Defense Logistics Agency v. Federal Labor Relations Authority, 83-2017

• Decision Date: 15 February 1985
• Docket Number: No. 83-2017,83-2017
• Citation: 754 F.2d 1003,244 U.S.App.D.C. 22
• Parties: 118 L.R.R.M. (BNA) 2829, 244 U.S.App.D.C. 22 DEFENSE LOGISTICS AGENCY, et al., Petitioners, v. FEDERAL LABOR RELATIONS AUTHORITY, Respondent.
• Court: U.S. Court of Appeals — District of Columbia Circuit

Page 1003

754 F.2d 1003

118 L.R.R.M. (BNA) 2829, 244 U.S.App.D.C. 22

DEFENSE LOGISTICS AGENCY, et al., Petitioners, v. FEDERAL LABOR RELATIONS AUTHORITY, Respondent.

No. 83-2017.

United States Court of Appeals District of Columbia Circuit.

Argued Sept. 18, 1984.

Decided Feb. 15, 1985.

William Kanter, Atty., Dept. of Justice, Washington, D.C., with whom Richard K. Willard, Acting Asst. Atty. Gen., Washington, D.C., was on brief for petitioners.

Robert J. Englehard, Atty., Federal Labor Relations Authority, Washington, D.C., with whom Ruth E. Peters, Sol., and Steven H. Svartz, Deputy Sol., Federal Labor Relations Authority, Washington, D.C., were on brief for respondent, Federal Labor Relations Authority. William R. Tobey, Atty., Federal Labor Relations Authority, Washington, D.C., also entered an appearance for respondent.

Before GINSBURG and STARR, Circuit Judges and McGOWAN, Senior Circuit Judge.

Opinion for the Court filed by Senior Circuit Judge McGOWAN.

McGOWAN, Senior Circuit Judge:

This petition for direct review of a ruling by the Federal Labor Relations Authority (Authority) presents a novel issue of statutory construction under the Labor-Management Relations Chapter of the Civil Service Reform Act of 1978, 5 U.S.C. Secs. 7101-7135 (1982) [hereinafter "the Statute"], the law that structures labor-management relations in the federal sector. The specific provision involved is Sec. 7117, which in part concerns assertions by government agencies that a particular matter is not negotiable because it is governed by an agency-wide rule. Section 7117 provides that such a matter is negotiable unless there is a compelling need for the rule, and it establishes a procedure by which the Authority may determine the existence vel non of compelling need.

Petitioners are the Defense Logistics Agency (DLA), which is a national subdivision of the Department of Defense; and the Defense Contract Administration Service Region-Boston (DCASR-Boston), a subordinate office within DLA. In an unfair-labor-practice (ULP) proceeding brought against petitioners for refusal to bargain over a newly promulgated DLA personnel rule, the Authority determined that there was no compelling need for the rule and that the rule was thus negotiable under the Statute. Petitioners claim that the Statute denies the Authority the "jurisdiction" to decide the compelling need issue except in the separate, expedited proceeding under Sec. 7117(b) of the Statute. Upon reviewing the Statute, the legislative history, and the policies underlying the parties' positions, we are persuaded that, although the Authority's understanding of Sec. 7117 is not the only one possible, it is certainly reasonable. Our obligation of deference to an agency's interpretation of its own statute therefore leads us to affirm the Authority's assertion of jurisdiction to decide the compelling need issue in this ULP proceeding. Because petitioners lacked a meaningful opportunity to present evidence on that issue before the Authority, however, we remand this case for a redetermination of whether the rule in question was supported by a compelling need.

I.

In May 1979, DLA issued a revised "standard of conduct" regulation, DLAR No. 5500.1, which, inter alia, redefined the class of DLA employees required to file "Confidential Statements of Affiliations and Financial Interests." DCASR-Boston announced the changes to its employees in a bulletin issued in July 1979; in September, DCASR-Boston set a deadline of October 31, 1979, for the filing of disclosure statements. By letter dated October 24, 1979, the National Association of Government Employees (NAGE), which represents an appropriate bargaining unit of employees at DCASR-Boston, requested negotiations on the changes in the filing criteria. In response, DCASR-Boston invited NAGE to comment upon the revised regulation and extended the filing deadline to November 30, 1979. In a meeting between the parties in early November, NAGE protested the delay between DLA's issuance of the revised regulation and DCASR-Boston's announcement of it. NAGE requested that DCASR-Boston postpone the filing deadline pending resolution of complaints over the new filing criteria. NAGE also proposed that the revised regulation not be applied to current employees. DCASR-Boston responded that it lacked authority to bargain over such matters. That refusal to negotiate was reiterated at a second meeting in early December, whereupon NAGE filed a ULP charge with the Authority.

In a complaint issued in April 1980, the FLRA General Counsel charged petitioners ¹ with violating Sec. 7116(a)(1) and Sec. 7116(a)(5) of the Statute ² by, inter alia, changing existing conditions of employment without first notifying NAGE and affording it an opportunity to bargain over the substance, impact, and implementation of the change. In July 1980, an Administrative Law Judge (ALJ) held a hearing in the case.

The ALJ found that petitioners' refusal to bargain over the substance of the change in personnel rules did not amount to a violation of the Statute. See Defense Logistics Agency, No. 1-CA-213, slip op. at 13-16 (July 7, 1981) (Dowd, A.L.J.), in Joint Appendix (JA) at 528-31. He based his decision on his interpretation of Sec. 7117 of the Statute, which provides, in relevant part:

(a)(2) The duty to bargain in good faith shall, to the extent not inconsistent with Federal law or any Government-wide rule or regulation, extend to matters which are the subject of any agency rule or regulation referred to in paragraph (3) of this subsection only if the Authority has determined under subsection (b) of this section that no compelling need (as determined under regulations prescribed by the Authority) exists for the rule or regulation.

(3) Paragraph (2) of the subsection applies to any rule or regulation issued by any agency or issued by any primary national subdivision of such agency, unless an exclusive representative represents an appropriate unit including not less than a majority of the employees in the issuing agency or primary national subdivision, as the case may be, to whom the rule or regulation is applicable.

(b)(1) In any case of collective bargaining in which an exclusive representative alleges that no compelling need exists for any rule or regulation referred to in subsection (a)(3) of this section which is then in effect and which governs any matter at issue in such collective bargaining, the Authority shall determine under paragraph (2) of this subsection, in accordance with regulations prescribed by the Authority, whether such a compelling need exists.

(2) For the purpose of this section, a compelling need shall be determined not to exist for any rule or regulation only if--

(A) the agency, or primary national subdivision, as the case may be, which issued the rule or regulation informs the Authority in writing that a compelling need for the rule or regulation does not exist; or

(B) the Authority determines that a compelling need for a rule or regulation does not exist.

(3) A hearing may be held, in the discretion of the Authority, before a determination is made under this subsection. If a hearing is held, it shall be expedited to the extent practicable and shall not include the General Counsel as a party.

(4) The agency, or primary national subdivision, as the case may be, which issued the rule or regulation shall be a necessary party at any hearing under this subsection.

5 U.S.C. Sec. 7117(a)(2)-(b) (1982).

In the ALJ's reading of these provisions, no duty to bargain over matters that are the subject of an agency-wide rule ³ would arise unless and until the Authority determined the absence of any compelling need for the rule. ⁴ Because a ULP action for failure to bargain could not be sustained unless the duty to bargain had first been established, and given that Sec. 7117(b) provides a means for resolving the compelling need issue, the ALJ ruled that a determination of compelling need could not be made initially in a ULP proceeding. Since the Authority had not made a Sec. 7117(b) determination of lack of compelling need, the ALJ held himself precluded from finding that the refusal to bargain over the substance of the new disclosure rule constituted an unfair labor practice. ⁵

On review of the case, the Authority disagreed with the ALJ's holding that the compelling need issue may never be determined in a ULP proceeding. ⁶ The Authority conceded that the Sec. 7117(b) negotiability appeal is the sole avenue for resolving the question of compelling need in the case "where an exclusive representative submits proposals on a matter subject to collective bargaining and the agency or activity asserts that such proposals are nonnegotiable because they conflict with an existing agency regulation for which a compelling need exists." Defense Logistics Agency, 12 F.L.R.A. No. 86, at 4 (1983), JA at 570. Under Sec. 7117, when the parties are engaged in ongoing negotiations, there must be a finding pursuant to Sec. 7117(b) that no compelling need exists for the regulation before the duty to bargain arises, and therefore, before refusal to bargain can amount to a ULP.

According to the Authority, however, a different case is presented when "actual or contemplated changes in conditions of employment are involved," id., JA at 570, for such a situation implicates the Authority's "statutory authority to resolve disputes involving alleged unilateral changes in conditions of employment where issues of negotiability are also raised." Id., JA at 570. The promulgation of a new agency-wide rule that effects such changes, the Authority maintained, subjects the promulgating agency to a ULP proceeding, to the same extent as would any unilateral change by the agency in the terms or conditions of employment. If in the course of such a ULP proceeding, the agency asserts as a defense that the newly promulgated rule was supported by a compelling need, the Authority is within...