Kachanis v. Dept of The Treasury

• Citation: 212 F.3d 1289
• Parties: (Fed. Cir. 2000) PETER R. KACHANIS, JR., Petitioner, v. DEPARTMENT OF THE TREASURY, Respondent. 99-3157 DECIDED:
• Decision Date: 09 May 2000
• Court: United States Courts of Appeals. United States Court of Appeals for the Federal Circuit

Page 1289

212 F.3d 1289 (Fed. Cir. 2000)

PETER R. KACHANIS, JR., Petitioner, v. DEPARTMENT OF THE TREASURY, Respondent.

99-3157

United States Court of Appeals for the Federal Circuit

DECIDED: May 9, 2000

Appealed from: Merit Systems Protection Board

[Copyrighted Material Omitted] Catherine A. Sammartino, of Providence, Rhode Island, argued for petitioner.

James H. Holl, III, Attorney, Commercial Litigation Branch, Civil Division, Department of Justice, of Washington, DC, argued for respondent. With him on the brief were David W. Ogden, Acting Assistant Attorney General, David M. Cohen, Director, and Harold D. Lester, Jr., Assistant Director. Of counsel was Rafael Morell, Office of the General Counsel, Office of Personnel Management, of Washington, DC.

Before MAYER, Chief Judge, SCHALL, and GAJARSA, Circuit Judges.

GAJARSA, Circuit Judge.

Peter R. Kachanis, Jr. petitions for review of the final decision of the Merit Systems Protection Board ("Board") sustaining the refusal by the Internal Revenue Service ("Agency") to restore Kachanis to full employment. See Kachanis v. Department of the Treasury, No. BN-0330-97-0210-I-1 (Jan. 22, 1999). The Board concluded that the Agency properly afforded all rights owed to Kachanis by placing him on its reemployment priority list ("RPL") after Kachanis had recovered from various work-related injuries that lasted more than one year. We conclude that Kachanis properly presented his challenge to the validity of the regulations promulgated at 35 C.F.R. Part 330, but that the regulations reasonably interpret the expression of Congress' intent at 5 U.S.C. § 5181(b) (1994). We further conclude, however, that the Board did not adequately consider the prejudice Kachanis may have suffered from: (1) the Agency's delay in placing Kachanis on the RPL; (2) the Agency's failure to consider Kachanis for positions other than those at the Warwick, Rhode Island facility; and (3) the Agency's refusal to consider Kachanis for part-time as well as full-time work. Accordingly, we affirm-in-part, vacate-in-part and remand.

I.

Peter Kachanis served as a GS-12 Revenue Officer for the Internal Revenue Service office in Warwick, Rhode Island. On January 27, 1986, Kachanis suffered injuries in a car accident while on duty, including injuries to his back and neck. Based on his injuries, Kachanis was deemed compensable by the Office of Workers' Compensation Programs and removed from active duty. As of March 13, 1987, he began receiving disability benefits.

On May 28, 1995, Kachanis was determined to be fully recovered, and his benefits were terminated. On June 19, 1995, Kachanis submitted a written request that he be restored to duty and given priority consideration "for any position within the Service in the Rhode Island commuting area." Shortly thereafter, on June 30, 1995, the Agency imposed a hiring freeze with certain blanket exceptions.

Under 5 C.F.R. § 330.202(b), the Service was required to place Kachanis on the its reemployment priority list within 10 days of the request. The Agency, however, did not place Kachanis on the RPL until October 18, 1995, almost four months after the request was submitted by Kachanis. The Agency limited its consideration of Kachanis to positions only in Warwick, rather than the entire Rhode Island commuting area, declaring to Kachanis that "[y]ou may not be considered for any other locations." Kachanis was further considered only for full-time, rather than part-time, positions.

On November 15, 1996, the Agency implemented its Career Transition Assistance Plan ("CTAP") for bargaining unit employees, including Kachanis. The plan was implemented pursuant to presidential memorandum. The declared intent of the plan is to "actively assist and empower its [the Agency's] surplus and displaced bureau employees to find other employment, either within the Federal Government, or in the private sector."

For two years, Kachanis remained on the RPL. He was never restored to any position with the Agency. The Agency considered Kachanis an external applicant, and due to the freeze did not conduct any external hiring for positions for which it deemed Kachanis as qualified. During this period, the Agency filled three other positions in the Rhode Island commuting area with internal hires.

On August 18, 1997, Kachanis appealed to the Board pursuant to 5 U.S.C. § 7701 and 5 C.F.R. § 330.209, contending that the Agency had violated its duty to return him to a comparable position under 5 U.S.C. § 8151 and 5 C.F.R. Part 353. On December 22, 1997, the chief administrative judge issued an initial decision reversing the Agency termination. The judge found that the Agency violated Kachanis's employment rights under the CTAP and under 5 U.S.C. § 8151(b)(2) and 5 C.F.R. § 353.301(b) and Part 330 when it assigned an internal Agency employee, Paul Howard, to a vacant position within the Agency while Kachanis was on the RPL. The judge then ordered the Agency to restore Kachanis to his former position, and awarded Kachanis back pay, interest, and adjustments to his retirement and health benefits. The judge also awarded Kachanis interim relief under 5 U.S.C. § 7701(b)(2)(A). The Agency complied with the order, and reinstated Kachanis as directed. The Agency then filed a petition for review of the initial decision with the full Board.

On January 22, 1999, the Board issued its opinion and order reversing the judge's initial decision. The Board based its order on its interpretation of the Agency's CTAP. Specifically, the Board determined that under the restoration regulations, Kachanis was only entitled to priority consideration by being placed on the RPL. The Board also concluded that the CTAP did not afford Kachanis any further rights beyond those under the regulations, noting that "the purpose, scope, and definition sections of the IRS-CTAP do not on their face afford the appellant any special restoration rights." Although the CTAP affords special selection rights for certain categories of employees, the Board concluded, Kachanis did not qualify for any of these categories. The Board also denied Kachanis's cross-petition challenging the administrative judge's denial of Kachanis' request for an extension of time to conduct discovery.

On March 4, 1999, this court denied Kachanis's motion for a stay pending further judicial review. On March 5, 1999, the Agency again removed Kachanis from his position.

Kachanis now appeals the decision of the full Board.¹ Kachanis argues that the regulations at 5 C.F.R. Part 330 are fundamentally inconsistent with Congress' mandate for priority at 5 U.S.C. § 8151(b)(2). Kachanis also contends that the Agency failed to meet its burden under section 8151(b)(2) of proving that it made all reasonable efforts to reemploy him. Finally, Kachanis contends that the Board erroneously considered new arguments and evidence raised by the Agency and did not accord proper deference to the findings of the administrative judge. This court has jurisdiction over the appeal pursuant to 28 U.S.C. § 1295(a)(9) (1994). See Lindahl v. OPM, 470 U.S. 768, 796-97 (1985) (holding that Federal Circuit has jurisdiction to review a final decision of the Board).

II.

Our scope of review in an appeal from a decision of the Board is limited. We must affirm the Board's decision unless we find it to be arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law; obtained without procedures required by law, rule, or regulation having been followed; or unsupported by substantial evidence. See 5 U.S.C. § 7703; Kewley v. Department of Health & Human Servs., 153 F.3d 1357, 1361 (Fed.Cir.1998).

We begin with Kachanis's challenge to the regulations at 5 C.F.R. Part 330. According to Kachanis, the regulations are irreconcilable with Congress' declarations at 5 U.S.C. § 8151(b)(2). Under the principles set forth by the Supreme Court in Chevron, Inc. v. Natural Resources Defense Council, Inc., 467 U.S. 837 (1984), Kachanis concludes, the regulations are entitled to no deference from this court.

Before turning to the merits of Kachanis's challenge, the court must first consider whether Kachanis properly preserved the issue for appellate review. This court has long held that appellants may not raise issues on appeal for the first time. See, e.g., Sage Products, Inc. v. Devon Industries, Inc., 126 F.3d 1420, 1426 (Fed. Cir. 1997); Frank v. Department of Transportation, Fed. Aviation Admin., 35 F.3d 1554, 1559 (Fed. Cir. 1994); Finch v. Hughes Aircraft Corp., 926 F.2d 1574, 1559 (Fed. Cir. 1991). As we explained in Wallace v. Department of the Air Force, 879 F.2d 829, 832 (Fed. Cir. 1989),

[o]rdinarily, appellate courts refuse to consider issues not raised before an administrative agency. [O]bjections to the proceedings of an administrative agency [must] be made while it has an opportunity for correction in order to raise issues reviewable by the courts. A corollary is that the issue must be raised with sufficient specificity and clarity that the tribunal is aware that it must decide the issue, and in sufficient time that the agency can do so.

(internal quotation marks and citations omitted).

The government argues that Kachanis did not raise his allegations of a conflict between 5 U.S.C. § 8151 and the surrounding regulations before the Board. According to the government, this deprived the Board of the opportunity to make sufficient factual findings and conclusions of law. The government concedes that Kachanis asserted that 5 U.S.C. § 8151 and certain regulations from 5 C.F.R. Parts 330 and 353 were interpreted incorrectly by the Agency. Nevertheless, it asserts that these arguments were not presented with any "significant specificity." As a result, the government maintains that the court should disregard the allegations in their entirety.

We do not find the government's argument to be persuasive. In the proceedings before the administrative judge, Kachanis raised the...