Curtis A. Khol v. Department of Defense

NOTE: This disposition is nonprecedential.
United States Court of Appeals
for the Federal Circuit
______________________
CURTIS A. KHOL,
Petitioner
v.
DEPARTMENT OF DEFENSE,
Respondent
______________________
2015-3164
______________________
Petition for review of the Merit Systems Protection
Board in No. DC-0752-14-0624-I-1.
-------------------------------------------------------------------------
JEROME E. PANNULLO,
Petitioner
v.
DEPARTMENT OF DEFENSE,
Respondent
______________________
2015-3168
______________________

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KHOL v. DEFENSE 2
Petition for review of the Merit Systems Protection
Board in Nos. DC-0752-13-5863-I-1, DC-0752-14-0624-I-1.
______________________
Decided: June 2, 2016
______________________
CURTIS A. K HOL, Vienna, VA, pro se.
JEROME E. PANNULLO , Kensington, MD, pro se.
AMELIA LISTER-S OBOTKIN , Commercial Litigation
Branch, Civil Division, United States Department of
Justice, Washington, DC, for respondent. Also represent-
ed by BENJAMIN C. M IZER, R OBERT E. K IRSCHMAN , JR.,
ALLISON K IDD -M ILLER; STEVEN J. WEISS , Office of General
Counsel, United States Department of Defense, Washing-
ton, DC.
______________________
Before NEWMAN , O’M ALLEY, and TARANTO , Circuit Judges.
NEWMAN , Circuit Judge.
Curtis A. Kohl and Jerome E. Pannullo each appeals
the decision of the Merit Systems Protection Board
(“Board”) sustaining the action of the Department of
Defense (DOD) imposing a six day furlough in July and
August of 2013 in response to sequestration legislation.1
The appeals to this court are combined. We discern no
reversible error in the Board’s decision.
1 Office of the Secretary v. Dep’t of Defense, DC-
0752-14-0624-I-1, 2015 WL 1655544 (MSPB Apr. 14,
2015) (Final Order).

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KHOL v. DEFENSE 3
BACKGROUND
The Budget Control Act of 2011 established spending
limits for federal agencies and required automatic spend-
ing cuts if certain deficit reduction legislation was not
enacted. Pub. L. No. 112-25, §§ 101-103; 125 Stat. 240,
241-46 (2011). On March 1, 2013 the automatic budget
cuts were triggered. 2 U.S.C. §§ 901a(8), 906(k)(2). As a
result, the DOD’s yearly budget was cut by approximately
$37 billion dollars, to be absorbed in the remaining six
months of the fiscal year. The DOD took a number of
steps to address the budgetary shortfall, including repro-
gramming funds, reducing facility maintenance, and
eliminating some military training exercises. In a May
2013 memorandum, the Secretary of Defense explained
that furloughs of civilian workers would be imposed to
address the “historic shortfall in our budget” resulting
from sequester.
Mr. Kohl is a civilian program analyst with Cost As-
sessment and Program Evaluation (CAPE), a department
with the agency’s Office of the Secretary of Defense. Mr.
Kohl was provided notice of the furloughs on May 30,
2013. Mr. Pannullo is a member of the Senior Executive
Service (SES) with CAPE, and was provided notice of the
furloughs on May 29, 2013. The Appellants were fur-
loughed for six days in July and August of 2013. Appel-
lants filed notices of appeal with the Board, alleging they
were improperly furloughed because the agency was not
facing an actual lack of funds as the result of sequestra-
tion. The administrative judge (AJ) consolidated the
cases with several others, and found that the DOD had
shown the furloughs were a reasonable management
solution to the shortage of funds caused by sequestration
and that the furloughs promoted the efficiency of the
service. Office of the Secretary v. Dep’t of Defense, 2014
WL 5326077 (MSPB Oct. 14, 2014). On appeal to the full
Board, the Appellants argued that the DOD operated with
a surplus at all relevant times, and thus could not fur-

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KHOL v. DEFENSE 4
lough employees for a “lack of funds.” The Board affirmed
the AJ’s decision, holding that “irrespective of any alleged
budgetary surplus, the agency established that it had
financial restrictions placed upon its FY 2013 budget.”
Final Order at ¶6.
Mr. Kohl and Mr. Pannullo appeal.
D ISCUSSION
We review the Board’s decision to ascertain whether it
was (1) arbitrary, capricious, an abuse of discretion or
otherwise not in accordance with law; (2) obtained with-
out following the procedures required by law; or (3) un-
supported by substantial evidence. 5 U.S.C. § 7703(c).
By statute, an agency may furlough an employee “be-
cause of lack of work or funds or other nondisciplinary
reasons.” 5 U.S.C. § 7511(a)(5); 5 C.F.R. § 752.402; see
also 5 U.S.C. § 3595a (SES employees may be furloughed
for “insufficient work or funds or for other nondisciplinary
reasons”). Furloughs of thirty days or less are deemed
adverse employment actions, and may only be taken “for
such cause as will promote the efficiency of the service.” 5
U.S.C. § 7513(a). An agency satisfies the “efficiency of the
service” standard by demonstrating “that the furlough
was a reasonable management solution to the financial
restrictions placed on the agency and that the agency
determined which employees to furlough in a fair and
even manner.” Einboden v. Dep’t of Navy, 802 F.3d 1321,
1325 (Fed. Cir. 2015).
Mr. Kohl and Mr. Pannullo argue that the DOD’s
overall budget reflected the existence of a surplus, and
thus the DOD could not furlough employees for a “lack of
funds.” The Board found that sequestration resulted in a
reduction of $37 billion across every budget account in the
DOD’s budget, exacerbating budgetary misallocation
under continuing resolution funding. The Board conclud-
ed that the DOD had to make significant budgetary cuts,

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KHOL v. DEFENSE 5
for in the already underfunded operations and mainte-
nance account from which civilian salaries were paid, the
total budgetary shortfall was estimated at $30 billion
dollars. The Board found that the furloughs were a
reasonable management solution to the financial re-
strictions.
Agencies have broad discretion to take actions to con-
trol spending and preserve flexibility and priorities. See
Einboden, 802 F.3d at 1325 (upholding furloughs when it
preserved “flexibility” to “address other high-priority
budgetary needs”). An agency is not required to operate
at a deficit before implementing a furlough. Non-
disciplinary furloughs are a statutorily-permitted man-
agement tool to address budgetary shortfalls.
In his declaration before the Board, Comptroller Hale
stated that administrative furloughs “would result in a
predictable, recurring amount of money being available
for use. . . .” The court will “give wide berth to agency
decisions as to what type of adverse action is necessary to
‘promote the efficiency of the service,’ provided that the
agency’s decision bears some nexus to the reason for the
adverse action.” Einboden, 802 F.3d at 1325–26. Here,
substantial evidence supports the DOD’s imposition of
furloughs to address the combined impacts of sequestra-
tion, operating under a continuing resolution, and higher
than anticipated wartime costs.
The Appellants argue that the furloughs did not meet
the efficiency of the service standard because the DOD
ended the year with a surplus in the operations and
maintenance accounts. They argue that the evidence of
various shortfalls and intra-agency transfer actions was
not controlling. Precedent negates this argument. See,
e.g., Smith v. Dep’t of Air Force, 2016 WL 145967, at *2
(Fed. Cir. Jan. 13, 2016) (“[I]t was reasonable for the DOD
to consider its budget holistically when faced with seques-

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KHOL v. DEFENSE 6
tration, rather than isolating components—or, as here,
accounts—of a military department.”).
The ability to structure spending decisions holistically
does not mean that the DOD should or can ignore the
sequester that Congress imposed on all accounts. 2
U.S.C. § 906(2) (“[T]he same percentage sequestration
shall apply to all programs, projects, and activities within
a budget account.”). Addressing the historic budget
shortfalls occasioned by sequestration required both
holistic and detailed financial planning.
CONCLUSION
We discern no reversible error in the Board’s ruling
that the furloughs were reasonable and in accordance
with law.
AFFIRMED
No costs.

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