[00:00:00] Speaker 00:
Case number 21-5266, Federal Law Enforcement Officers Association, Avalance, versus Karen Ahuja in her official capacity as Director of the United States Office of Personnel Management and Office of Personnel Management.

[00:00:16] Speaker 00:
Mr. Griffin for the Avalance, Ms.

[00:00:18] Speaker 00:
Mohan for the Avalance.

[00:00:20] Speaker 05:
Mr. Griffin, good morning.

[00:00:25] Speaker 05:
Good morning, Your Honor.

[00:00:41] Speaker 05:
May it please the court?

[00:00:44] Speaker 01:
Section 8467 of Title 5 contains Congress's instructions to OPM on how to interpret and process divorce court orders when administering federal retirement benefits.

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The statutory instruction is clear.

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OPM may pay federal benefits to someone other than the retiree only to the extent expressly provided for in a divorce decree.

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The purpose of this standard is equally clear.

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as recognized by the agency itself when it implemented formal regulations for this act.

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And that is to keep the federal government out of the substance of marital property disputes and to restrict OPM to a purely ministerial role.

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In 2016, after nearly 30 years of administering the current retirement statute, OPM took an interpretive U-turn without any notice or opportunity for comment

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It decided that the expressly provided for standard does not apply with respect to the annuity supplement that retired federal law enforcement officers receive as a stand in for the Social Security benefits for which they are ineligible during the period from their statutory retirement age until age 62.

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Instead for this benefit and this benefit alone, OPM began looking only at whether a divorce decree expressly divides an entirely different federal benefit.

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That is the basic annuity provided to all federal civilian employees.

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If so, OPM will now automatically apportion a retirees supplement along with the basic annuity, regardless of what the decree says or doesn't say about the supplement.

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One group of affected retirees, those whose basic annuities were already being divided, but who were receiving the entirety of their supplements at the time of the rule change, immediately saw cuts to their retirement income.

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Not only that, but OPM applied this new interpretation retroactively and began falling back portions of annuity supplements from retirees whom it had already paid in full.

[00:02:55] Speaker 02:
You want to get to the jurisdictional issue?

[00:02:58] Speaker 02:
Yes.

[00:02:58] Speaker 02:
It's a big one.

[00:03:00] Speaker 02:
It is, indeed.

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And we can't do anything if there's no jurisdiction.

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You are correct.

[00:03:04] Speaker 01:
And I was about to get there, but let me turn to that now.

[00:03:09] Speaker 05:
And please, we have a rule against reading.

[00:03:10] Speaker 05:
Don't read.

[00:03:11] Speaker 01:
Just talk to us.

[00:03:14] Speaker 01:
Sure.

[00:03:17] Speaker 01:
OPM argues that you don't have jurisdiction for this case because it says that this court's opinion, Judge Edwards' opinion into Vine is no longer good law.

[00:03:26] Speaker 02:
Vine's gotten beaten up over the years.

[00:03:29] Speaker 01:
Well, I'm on your side here.

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We believe we don't know what my side is because I know what the case is.

[00:03:36] Speaker 01:
Fair enough.

[00:03:37] Speaker 01:
We're on the side of divide.

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We think divide is fully consistent with later cases, including Thunderbase and coal that draw a clear and workable distinction between claims that effectively resolve individual benefits and are appropriately channeled through the MSPB and traditional APA rulemaking claims.

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which as Judge Henderson, as you noted in the NAP Medical Center case, there's a strong presumption in favor of judicial review for those type of claims.

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What about Fornaro and Elgin in the AFGE cases?

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I mean, Fornaro is pretty explicit at saying even if it's a systemic challenge, if it's a challenge to a broad policy, it has to go OPM, MSPB, Federal Circuit.

[00:04:29] Speaker 01:
Well, Fornaro was not an APA claim.

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So the case in Fornaro was plaintiffs seeking a writ of mandamus.

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The individual plaintiffs seeking a writ of mandamus in the district court asking OPM to change their individual benefits.

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There had been a recent federal circuit case that had increased granted enhanced benefits to one group of retirees.

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And they said, we think we're entitled to that too.

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District court, please tell OPM to change our benefits.

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Elgin was also not an APA case.

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That was a constitutional claim challenging the constitutionality of the selective service statute.

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In both of those cases, the key distinction is that they resolve individual claims.

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So after those cases, the plaintiffs before the court were going to have their decisions changed or not.

[00:05:24] Speaker 01:
We're not asking the court here to resolve any individual claims.

[00:05:29] Speaker 04:
I mean, maybe you should be.

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You're characterizing it as not asking for change in individual claims, but you're absolutely in here on behalf of and representing individual claimants who are dismayed at what's happened to their payments.

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So it's not pre-enforcement, which is the line I thought you were drawing, to put yourselves under divine.

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Here, there has been and is ongoing enforcement, as your complaint itself, alleged,

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that you're seeking to halt the continuing application of this policy.

[00:06:05] Speaker 01:
Well, it is pre-enforcement for two groups of people who are presently adversely affected.

[00:06:12] Speaker 04:
It's the same policy.

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The fact that enforcement hasn't reached everybody doesn't mean that it's pre-enforcement.

[00:06:20] Speaker 01:
Well, it is the same policy.

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It's one policy.

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It is the same policy.

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But even for people whom it has already reached, what we are asking is not for the court to look at a divorce decree and decide what it means.

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So our view is that in order to decide an individual case, what OPM has to do is apply 8467, the expressly provided court rule, and look at the decree and see does this decree, the specific language in this individual case, expressly provide for division of the supplement.

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OPM says no, we don't have to make an inquiry at all because 8421 says we just do that inquiry for the basic annuity and if so we divide the supplement too.

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What we're saying is no, tell OPM they have to go back and apply 8467 expressly provided with respect to what the divorce court says about the annuity supplement.

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And how particular language in a divorce decree will come out in an individual case, we don't know.

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We're not arguing because we're not taking issue with how OPM reads and applies that expressly provided for standards.

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All we're taking issue with is whether they apply it at all with respect to the annuity supplement, or they just skip that step.

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And that's why there's no individual decisions here, even if we had individual plaintiffs with individual decrees in front of the court.

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So tell me how you're getting around Fornero, Elgin, Fornero, allowing district courts actions, challenging how OPM calculates civil service benefits for particular classes of beneficiaries.

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would plainly undermine the whole point of channeling review of benefit determinations to the MSPB, the Federal Circuit.

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You say this, where is the case law that carves out a divine exception?

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I don't see it.

[00:08:19] Speaker 01:
We think divine is fully consistent with thunder basin call and so I would I would ask you to take a step back to the thunder basin call inquiry and walk through the framework and I think you'll find that divine fits into that framework on one side of the line.

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Where does Thunder Bay say we make an exception for pre-enforcement or for rules or for what?

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I'm not sure how you want to characterize it, so I won't say that for you.

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Where does Thunder Bay say that?

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I think Thunder Bay is one of the cases that works heavily against you.

[00:08:52] Speaker 01:
Well, I disagree on that point.

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So what Thunder Basin says is the first step you look at is, did Congress intend to preclude some type of cases?

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And the answer to that is absolutely yes.

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That's not in dispute.

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But the second step of Thunder Basin call is, OK, well, what is the scope of that preclusion?

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And this court has looked at that in a number of cases.

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We cite the JARTCV SEC case.

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which says, okay, at step two of Thunder Bay's Enquals, you look at the congressional intent and figure out what kind of cases Congress was intending to preclude and what kind it wasn't.

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And... What case tells us, other than Devon, what kind of, what case tells us, gives us the answer to that question?

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Well, the primary answer to that question is a question of what Congress intended, and so I will direct you to a staff 8461.

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I believe has the answer of what Congress intended.

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And what 8461 says, 8461C says, for claims under Chapter 84, the FERS system, you bring those in the first instance to OPM.

[00:10:00] Speaker 01:
Chapter 84 provides individual benefits.

[00:10:02] Speaker 01:
So it's talking about individual claims.

[00:10:05] Speaker 01:
8461E says, if an OPM action affects the rights or interests of an individual,

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You can then bring that to the MSPB and so you read those two together and the scope of the of what Congress is channeling into administrator review is pretty clear.

[00:10:25] Speaker 01:
It's individual benefit.

[00:10:28] Speaker 01:
And now there's a second piece of that puzzle is.

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Now that you know that, can you also infer from that channeling of individual claims that Congress also intended to channel traditional APA claims to that channel?

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And the answer is no.

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And the reason is, and Judge Henderson said this very well in that medical center case, there is a strong presumption

[00:10:55] Speaker 01:
in favor of maintaining jurisdiction for APA review.

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And we're not going to read Congress's writing that off unless there is specific language evincing a clear intent to channel APA claims through the administrative process.

[00:11:14] Speaker 01:
And here there isn't.

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8461 just says you take individual claims through that process and doesn't say anything about APA claims.

[00:11:25] Speaker 01:
under the NAP Medical Center case could mean that they're still available.

[00:11:38] Speaker 05:
Do you want to reserve the rest of your time?

[00:11:42] Speaker 01:
Well, if I can turn to the merits if we're done with the jurisdictional questions, let me just address that quickly.

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And I want to remind the court we have three claims on the merits.

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Let me start quickly with claim 2.

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Claim 2 is a standard notice and comment claim.

[00:12:00] Speaker 01:
Our argument is that this is a legislative rule.

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Whatever you think the statute means, this is a legislative rule because it had an immediate impact on affected retirees.

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People immediately lost benefits.

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People immediately became indebted to the federal government for benefits they had received before.

[00:12:21] Speaker 01:
And so we would argue that that requires notice and comment rulemaking, and that without even getting into what the statute means, you should invalidate the rule and send it back to the agency to go through the correct process.

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Claim three is that OPM lacks statutory authority for retroactive rulemaking.

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And again, that's a pretty straightforward claim.

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This court has said in Health Insurance Association, the Supreme Court has said in both Cohen v Georgetown Hospital that agencies have limited power and we're not going to presume any power to make rules retroactively, including for legislative or including for interpretive rules, unless Congress specifically says you have authority to make those retroactively.

[00:13:13] Speaker 01:
There is no such authority for OPM anywhere in the statute.

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And the agency hasn't pointed to any.

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And so we would argue that whatever you decide about the rule and the interpretation of the statute going forward, the retroactive application of it can't stand.

[00:13:31] Speaker 04:
Doesn't your position depend on the notion that this is actually a change?

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And I took the government's briefing

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characterize the practice as largely consistent with the reaffirmed practice, but that some of the staff who were implementing it were implementing the way you advocate as distinct from pairing the basic and the supplemental annuity the way they now have expressly said.

[00:14:04] Speaker 04:
Do we know whether the past practice was

[00:14:07] Speaker 04:
predominantly in accord with your reading or not?

[00:14:15] Speaker 01:
Well, let me answer that in two parts.

[00:14:16] Speaker 01:
So there was, like you said, there was some confusion apparently within the agency as to what the agency did.

[00:14:22] Speaker 01:
And that's reflected in the two requests for guidance that are in the administrative record.

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I think they're JA57 and 59.

[00:14:31] Speaker 01:
But that confusion was not between our two positions.

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So the confusion among the paralegals was between

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Some paralegals would get an order that said expressly said divide the annuity supplement and they would do it because again 8467 says do what the divorce court expressly divides you to do.

[00:14:52] Speaker 01:
Other paralegals in the agency were not sure whether they should do that and the reason was because they see this supplement correctly so in our view as a social security supplement.

[00:15:02] Speaker 01:
It's a stand in for social security benefits.

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or people who are required to retire by statute before they reach 62.

[00:15:09] Speaker 01:
Social security is not visible.

[00:15:11] Speaker 01:
The debate between the paralegals was, do you divide it when you're expressly told to do it or do you not divide it because it's like social security?

[00:15:23] Speaker 01:
There's no indication that the agency ever prior to 2016 took the position

[00:15:30] Speaker 01:
that you divide the supplement even where an order doesn't say anything about the supplement.

[00:15:36] Speaker 01:
That, as far as we know and is from the record, is entirely new as of 2016.

[00:15:40] Speaker 04:
And your support for the characterization that you just gave, which is very helpful, you know, do we divide when it's express or do we override the expression that it should be divided because we treat this like social security, which is indivisible, the best record support for that is where?

[00:16:00] Speaker 01:
I'm sorry, I'm not quite sure what.

[00:16:03] Speaker 04:
So I asked you a question about agency practice and understanding.

[00:16:08] Speaker 04:
And you gave me an explanation of what you thought were the conflicts between the different paralegals understandings.

[00:16:16] Speaker 04:
And I'm asking you, if that is, in fact, what was going on, where would you point me in the record to support

[00:16:25] Speaker 04:
what you just described.

[00:16:27] Speaker 01:
Again, the record is very limited here.

[00:16:29] Speaker 01:
And so the only document that describes that conflict and that prior practice is the two requests for guidance.

[00:16:39] Speaker 01:
It's JA57 and 59.

[00:16:40] Speaker 01:
And then just the one other question you asked, it's not anything in the record.

[00:16:46] Speaker 01:
It's the lack of anything in the record about doing what they started doing in 2016 prior

[00:16:54] Speaker 01:
There's no indication that they had ever done that.

[00:16:57] Speaker 02:
Does OPM ever engage in rulemaking in the traditional sense?

[00:17:03] Speaker 01:
Yes, OPM does.

[00:17:04] Speaker 01:
And they have formal, there are formal OPM regulations relating to 8467 and how the agency processes divorce court work.

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Are there any judicial decisions on challenges to OPMs?

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rulemaking or failure to rulemake?

[00:17:30] Speaker 02:
You're essentially, as I understand your argument on the jurisdictional question, you seem to be arguing this is really a rulemaking or something that should have been subject to rulemaking.

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The agency didn't engage in the normal APA procedures.

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We can challenge that.

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That's a pre-enforcement kind of issue.

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We can challenge their failure to engage in rulemaking without regard to even getting to the merits.

[00:18:04] Speaker 02:
We can challenge that failure.

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And that's how we stay here.

[00:18:07] Speaker 02:
But there's no case law.

[00:18:12] Speaker 02:
I'm not blaming you.

[00:18:15] Speaker 02:
I'm just asking.

[00:18:16] Speaker 02:
I couldn't find any.

[00:18:18] Speaker 01:
We cited a couple of cases.

[00:18:21] Speaker 01:
We cited a few cases from the D.C.

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District Court in our brief that follow and apply this court's divine decision.

[00:18:28] Speaker 01:
One of them, the NTEU v. Whipple case in 2009.

[00:18:32] Speaker 02:
Do you have any Court of Appeals decision saying that if and when the OPM

[00:18:40] Speaker 02:
rule makes or fails to rule make that is subject to review under the APA, which would bring it and take it out of the MSPB route.

[00:18:48] Speaker 02:
The MSPB doesn't handle rule making challenges, right?

[00:18:51] Speaker 02:
That's correct.

[00:18:52] Speaker 02:
OK, I'll ask the government, unless you know something to tell me.

[00:18:56] Speaker 02:
That's the part of the case that's perplexing to me.

[00:18:58] Speaker 02:
You're saying it's a rulemaking, a fail rulemaking.

[00:19:03] Speaker 01:
Right, and I would just note that Divine was a challenge to OKM rulemaking.

[00:19:08] Speaker 01:
That was rules regarding

[00:19:10] Speaker 01:
I believe it was reduction in forced rules, but it was a challenge to opiate rulemaking.

[00:19:17] Speaker 05:
All right.

[00:19:17] Speaker 05:
Thank you.

[00:19:17] Speaker 05:
We'll give you some time and reply.

[00:19:20] Speaker 05:
Thank you.

[00:19:22] Speaker 05:
Ms.

[00:19:22] Speaker 05:
Mowen?

[00:19:40] Speaker 02:
Can I start you before, and I don't mean to interrupt you, except I am, so maybe I do.

[00:19:45] Speaker 02:
Not a problem, Your Honor.

[00:19:47] Speaker 02:
Answer me on the rulemaking question, because as far as I'm seeing it, not definitively for the panel, the suggestion is you should have engaged in rulemaking here, and you didn't.

[00:19:59] Speaker 02:
And that's their challenge.

[00:20:01] Speaker 02:
And how does OPM engage in rulemaking?

[00:20:12] Speaker 02:
making or the merits of the rule making?

[00:20:15] Speaker 03:
Your Honor, OPM does engage in rule making.

[00:20:18] Speaker 03:
I think in thinking about the failure to use notice and comment procedures here in that claim, it's really applicable to think of it under this wholly collateral question that's raised in Thunder Basin and Elgin.

[00:20:33] Speaker 03:
And what those cases have established is that where a claim, even if procedural, sort of inextricably intertwined

[00:20:41] Speaker 03:
in the substantive claim that needs to be challenged through the statutory review scheme, then it cannot, you can't circumvent that scheme by bringing that claim.

[00:20:51] Speaker 02:
If we don't buy that, then you lose.

[00:20:54] Speaker 03:
No, Your Honor.

[00:20:55] Speaker 02:
In other words, I'm not, I don't mean to be glib, but I mean, they're saying you didn't pursue rulemaking.

[00:21:03] Speaker 02:
You simply failed to, you know, forgetting what we think about

[00:21:07] Speaker 02:
whatever it is you're proposing, you have to go through rulemaking.

[00:21:11] Speaker 02:
And that's our challenge.

[00:21:12] Speaker 02:
You fail to engage in rulemaking.

[00:21:15] Speaker 03:
Your Honor, we don't lose if that's the case.

[00:21:18] Speaker 03:
I think in the first instance, that would at the very least mean that the two substantive claims challenging OPM interpretation of the statute would still have to go through the CSRA scheme.

[00:21:30] Speaker 03:
And I think the fact that that would be the case is what shows that the notice and comment claim also needs to go through the scheme.

[00:21:36] Speaker 03:
Because if you allow the noticing claim, comment claim to be severable and for this court to address it and not the federal circuit, you would have the very risk of inconsistent decision-making.

[00:21:49] Speaker 02:
Let me change it this way.

[00:21:50] Speaker 02:
Suppose there isn't a challenge on the merits.

[00:21:55] Speaker 02:
You say you have a new rule in effect in their view.

[00:21:59] Speaker 02:
You've promulgated a new rule and you had to promulgate it through noticing comment rule making you fail.

[00:22:04] Speaker 02:
Is that a viable claim?

[00:22:06] Speaker 03:
Your honor, I believe that claim would still have to be channeled rather through the CSRA scheme.

[00:22:12] Speaker 02:
Why?

[00:22:12] Speaker 02:
MSPB doesn't handle rulemaking challenges as far as I understand.

[00:22:17] Speaker 03:
Elgin is helpful on this point because there you had a constitutional challenge to the validity of a statute.

[00:22:24] Speaker 03:
And similarly there, the MSPB doesn't routinely handle constitutional challenges.

[00:22:30] Speaker 03:
The statute

[00:22:31] Speaker 03:
And the court nonetheless said that the claims needed to be channeled through the CSRA scheme because you would ultimately get meaningful review on those claims from the federal circuit.

[00:22:41] Speaker 02:
So as Europe is as the government's position, there is no way to challenge rulemaking.

[00:22:48] Speaker 03:
I believe there are specific provisions within the CSRA that allow for challenges to rulemaking as

[00:22:56] Speaker 03:
unfair, unfair practices.

[00:22:58] Speaker 03:
I believe it's five USC 1204 specifies some rulemaking challenges that can go directly to the MSPB.

[00:23:08] Speaker 03:
But no, in this case, I think it's important to remember that- No, no, no, wait.

[00:23:13] Speaker 02:
I'm just trying to get the framework in my head.

[00:23:17] Speaker 02:
Is it your position that there is no possibility, everything has to go through MSPB?

[00:23:24] Speaker 02:
Is that what you're saying?

[00:23:25] Speaker 02:
That's what I just heard you

[00:23:27] Speaker 02:
hinting at everything has to go to the, I didn't think the MSPB took challenges to claims with respect to failed rulemaking.

[00:23:36] Speaker 03:
Your honor, it's a claim as it does here implicate.

[00:23:39] Speaker 02:
No, I don't stick with my hypothetical because that gives me a sense of what you're arguing in particular.

[00:23:46] Speaker 03:
Your honor, I don't think you need to answer the question.

[00:23:48] Speaker 02:
No, but I do need to answer it in my head.

[00:23:50] Speaker 02:
I need to understand what the government's position is because that'll help me to understand how far you mean to reach.

[00:23:56] Speaker 03:
Our position is that where a claim implicates the calculation of federal retirement benefits and the statutes that provide for that calculation, it must be channeled through the CSRA scheme.

[00:24:08] Speaker 02:
And what do you want to try now and answer my question about?

[00:24:11] Speaker 02:
They're saying you had to use rulemaking to do whatever you just did and you didn't.

[00:24:19] Speaker 02:
It looks new to us.

[00:24:21] Speaker 02:
It should have gone through rulemaking.

[00:24:22] Speaker 02:
Is that a viable claim ever?

[00:24:27] Speaker 03:
Your honor, it's hard for me to think of every conceivable situation.

[00:24:32] Speaker 02:
Think of any conceivable situation.

[00:24:34] Speaker 03:
And I'm sorry that I'm not being entirely helpful here.

[00:24:37] Speaker 03:
But again, I think that the key here is that any decision on that failure to rule make challenge would carry that risk of inconsistency with the substantive claims that are already

[00:24:50] Speaker 02:
proceeding through the CSRA scheme.

[00:25:12] Speaker 02:
I want to know, there are lots of agencies that are subject to challenges because they didn't give notice and comment on something that was allegedly new or they didn't do it properly.

[00:25:22] Speaker 02:
And I'm just wondering, and they're not, this is not, that's not normally an MSPB question.

[00:25:27] Speaker 02:
And I was wondering what the government has to say about that.

[00:25:29] Speaker 03:
Your honor, and I'm apologizing for not being definitive on sort of the entire universe of cases, because I really do think that the answer here is clear and confined to the fact that

[00:25:41] Speaker 03:
you have this sort of inextricably intertwined relationship between the failure to rule-make or the failure to follow particular rule-making procedures challenge and the substantive claim.

[00:25:53] Speaker 03:
If, for example, the Federal Circuit, as a result of these 69 cases that are currently proceeding, says we agree with OPM that the statute unambiguously requires the supplement to be divided in the same way as the basic amount,

[00:26:10] Speaker 03:
then there would be no reason to follow notice and comment proceedings for OPM because the text of the statute would allow for only one result.

[00:26:19] Speaker 03:
So that's why we believe that they're trying to parse off one of these claims versus the others with varying consistency that the CSRA was intended to avoid.

[00:26:31] Speaker 04:
Although, and I'm going to shift a little bit to the retroactivity

[00:26:36] Speaker 04:
question because it seems like there's a relationship between these two things to the extent that the exhaustion going through OPM and MSPB is required where there might be a defect sort of facial reinforcement legal defect in the rule or a failure to make a rule that

[00:26:57] Speaker 04:
you're going to get further into a course of conduct that you might then have to undo if exhaustion is required.

[00:27:05] Speaker 04:
And I had a question about your claim that the government can recoup overpayments where they're made on erroneous grounds, which seems to be not entirely the authority seems to stand for that.

[00:27:21] Speaker 04:
And that's not entirely what we have here.

[00:27:26] Speaker 04:
So I guess, do you have authority that would allow recruitment all the way back to 1987?

[00:27:34] Speaker 03:
Your honor, we believe those authorities we cited in our brief provide that authorization.

[00:27:40] Speaker 03:
There is also specific statutory authority in Section 37 USC

[00:27:47] Speaker 03:
3716, which talks about administrative offset and recruitment of payments.

[00:27:55] Speaker 03:
And then there are regulations that govern recruitment specifically in the context of these first benefits we're dealing with.

[00:28:01] Speaker 03:
So we think that if the statute has said this is the way that benefits need to be paid out from the start, then that is the way that OPM was required to be paying out those benefits beginning in 1987.

[00:28:17] Speaker 03:
And importantly, I would just note that to the extent that an individual claimant would face financial hardship from having to pay back an overpayment or maybe detrimentally relied and changing financial positions based on an overpayment, there is a waiver mechanism in 5USD 8470B, which allows OPM to waive the collection of overpayments.

[00:28:43] Speaker 03:
It would be against equity and good conscience.

[00:28:47] Speaker 03:
And the regulations just implementing that provision specify that cases of financial hardship where the individual is not themselves at fault for the overpayment are kind of good grounds for that type of waiver.

[00:29:03] Speaker 04:
I guess for me a clarifying question, which is the flip side of what I asked or the same question that I asked Mr. Griffin is what was the past practice?

[00:29:15] Speaker 04:
Was the past practice largely in accord with your current interpretation or not?

[00:29:23] Speaker 04:
And how do we know?

[00:29:24] Speaker 03:
Your Honor, so it's difficult to say.

[00:29:28] Speaker 03:
There was no formal regulation or formal interpretation of the statute via adjudication that is different from what OPM is now saying.

[00:29:39] Speaker 03:
My understanding is that a lot of this was occurring via computer

[00:29:46] Speaker 03:
voting and individual specialists interpreting court orders and making determinations.

[00:29:52] Speaker 03:
Again, we don't have evidence in the record about sort of the

[00:29:55] Speaker 03:
practice across the board.

[00:29:57] Speaker 03:
But as plaintiffs' counsel raised, there are lettered questions that individual specialists had about when a court order specifies something about the supplement, what do we do?

[00:30:10] Speaker 03:
I think part of the reason maybe those questions hadn't arisen to that point is that OPM has promulgated regulations that give state courts some terms that they can consider using when they are

[00:30:23] Speaker 03:
issuing these divorce orders, and those terms don't use words like basic amount or supplement.

[00:30:29] Speaker 03:
They say gross annuity, net annuity, FERS benefits, benefits earned through service in the US Department of Agriculture.

[00:30:37] Speaker 04:
I don't hear you saying that it's clear that there was no new interpretation.

[00:30:44] Speaker 04:
It seems like we'd be on pretty safe ground to say that

[00:30:49] Speaker 04:
the 2016 interpretation is a new interpretation that conflicts at least with some body of past practice.

[00:30:58] Speaker 04:
And so there's more of a retroactivity analysis that you'd have to go through in order to be able to recoup, no?

[00:31:08] Speaker 03:
Yeah, I think to the extent there's a conflict, it's only with that informal operational on the ground.

[00:31:15] Speaker 03:
practice and that I think feeds into the retroactivity question because cases like Health Insurance of America, Association of America versus Shalala say, you know, if the agency is just saying this is what the statute that was in existence at the time required, you know, you can apply that retroactively if this court were determined, for example, to only side with OPM based on deference to the 2014 policy.

[00:31:46] Speaker 03:
then maybe there would be a different question about retroactivity.

[00:31:49] Speaker 03:
And we think Shalala stands pretty clearly for that proposition.

[00:31:52] Speaker 03:
So if it were solely a question of deference, maybe OPM could only go back to 2014.

[00:31:58] Speaker 03:
But since our primary position is that this is what the statute, this is the best reading, this is the plain reading of the statute and what it's always required.

[00:32:06] Speaker 04:
I mean, I think the more fundamental question is where is your statutory authority to promulgate a rule with this kind of retroactive effect?

[00:32:17] Speaker 04:
and really reaching back and changing, not changing things that people relied on, changing the legal landscape, at least with respect to somebody of these recipients.

[00:32:30] Speaker 04:
And I didn't see you citing that.

[00:32:35] Speaker 04:
It's just the general authority to administer all provisions of this chapter, right?

[00:32:40] Speaker 03:
We don't contend that OPM has specific retroactive rulemaking authority.

[00:32:46] Speaker 03:
We don't think that changes the position here because, again, it's our contention that the statute has always required this result.

[00:32:55] Speaker 03:
And to the extent that specialists in internal operations were doing something different, that was an error at the time.

[00:33:03] Speaker 03:
And it remains an error to this day.

[00:33:05] Speaker 03:
And OPM has authority to collect and result.

[00:33:11] Speaker 04:
So you're arguing that an interpretive rule can't be retroactive, but I thought that in Georgetown Hospital, we rejected that notion that just because it's interpretive doesn't mean that the rule that is effecting some kind of substantive change necessarily reaches back to the statute.

[00:33:29] Speaker 03:
I think the key question that that case raised was whether the court is deferring to the interpretive rule or not.

[00:33:38] Speaker 03:
So if you have a situation where you have an interpretive rule that is filling a gap and the court says, look, we don't think this is necessarily the best reading of the statute, but we are going to defer to this rule that you promulgated, then you can only reach as far back as that rule.

[00:33:55] Speaker 03:
And we don't contest that.

[00:33:57] Speaker 03:
If this court were determined that OPM is right on the merits, but only as a result of deference to the 2014 memo, we don't think that OPM could collect

[00:34:07] Speaker 03:
before 2014.

[00:34:08] Speaker 03:
But because our primary position is that the statute has required this all along as the unambiguous best reading, we think that OPM can go back to correct those errors.

[00:34:22] Speaker 05:
All right.

[00:34:25] Speaker 05:
Thank you.

[00:34:26] Speaker 03:
Thank you, Your Honor.

[00:34:27] Speaker 03:
If there are no further questions, we ask that this court vacate the judgment below.

[00:34:35] Speaker 05:
Griffin, why don't you take two minutes?

[00:34:45] Speaker 05:
Thank you, Your Honor.

[00:34:46] Speaker 01:
I wanted to just very briefly address the retroactivity issues you were just talking about.

[00:34:53] Speaker 01:
And I just want to point out that there are three main cases the government relies on, and none of those involve

[00:35:00] Speaker 01:
retroactive rulemaking.

[00:35:02] Speaker 01:
So they cite OPM v. Richmond, King v. OPM, the Federal Circuit case, and then U.S.

[00:35:09] Speaker 01:
v. Leahy Clinic, a First Circuit case.

[00:35:14] Speaker 01:
And one of those is about whether a stopper runs against the government.

[00:35:22] Speaker 01:
One is about OPM statute that allows

[00:35:27] Speaker 01:
a waiver of recovery for various equitable reasons.

[00:35:31] Speaker 01:
One is about the government's common law, rights of recovery under state law.

[00:35:35] Speaker 01:
None of them are about rules being applied retroactively.

[00:35:41] Speaker 01:
And then, if I can very quickly, Judge Pollard, you asked about, for any evidence in the record, whether this is a change.

[00:35:49] Speaker 01:
And again, there's nothing that really documents the agency's past practice in the record.

[00:35:54] Speaker 01:
But I think when you read

[00:35:56] Speaker 01:
the advice memorandum, and I'm looking at page 60, the first page of that 2014 memorandum, it's pretty clear that the agency itself understands this as a big shift.

[00:36:09] Speaker 01:
And so what they say is after careful review, we've determined not only does 8421C obligate OPM to honor provisions that expressly divide an annuity supplement

[00:36:23] Speaker 01:
This provision also requires OPM to divide an annuity supplement in circumstances where a corridor simply divides a FERS annuity benefit.

[00:36:33] Speaker 01:
And I think just the language of that makes clear is, hey, we just discovered how this works, and this is different than what we were doing before.

[00:36:42] Speaker 04:
And so your view on the line between retroactive and prospective is what?

[00:36:48] Speaker 04:
How would you draw that line?

[00:36:50] Speaker 04:
Clearly, they have authority.

[00:36:53] Speaker 04:
to clarify going forward.

[00:36:56] Speaker 02:
Yes.

[00:36:58] Speaker 02:
Right.

[00:36:59] Speaker 02:
What did you say?

[00:37:02] Speaker 04:
Clearly they have authority to clarify their policy going forward.

[00:37:07] Speaker 04:
They think it's a conflict with the statute and they have an obligation to comply with the statute

[00:37:13] Speaker 04:
if we were to hold that their reading is correct but is in fact a change from past practice that would trigger a retroactivity analysis.

[00:37:22] Speaker 04:
And what is your view about where the line between retroactive application and application to current cases is drawn?

[00:37:33] Speaker 01:
So that line is the line between benefits to be paid out in the future and benefits that have been paid out.

[00:37:39] Speaker 04:
Benefits to be paid out so somebody who's received some but not all these change in their case would would Right happen.

[00:37:47] Speaker 01:
These are a new month annuity benefits paid out in monthly installments and so the July 1 2016 when this change went into effect it both changed people's monthly payments going forward and the agency calculated retroactively and said oh and I

[00:38:06] Speaker 01:
You know, we're applying this change the last month, which means you owe us this many dollars.

[00:38:10] Speaker 01:
So that's the record.

[00:38:11] Speaker 04:
I haven't worked through this myself, but presumably you could say a divorce decree that has yet to be interpreted by the agency has yet to be entered.

[00:38:24] Speaker 01:
Will, that's a slightly different question.

[00:38:26] Speaker 01:
I don't think that's quite retroactivity versus prospectivity.

[00:38:33] Speaker 01:
I think that's the question on whether the rule has immediate effect or not.

[00:38:37] Speaker 01:
So you could imagine the agency implementing a rule that doesn't have immediate effect.

[00:38:42] Speaker 01:
That says, from July 1, 2016, any divorce decrees entered into after that date, this is how we're going to interpret them.

[00:38:52] Speaker 01:
And that doesn't have any change on current benefits prospectively or retroactively.

[00:38:56] Speaker 01:
But that's obviously not what this is.

[00:39:05] Speaker 01:
Thank you.