Department of Treasury, Internal Revenue Service v. Federal Labor Relations Authority
Decision Date | 17 April 1990 |
Docket Number | No. 88-2123,88-2123 |
Citation | 110 S.Ct. 1623,494 U.S. 922,108 L.Ed.2d 914 |
Parties | DEPARTMENT OF the TREASURY, INTERNAL REVENUE SERVICE, Petitioner v. FEDERAL LABOR RELATIONS AUTHORITY, et al |
Court | U.S. Supreme Court |
During collective-bargaining negotiations, respondent National Treasury Employees Union (NTEU) proposed that contractual grievance and arbitration provisions be designated as the "internal appeals procedure" required for employee complaints by an Office of Management and Budget (OMB) Circular relating to the "contracting out" of work. Petitioner Internal Revenue Service (IRS) refused to bargain over the proposal, claiming that its subject matter was nonnegotiable under Title VII of the Civil Service Reform Act of 1978 (Act), 5 U.S.C. § 7101 et seq. The Federal Labor Relations Authority (FLRA), which is charged with administering the Act, held that the IRS was required to negotiate over the NTEU proposal by § 7114, which requires agency management and employee unions to bargain in good faith to reach an agreement, and by § 7121, which specifies that such agreements must contain grievance-settlement procedures.
Held: The FLRA erred in holding that the Act requires the IRS to bargain over the NTEU proposal. Pp. 926-934.
(a) The plain text of § 7106(a)(2)(B)—which provides that "nothing in this [Act] shall affect the authority of [agency management officials] in accordance with applicable laws . . . to make [contracting-out] determinations" (emphasis added) demonstrates that the section supersedes § 7121. P. 928.
(b) The arguments presented by the FLRA to overcome § 7106(a)(2)(B)'s plain meaning lack merit. First, § 7121(c), which exempts certain appointment, suspension, and removal decisions from the grievance requirements, is not rendered superfluous if such decisions are already insulated from those requirements by § 7106(a), subsection (2)(A) of which refers to those same decisions as protected management rights. Although the two provisions sometimes overlap, each also has a distinct effect on such decisions: § 7121(c) removes them from the coverage of only the grievance provisions regardless of whether they are made in accordance with applicable laws, while § 7106 removes them from the coverage of the entire Act, but only if they are made in accordance with such laws. Second, agency management cannot be subjected to grievance procedures over the exercise of reserved rights on the theory that § 7121 is among the "applicable laws" referred to in § 7106(a)(2), since that phrase clearly refers to laws outside the Act. Third, § 7106(a) is applicable even though the NTEU proposal would not establish any substantive limitation on management's contracting-out decisions, but would only provide for the enforcement of "external limitations" on those decisions contained in the OMB Circular's mandatory and nondiscretionary provisions. Insofar as union rights are concerned, it is entirely up to the IRS whether it will comply at all with the Circular's requirements, except to the extent that such compliance is required by an "applicable law." Fourth, it is not reasonable to interpret the latter phrase as being synonymous with the term "any law, rule, or regulation" in § 7103(a)(9)(C)(ii), which defines "grievance" as a claimed "violation, misinterpretation, or misapplication of any law, rule, or regulation affecting conditions of employment." (Emphasis added.) Thus, it cannot be said that all agency contracting decisions that violate rules or regulations are, by definition, "not in accordance with applicable laws." Pp. 928-932.
(c) This Court will not decide in the first instance whether the OMB Circular is an "applicable law" under § 7106(a)(2). Pp. 932-933.
(d) The question whether § 7117(a)—which provides that the "duty to bargain . . . shall, to the extent not inconsistent with . . . any Government-wide rule or regulation, extend to matters which are the subject of any [non-Government-wide] rule or regulation" (emphasis added)—renders the FLRA proposal nonnegotiable as inconsistent with "no arbitration" language in the OMB Circular is not properly presented, since it was not raised or considered by the court below. Nor will this Court consider whether the FLRA properly held the Circular to be a "rule" or "regulation" within § 7103(a)(9)'s meaning, since the IRS did not argue that question here. P. 934.
274 U.S.App.D.C. 135, 862 F.2d 880, reversed and remanded.
STEVENS, J., filed a dissenting opinion, post, p. 937.
David L. Shapiro, Washington, D.C., for petitioner.
Robert J. Englehart, Washington, D.C., for respondent, Federal Labor Relations Authority.
Gregory
O'Duden, Washington, D.C., for respondent, National Treasury Employees Union.
In this case we review the determination of the Federal Labor Relations Authority (FLRA or Authority) that, under Title VII of the Civil Service Reform Act of 1978 (Act), 5 U.S.C. § 7101 et seq., the Internal Revenue Service (IRS) must bargain with the National Treasury Employees Union (NTEU or Union) over a proposed contract provision subjecting to grievance and arbitration procedures claims that the IRS had failed to comply with an Office of Management and Budget (OMB) Circular relating to the "contracting out" of work.
Title VII of the Civil Service Reform Act establishes a collective-bargaining system for federal agencies and their employees, under the administration of the FLRA. The Act recognizes the right of federal employees to form and join unions, 5 U.S.C. § 7102, and imposes upon management officials and employee unions the duty to "negotiate in good faith for the purposes of arriving at a collective bargaining agreement." § 7114(a)(4). A collective bargaining agreement must provide procedures "for the settlement of grievances," § 7121(a)(1), which are defined as "complaint[s] . . . concerning . . . any claimed violation, misinterpretation, or misapplication of any law, rule, or regulation affecting conditions of employment," § 7103(a)(9)(C)(ii); and the agreement must "provide that any grievance not satisfactorily settled under the negotiated grievance procedure shall be subject to binding arbitration" which may be invoked by either party. § 7121(b)(3)(C). The agency's duty to bargain is qualified, however, in one pertinent respect. The Act reserves to management officials the authority "in accordance with applicable laws . . . to make determinations with respect to contracting out." § 7106(a)(2)(B).
Office of Management and Budget Circular A-76 generally directs federal agencies to "contract out" to the private sector their non-"governmental" activities (e.g., data processing) unless certain specified cost comparisons indicate that the activities can be performed more economically "in house." Executive Office of the President, OMB Circular A-76, as revised, 48 Fed.Reg. 37110 (1983). The Circular also requires agencies to establish an administrative appeals procedure to resolve complaints by employees or private bidders relating to "determinations resulting from cost comparisons performed in compliance with [the] Circular," or relating to decisions to contract out where no cost comparison is required. OMB Circular A-76, Supp. I-14, I-15 (1983).
During the course of contract negotiations with the IRS, respondent NTEU put forward a proposal that, with respect to contracting-out decisions employees wished to contest, the "grievance and arbitration" provisions of the collective-bargaining agreement would constitute the "internal appeals procedure" required by the Circular.1 The IRS refused to bargain over this proposal, taking the position that its subject matter was nonnegotiable under the Act. The Union then petitioned for review by the Authority, which is empow- ered by the Act to "resolv[e] issues relating to the duty to bargain." §§ 7105(a)(2)(E); see § 7117(c).
The FLRA held that the IRS was required by §§ 7114 and 7121 to negotiate over the proposal. In its view the IRS' failure to comply with Circular A-76 would be a "violation . . . of [a] law, rule, or regulation" affecting "conditions of employment," so that an employee complaint on the matter would qualify as a "grievance" for which procedures must be specified in the collective-bargaining agreement. 27 F.L.R.A. 976, 978-979 (1987). The FLRA found that the union's proposal was not precluded by § 7106(a)(2)(B)'s reservation of management authority over contracting-out determinations, because it "would only contractually recognize external limitations on management's right." Id., at 978.2
The Court of Appeals for the District of Columbia Circuit affirmed the Authority's decision. 274 U.S.App.D.C. 135, 862 F.2d 880 (1988). We granted certiorari. 493 U.S. 807, 110 S.Ct. 47, 107 L.Ed.2d 16 (1989).
The management rights provision of the Act provides, in pertinent part:
"(a) [N]othing in this chapter [i.e., the Act] shall affect the authority of any management official of any agency—
. . . . .
"(ii) any other appropriate source. . . ." 5 U.S.C. § 7106 (emphasis added).
In the proceedings below and again before this Court, the IRS has argued that even when an agency's decision to contract...
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