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August 24, 1995


The opinion of the court was delivered by: PAUL L. FRIEDMAN

 Sydney Goldsmith brought this action, pro se to recover payment of approximately $ 13,270 of the $ 16,340 that the Department of State has withheld from his retirement benefits. The Department claims that this is a legitimate offset for the amount that Mr. Goldsmith wrongfully received in Separate Maintenance Allowance ("SMA") payments. *fn1" SMA payments are designed to help Department employees financially maintain family members who cannot live with the employee at his or her post. The parties filed cross motions for summary judgment and the Court heard oral argument on June 22, 1995.

 Plaintiff's complaint is brought pursuant to the Foreign Service Act of 1980. 22 U.S.C. §§ 3901 et seq. Jurisdiction to provide judicial review under the Act is afforded to the district courts of the United States under 22 U.S.C. § 4140. The Act requires application of Section 706 of the Administrative Procedure Act to the Secretary's decision. 22 U.S.C. § 4140. Under the APA, a court reviewing an agency decision shall set aside agency actions, findings and conclusions that it finds to be "arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with the law." 5 U.S.C. § 706(2)(A). See, e.g., Citizens to Preserve Overton Park, Inc. v. Volpe, 401 U.S. 402, 416, 28 L. Ed. 2d 136, 91 S. Ct. 814 (1971); Robinson v. Cheney, 277 U.S. App. D.C. 393, 876 F.2d 152, 155 (D.C. Cir. 1989). The arbitrary and capricious standard is highly deferential. The scope of judicial review is narrow and a court may not substitute its judgment for that of the agency. Citizens to Preserve Overton Park v. Volpe, 401 U.S. at 416, 419. Applying these principles, the Court concludes that defendant is entitled to judgment as a matter of law.


 A. Facts

 Plaintiff Sydney Goldsmith was a member of the United States Foreign Service until his retirement on September 30, 1989. From 1985 until he retired, Mr. Goldsmith served as Branch Section Chief of the American Institute of Taiwan, Kaohsiung, Taiwan. The Institute was established by Congress in the Taiwan Relations Act, and its employees continue to participate in any government benefit program in which they participated prior to their employment with the Institute. In April 1985, plaintiff applied for SMA payments for his two children, Ruth, born June 1, 1967, and Eric, born August 19, 1968. In his application, Mr. Goldsmith reported that his children, then 16 and 17 years old, were in his legal custody pursuant to a 1979 Texas divorce decision granting him joint custody with his former spouse. Between 1985 and 1989, Mr. Goldsmith received $ 16,340 in SMA payments. When Mr. Goldsmith retired from the Department of State in September of 1989, the Department initially withheld payment of $ 15,000 from his lump sum retirement benefits pending an investigation and decision concerning his eligibility for the SMA payments he had received. The $ 15,000 was provisionally withheld while the Department determined the exact amount, if any, that Mr. Goldsmith owed.

 After an investigation performed by the Department of State's Office of Inspector General, the Department's Committee of Inquiry into Fiscal Irregularities advised Mr. Goldsmith that he was not entitled to any part of the SMA payments he had received. It concluded that he did not have joint custody under the Texas decree because it had been superseded by a 1983 Virginia divorce decree, not reported to the Department by Mr. Goldsmith, granting sole custody to his former spouse. Mr. Goldsmith appealed the Department's decision to the General Accounting Office. The GAO denied Mr. Goldsmith's appeal and affirmed the Department's determination that he was not entitled to the SMA payments he received between 1985 and 1989.

 On June 30, 1992, the Department of State informed Mr. Goldsmith that his appeal to the GAO had been denied and that he had 30 days within which to repay the $ 16,340 he had been overpaid. Mr. Goldsmith was advised that if the Department did not receive this money within the 30 day period it would collect this amount from his lump sum and monthly retirement benefits. Mr. Goldsmith did not pay the amount and the Department withheld $ 16,340 from his retirement benefits.

 Mr. Goldsmith filed suit in the United States Court of Claims challenging the Department of State's determination. The Court of Claims dismissed the complaint for lack of subject matter jurisdiction. Plaintiff then filed suit in this Court.

 B. Statutory and Regulatory Framework

where the employee has a personal reason of special need or hardship to maintain family members elsewhere, including but not limited to career, educational or family considerations for the spouse, or educational considerations for the children . . .

 SR 040m defines "family" as follows:

"Family" means one or more of the following relatives of an employee residing at his/her post, or who would normally reside at the post except for the existence of circumstances cited in Section 262 warranting ...

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