Bradford v. U.S. Dep't of Labor

• Decision Date: 24 January 2022
• Docket Number: Civil Action No. 21-cv-03283-PAB-STV
• Citation: 582 F.Supp.3d 819
• Parties: Duke BRADFORD, Arkansas Valley Adventure, LLC, d/b/a AVA Rafting and Zipline, and Colorado River Outfitters Association, Plaintiffs, v. U.S. DEPARTMENT OF LABOR, U.S. Department of Labor, Wage & Hour Division, Joseph R. Biden, President of the United States, Martin J. Walsh, U.S. Secretary of Labor, and Jessica Looman, Acting Administrator, Defendants.
• Court: U.S. District Court — District of Colorado

582 F.Supp.3d 819

Duke BRADFORD, Arkansas Valley Adventure, LLC, d/b/a AVA Rafting and Zipline, and Colorado River Outfitters Association, Plaintiffs,

v.U.S. DEPARTMENT OF LABOR, U.S. Department of Labor, Wage & Hour Division, Joseph R. Biden, President of the United States, Martin J. Walsh, U.S. Secretary of Labor, and Jessica Looman, Acting Administrator, Defendants.

Civil Action No. 21-cv-03283-PAB-STV

United States District Court, D. Colorado.

Signed January 24, 2022

Michael Poon, Pacific Legal Foundation, Sacramento, CA, Steve M. Simpson, Caleb J. Kruckenberg, Pacific Legal Foundation, Arlington, VA, for Plaintiffs.

Kate Talmor, Taisa M. Goodnature, U.S. Department of Justice, Civil Division, Washington, DC, for Defendants.

ORDER

PHILIP A. BRIMMER, Chief United States District Judge

This matter is before the Court on plaintiffs’ Motion for a Preliminary Injunction [Docket No. 7]. Defendants responded, Docket No. 21, and plaintiffs replied. Docket No. 22. The Court has jurisdiction pursuant to 5 U.S.C. § 702 and 28 U.S.C. § 1331.

I. BACKGROUND

On February 12, 2014, President Obama issued an executive order establishing a minimum wage for federal contractors under the Federal Property and Administrative Services Act, 40 U.S.C. §§ 101, et seq. (the "Procurement Act" or "FPASA"). See Exec. Order No. 13,658, 79 Fed. Reg. 9,851 (Feb. 12, 2014) (" E.O. 13658" or the "Obama Order"). E.O. 13658 applies, in relevant part, to (1) new "contract[s] or contract-like instrument[s] for services covered by the Service Contract Act" and those "with the Federal Government in connection with Federal property or lands and related to offering services for Federal employees, their dependents, or the general public," if (2) "the wages of workers under such contract[s] or contract-like instrument[s] are governed by the Fair Labor Standards Act [("FLSA")], the Service Contract Act [("SCA")], or the Davis-Bacon Act [("DBA")]." Id. at 9,853. The Department of Labor ("DOL") implemented E.O. 13658 through notice-and-comment rule-making, establishing a $10.10 per hour minimum wage plus overtime in excess of 40 hours in a workweek for federal contractors. See Establishing a Minimum Wage for Contractors , 79 Fed. Reg. 60,634 (Oct. 7, 2014) (29 C.F.R. pt. 10) (the "Obama Rule"). Pursuant to the Obama Rule, a "[c]ontract or contract-like instrument" includes "licenses, permits, or any other type of agreement, regardless of nomenclature, type, or particular form." Id. at 60,722. The Obama Rule defines a "[n]ew contract" as "a contract that results from a solicitation issued on or after January 1, 2015, or a contract that is awarded outside the solicitation process on or after January 1, 2015," or a contract entered into before then that is "renewed," "extended," or "amended pursuant to a modification that is outside the scope of the contract" on or after January 1, 2015. Id.

On May 25, 2018, President Trump issued an executive order, also under the Procurement Act, exempting "seasonal recreational services" workers, including those providing "river running, hunting, fishing, horseback riding, camping, mountaineering activities, recreational ski services, and youth camps." See Exec. Order 13,838, 83 Fed. Reg. 25,341, 25,341 (" E.O. 13838" or the "Trump Order"). E.O. 13838 states, in part,

These individuals often conduct multiday recreational tours through Federal lands, and may be required to work substantial overtime hours. The implementation of Executive Order 13658 threatens to raise significantly the cost of guided hikes and tours on Federal lands, preventing many visitors from enjoying the great beauty of America's outdoors. Seasonal recreational workers have irregular work schedules, a high incidence of overtime pay, and an unusually high turnover rate, among other distinguishing characteristics. As a consequence, a minimum wage increase would generally entail large negative effects on hours worked by recreational service workers. Thus, applying Executive Order 13658 to these service contracts does not promote economy and efficiency in making these services available to those who seek to enjoy our Federal lands.

Id. DOL implemented E.O. 13838 on September 26, 2018 without notice and comment. See Minimum Wage for Contractors; Updating Regulations to Reflect Executive Order 13838 , 83 Fed. Reg. 48,537 (Sept. 26, 2018) (29 C.F.R. pt. 10) (the "Trump Rule"); 83 Fed. Reg. at 48,538 (DOL "promulgates this final rule without notice or an opportunity for public comment because this action is limited to implementing E.O. 13838.").

On April 27, 2021, President Biden revoked President Trump's E.O. 13838 exempting outfitters, reinstated much of President Obama's E.O. 13658, and increased the minimum wage from $10.10 per hour in President Obama's rule to $15.00 per hour. See Increasing the Minimum Wage for Federal Contractors , Exec. Order. No. 14,026, 86 Fed. Reg. 22,835 (Apr. 27, 2021) (" E.O. 14026" or the "Biden Order"). E.O. 14026 applies to "new contracts; new contract-like instruments; new solicitations; extensions or renewals of existing contracts or contract-like instruments; and exercises of options on existing contracts or contract-like instruments ... where the relevant contract or contract-like instrument will be entered into, ... extended or renewed, or ... exercised" by January 30, 2022. Id. at 22,837.

On November 24, 2021, DOL implemented the Biden Order after notice and comment with the final rule Increasing the Minimum Wage for Federal Contractors , 86 Fed. Reg. 67,126 (Nov. 24, 2021) (to be codified at 29 C.F.R. pts. 10, 23) (the "Biden Rule"). DOL explained,

The use of the term "contract-like instrument" in Executive Order 14026 reflects that the order is intended to cover all arrangements of a contractual nature, including those arrangements that may not be universally regarded as a "contract" in other contexts, such as special use permits issued by the Forest Service, Commercial Use Authorizations issued by the National Park Service, and outfitter and guide permits issued by the Bureau of Land Management and the U.S. Fish and Wildlife Service.

Id. at 67,134. The Biden Rule states that DOL's "understanding" is that outfitters enter into commercial use authorization ("CUA") agreements with the National Park Service, and outfitter and guide permit agreements with the Bureau of Land Management ("BLM") and U.S. Fish and Wildlife Service ("USFWS"), respectively. Id. at 67,148. "The principal purpose of these legal instruments," according to DOL, "seems to be furnishing services through the use of service employees." Id. "If this is true," DOL states, the SCA "and thus [E.O.14026] may generally cover the CUA and outfitter and guide permit agreements that contractors enter into with the NPS, BLM, and USFWS, respectively." Id.

The Biden Rule mandates overtime pay for compensable work beyond 40 hours per workweek at $22.50 per hour, which is one and one-half times the minimum wage. Id. at 67,176. In rescinding President Trump's exemption for recreational service workers, the Biden Rule states that, with respect to contracts entered into between January 1, 2015 and January 29, 2022, contracting agencies shall "take steps ... to exercise any applicable authority to insert the Executive Order 13658 contract clause" into the existing contracts "and to ensure that those contracts comply with the requirements of Executive Order 13658 on or after January 30, 2022." Id. at 67,155. With respect to new contracts entered into on or after January 30, 2022, the Biden Rule states that E.O. 14026 will apply. Id.

On December 7, 2021, plaintiffs filed this lawsuit. Docket No. 1. Plaintiffs bring three claims: (1) the Biden Rule exceeded President Biden's authority in violation of the Administrative Procedure Act, 5 U.S.C. § 706(2)(C) ("APA"); (2) the Biden Rule is arbitrary and capricious under the APA, 5 U.S.C. § 706(2)(A) ; and (3) President Biden violated the Constitution's separation of powers and non-delegation doctrines by exercising legislative power without clear congressional authorization. Id. at 15–19, ¶¶ 51–77.

On December 9, 2021, plaintiffs filed a motion for a preliminary injunction to enjoin the enforcement of the Biden Rule before it takes effect on January 30, 2022, pending a final judgment in this litigation. Docket No. 7 at 20. On January 6, 2022, the Court held a hearing on plaintiffs’ motion. The Court heard testimony from plaintiffs’ witnesses Duke Bradford, owner of Arkansas Valley Adventure, LLC ("AVA"), and David Costlow, executive director of the Colorado River Outfitters Association ("CROA").¹

AVA has provided outdoor excursions in central Colorado since 1998. AVA offers, either itself or in partnership with other companies, activities including rafting, ziplining, fishing, horseback riding, stand-up paddle boarding, and all-terrain vehicle tours. AVA also offers train rides, cabin and campsite rentals, gear rentals, and other services. Most of AVA's activities last part of a day or a full day. However, some AVA trips are multi-day, overnight trips. AVA operates on both federal and non-federal land. Approximately 30% of AVA's revenue is from activities that take place on federal land, and less than 10% of AVA's revenue is from overnight trips on federal land.

AVA's business is seasonal. It employs approximately 250 to 350 guides and other employees between mid-May and September. AVA also employs 15 year-round employees, who handle marketing and other operations. On federal land, AVA operates under two permits. One permit is a "Special Recreation Permit" from BLM that authorizes, among other things, float fishing trips; shuttle services of vehicles, equipment, and clients; rental services of equipment; and rafting on the Eagle River from Squaw Creek to the Colorado River confluence in the State of Colorado (the "Eagle River Permit"). See Exh. 1.²

The Eagle River Permit was issued on April 1, 2012 and expires on March 30, 2022. Exh. 1 at...