Court Opinion

ID: 2798277
Source: CourtListenerOpinion
Date Created: 2015-05-04 19:00:10.470585+00
Date Added: 2024-06-11T15:24:44.071676
License: Public Domain

UNITED STATES OF AMERICA
                      MERIT SYSTEMS PROTECTION BOARD
                                      2015 MSPB 36

                             Docket No. PH-0752-13-0236-I-1

                                     Paul D. Jonson,
                                        Appellant,
                                             v.
                       Federal Deposit Insurance Corporation,
                                         Agency.
                                        May 4, 2015

           Paul J. Adams, Esquire, Brockton, Massachusetts, for the appellant.

           Eric S. Gold, Arlington, Virginia, for the agency.

                                         BEFORE

                            Susan Tsui Grundmann, Chairman
                               Mark A. Robbins, Member

                                 OPINION AND ORDER

¶1         The Federal Deposit Insurance Corporation (FDIC) has filed a petition for
     review of the initial decision, which reversed the appellant’s removal. For the
     reasons discussed below, we GRANT the petition for review, VACATE the initial
     decision, and REMAND the appeal to the regional office for further adjudication
     in accordance with this Opinion and Order.

                                     BACKGROUND
¶2         FDIC removed the appellant from his position as Case Manager for conduct
     prohibited by its regulations at 12 C.F.R. Part 336, Subpart B, concerning
     minimum standards of fitness for employment (the minimum fitness regulations).
                                                                                       2

     Jonson v. Federal Deposit Insurance Corporation, 121 M.S.P.R. 56, ¶ 2 (2014)
     (Jonson I). The basis of the removal was the appellant’s alleged failure to satisfy
     eight separate debts to FDIC-insured institutions.    Id., ¶ 2; Initial Appeal File
     (IAF), Tab 4 at 125-26 of 129. The agency found that this conduct violated the
     prohibition in the minimum fitness regulations against “a pattern or practice of
     defalcation.” Jonson I, 121 M.S.P.R. 56, ¶ 2; 12 C.F.R. § 336.5(a)(3). A pattern
     or practice of defalcation is defined in the regulations, in pertinent part, as “[a]
     history of financial irresponsibility with regard to debts owed to insured
     depository institutions which are in default in excess of $50,000 in the
     aggregate.” 12 C.F.R. § 336.3(i)(1). The regulations provide that employees who
     are not in compliance “shall be terminated.” 12 C.F.R. § 336.8(a).
¶3         This is the second time we have considered the appellant’s removal. The
     administrative judge previously certified the following rulings for interlocutory
     review:
           1. Pursuant to the Resolution Trust Corporation Completion Act
           (RTCCA), 1 FDIC was authorized by Congress to promulgate
           minimum standards for employment, which are set forth in 12 C.F.R.
           § 336.5;
           2. FDIC was required to obtain concurrence from the Office of
           Government Ethics (OGE) before enacting 12 C.F.R. Part 336;
           3. FDIC defined the word “defalcation” in 12 C.F.R. Part 336 more
           broadly than is utilized in the Bankruptcy Code;
           4. FDIC was permitted to utilize a more expansive definition of the
           word “defalcation”;
           5. If FDIC establishes by preponderant evidence that the appellant
           violated 12 C.F.R. Part 336, such a violation would not necessarily
           subject him to mandatory removal as prescribed in 12 C.F.R.
           § 336.8; and

     1
       At issue is section 19 of the RTCCA, Pub. L. No. 103-204, § 19, 107 Stat. 2369,
     2402-04 (1993) (codified as amended at 12 U.S.C. § 1822(f)).
                                                                                            3

             6. The Board has jurisdiction over the appeal of the adverse
             employment action suffered by the appellant, including a
             determination regarding the reasonableness of the penalty in light of
             the criteria and exceptions set forth in 12 C.F.R. Part 336.
     Jonson I, 121 M.S.P.R. 56, ¶¶ 1, 3.
¶4           Previously, on interlocutory review, we affirmed the administrative judge’s
     rulings regarding issues 1, 2, and 6, reversed the appellant’s removal, and
     returned the appeal to the regional office for further adjudication of his prohibited
     personnel practices claims. 2 Id., ¶¶ 1, 5, 18-20. The reversal was based on the
     determination that the removal was “not in accordance with law” because the
     minimum fitness regulations on which it was based were promulgated without
     the approval of OGE, as required by section 1822(f)(2) of the RTCCA. Jonson
     I, 121 M.S.P.R. 56, ¶¶ 16-17.
¶5           After the appeal was returned to the administrative judge, the appellant
     withdrew his prohibited personnel practices claims with prejudice. IAF, Tab 32
     at 4. Therefore, the administrative judge issued an initial decision finding these
     claims moot and adopting the Board’s reversal of the appellant’s removal. IAF,
     Tab 34, Initial Decision (ID) at 4-5.
¶6           FDIC has filed a petition for review, arguing that we exceeded the scope of
     our authority by invalidating the minimum fitness regulations and that our finding
     that OGE approval was required for the regulations was incorrect. Petition for
     Review (PFR) File, Tab 1 at 4-5. 3 The appellant has not responded to the petition

     2
         Member Robbins dissenting.
     3
       FDIC has provided a certification of compliance with the interim relief order in the
     in itial decision. PFR File, Tab 1 at 7, 29; see ID at 6-7 (ordering interim relief); see
     also 5 C.F.R. § 1201.116(a) (an agency’s petition for review filed in a case where the
     appellant was the prevailing party and was granted interim relief must be accompanied
     by a certification of compliance with the interim relief order). The appellant has not
     challenged the certification, and therefore we decline to review it further here. Cf.
     Guillebeau v. Department of the Navy, 362 F.3d 1329, 1332-34 (Fed. Cir. 2004)
     (interpretin g 5 C.F.R. § 1201.116(e), identified by its previous location at
                                                                                           4

     for review. We disagree with FDIC regarding the first issue. However, in light
     of an OGE declaration provided by FDIC after we issued Jonson I, we now find
     that OGE concurrence was not required prior to the promulgation of the minimum
     fitness regulations. See id. at 28 (containing the OGE declaration); IAF, Tab 23
     at 30 (same). Therefore, we REVERSE our prior ruling regarding issue 2, above.
     In light of this finding, we now address certified issues 3, 4, and 5, which we
     previously did not reach. Jonson I, 121 M.S.P.R. 56, ¶¶ 1, 5.

                                            ANALYSIS
     The Board acted within its authority in declining to follow the minimum fitness
     regulations.
¶7            FDIC argues that we exceeded the scope of our authority when we
     invalidated its minimum fitness regulations. PFR File, Tab 1 at 8-11. According
     to FDIC, the Board’s authority is limited to review of Office of Personnel
     Management (OPM) regulations, as provided in 5 U.S.C. § 1204(f). PFR File,
     Tab 1 at 8-9; see IAF, Tab 13 at 7 (making this argument below). 4 We disagree
     with FDIC that we invalidated its minimum fitness regulations.             We also find
     unpersuasive FDIC’s reliance on decisions that address the scope of the Board’s
     original jurisdiction under section 1204(f), because this appeal arises under the
     Board’s appellate jurisdiction.
¶8            In Jonson I, we found that the adverse action was taken pursuant to
     regulations that FDIC promulgated without concurrence from OGE.                  Jonson
     I, 121 M.S.P.R. 56, ¶¶ 10, 16. Therefore, we found the regulations to be “not in
     accordance with law.” Id., ¶ 17 (citing 5 U.S.C. § 7701(c)(2)(C) (providing that

     section 1201.115(b)(4), as providing that dismissal for failure to comply with interim
     relief is d iscretionary).
     4
         Because we did not previously address this argument in Jonson I , we do so now.
                                                                                             5

     an adverse action may not be sustained if it is “not in accordance with law”)).
     We did not make a finding that the regulations were invalid. 5
¶9         FDIC argues that our “authority to review regulations is limited to that
     which is provided by 5 U.S.C. § 1204(f).” PFR File, Tab 1 at 8-11 (citing Latham
     v. U.S. Postal Service, 117 M.S.P.R. 400 (2012); Thompson v. Office of Personnel
     Management, 87 M.S.P.R. 184 (2000); Ramsey v. Office of Personnel
     Management, 87 M.S.P.R. 98 (2000)). The Board has two types of jurisdiction,
     original and appellate.      5 C.F.R. § 1201.1.       The Board’s original jurisdiction
     includes, in pertinent part, review of rules and regulations issued by OPM to
     declare such provisions invalid on their face or invalidly implemented by any
     agency. 5 U.S.C. § 1204(a)(4), (f)(2); Thompson, 87 M.S.P.R. 184, ¶ 7; 5 C.F.R.
     § 1203.1. In Thompson, the Board found that its original jurisdiction does not
     include the authority to determine whether OPM followed the proper procedures
     in issuing its regulations.        87 M.S.P.R. 184, ¶ 8 (citing 5 U.S.C. § 1204).       In
     contrast, in the instant appeal, our authority arises from our appellate jurisdiction
     under chapter 75 of Title 5.          5 U.S.C. § 7512(1) (including removals among
     adverse    actions    appealable      to   the   Board);   Samble   v.   Department     of
     Defense, 98 M.S.P.R. 502, ¶ 11 (2005) (finding that the involuntary separation of
     an appellant who met the statutory definition of employee with adverse action
     appeal    rights   fell   within    the    Board’s appellate   jurisdiction);   5   C.F.R.
     § 1201.3(a)(1) (listing adverse actions as falling within the Board’s appellate
     jurisdiction). We find unpersuasive FDIC’s citation to Thompson to suggest that

     5
       Although we stated in Jonson I that the minimum fitness regu lations were “invalid ly
     promulgated,” we did not intend to infer by that statement that we were invalidating the
     regu lations. Jonson I , 121 M.S.P.R. 56, ¶ 17.
                                                                                            6

      we cannot review whether an agency other than OPM properly promulgated
      regulations in determining whether to sustain an adverse action. 6
¶10         We also are not persuaded by FDIC’s arguments that the Board lacks
      authority to invalidate regulations under the Administrative Procedures Act
      (APA).    PFR File, Tab 1 at 9-11 & n.3 (citing Latham, 117 M.S.P.R. 400,
      ¶¶ 18-19 (holding that the Board does not have jurisdiction under the APA to
      review OPM regulations to determine whether they exceed the statutory grant of
      authority, but going on to discuss the Board’s authority to address whether a
      regulation improperly expands Board jurisdiction because the Board’s jurisdiction
      is always before it)); see 5 U.S.C. § 706(2)(C) (granting reviewing courts the
      authority under the APA to “hold unlawful and set aside agency action . . . in
      excess of statutory . . . authority”).    We did not review the minimum fitness
      regulations under the APA and did not invalidate them in any event. Rather, we
      declined to follow them as they concerned this adverse action appeal. Jonson
      I, 121 M.S.P.R. 56, ¶¶ 9, 17.

      FDIC was not required to obtain concurrence from OGE for its minimum fitness
      regulations.
¶11         After we issued Jonson I, FDIC submitted a declaration from OGE stating
      that FDIC was not required to obtain concurrence from OGE prior to
      promulgating the minimum fitness regulations. 7 PFR File, Tab 1 at 7, 28. As a

      6
        We are likewise unpersuaded by the agency’s citation to Ramsey. PFR File, Tab 1 at 9
      (citin g Ramsey, 87 M.S.P.R. 98, ¶ 10 (finding that a challenge to an OPM regulation
      that merely repeated statutory language failed because the Board does not have
      authority under section 1204(f) to review a statutory provision)).
      7
        The agency submitted this declaration for the first time below as part of a motion for
      reconsideration, which it titled a request to reopen. IAF, Tab 23 at 6, 30. The Clerk of
      the Board denied the motion because reconsideration of interlocutory decisions is not
      contemplated by the Board’s regulations. See 5 C.F.R. §§ 1201.91-.93 (containing the
      Board’s regulations on interlocutory appeals).
                                                                                              7

      matter of comity to OGE, we now find that its concurrence was not required for
      the minimum fitness regulations and overrule our contrary holding in Jonson I. 8
¶12           OGE “provide[s], in consultation with [OPM], overall direction” on the
      prevention of conflicts of interest by executive agency employees. 5 U.S.C. app.
      § 402(a); 5 C.F.R. § 2600.101(a).        Executive agencies in this context include
      FDIC.    See 5 U.S.C. § 105 (defining executive agency to include government
      corporations); 5 U.S.C. app. § 402(a) (incorporating the definition of executive
      agency from 5 U.S.C. § 105); 12 U.S.C. §§ 1811-12 (establishing FDIC and its
      general structure as a government corporation), 1822(f)(1)(A) (stating that FDIC
      is an agency for purposes of Title 18); 31 U.S.C. § 9101(2)(B) (reflecting that
      FDIC is a “mixed-ownership Government corporation”); Supplemental Standards
      of Ethical Conduct for FDIC Employees, 72 Fed. Reg. 19,375, 19,376 (Apr. 18,
      2007) (reflecting that FDIC obtained OGE concurrence for changes to its ethics
      regulations codified at 5 C.F.R. Part 3201).           OGE has broad oversight of
      executive branch ethics, including developing rules and regulations on conflicts

      8
        Under the law of the case doctrine, a tribunal generally will not reconsider issues that
      already have been decided in an appeal, unless there is new and material evidence
      adduced at a subsequent trial, controlling authority has made a contrary decision of law,
      or the prior decision was clearly erroneous and would work a manifest injustice.
      O’Connell v. Department of Navy, 73 M.S.P.R. 235, 240 (1997). The doctrine “merely
      expresses the practice of courts generally to refuse to reopen what has been decided,
      [and is] not a limit to their power.” Messinger v. Anderson, 225 U.S. 436, 444 (1912);
      see Mendenhall v. Barber-Greene Co., 26 F.3d 1573, 1582-83 (Fed. Cir. 1994)
      (observing that a court’s decision to apply the law of the case doctrine is with in its
      discretion). Although FDIC had previously provided a letter from OGE that opined that
      “FDIC complied with the requirements of OGE’s regu latory process leading up to its
      publication” of the minimum fitness regulations, the letter provided no insight into what
      compliance was required or how FDIC complied. IAF, Tab 10 at 18; see Jonson I,
      121 M.S.P.R. 56, ¶ 10 (referring to this evidence). In contrast, the new OGE
      declaration states that concurrence was not required and provides an explanation for
      this conclusion. PFR File, Tab 1 at 28. In light of this declaration, we find our prior
      decision in Jonson I was clearly erroneous, and therefore we do not apply the law of the
      case doctrine to our finding that prior OGE concurrence was required for the minimum
      fitness regulations.
                                                                                       8

      of interest; evaluating the need for changes in agency ethics and conflict of
      interest rules and regulations to make them consistent with conflict of interest
      laws; and providing information on, and promoting the understanding of, ethical
      standards in executive agencies. 9 5 U.S.C. app. § 402(b)(1), (12), (14); 5 C.F.R.
      § 2635.105 (discussing the requirement that agencies obtain concurrence from
      OGE for regulations supplementing OGE’s standards of ethical conduct for
      employees of the executive branch).
¶13         The new OGE declaration responds to our Jonson I decision. PFR File,
      Tab 1 at 28.   The declaration states that “OGE concurrence was not required
      under 12 U.S.C. § 1822(f)(2)” for the minimum fitness regulations. PFR File,
      Tab 1 at 28.     As a matter of comity and cooperation, we defer to OGE’s
      determination that FDIC was not required to obtain its approval before
      promulgating the minimum fitness regulations.        Comity is the discretionary
      practice of forums to recognize each other’s acts. B LAC K’ S LAW D ICT IONARY
      303 (9th ed. 2009); see Montana-Dakota Utilities Co. v. Northwestern Public
      Service Co., 341 U.S. 246, 254 (1951) (observing that it is proper for the court to
      refer to an administrative forum a matter that falls within its authority both as a
      matter of comity and to avoid conflict). Based on policy considerations of comity
      and cooperation with the Equal Employment Opportunity Commission (EEOC) as
      a coequal tribunal, the Board has previously exercised its discretion to defer to
      EEOC’s procedural determinations regarding whether an appellant made a valid
      election between the Board and equal employment opportunity processes.
      Gomez-Burgos v. Department of Defense, 79 M.S.P.R. 245, ¶ 10 (1998)
      (observing that the Board and EEOC are coequal in the mixed-case process); cf.
      Cloutier v. U.S. Postal Service, 89 M.S.P.R. 411, ¶ 6 (2001) (deferring to the

      9
        In connection with these first two functions, OGE consults with, or seeks the
      assistance of, the Attorney General and OPM. 5 U.S.C. app. § 402(b)(1), (12).
                                                                                       9

      employing agency’s determination that a discrimination complaint was untimely).
      This deference is based on the recognition of EEOC’s major responsibility for the
      equal employment opportunity process and a desire not to frustrate EEOC’s goals.
      Dawson v. U.S. Postal Service, 45 M.S.P.R. 194, 197 (1990). Similarly, we find
      here that OGE is primarily responsible for oversight of the ethical standards of
      federal employees. See Special Counsel v. Nichols, 36 M.S.P.R. 445, 455 (1988)
      (recognizing that OGE is the agency primarily responsible for developing rules
      and regulations pertaining to conflicts of interest and standards of conduct). Our
      prior finding in Jonson I is contrary to OGE’s determination that its concurrence
      in the minimum fitness regulations was not required and could create confusion.
      Therefore, we find this situation one in which it is appropriate to defer.
¶14         In light of our ruling here, we reverse our prior finding in Jonson I that
      section 1822(f)(2), and not section 1822(f)(4), of the RTCCA empowers FDIC to
      prescribe the conduct for which it removed the appellant. Jonson I, 121 M.S.P.R.
      56, ¶ 12. Section 1822(f)(2) requires FDIC to obtain OGE concurrence before
      prescribing regulations that supplement the ethics and conflict of interest rules
      and regulations issued by OGE.         The declaration from OGE compared the
      minimum fitness regulations to OGE’s own regulatory authority and concluded
      that the minimum fitness regulations did not require OGE’s approval because they
      did not “modify or expand the government-wide Standards of Ethical Conduct for
      Executive Branch Employees, nor do they regulate an area reserved for
      supplemental agency regulations (such as: outside activity limitations, prior
      approval requirements and prohibited holding restrictions).” PFR File, Tab 1 at
      28.   Therefore, we conclude that FDIC was not required to promulgate the
      minimum fitness regulations under section 1822(f)(2).
¶15         We also agree with FDIC that our prior ruling incorrectly found that it
      lacks authority under section 1822(f)(4) to regulate employee conduct.       Id. at
      12-17; see Jonson I, 121 M.S.P.R. 56, ¶ 12.             In evaluating an agency’s
      construction of a statute, we look first to congressional intent. Chevron, U.S.A.,
                                                                                           10

      Inc. v. Natural Resources Defense Council, Inc., 467 U.S. 837, 841-42 (1984).
      Absent clear congressional intent, as here, we next examine whether the agency
      was explicitly charged with filling in a gap left in the legislation. 10 Id. at 843-44.
      Where, as here, we find that it was, the agency’s regulations “are given
      controlling weight unless they are arbitrary, capricious, or manifestly contrary to
      the statute.”   Id. at 844. Express congressional authorization to an agency to
      engage in rulemaking, and the use of the notice and comment procedures in
      promulgating such rules, are significant indicators that Chevron deference is
      appropriate.    Mayo Foundation for Medical Education & Research v. United
      States, 562 U.S. 44, 57-58 (2011).
¶16         The text of section 1822(f)(4) provides that FDIC may “prescribe
      regulations . . . for ensuring that any individual who is performing, directly or
      indirectly, any function on behalf of the Corporation meets the minimum
      standards of competence, experience, integrity and fitness.”                12 U.S.C.
      § 1822(f)(4)(A).    No OGE approval is required for the subject regulations.
      Therefore, FDIC was charged with filling any gaps left in the statute with the
      minimum fitness regulations. In promulgating the minimum fitness regulations,
      FDIC relied on section 1822(f)(4)(E), which requires that the minimum fitness
      regulations prohibit certain behaviors, including “a pattern or practice of
      defalcation regarding obligations to insured depository institutions.” Minimum

      10
         FDIC argues that it has authority to promulgate the minimum fitness regulations
      under section 1822(f)(4) of the RTCCA because: (1) the language of that section,
      supported by the legislative history, unambiguously permits it to promulgate the
      regu lations; (2) the subheadings contained in the RTCCA were borrowed from its
      predecessor statute, and therefore we erred in rely ing on them to interpret section
      1822(f) in our decision in Jonson I; and (3) the plain text of 12 U.S.C. § 1822(f)(4)(E)
      may serve as the basis for its removal of the appellant. PFR File, Tab 1 at 11-22, 24.
      In light of OGE’s declaration, we believe it is now clear that FDIC has authority to
      promulgate the minimum fitness regulations under section 1822(f)(4). We find it
      unnecessary, therefore, to reach FDIC’s remaining arguments.
                                                                                          11

      Standards of Fitness for Employment with the Federal Deposit Insurance
      Corporation, 61 Fed. Reg. 28,725, 28,726 (June 6, 1996).             Further, before
      finalizing its regulations, FDIC sought notice and comment. Minimum Standards
      of Fitness for Employees with the Federal Deposit Insurance Corporation, 61 Fed.
      Reg. 5956 (Feb. 15, 1996). We find the agency’s reliance on section 1822(f)(4)
      to be appropriate, and we give its regulations controlling weight.

      FDIC is not constrained by the definition of defalcation in the bankruptcy code.
¶17         In her certified rulings on issues 3 and 4, the administrative judge found
      that FDIC’s definition of defalcation in the minimum fitness regulations was
      broader than the definition in the bankruptcy code, but that FDIC was permitted
      to use this broader definition.    IAF, Tab 12 at 6-7, Tab 16 at 1.            Both the
      proposed removal and removal decision relied on the minimum fitness
      regulations’ definition of a pattern or practice of defalcation to include “[a]
      history of financial irresponsibility with regard to debts owed to insured
      depository institutions which are in default in excess of $50,000 in the
      aggregate.”   IAF, Tab 4 at 82, 124 of 129 (quoting 12 C.F.R. § 336.3(i)(1)).
      Relying on the bankruptcy code, the appellant argued that this definition is too
      broad because it does not require a fiduciary relationship. IAF, Tab 11 at 8-9.
      The agency argued that the definition of defalcation from the bankruptcy code is
      irrelevant and that its own definition in the minimum fitness regulations is
      entitled to deference. IAF, Tab 10 at 10-12, Tab 13 at 10. We agree. Therefore,
      we find it unnecessary to address the administrative judge’s ruling regarding
      certified issue 3, and we agree with her ruling regarding certified issue 4.
¶18         An agency has the right “to establish and enforce reasonable rules
      governing the workplace.” Carosella v. U.S. Postal Service, 816 F.2d 638, 642
      (Fed. Cir. 1987); Miller v. U.S. Postal Service, 7 M.S.P.R. 572, 577-78 (1981),
      aff’d, 712 F.2d 1006 (6th Cir. 1983). Thus, the Board has held that, when an
      agency charges an employee with violating its own policy or rule on sexual
      harassment, it is not required to prove Title VII’s sexual harassment standards.
                                                                                        12

      Hillen v. Department of the Army, 35 M.S.P.R. 453, 462 (1987). We also have
      recognized that an agency has a right to promulgate and enforce reasonable
      regulations governing its employees’ ethical conduct.        Miller, 7 M.S.P.R. at
      577-78.
¶19         The minimum fitness regulations are intended to “state the minimum
      standards of fitness and integrity required” of those providing services on FDIC’s
      behalf. 12 C.F.R. § 336.2(b). The prohibition on defalcation in the regulations is
      limited to “obligations to insured depository institutions,” in other words, those
      banking institutions and savings associations that FDIC insures.          12 U.S.C.
      § 1813(c)(2) (defining insured depository institutions); 12 C.F.R. §§ 336.3(h)
      (same), 336.5(a)(3) (limiting the prohibition on defalcation to insured depository
      institutions). According to the agency, the purpose of the prohibition on a history
      of financial irresponsibility is to preserve its integrity and credibility. PFR File,
      Tab 1 at 25-26; see 61 Fed. Reg. at 28,727 (explaining the purposes of the
      prohibition on a pattern or practice of defalcation). Both the proposed removal
      and removal decision relied on the minimum fitness regulation’s definition of a
      pattern or practice of defalcation as “[a] history of financial irresponsibility with
      regard to debts owed to insured depository institutions which are in default in
      excess of $50,000 in the aggregate.”           IAF, Tab 4 at 82, 124 of 129
      (citing 12 C.F.R. § 336.3(i)(1)). Given FDIC’s relationship with the institutions
      that it insures, we find that the agency’s definition of a pattern or practice of
      defalcation is a reasonable exercise of its right to establish workplace rules.
¶20         In addition, we find that the agency’s prohibition on a pattern or practice of
      defalcation is a valid exercise of its regulatory authority under the RTCCA. See
      Chevron, 467 U.S. at 841-44.         Congress specifically contemplated that the
      minimum fitness regulations would prohibit individuals who “demonstrated a
      pattern or practice of defalcation regarding obligations to insured depository
      institutions . . . from performing any service on behalf of [FDIC].” 12 U.S.C.
      § 1822(f)(4)(E)(iii).   As discussed above, FDIC provided public notice of, and
                                                                                             13

      comment on, what are now codified as the minimum fitness regulations. 61 Fed.
      Reg. at 5956. Included in the proposed regulations was the current definition of a
      pattern or practice of defalcation. Compare id. at 5959 (containing the definition
      in the final rule), with 12 C.F.R. § 336.3(i) (containing the identical definition in
      the minimum fitness regulations). The definition has been in place since 1996.
      See 61 Fed. Reg. at 28,729 (final rule); see also Barnhart v. Walton, 535 U.S.
212, 221-22 (2002) (indicating that the fact that an agency interpretation has been
      longstanding weighs in favor of applying Chevron deference despite a lack of
      “‘notice and comment’ rulemaking”).            We find that FDIC’s definition of
      defalcation is not arbitrary or capricious, and is consistent with the RTCCA. 11

      Removal is the mandatory penalty for a pattern or practice of defalcation.
¶21         We did not reach the certified ruling in Jonson I on issue 5 that, if FDIC
      established by preponderant evidence that the appellant violated the minimum
      fitness regulations, he would not necessarily be subject to mandatory removal.
      Jonson I, 121 M.S.P.R. 56, ¶ 9 n.2.         We do so now, finding that, under the
      RTCCA, the only penalty available for a pattern or practice of defalcation is
      removal.
¶22         The RTCCA states that the minimum fitness regulations “shall prohibit any
      person who does not meet [them] from . . . becoming employed by [FDIC] or
      otherwise performing any service for or on behalf of [FDIC].”                 12 U.S.C.
      § 1822(f)(4)(B)(ii).   It also specifies that FDIC’s minimum fitness regulations

      11
         The agency’s definition of a pattern or practice of defalcation contains an exception
      for defaults “caused by catastrophic events beyond the control of the employee such as
      death, disability, illness or loss of financial support.” 12 C.F.R. § 336.3(i)(3). The
      appellant claimed that the illnesses of his wife and children and the 2008 collapse of the
      housing market precipitated his indebtedness. IAF, Tab 4 at 89-90 of 129. In light of
      this regulatory exception for catastrophic events, the administrative judge should
      determine on remand whether the agency proved the charge of defalcation, including
      whether it properly found that the appellant did not fall with in this exception.
                                                                                         14

      “shall . . . prohibit any person who has . . . demonstrated a pattern or practice of
      defalcation regarding obligations to insured depository institutions . . . from
      performing any service on behalf of [FDIC].”        12 U.S.C. § 1822(f)(4)(E)(iii).
      The U.S. Court of Appeals for the Federal Circuit interpreted similar statutory
      language in Delong v. Department of Health & Human Services, 264 F.3d 1334
      (Fed. Cir. 2001), to find that it required removal.        At issue in Delong was
      language from 25 U.S.C. § 3207. 264 F.3d at 1340-41. In pertinent part, the
      statute required the Secretary of Health and Human Services to prescribe
      “minimum standards of character” regulations that would ensure that employees
      in regular contact with Indian children had not been found guilty of certain
      enumerated crimes.    Id. (citing 25 U.S.C. § 3207(a)(3), (b)).      In rejecting the
      employee’s argument that the agency was required to consider mitigating factors
      prior to removing her, the court observed that “the only way [the Department of
      Health and Human Services] can ‘ensure’ that current employees meet the
      minimum standards of character is to remove employees who fail to meet the
      standards.” 12 Delong, 264 F.3d at 1341; cf. James v. Tablerion, 363 F.3d 1352,
      1355, 1358-59 (Fed. Cir. 2004) (holding that the election of the penalty of
      removal was not reviewable where the subject statute mandated removal for the
      charged conduct and gave exclusive discretion to a specific individual within the
      agency to decide whether to mitigate, and the designated official had made a
      determination not to do so (relying on 26 U.S.C. § 7804 note)).
¶23           Similarly, the statute at issue here contemplates that individuals who
      engage in a pattern or practice of defalcation will not perform service on behalf of
      FDIC.     The only way to avoid such service is if employees who violate the
      regulations are removed. FDIC has given effect to the statute by stating in the

      12
         The appellant argued, below, that such a mandatory penalty is not appropriate for a
      charge that is not based on misconduct. IAF, Tab 11 at 10. We do not find meaningful
      this characterization of the charged behavior.
                                                                                            15

      minimum fitness regulations that employees not in compliance with the
      regulations “shall be terminated.”      12 C.F.R. § 336.8(a).       Assuming that the
      agency proves both the charge and that the appellant’s removal is for such cause
      as to promote the efficiency of the service by preponderant evidence, the
      administrative judge should not mitigate the penalty of removal. 13

                                              ORDER
¶24         For the reasons discussed above finding that the Board’s prior reversal of
      the appellant’s removal was in error, we CANCEL the order of interim relief and
      REMAND this case to the regional office for further adjudication. 14

      FOR THE BOARD:

      ______________________________
      William D. Spencer
      Clerk of the Board
      Washington, D.C.

      13
        We therefore modify our finding in Jonson I regarding issue 6 to find that the
      mandatory penalty for a pattern or practice of defalcation is termination. See Jonson I ,
      121 M.S.P.R. 56, ¶¶ 6, 9.
      14
         On remand, the appellant should be provided with an opportunity to reinstate his
      affirmative defenses because they appear to have been withdrawn in reliance on the
      Board’s decision in Jonson I . IAF, Tab 32 at 4; see Jonson I , 121 M.S.P.R. 56,
      ¶¶ 18-19.