This matter is before the Court upon the appeal of the Petitioner, Mr. John Leslie, from two separate orders of the Commonwealth of Kentucky, Personnel Board, Case No. 89-650 and Case No. 91-870. In each case, the Personnel Board determined that the Petitioner was not entitled to relief and dismissed the appeal. The two cases involve similar issues of law and arise out of similar factual backgrounds, and have therefore been consolidated for appeal.

In June of 1985, the Petitioner, Mr. John Leslie, began working for the Pikeville Regional Office for the Department of Surface Mining Reclamation and Enforcement a division of the Respondent, Natural Resources and Environmental Protection Cabinet ("Cabinet'). Mr. Leslie was initially appointed to the position of Reclamation Inspector ("Inspector') and thereafter was promoted to the position of Reclamation Inspector Principal ("Inspector Principal").

On October 4, 1988, Mr. Leslie resigned his position as an Inspector Principal in good standing. In May of 1989, Mr. Leslie requested reinstatement with the Pikeville Office. On June 23, 1989, Mr. Leslie received written acknowledgment of his reinstatement request from the Cabinet, which informed him that he possessed reinstatement rights." In August of 1989, the regional administrator of the Pikeville Office, Ms. Jolene Crawford, requested Mr. Leslie's reinstatement.

On June 15, 1989, Inspector Principal, Mr. Donald Eversole, transferred out of the Pikeville Office. On October 16, 1989, the Cabinet appointed Mr. William Barger to the position of Reclamation Inspector with the Pikeville Office. Mr. Barger filled a position different from the position vacated by Mr. Eversole. On January 1, 1990, the Cabinet reinstated Mr. Leslie to the position of Inspector Principal with the Pikeville Office. Mr. Leslie filled a position vacated by Mr. David Ransdall in November of 1989. The position vacated by Mr. Eversole was filled in May of 1990 by Ms. Gretchen Bartley.

On November 14, 1989, Mr. Leslie filed an appeal with the Personnel Board alleging that the Cabinet's appointment of Mr. Barger, rather than his own reinstatement constituted a penalization without cause in violation of KRS 18A.095(l). After his reinstatement, Mr. Leslie argued that he should have been hired on October 16, 1989, and sought back pay for October 16, 1989, through January 3, 1990. After a hearing on the matter, the Personnel Board found that no penalization had occurred and dismissed his Appeal. Personnel Board Final Order, Appeal No. 89-650.

After his reinstatement as an Inspector Principal with the Cabinet on January 3, 1990, Mr. Leslie again resigned from his position on June 26, 1990. In June of 1991, Mr. Leslie learned that Inspector Principal, Mr. Jack Ratiliff, had transferred from the Pikeville Office, leaving a vacant position. Thereafter, Mr. Leslie again sought reinstatement to the position of Inspector Principal with the Pikeville Office. After Mr. Ratiliff’s departure, the Cabinet abolished the Inspector Principal position vacated by Mr. Ratiliff and established a Reclamation Inspector position. Mr. Michael Flannery was hired to fill this position.

After Mr. Fannery's appointment, Mr. Leslie initiated Personnel Board Appeal No. 91-870 claiming that the appointment of Mr. Flannery rather than his own reinstatement, constituted a penalization in violation of KRS 18A.095(l). After a hearing on the matter, the Personnel Board found that no penalization had occurred and dismissed his appeal. Personnel Board Final Order, Appeal No. 91-870. Mr. Leslie then appealed both final Personnel Board Orders (89-650 and 91-870) to this Court.

Mr. Leslie argues that the Cabinet's hiring of Mr. Barger and then Mr. Flannery instead of himself constituted a penalization without cause in violation of KRS 18A.095. He argues that KRS Chapter 18A and the regulations promulgated pursuant thereto granted him certain "reinstatement rights,' which included the right to reinstatement to the positions filled by Mr. Barger and Mr. Flannery. The Petitioner further contends that the Cabinet's failure to appoint him violated his right to be free from arbitrary and capricious agency action as guaranteed by §2 of the Kentucky Constitution.

KRS 18A.095 prohibits penalization of a "classified employee with status" except for cause. KRS 18A.055(17) defines penalization as including any abridgment or denial of rights granted to state employees. The Personnel Board found that the Cabinet had neither denied or abridged any right possessed by Mr. Leslie, and that therefore no penalization had occurred.

The review of this court is limited to a determination of whether the Board's conclusions are supported by substantial evidence and in accordance with applicable law. KRS 18A.100(5). Substantial evidence is that which, when taken alone or in light of all of the evidence, has sufficient probative value to induce conviction in the minds of reasonable persons. Commonwealth Department of Education v. Commonwealth, Ky. App., 798 S.W.2d 464 (1990). If substantial evidence supports an agency determination, the agency's action cannot be considered arbitrary in violation of Kentucky Constitution §2. Couch v. Jefferson County Police Merit Board, Ky., 773 S.W.2d 461 (1988); Thurman v. Meridian Mutual Insurance Co., Ky., 345 S.W.2d 635 (1961).

Mr. Leslie argues that applicable statutes and regulations granted him the right to be reinstated to the positions filled by Mr. Barger and Mr. Flannery. KRS 18A.005(27) which defines reinstatement provides:

"Reinstatement" shall mean the reinstatement of an employee who has resigned in good standing, or who has been ordered reinstated by the board or a court to a position in his former class, or to a position of like status and pay.

The regulations promulgated pursuant to KRS Chapter 18A grant persons eligible for reinstatement certain rights. Persons eligible for reinstatement may be appointed to the same job classification without having to take an examination and compete on the registers. 101 KAR 1:335 §4. They may be appointed to a different job classification without having to score in the top five on the appropriate examination. 101 KAR 1:335 §4. They don't serve an initial probationary period, during which they can be removed without cause, but rather a promotional probationary period during which they can only be demoted to their former position. 101 KAR 1:325 §3.

None of the rights afforded employees eligible for reinstatement encompass an entitlement to reinstatement or preferential treatment in the appointment process. The regulations grant the appointing authority complete discretion to determine whether to reinstate a former employee or appoint a new employee from the registers:

All vacancies ... shall be filled by probationary appointment, reemployment of career employees or laid off employees, reversion, reinstatement, emergency appointment, or provisional appointment.

101 KAR 2:076. 101 KAR 1:335 further establishes the discretionary nature of the reinstatement decision:

Reinstatement may be made upon the request of the appointing authority... (emphasis added).

Applicable statutes and regulations grant the appointing authority discretion to decide whether to reinstate a former employee or hire a new employee from the registers; they create no preference for employees eligible for reinstatement. The Cabinet violated no right granted by applicable statutes and regulations to Mr. Leslie as an employee eligible for reinstatement by choosing to appoint new employees rather than to reinstate Mr. Leslie. Therefore, the conclusion of the Personnel Board was in accordance with applicable law and supported by substantial evidence.

The Petitioner argues than even if applicable statues and regulations create no entitlement to reinstatement, the Cabinet's failure to appoint Mr. Leslie constituted arbitrary and capricious agency action in violation of § 2 of the Kentucky Constitution. While applicable statutes and regulations grant no entitlement to reinstatement or preferential treatment in the appointment process, Kentucky Constitution § 2 prohibits the appointing authority from exercising its discretion in an arbitrary manner. Bunch v. Personnel Board, Commonwealth of Kentucky, Ky. App., 719 S.W.2d 8 (1986).

First, the Petitioner contends that reclassification of the positions filled by Mr. Barger and Mr. Flannery from Inspector Principal to Inspector constituted arbitrary agency action. However, the record contained evidence establishing that the agency routinely made such reclassifications. When an inspector principal vacated his or her position, the agency would determine whether to fill it with a transfer or reinstatement. If the agency choose to fill the position with a new hire, rather than a transfer or reinstatement, it would reclassify the position to the lower status of inspector to accommodate the necessity of training a new recruit. The rational for such a policy appears obvious: a new recruit needs substantially more training than a transfer or reinstatement and should receive lower compensation until such training is complete. Both Jack O'Nan, Personnel Branch Manager, and Jolene Crawford, Regional Administrator, explained the policy and the purpose for the policy. The Court finds that a rational purpose for such reclassifications existed and that the reclassifications did not constitute arbitrary agency action.

Next, the Petitioner argues that the decision to appoint unexperienced new employees, rather than to reinstate an experienced, former inspector principal constituted arbitrary agency action. The record contains evidence that the Cabinet complied with all regulatory and statutory requirements in making the appointments. The Petitioner offered no evidence of fraud, misconduct, bias, or other type of inappropriate agency conduct. Applicable statutes and regulations grant an appointing authority discretion in making hiring determinations. In the absence of some evidence of fraud, illegality or misconduct, exercise of such discretion cannot be considered arbitrary or capricious agency action. In this case, the Petitioner offered no substantial evidence of fraud, misconduct, or illegality. Thus, the Cabinet's failure to reinstate Mr. Leslie was not arbitrary and did not violate any rights guaranteed Mr. Leslie by § 2 of the Kentucky Constitution.

To establish a violation of KRS 18A.095(l), an individual must offer evidence establishing that he or she has been penalized. Penalization involves some abridgment or denial by an agency of a right granted to a state employee. Here, the Petitioner failed to establish that the Cabinet abridged or denied any right granted to him by KRS Chapter 18A, the regulations promulgated pursuant to KRS Chapter 18A, or § 2 of the Kentucky Constitution. The Personnel Board's determination that no penalization occurred was supported by substantial evidence and in accordance with applicable law.

Therefore, the Final Orders of the Personnel Board in Appeal No. 89-650 and Appeal No. 91-870 are AFFIRMED. The Petitioner's appeal is hereby DISMISSED.

This is a final and appealable order.

SO ORDERED this 12^th day of April, 1993.

Civil Action No. 92-CI-00827