submissions of the evidence
file and additional information, OPM revises the final rule to state
that VA will furnish a copy of both the evidence file and any
additional information to OPM and the employee. The requirement to
serve the employee and OPM the same submissions will promote
transparency in the adjudicative process and provide a check on any
attempt to raise new issues or withhold evidence or arguments submitted
by the employee to the VA. However, OPM believes it is unnecessary to
provide employees a right of reply to VA's submissions due to the
limited nature of OPM's review of the VA order, as discussed in more
detail below. Moreover, the VA will not have a right to respond to the
employee's appeal to OPM. The employee and VA will have had an
opportunity to present their respective positions on the propriety of
the VA recoupment during VA's decision-making process.

Comments Related to Basis of OPM's Appeal Decision

Sections 755.103 and 755.203 provide that OPM will fulfill its
statutory obligation to render a timely decision on any appeal of a VA
recoupment order by basing the decision on the written record only,
which will include the submissions by the employee and the agency.
OPM's appeal decision regarding a VA recoupment order is limited to
whether the procedures in VA's recoupment policies were followed, or,
in the absence of such policies, whether the order was otherwise in
compliance with 38 U.S.C. 721-723. OPM will accept the facts found by
the VA regarding the disciplinary or adverse action, performance-based
action, or other type of finding or action, if any, which was relied
upon by the VA in making its recoupment decision.
OPM received a comment from an individual who stated that OPM's
interim final rule lacked sufficient detail in Sec. Sec. 755.103 and
755.203 about what a VA employee must establish to prove that a
recoupment order is erroneous. The same commenter asked what will
happen if the VA fails to adhere to a timeframe in its policies or
states an incorrect award amount in its proposal notice. The individual
went on to ask that OPM address whether the employee is required to
prove that an error prejudiced the employee in some way.
OPM will not revise Sec. Sec. 755.103 and 755.203 based on these
comments. The regulatory text is sufficiently detailed for a VA
employee to understand what is needed to prove that a recoupment order
is erroneous. OPM does not require any particular form--only a
``statement.'' The statement must explain why the employee believes the
recoupment order is in error. That statement will vary based on the
specific facts of each case. In addition, the regulations specify that
OPM's review is limited to whether the VA followed its procedures (or,
in the absence of such procedures, the relevant statutory provision).
Thus, the statement must explain how the VA erred in following its
procedures. If an employee alleges that the VA erred in adhering to a
timeframe or made a technical error in its proposal notice, OPM will
consider whether the VA's error would result in a different outcome.
An individual commenter asserted that a procedural review will not
provide an employee a meaningful opportunity to put forth an argument
that the VA erred on a substantive issue in the recoupment process. In
addition, an organization commented that OPM should expand the scope of
its review under Sec. Sec. 755.103 and 755.203 to remove
``artificial'' constraints that are not required by 38 U.S.C. 721(b)
and 723(b). Specifically, the organization urged that OPM revise
Sec. Sec. 755.103 and 755.203 to add a substantive assessment of VA's
exercise of its authority under sections 721(a)(1) and 723(a)(1). The
organization also commented that Sec. Sec. 755.103 and 755.203 should
be revised to delete the language, ``OPM will accept the facts found by
the VA regarding the disciplinary or adverse action, or performance-
based action, or other type of finding or action, if any, which was
relied upon by the VA in making its recoupment decision.'' The
organization recommends a de novo appeal decision in which OPM makes
its own factual findings. To do otherwise, according to the
organization, would prevent employees from receiving a meaningful post-
decision assessment and allow OPM to ``abdicate its responsibility to
conduct appellate review as required under 38 U.S.C. 721(b), 723(b).''
A national union likened OPM's appeal procedures to ``procedural
rubber-stamping'' that will deprive employees of ``a meaningful,
substantive right of appeal consistent with the legislative purpose and
plain text of 38 U.S.C. 721-723.'' The union argued that the statutory
language in sections 721 and 723 places no limitation on the scope of
an employee's appeal and OPM's standards of review. The union added
that OPM's rule is not in accordance with law because OPM limits its
review to procedural compliance with agency policy.
OPM disagrees with the commenters and will not expand the scope of
OPM's review. Prior to a VA recoupment order, the VA renders a
determination under section 721(a)(1) that the individual engaged in
misconduct or demonstrated poor performance, or a determination under
section 723(a)(1) that the individual engaged in fraud or malfeasance.
Such determinations will involve factual findings that can be
challenged and assessed through the response period afforded an
employee, or if those factual findings are the basis for disciplinary
or adverse action, a grievance, appeal, or other appropriate
administrative process. Further, a reading of sections 721(b) and
723(b) requiring de novo review by OPM ignores the time limitation
placed upon OPM to issue a decision within 30 business days. OPM does
not believe Congress intended for it to conduct a full review of the
facts and reach its own conclusions underlying a recoupment order based
on the limited amount of time afforded. To read these two sections
otherwise would be a novel interpretation without parallel in the body
of statutory law governing federal employment and would impose
substantial burden on OPM, creating the risk that it could not render a
decision within the 30-day deadline for issuing a decision. Thus, OPM
concludes that the statutory timeframes established by Congress suggest
that Congress did not intend for OPM to conduct a more fulsome or
comprehensive review of the merits concerning the VA's order.
In its own analysis of Congress' intent, the organization provided
a brief discussion of the legislative history and argued that Congress
did not indicate that it intended to limit OPM's review to whether VA
followed its procedures. The organization pointed to legislative
history that Congress intended to preserve minimal Constitutional due
process and to allow for post-decisional appeal. The organization
pointed to statements that Congress designed the recoupment process
such that ``each [employee] would receive pre-decisional due process
and enough process after a decision to pass constitutional muster.''
The organization cited that such constitutional muster ``requires that
an individual receive notice of an action affecting the individual's
interests and a reasonable opportunity to contest that action.'' The
organization concludes that reading into the statute a solely
procedural review is ``contrary to the canon of avoidance of absurd
result.''

[[Page 35226]]

OPM disagrees with the organization's argument that the legislative
history indicates Congress' desire to require OPM review both
substantive and procedural review of VA recoupment orders. The
organization relies on legislative history that describes the
constitutional minimum pre-decisional process required for every
recoupment order--advance notice and an opportunity to respond to an
order before the VA issues an order. The same legislative history did
not, however, speak to OPM's post-decisional review. Nevertheless, OPM
believes that its regulations provide the constitutional minimum
consistent with Congress' intent and the statutory text.

Comments Related to Finality of Appeal Decision

Sections 755.105 and 755.205 establish that OPM's decision in a VA
recoupment order appeal is final, pursuant to 38 U.S.C. 721(b)(2) and
723(b)(2), respectively. In response to OPM's Request for Comment
section of the interim final rule, both the national union and the
organization responded that, yes, a VA employee may seek judicial
review of an OPM appeal decision. The union and organization stated
that OPM's regulations should clarify additional appeal rights
available to employees.
The commenters stated that the statutory text in sections 721 and
723 does not preclude judicial review. To that point, the union and
organization cited Immigration and Naturalization Service v. St. Cyr,
533 U.S. 289, 298, 298 fn.9 (2001) for the proposition that ``a statute
should not be construed as barring judicial review of administrative
actions, absent a clear statement of congressional intent to do so.''
In addition, both commenters noted that ``other adverse actions'' under
the Accountability Act are subject to judicial review. On the latter
point, the organization referred to Trinka v. McDonough, Civil Action
No. 21-2904 (RC) (September 21, 2023) (Contreras, J.) (citing Order,
McLafferty v. Wilkie, No. 20-1772, at 2 (Fed. Cir. Aug. 31, 2020), ECF
No. 10).
In addition to ``the constitutionality challenge discussed in
Trinka and McLafferty,'' the organization raised what it sees as other
``potential causes'' of action for judicial review: (1) an arbitrary
and capricious review under the APA, 5 U.S.C. 702; (2) an ``illegal
exaction'' review under the Tucker Act if the employee wants to
challenge the recoupment after payment; and (3) enforcement of OPM's
decision in mandamus if the VA does not prevail in the appeals process,
pursuant to 28 U.S.C. 1361. The national union pointed to the
availability of 28 U.S.C. 1361 for an employee to seek judicial review
if the VA fails to act on OPM's reversal of a recoupment order.
OPM declines the commenters' recommended modifications to the
regulations to address further appeal rights. In 38 U.S.C. 714,
Congress expressly provided for appeal rights to the U.S. Court of
Appeals for the Federal Circuit or to any court of appeals of competent
jurisdiction. In 38 U.S.C. 713, Congress granted a right to judicial
review for decisions to remove a covered senior executive from the
civil service. Accordingly, in Trinka, the court reviewed a grievance
decision that affirmed the senior executive's removal under section
713, pursuant to McLafferty (federal district courts have jurisdiction
to review final grievance decisions governed by 38 U.S.C. 713(b)(5)).
Congress could have explicitly provided for judicial review of OPM
appeal decisions of VA recoupment orders and chose not to do so.
Additionally, OPM notes that a recoupment action is not an adverse
action under 38 U.S.C. 714 or chapter 75 of title 5. The applicability
of judicial review for adverse actions may or may not be instructive
for appeal decisions involving VA recoupment actions. The organization
did not provide additional details about the other potential causes of
action it identified and why those considerations favor an amendment to
Sec. Sec. 755.105 and 755.205. Accordingly, OPM is not persuaded to
revise the regulatory text to add whether or where judicial review may
occur.
The commenters also opined that OPM should affirmatively provide
notice of available judicial review options to avoid prejudice to
employees. Sections 721 and 723 do not require that OPM affirmatively
provide notice of judicial review options in its appeal decision. In
the absence of clear statutory entitlement to judicial review, OPM does
not believe the lack of notice regarding possible further judicial
review will prejudice an employee. Accordingly, OPM's decision notice
to the employee will not include a statement of ``appeal rights.''
In the next sections, we outline the specific amendments, provide a
regulatory analysis and address related comments, and summarize and
address responses to OPM's request for comment regarding additional
considerations for the implementation and impact of this rule.

Subpart A: Awards and Bonuses

Under part 755, OPM added a new subpart A ``Awards and Bonuses.''
The provisions of subpart A, as revised in this final rule, are
outlined below.

Section 755.101 Scope of Subpart and Definitions

Subpart A applies to a current or former civil service employee of
the VA. OPM has concluded that a ``current employee'' is an individual
appointed in the civil service as outlined in 5 U.S.C. 2105 or under
title 38 regarding VA civil service employees. This subpart does not
apply to contractor employees performing work at the VA on behalf of a
contractor because contractor employees are not appointed in the civil
service. In recognition of the possibility that VA may issue a
recoupment order after an employee has left the VA, for example through
transfer to another agency, removal, resignation, or retirement from
federal service, former VA employees are also covered by this appeal
process.
Specifically, subpart A is limited to appeals filed pursuant to 38
U.S.C. 721 by an ``employee'' of the VA to the Director of OPM, or
designee, regarding an order by the Secretary of the VA, or designee,
directing the employee to repay the amount, or a portion of the amount,
of any award or bonus paid to the employee under title 5, including
chapters 45 or 53, or under title 38. OPM has determined this includes,
among other provisions under title 5, awards and bonuses paid pursuant
to 5 U.S.C. chapter 45 (Awards); 5 U.S.C. 5336 (Additional step
increases, commonly known as Quality Step Increases); 5 U.S.C. 5384
(Performance awards in the Senior Executive Service); 5 U.S.C. 5753 and
5754 (Recruitment, relocation, and retention bonuses); and any title 38
authorities regarding awards and bonuses.
OPM's review on appeal is limited to whether the procedures in VA's
policies on recoupment were followed or, in the absence of any such
policies, the VA's order was otherwise in compliance with 38 U.S.C.
721. As discussed in more detail elsewhere in this rule (see, e.g.,
discussion regarding Sec. 755.103), OPM concludes, based on the
statutory timeframes established by Congress, that Congress did not
intend for OPM to conduct a more fulsome or comprehensive review of the
merits concerning the VA's order. Furthermore, Congress did not provide
OPM the authority to adjudicate the underlying decisions by the VA
regarding any disciplinary or adverse action or any performance-based
action. Accordingly,

[[Page 35227]]

subpart A does not cover appeals regarding any disciplinary or adverse
action, or any performance-based action taken by the VA, even if such
action serves as the basis for the Secretary of the VA, or designee, to
order recoupment of a bonus or award paid to an employee of the VA.
Likewise, OPM will not review any claims of discrimination, prohibited
personnel practice, or other collateral issues claim raised in any
appeal. Depending on the employee, VA may have multiple legal
authorities available for addressing misconduct and performance issues,
such as 5 U.S.C. chapter 75 (Adverse Actions); 5 U.S.C. 4303 (Actions
based on unacceptable performance); 5 U.S.C. 3592 (addressing
unacceptable performance for SES); and various title 38 authorities for
addressing misconduct or unacceptable performance. These statutory
authorities have separate appeals or grievance procedures to address
any adverse actions or performance-based actions taken by the VA and
which may serve as the basis for the Secretary of the VA, or designee,
to order recoupment of awards or bonuses. Employees may file
discrimination complaints to the Equal Employment Opportunity
Commission (EEOC) or to the Department of Labor's Veterans' Employment
and Training Service (DOL VETS) and prohibited personnel practice
complaints with the U.S. Office of Special Counsel (OSC). VA employees
should consult with their servicing human resources office with
questions regarding applicable grievance or appeal rights regarding any
disciplinary or adverse action, or performance-based actions, that may
be taken against an employee.
To implement the statutory timeframes established by Congress, OPM
is defining the term ``business days'' to mean weekdays, which are
Monday through Friday, except when such a day is designated as a
federal holiday by OPM, or the employee's assigned facility or OPM is
closed for regular business, e.g., inclement weather or lapse in
appropriations. OPM notes that this definition is similar to the
definition of ``Business Days'' outlined in VA's policy regarding the
recoupment of awards and bonuses but notes that the calculation of
business days is slightly different from that established in VA's
policy. VA's definition of a business day is based upon the employee's
receipt of an order, whereas OPM defines a business day, for the
purposes of an appeal to OPM, as beginning on the first business day
after the issuance of the order to the employee. OPM's approach to
calculating business days mirrors the statutory language in 38 U.S.C.
721(b)(1) and promotes consistent use of the term.

Section 755.102 Procedures for Submitting Appeals

This section describes the procedures for VA employees to follow
when submitting an appeal regarding a VA order for recoupment of an
award or bonus under 38 U.S.C. 721. An employee may file an appeal to
the Director of OPM by U.S. mail or by email, within seven business
days after the date of issuance of the order pursuant to 38 U.S.C.
721(a)(3). This time limit is established in law. Appeals which are
untimely filed may be dismissed resulting in the VA's decision being
upheld. OPM, for good cause shown, may accept an untimely appeal. OPM
adopts the approach taken by the Merit Systems Protection Board in
Alonzo v. Department of the Air Force, 4 MSPB 262, 4 M.S.P.R. 180
(1980), in determining whether an employee establishes good cause for
the untimely filing of an appeal.
If the employee elects to file by the U.S. mail, it must be
addressed to Director, U.S. Office of Personnel Management, 1900 E
Street NW, Room 7H28 (Attention: Accountability and Workforce
Relations), Washington, DC 20415. OPM will rely upon the postmark to
determine timeliness for filing the appeal. If the employee elects to
file by email, it must be sent to <a href="/cdn-cgi/l/email-protection#8ce9e1fce0e3f5e9e9edefefe3f9e2f8edeee5e0e5f8f5cce3fce1a2ebe3fa"><span class="__cf_email__" data-cfemail="62070f120e0d1b07070301010d170c1603000b0e0b161b220d120f4c050d14">[email&#160;protected]</span></a>. OPM
will rely upon the date the email was sent to determine timeliness for
filing the appeal.
The law does not specify the content for any appeal filed with OPM.
Therefore, OPM has determined what information OPM needs to adequately
consider the appeal. OPM is requiring that minimum information to be
included in any appeal to reflect the narrow grant of authority 38
U.S.C. 721 gives to OPM. The appeal must be submitted in writing and
must be signed by the employee or their representative. OPM is not
requiring a specific form be used in filing the appeal, but any appeal
must include the specified information for OPM to properly adjudicate
the appeal. The written appeal must include (1) a copy of the notice of
proposed order received pursuant to 38 U.S.C. 721(a)(2)(A); (2) a copy
of the employee's response to the proposed order, if any; (3) a copy of
the order received pursuant to 38 U.S.C. 721(a)(3); (4) a statement
explaining why the employee believes the order received pursuant to 38
U.S.C. 721(a)(3) is in error; (5) the name, mailing address, telephone
number, and email address of the employee and, if applicable, the same
information for their representative; and (6) the name, mailing
address, telephone number, and email address of the VA official who
issued the order pursuant to 38 U.S.C. 721(a)(3). OPM will notify the
VA upon receipt of a complete, timely appeal. The VA must provide OPM
and the employee a copy of the evidence file relied upon in proposing
and deciding its recoupment order as soon as possible but no later than
five business days after OPM sends its notice to the VA. For OPM to
make an appropriate decision, OPM must have all necessary facts and
evidence relied upon by the VA when making its recoupment decision. If
necessary, OPM may request VA provide information in addition to the
evidence file. For example, OPM may need additional information to
address the employee's belief the order by the VA was in error. Any
additional information requested by OPM must be provided to OPM within
five business days after OPM's request. VA must also furnish a copy of
any additional information requested by and provided to OPM to the
employee. VA's failure to provide the evidence file or any requested
additional information to OPM and the employee will result in a finding
against the VA.
An employee covered by this subpart is entitled to be represented
by an attorney or other representative. OPM may disallow as an
employee's representative an individual whose activities as
representative would cause a conflict of interest or position, or an
employee of any agency whose release from their official position would
give rise to unreasonable costs or whose priority work assignments
preclude their release. This is consistent with other complaint
processes regulated by OPM (e.g., classification appeals and complaints
involving violations of the Fair Chance Act of 2019).

Section 755.103 Basis of Appeal Decision

[[Page 35228]]

the agency. There will be no formal hearing procedures for this appeal.
The burden is upon the employee to establish the timeliness of the
appeal and to explain why the VA's order is in error. OPM may uphold
the VA order if the employee or their designated representative fails
to provide required information. As noted previously, OPM will also
uphold the VA order if the appeal was untimely filed without good cause
shown for the delay.
Since Congress did not provide OPM the authority to adjudicate
decisions by the VA regarding any disciplinary or adverse action, or
any performance-based action, OPM's review of the VA order is limited
to whether the procedures in VA's policies on recoupment of awards and
bonuses \3\ pursuant to 38 U.S.C. 721 were followed, or, in the absence
of such policies, whether the order was otherwise in compliance with
the statute. In other words, OPM will not review whether any
disciplinary or adverse action, or performance-based action, which may
have been relied upon by the VA in its recoupment order, was
appropriate. OPM will accept the facts found by the VA regarding the
disciplinary or adverse action, performance-based action, or other type
of finding or action, if any, which was relied upon by the VA in making
its recoupment decision. As noted earlier, OPM will not review any
claims of discrimination, prohibited personnel practices, or other
collateral issues raised in any appeal. Employees may file complaints
with the EEOC, DOL VETS, OSC, or other administrative body having
jurisdiction. where appropriate.
---------------------------------------------------------------------------

\3\ See id., Procedures for Recoupment of Award or Bonus, p. VI-
3.
---------------------------------------------------------------------------

Section 755.104 Form of Appeal Decision

Within 30 business days after receiving an appeal, OPM will make a
decision on the employee's appeal. OPM will then send a written appeal
decision to the employee or to the employee's representative, if any,
advising whether the VA order is upheld by OPM. OPM will send the VA a
copy of the appeal decision. This time limit is consistent with the
statutory requirements.

Section 755.105 Finality of Appeal Decision

Pursuant to 38 U.S.C. 721(b)(2), the OPM decision on appeal is
final. There will not be any further administrative review available
within OPM, and thus this rule does not establish any process for
requests for reconsideration. The law is silent regarding any statutory
right to judicial review of an OPM appeal decision. Accordingly,
although OPM will send its appeal decision to the employee, OPM will
not provide an accompanying statement of ``appeal rights.''

Subpart B: Relocation Expenses

Under part 755, OPM added a new subpart B ``Relocation Expenses.''
These provisions of subpart B, as revised in this final rule, are
outlined below.

Section 755.201 Scope of Subpart and Definitions

Like subpart A, subpart B applies to a current or former civil
service employee of the VA. OPM has concluded that a ``current
employee'' is an individual appointed in the civil service as outlined
in 5 U.S.C. 2105 or under title 38 regarding VA civil service
employees. This subpart does not apply to contractor employees
performing work at the VA on behalf of a contractor because contractor
employees are not appointed in the civil service. In recognition of the
possibility that VA may issue a recoupment order for relocation
expenses after an employee has left the VA, for example through
transfer to another agency, resignation from federal service, removal,
or retirement from federal service, former VA employees are covered by
this appeal process.
Specifically, subpart B is limited to appeals filed pursuant to 38
U.S.C. 723 by an ``employee'' of the VA to the Director of OPM, or
designee, regarding an order by the Secretary of the VA, or designee,
directing the employee to repay the amount, or a portion of the amount,
paid to or on behalf of the employee for relocation expenses under
title 5, including any expenses under section 5724 or 5724a of title 5,
or under title 38.
OPM's review on appeal is limited to whether the procedures in VA's
policies on recoupment of relocation expenses were followed or, in the
absence of any such policies, whether the VA's order was otherwise in
compliance with 38 U.S.C. 723. As discussed in more detail elsewhere in
this rule (see, e.g., discussion regarding Sec. 755.203), OPM
concludes, based on the statutory timeframes established by Congress,
that Congress did not intend for OPM to conduct a more fulsome or
comprehensive review of the merits concerning the VA's order.
Furthermore, as previously discussed in subpart A, Congress did not
provide OPM the authority to adjudicate the underlying decisions by the
VA regarding any disciplinary or adverse action or any performance-
based action. Accordingly, subpart B does not cover appeals regarding
any disciplinary or adverse action, or any performance-based action
taken by the VA, even if such action serves as the basis for the
Secretary of the VA, or designee, to order recoupment of relocation
expenses paid to an employee of the VA. Likewise, OPM will not review
any discrimination claim or prohibited personnel practice claim raised
in any appeal. Depending on the employee, VA may have multiple legal
authorities for addressing misconduct and performance issues such as 5
U.S.C. chapter 75 (Adverse Actions); 5 U.S.C. 4303 (Actions based on
unacceptable performance); 5 U.S.C. 3592 (addressing unacceptable
performance for SES); and any title 38 authorities for addressing
misconduct or unacceptable performance. These statutory authorities
have separate appeals or grievance procedures to address any adverse
actions or performance-based actions taken by the VA and which may
serve as the basis for the Secretary of the VA, or designee, to order
recoupment of relocation expenses. Employees may file complaints with
the EEOC, DOL VETS, or OSC, where appropriate. VA employees should
consult with their servicing human resources office with questions
regarding applicable grievance or appeal rights regarding any
disciplinary or adverse action, or performance-based actions, that may
be taken against an employee.
OPM is defining ``business days'' to mean weekdays, which are
Monday through Friday, except when such a day is designated as a
federal holiday by OPM, or the employee's assigned facility or OPM is
closed for regular business, e.g., inclement weather or lapse in
appropriations. OPM notes that this definition is similar to the
definition of ``Business Days'' outlined in VA's policy regarding the
recoupment of relocation expenses but notes that the calculation of
business days is slightly different from that established in VA's
policy. VA's definition of a business day is based upon the employee's
receipt of an order, whereas OPM defines a business day, for the
purposes of an appeal to OPM, as beginning on the first business day
after the issuance of the order to the employee. OPM's approach to
calculating business days mirrors the statutory language in 38 U.S.C.
721(b)(1) and promotes consistent use of the term.

[[Page 35229]]

Section 755.202 Procedures for Submitting Appeals

This section describes the procedures for VA employees to follow
when submitting an appeal regarding a VA order for recoupment of
relocation expenses as provided by 38 U.S.C. 723. An employee may file
an appeal to the Director of OPM by U.S. mail or by email, within seven
business days after the date of issuance of the order pursuant to 38
U.S.C. 723(a)(3). Like the time limit established for recoupment of
awards and bonuses, this time limit is established in law. Appeals
which are untimely filed may be dismissed resulting in the VA's
decision being upheld. OPM, for good cause shown, may accept an
untimely appeal. OPM adopts the approach taken by the Merit Systems
Protection Board in Alonzo v. Department of the Air Force, 4 MSPB 262,
4 M.S.P.R. 180 (1980), in determining whether an employee establishes
good cause for the untimely filing of an appeal.
If the employee elects to file by the U.S. mail, it must be
addressed to Director, U.S. Office of Personnel Management, 1900 E
Street NW, Room 7H28 (Attention: Accountability and Workforce
Relations), Washington, DC 20415. OPM will rely upon the postmark to
determine timeliness for filing the appeal. If the employee elects to
file by email, it must be sent to <a href="/cdn-cgi/l/email-protection#a2c7cfd2cecddbc7c7c3c1c1cdd7ccd6c3c0cbcecbd6dbe2cdd2cf8cc5cdd4"><span class="__cf_email__" data-cfemail="0c69617c60637569696d6f6f637962786d6e65606578754c637c61226b637a">[email&#160;protected]</span></a>. OPM
will rely upon the date the email was sent to determine timeliness for
filing the appeal.
The law does not specify the content for any appeal filed with OPM.
Therefore, OPM has determined what information OPM needs to adequately
consider the appeal. OPM is requiring that minimum information to be
included in any appeal to reflect the narrow grant of authority 38
U.S.C. 721 gives to OPM. The appeal must be submitted in writing and
must be signed by the employee or their representative. OPM is not
requiring a specific form be used in filing the appeal, but any appeal
must include the specified information for OPM to properly adjudicate
the appeal. The written appeal must include (1) a copy of the notice of
proposed order received pursuant to 38 U.S.C. 723(a)(2)(A); (2) a copy
of the employee's response to the proposed order, if any; (3) a copy of
the order received pursuant to 38 U.S.C. 723(a)(3); (4) a statement
explaining why the employee believes the order received pursuant to 38
U.S.C. 723(a)(3) is in error; (5) the name, mailing address, telephone
number, and email address of the employee and the same information for
their representative, if the employee has elected to be represented;
and (6) the name, mailing address, telephone number, and email address
of the VA official who issued the order pursuant to 38 U.S.C.
723(a)(3). OPM will notify the VA upon receipt of a complete, timely
appeal. The VA must provide OPM and the employee a copy of the evidence
file relied upon in proposing and deciding its recoupment order as soon
as possible but no later than five business days after OPM sends its
notice to the VA. For OPM to make an appropriate decision, OPM must
have all necessary facts and evidence relied upon by the VA when making
its recoupment decision. If necessary, OPM may request VA provide
information in addition to the evidence file. For example, OPM may need
additional information to address the employee's belief the order by
the VA was in error. Any additional information requested by OPM must
be provided to OPM within five business days after OPM's request. VA
must also furnish a copy of any additional information requested by and
provided to OPM to the employee. VA's failure to provide the evidence
file or any requested additional information to OPM and the employee
will result in a finding against the VA.
An employee covered by this subpart is entitled to be represented
by an attorney or other representative. OPM may disallow as an
employee's representative an individual whose activities as
representative would cause a conflict of interest or position, or an
employee of any agency whose release from their official position would
give rise to unreasonable costs or whose priority work assignments
preclude their release. This is consistent with other complaint
processes regulated by OPM.

Section 755.203 Basis of Appeal Decision

The law provides that, upon the issuance of an order by the
Secretary, an individual shall have an opportunity to appeal the order
to the Director of OPM within seven business days after the date of
such issuance. The law further provides that the Director shall make a
final decision regarding the appeal within 30 business days after
receiving the appeal. Therefore, due to this compressed timeline, OPM
has determined the best way to fulfill its obligation to render a
timely decision on any appeal is to base the decision on the written
record only, which will include the submissions by the employee and the
agency. Like the appeal process for recoupment of awards and bonuses,
there will be no formal hearing procedures for this appeal.
The burden is upon the employee to establish the timeliness of the
appeal and to explain why the VA's order is in error under 38 U.S.C.
723. OPM may uphold the VA order if the employee or their designated
representative fails to provide required information. As noted
previously, OPM will also uphold the VA order if the appeal was
untimely filed without good cause shown for the delay.
Since Congress did not provide OPM the authority to adjudicate
decisions by the VA regarding any disciplinary or adverse action, or
any performance-based action, OPM's review of the VA order is limited
to whether the procedures in VA's policies on recoupment of relocation
expenses \4\ pursuant to 38 U.S.C. 723 were followed, or, in the
absence of such policies, compliance with the statute. In other words,
OPM will not review whether any disciplinary or adverse action, or
performance-based action, which may have been relied upon by the VA in
its recoupment order, was appropriate. OPM will accept the facts found
by the VA regarding any disciplinary or adverse action, or performance-
based action and relied upon by the VA in making its recoupment
decision. OPM will not review any discrimination claim or prohibited
personnel practice claim raised in any appeal. Employees may file
complaints with the EEOC, DOL VETS, or OSC, where appropriate.
---------------------------------------------------------------------------

\4\ See id., Procedures for Recoupment of Relocation Expenses,
Page VI-6.
---------------------------------------------------------------------------

Section 755.204 Form of Appeal Decision

Section 755.205 Finality of Appeal Decision

Pursuant to 38 U.S.C. 723(b)(2), the OPM appeal decision is final.
There will not be any further administrative review available within
OPM, and thus this rule does not establish any process for requests for
reconsideration. Like appeals of recoupment of awards and bonuses, the
law is silent regarding any statutory right to judicial review of an

[[Page 35230]]

OPM appeal decision. Accordingly, although OPM will send its appeal
decision to the employee, OPM will not provide an accompanying
statement of ``appeal rights.''

OPM's Request for Comment

Given the unique nature of OPM's responsibility for adjudicating
employee appeals on matters specific only to the VA, OPM requested
comment on the implementation and impact of the interim final rule. In
the paragraphs that follow, OPM restates the questions and discusses
the responses from three commenters.
<bullet> If a disciplinary or adverse action, or performance-based
action, relied upon by the VA in recoupment of an award, bonus, or
relocation expense is subject to a grievance or appeal in a separate
process and the grievance or appeal is still pending, how should this
impact any decision by OPM? What if the disciplinary or adverse action,
or performance-based action, relied upon by the VA is later overturned
in the separate process after any decision by OPM regarding the
recoupment by the VA?
The national union stated that, if the VA seeks recoupment while
the disciplinary or adverse action, or performance-based action is
still in litigation, OPM should stay its adjudication of the employee
appeal pending resolution of the litigation. The union suggested that
OPM should reverse the VA's recoupment order through its appeal process
if the underlying disciplinary or adverse action, or performance-based
action, relied upon by the VA in recoupment is overturned, rescinded,
vacated or otherwise undone. The organization also recommended that OPM
stay VA's recoupment action pending litigation of any underlying
adverse personnel action. Additionally, the organization made a similar
suggestion that, if the underlying adverse personnel action is undone,
then the recoupment should also be undone.
An individual also responded to OPM's request for comments
regarding how any pending appeal would impact a decision by OPM. The
individual suggested that OPM's decision on a VA recoupment order
should not be implemented until any pending grievance or appeal of the
underlying action is resolved. As to OPM's request for comments
regarding the impact of an overturned personnel action on OPM's
decision, the individual recommended that OPM's decision is issued and
implemented only if the decision reverses the VA recoupment order.
OPM thanks the commenters for their responses. However, OPM will
not make any revisions based on these comments. After careful
consideration, OPM has concluded that a decision by OPM should not be
impacted by a grievance or appeal in a separate process in a
disciplinary or adverse action, or performance-based action, relied
upon by the VA in recoupment of an award, bonus, or relocation expense.
Congress afforded OPM only 30 business days to adjudicate an appeal
filed seven business days after the date of an order. Such a limited
timeframe indicates that Congress intended for OPM to conduct a limited
review of the Secretary's order and issue a prompt decision on the
employee's appeal. In addition, Congress did not authorize OPM to stay
a decision on a recoupment appeal pending the outcome of collateral
litigation. Further, even if, after OPM makes its decision, a tribunal
overturns a disciplinary or adverse action, or performance-based action
that was relied upon by the VA, Congress did not authorize OPM to
reopen or revisit its decisions on recoupment appeals. Finally,
allowing for OPM to stay or revisit its decisions based on underlying
substantive matters is incongruent with OPM's conclusion that its
review under 38 U.S.C. 721(a) and 723(a) is limited to VA's compliance
with its internal policy or, in the absence of such policy, compliance
with the law.
<bullet> May VA bargaining unit employees use the negotiated
grievance process under 5 U.S.C. 7121 to challenge a VA recoupment
order in lieu of filing an appeal with OPM? Or do 38 U.S.C. 721 and 723
provide the sole method to challenge a VA recoupment order?
The national union put forth that the plain text of sections 721
and 723 ``does not supersede 5 U.S.C. 7121, and therefore, cannot be
interpreted to exclude or otherwise prohibit a grievance being filed
under the negotiated grievance procedure.'' The commenting organization
provided a similar rationale, noting that no provision in sections 721
and 723 expressly excludes coverage by a negotiated grievance
procedure. The organization also stated that the terms of the
applicable collective bargaining agreement would decide whether a
covered employee can grieve a recoupment order. Both the national union
and organization stated that sections 721 and 723 cannot be read to
mean that an OPM appeal is the sole method to contest a VA recoupment
order. They concluded that the statute should be interpreted instead to
mean that an employee may file a negotiated grievance or an appeal to
OPM, but not both.
As stated in the interim final rule, it was unclear to OPM whether
the appeal rights to OPM are the exclusive process for bargaining unit
employees to challenge a VA order on recoupment of awards or bonuses or
whether VA bargaining unit employees may file a grievance under any
applicable negotiated grievance procedure which ends in binding
arbitration. After consideration of these comments, it is not clear to
OPM that Congress intended to exclude VA bargaining unit employees from
pursuing a grievance under a negotiated grievance procedure concerning
a recoupment award issued under 38 U.S.C. 721(a) or 723(a). However, it
is unnecessary for OPM to decide this question of statutory
interpretation as such issues are more appropriate for resolution
through the procedures established by the Federal Labor Relations
Authority. However, OPM agrees with the commenters' arguments that an
employee could not both file grievance and a recoupment appeal.
Accordingly, OPM is revising Sec. Sec. 755.102 and 755.202 to collect
information related to any grievance as part of the appeal and to
clarify that an employee must elect to pursue either an appeal to OPM
or negotiated grievance procedures.
<bullet> Does coverage by the negotiated grievance procedure depend
on whether the award or bonus was paid under title 5 authority or by
title 38 authority?
The national union responded that the authority, whether title 5 or
title 38, for the award is irrelevant. The union pointed to 38 U.S.C.
7422(a), stating that the statute entitles bargaining unit employees to
collective bargaining and negotiated grievance procedures. The union
noted that an employee who contests a VA recoupment is not challenging
the award itself but rather the recoupment of the award. Such a
challenge, in the union's view, is not excluded by 38 U.S.C. 7422(b).
Lastly, the union stated that relocation expenses are similar to
payments for travel and training, which the VA has previously found
under 38 U.S.C. 7422(d) are not matters that would be excluded from
negotiated grievance procedures by 38 U.S.C. 7422(b). The organization
shared a perspective similar to the national union's and posited that
the ``sole limitation'' is whether coverage is excluded by 38 U.S.C.
7422.
<bullet> OPM appreciates the commenters' feedback on this question
but will not make changes to the regulations based on the feedback.
Because the Secretary of Veterans Affairs retains exclusive

[[Page 35231]]

authority, subject to judicial review, to determine whether an award or
bonus paid under title 38 for employees described under 38 U.S.C.
7421(b) falls within the exclusion in 38 U.S.C. 7422(b), OPM will defer
to VA on the applicability of that statute to recoupments. May a VA
employee seek judicial review of an OPM final decision? If so, where
would judicial review occur?
As discussed in the sections about comments on Sec. Sec. 755.105
and 755.205, both the national union and the organization responded
that, yes, a VA employee may seek judicial review of an OPM appeal
decision. The commenters stated that OPM should clarify in its
regulations additional appeal rights available to employees. In
addition, the comments recommended that OPM should affirmatively
provide notice of available judicial review options to avoid prejudice
to employees. For the reasons provided in the comment discussion for
Sec. Sec. 755.105 and 755.205, OPM declines the recommendation to
modify the regulations to address further appeal rights.
<bullet> Should OPM publish its appeal decisions and make them
publicly available?
The national union and the organization both believe OPM should
publish its appeal decisions and make them publicly available, in the
same manner that OPM makes publicly available OPM's decisions on
compensation and leave claims. The commenters recommended that OPM
protect the employee's privacy by identifying the cases by an OPM case
number and pseudonym or redacted name.
OPM appreciates the responses and will take them under advisement
in developing internal procedures.

Waiver of Notice of Proposed Rule Making and Related Comments

OPM issued an interim final rule because it determined that, under
the Administrative Procedure Act (APA), 5 U.S.C. 553(b)(B), it would be
impracticable to delay a final regulation until a public notice and
comment process had been completed. A national union asserted that
OPM's issuance of the interim final rule was without good cause, in
violation of the APA, and done in haste. The union recommended that OPM
rescind the interim final rule and issue a notice of proposed
rulemaking to solicit public comment consistent with the APA and the
Accountability Act. The union averred that, as far as the union was
aware, the VA had not exercised its recoupment authority. In support of
its claim, the union included a copy of a negative June 2022 VA
response to a Freedom of Information Act (FOIA) request for records
related to the recoupment of awards or bonuses under 38 U.S.C. 721.
OPM disagrees with the union's assertion that the interim final
rule was without good cause and in violation of the APA. As the union
noted, VA finalized its internal policies regarding implementation of
the authority to recoup awards, bonuses, and relocation expenses on
January 29, 2024. Following the issuance of that policy, VA began using
the authority to pursue recoupment actions. Therefore, it was
imperative that OPM prepare to receive and adjudicate appeals from VA
employees. In fact, two VA recoupment orders were appealed to OPM
shortly before publication of the interim final rule, and the appeals
were adjudicated during the comment period. The fact that VA began
ordering recoupment of awards prior to OPM's publication of the interim
final rule confirms that OPM's waiver of notice and comment was prudent
and in the public interest.
Although OPM has statutory authority to hear appeals, the public is
better served to have clear, established procedures that are easily
accessible in the Code of Federal Regulations than for OPM to operate
under uncodified procedures that could be variable or haphazard pending
a final rule. Accordingly, to ensure the regulations accurately reflect
the current state of the law and to provide clear procedures for an
employee seeking OPM review of a VA recoupment order, OPM correctly
determined that good cause existed to waive the general notice of
proposed rulemaking pursuant to 5 U.S.C. 553(b)(B).
The national union also asserted that OPM violated the APA by not
affording the public an opportunity to participate in the rulemaking
process as required by 5 U.S.C. 553(c). OPM disagrees. Given that OPM
reasonably found that good cause existed pursuant to section 553(b)(B),
OPM was not required to allow for public comment prior to publication
of a final rule. Nonetheless, OPM gave interested persons an
opportunity to participate in the rulemaking through public comment as
part of the interim final rule. OPM welcomed comment on the provisions
codified in its interim final rule and on a number of additional
procedural topics that OPM expressly sought to address before
finalizing its appeal procedures. OPM has now solicited and responded
to comment, thus fulfilling all of the procedural requirements under
the APA.
Regarding the union's perspective that OPM acted in haste, OPM
determined that, after the VA finalized its internal policy,
expeditious issuance of an interim final regulation was required to
prevent confusion and promote fairness as VA exercises its statutory
authority resulting in appeals to OPM. We note that OPM developed its
interim final rule after review of VA's policies and procedures,
consideration of legal and policy options, and in consultation with VA.
OPM developed procedures only after it had a better understanding of
what process VA would provide and what record would be available for
OPM review.

Waiver of Delay in Effective Date and Related Comments

Pursuant to 5 U.S.C. 553(d)(3), OPM found that good cause existed
to waive the 30-day delay in effective date for the interim final rule
and made those interim procedural regulations effective upon
publication. The delay in effective date was waived because the
provisions of the law regarding recoupment of bonuses, awards, or
relocation expenses (see 38 U.S.C. 721 and 723) became effective upon
enactment, June 23, 2017, and the VA finalized its internal procedures
regarding this law on January 29, 2024.
The national union characterized OPM's interim final rule as
lacking an explanation for its delay in rulemaking and speculative
regarding the potential impact if OPM were to adhere to the 30-day
delay in effective date. For these reasons, the union believed the
interim final rule was arbitrary and capricious under the APA.
OPM notes that the union has described OPM's rulemaking as both
hasty and unjustifiably delayed. Neither is the case, and nor was the
interim final rule arbitrary and capricious. As explained in the
interim final rule, OPM considered the VA's internal procedures, first,
to ensure it designed an effective and efficient process for
adjudicating appeals given the limited period of time afforded OPM by
sections 721(b) and 723(b) to issue a decision. To issue a rule before
VA established its internal procedures would have been unworkable and
may have created inefficiencies that would either delay or rush OPM in
reaching a decision; both of which would unnecessarily prejudice VA
employees and the VA.
As noted above, after VA finalized its policy, the VA began
exercising its authority under this statute. Subsequent to the union's
2022 FOIA request, the VA informed OPM that it had issued several
recoupment orders. Therefore, OPM's justification for waiving the

[[Page 35232]]

delay in effective date was not speculative. In December 2024, two VA
employees appealed their recoupment orders to OPM, and OPM was aware
that additional recoupment orders and appeals could occur at any time.
A delay in the effective date would not have addressed the immediate
need to avoid confusion and inconsistency in how to file new appeals
with OPM and to provide information about the content needed for such
appeals.

Regulatory Impact Analysis

A. Statement of Need

The interim final rule implemented portions of sections 204 and 205
of the Accountability Act, which provides VA employees certain appeal
rights to the Director of OPM regarding decisions by the VA to recoup
awards, bonuses, or relocation expenses. These sections of the
Accountability Act amend chapter 7 of title 38, United States Code.
Under these authorities, OPM prescribed additional details of the
appeal process to provide consistency and transparency.
After consideration of public comments about the interim final
rule, OPM determined that minor changes to the appeal procedures were
needed. OPM added provisions to Sec. 755.102(b) and Sec. 755.202(b)
that require an employee to disclose information concerning any
grievance concerning the recoupment award. OPM also added a requirement
in Sec. 755.102(c) and Sec. 755.202(c) for the VA provide to the VA
employee copies of information provided to OPM. OPM also added new
subparagraphs (e) to both Sec. 755.102 and Sec. 755.202 that preclude
OPM from asserting jurisdiction over an appeal of a recoupment award
where the employee first elects to challenge a recoupment award through
a negotiated grievance process.

B. Regulatory Alternatives

An alternative to this final rule was to rescind the provisions of
the interim final rule and publish a new notice of proposed rulemaking,
as suggested by one commenter. As discussed in the section ``Waiver of
Notice of Proposed Rule Making and Related Comments,'' VA began
exercising its authority under 38 U.S.C. 721 and 723 in 2024. OPM's
rescission of the interim final rule would result in confusion
regarding how OPM will administer the appeals process as the law only
outlines the right to appeal to the Director of OPM; the time limit for
a VA employee to file an appeal; and a time limit for the Director to
issue a decision regarding any appeal. To leave VA employees without
any procedures for appealing those decisions would not be in their
interest. Accordingly, OPM determined that this was not an appropriate
course of action.
Another alternative was for OPM to refrain from publishing this
final rule. OPM found good cause to adopt interim regulations prior to
receiving public comment; however, OPM sought public input to ensure
that it had considered a range of viewpoints and concerns prior to
finalizing those processes. Although OPM is only making minor changes
in response to public comments, OPM believes that the changes made in
this rule will better guide VA employees through the appeals process.

C. Impact

OPM is issuing this final rule to provide consistency and
transparency regarding appeals by VA employees involving orders by the
VA to recoup awards, bonuses, or relocation expenses previously paid to
these employees. Congress provided VA employees appeal rights regarding
such orders by the VA. OPM's final rule provides more clarity regarding
this appeal process. It provides VA employees with structure and an
explanation of what to expect and provides employees with security that
they will receive fair, consistent treatment in the consideration of an
appeal.

D. Costs

The costs associated with this final rule are de minimis. OPM
estimates that the final rule would result in costs of about $7,100 to
OPM for each appeal filed with OPM. This estimate is slightly larger
than the $6,937.20 estimated in the interim final rule. The difference
between the two estimates is attributed to the difference between
salary rates used to estimate labor costs. The interim final rule used
the 2024 salary rates. This final rule used the 2025 salary rates.
As already noted, this final rule specifies that VA will provide
both OPM and the employee a copy of the evidence file for the appeal
process. OPM anticipates a negligible cost to VA for providing the
requested file to the employee in addition to OPM. While VA may incur
some costs regarding decisions it makes regarding recoupment of awards,
bonuses, or relocation expenses, such matters are not covered by this
final rule and are covered by VA policies.
OPM does not expect the changes in this final rule to result in any
costs to VA employees that were not accounted for in the interim final
rule.

E. Benefits

This final rule will benefit VA employees. This rule will provide
consistency and transparency regarding the procedures OPM will follow
when processing appeals by VA employees regarding decisions by the VA
regarding recoupment of awards, bonuses, or relocations expenses. This
final rule provides clarity regarding the procedural protections
Congress has provided VA employees on such matters.

Regulatory Compliance

1. Regulatory Review

OPM has examined the impact of this rule as required by Executive
Orders 12866 and 13563, which direct agencies to assess all costs and
benefits of available regulatory alternatives and, if regulation is
necessary, to select regulatory approaches that maximize net benefits
(including potential economic, environmental, public, health, and
safety effects, distributive impacts, and equity). A regulatory impact
analysis must be prepared for rules that have an annual effect on the
economy of $100 million or more or adversely affect in a material way
the economy, a sector of the economy, productivity, competition, jobs,
the environment, public health or safety, or State, local, or tribal
governments or communities. This rulemaking does not reach that
threshold but has otherwise been designated as a ``significant
regulatory action'' under section 3(f) of Executive Order 12866. This
rule is not an E.O. 14192 regulatory action because it is does not
impose any more than de minimis regulatory costs.

2. Regulatory Flexibility Act

The Acting Director of OPM certifies this regulation will not have
a significant impact on a substantial number of small entities because
it will apply only to Federal agencies and individuals (Federal
employees and former employees).

3. Federalism

This regulation will not have substantial direct effects on the
States, on the relationship between the National Government and the
States, or on distribution of power and responsibilities among the
various levels of government. Therefore, in accordance with Executive
Order 13132, it is determined that this final rule does not have
sufficient federalism implications to warrant preparation of a
Federalism Assessment.

[[Page 35233]]

4. Unfunded Mandates Reform Act

Section 202 of the Unfunded Mandates Reform Act of 1995 (UMRA)
requires that agencies assess anticipated costs and benefits before
issuing any rule that would impose spending costs on State, local, or
tribal governments in the aggregate, or on the private sector, in any 1
year of $100 million in 1995 dollars, updated annually for inflation.
That threshold is currently approximately $206 million. This rulemaking
will not result in the expenditure by State, local, or tribal
governments, in the aggregate, or by the private sector, in excess of
the threshold. Therefore, no written assessment of unfunded mandates is
required.

Paperwork Reduction Act

Notwithstanding any other provision of law, no person is required
to respond to, nor shall any person be subject to a penalty for failure
to comply with a collection of information subject to the requirements
of the Paperwork Reduction Act of 1995 (44 U.S.C. 3501 et seq.) (PRA),
unless the collection of information displays a currently valid Office
of Management and Budget (OMB) Control Number.
Case records are subject to the Privacy Act and are covered by OPM
System of Records Notice (SORN) ``OPM/Internal-29, VA Recoupment and
Reduction Appeals to OPM'' (90 FR 3970).

List of Subjects in 5 CFR Part 755

Administrative practice and procedure, Government employees.

Jerson Matias,
Federal Register Liaison.

Accordingly, for the reasons stated in the preamble, OPM amends 5
CFR part 755 as follows:

PART 755--APPEAL PROCEDURES FOR RECOUPMENT OF AWARDS, BONUSES, OR
RELOCATION EXPENSES AWARDED OR APPROVED FOR ALL EMPLOYEES OF THE
DEPARTMENT OF VETERANS AFFAIRS (VA)

0
1. The authority citation for part 755 continues to read as follows:

Authority: 5 U.S.C. 1103; 38 U.S.C. 721 and 723.

Subpart A--[Amended]

0
2. Remove the authority citation for subpart A.

0
3. Amend Sec. 755.102 by revising paragraphs (b) and (c) and adding
paragraph (e) to read as follows:

Sec. 755.102 Procedures for submitting appeals.

* * * * *
(b) Content of appeals. An appeal must be submitted by the employee
in writing and must be signed by the employee or their representative.
While no specific form is required, the appeal must include:
(1) A copy of the notice of proposed order received pursuant to 38
U.S.C. 721(a)(2)(A);
(2) A copy of the employee's response to the proposed order, if
any;
(3) A copy of the order received pursuant to 38 U.S.C. 721(a)(3);
(4) A copy of any grievance filed by the employee under a
negotiated grievance procedure pursuant to 5 U.S.C. 7121 seeking to
reverse a recoupment order;
(5) A statement explaining why the employee believes the order
received pursuant to 38 U.S.C. 721(a)(3) is in error and whether the
employee filed a grievance under a negotiated grievance procedure
pursuant to 5 U.S.C. 7121 seeking to reverse a recoupment order;
(6) The name, mailing address, telephone number, and email address
of the employee and their representative (if applicable); and
(7) The name, mailing address, telephone number, and email address
of the VA official who issued the order pursuant to 38 U.S.C.
721(a)(3).
(c) VA submission of evidence file. OPM will notify the VA upon
receipt of a complete, timely appeal. The VA must provide OPM and the
employee a copy of the evidence file as soon as possible but no later
than five business days. If necessary, OPM may request VA provide
information in addition to the evidence file. Any additional
information requested by OPM must be provided to OPM and the employee
within five business days after OPM's request. VA must also furnish a
copy of any additional information requested by and provided to OPM to
the employee. VA's failure to provide the evidence file or any
requested additional information to OPM and the employee will result in
a finding against VA.
* * * * *
(e) Election under a negotiated grievance procedure. When an
employee has an option of pursuing either a recoupment appeal to OPM or
a grievance under a negotiated grievance procedure pursuant to 5 U.S.C.
7121, OPM will only review a recoupment appeal where the employee files
a timely appeal first with OPM. Where an employee makes a timely
election to file a recoupment appeal and a grievance on the same day,
OPM will not consider the recoupment appeal absent clear and
unmistakable evidence that the employee filed his or her recoupment
appeal before filing a grievance.

Subpart B--[Amended]

0
4. Remove the authority citation for subpart B.

0
5. Amend Sec. 755.202 by revising paragraphs (b) and (c) and adding
paragraph (e) to read as follows:

Sec. 755.202 Procedures for submitting appeals.

* * * * *
(b) Content of appeals. An appeal must be submitted by the employee
in writing and must be signed by the employee or their representative.
While no specific form is required, the appeal must include:
(1) A copy of the notice of proposed order received pursuant to 38
U.S.C. 723(a)(2)(A);
(2) A copy of the employee's response to the proposed order, if
any;
(3) A copy of the order received pursuant to 38 U.S.C. 723(a)(3);
(4) A copy of any grievance filed by the employee under a
negotiated grievance procedure pursuant to 5 U.S.C. 7121 seeking to
reverse a recoupment order;
(5) A statement explaining why the employee believes the order
received pursuant to 38 U.S.C. 723(a)(3) is in error and whether the
employee filed a grievance under a negotiated grievance procedure
pursuant to 5 U.S.C. 7121 seeking to reverse a recoupment order;
(6) The name, mailing address, telephone number, and email address
of the employee and their representative (if applicable); and
(7) The name, mailing address, telephone number, and email address
of the VA official who issued the order pursuant to 38 U.S.C.
723(a)(3).
(c) VA submission of evidence file. OPM will notify the VA upon
receipt of a complete, timely appeal. The VA must provide OPM and the
employee a copy of the evidence file as soon as possible but no later
than five business days. If necessary, OPM may request VA provide
information in addition to the evidence file. Any additional
information requested by OPM must be provided to OPM and the employee
within five business days after OPM's request. VA must also furnish a
copy of any additional information requested by and provided to OPM to
the employee. VA's failure to provide the evidence file or any
requested additional information to OPM and the employee will result in
a finding against VA.
* * * * *

[[Page 35234]]

(e) Election under a negotiated grievance procedure. When an
employee has an option of pursuing either a recoupment appeal to OPM or
a grievance under a negotiated grievance procedure pursuant to 5 U.S.C.
7121, OPM will only review a recoupment appeal where the employee files
a timely appeal first with OPM. Where an employee makes a timely
election to file a recoupment appeal and a grievance on the same day,
OPM will not consider the recoupment appeal absent clear and
unmistakable evidence that the employee filed his or her recoupment
appeal before filing a grievance.

[FR Doc. 2025-14006 Filed 7-24-25; 8:45 am]
BILLING CODE 6325-39-P

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