National Treasury Employ. v. Fed. Labor Relat., 04-1137.

• Decision Date: 08 July 2005
• Docket Number: No. 04-1137.,04-1137.
• Citation: 414 F.3d 50
• Parties: NATIONAL TREASURY EMPLOYEES UNION, Petitioner v. FEDERAL LABOR RELATIONS AUTHORITY, Respondent United States Customs and Border Protection, United States Department of Homeland Security Intervenor.
• Court: U.S. Court of Appeals — District of Columbia Circuit

414 F.3d 50

NATIONAL TREASURY EMPLOYEES UNION, Petitioner v. FEDERAL LABOR RELATIONS AUTHORITY, Respondent United States Customs and Border Protection, United States Department of Homeland Security Intervenor.

No. 04-1137.

United States Court of Appeals, District of Columbia Circuit.

Argued February 7, 2005.

Decided July 8, 2005.

On Petition for Review of an Order of the Federal Labor Relations Authority.

Elaine D. Kaplan argued the cause for the petitioner. Gregory O'Duden and Larry J. Adkins were on brief.

James F. Blandford, Attorney, Federal Labor Relations Authority, argued the cause for the respondent. David M. Smith, Solicitor, Federal Labor Relations Authority, and William R. Tobey, Deputy Solicitor, Federal Labor Relations Authority, were on brief.

Peter D. Keisler, Assistant Attorney General, United States Department of Justice, William G. Kanter, Deputy Director, and Sandra W. Simon, Attorney, were on brief for the intervenor. E. Roy Hawkens, Attorney, entered an appearance.

Before: GINSBURG, Chief Judge, and HENDERSON and RANDOLPH, Circuit Judges.

Opinion for the court filed by Circuit Judge HENDERSON.

KAREN LECRAFT HENDERSON, Circuit Judge.

Granting the exceptions taken by the United States Department of the Treasury's Customs Service¹ (Customs), the Federal Labor Relations Authority set aside an arbitration award in favor of the National Treasury Employees Union (NTEU). See United States Dep't of the Treasury Customs Serv., Washington, D.C. (Agency) & Nat'l Treasury Employees Union (Union), 59 FLRA 703 (2004) (Customs Order), reprinted in Joint Appendix (J.A.) at 271-96. The NTEU now petitions for review of the Authority's order, alleging that the Authority erred twice: initially, by concluding that Customs exercised statutorily protected management rights when it implemented a revised National Inspectional Assignment Policy (NIAP); and, again, by concluding that, assuming arguendo that Customs in fact exercised its managements right in implementing the revised NIAP, Customs was not obligated to bargain over the NTEU's ground rule proposal. Because the Authority erred in neither respect, we deny the NTEU's petition.

I.

The Federal Service Labor-Management Relations Statute (FSLMRS or Statute), 5 U.S.C. §§ 7101-7135, "establishes a collective bargaining regime in the federal public sector." Ass'n of Civilian Technicians v. FLRA, 353 F.3d 46, 49 (D.C.Cir.2004) (citing United States Dep't of the Navy v. FLRA, 952 F.2d 1434, 1438 (D.C.Cir.1992)). This controversy involves the Statute's management rights doctrine codified in section 7106. See 5 U.S.C. § 7106. While the Statute generally obligates an agency to negotiate with its employees' bargaining representative over "conditions of employment," id. § 7103(a)(12)—i.e., "personnel policies, practices, and matters . . . affecting working conditions," id. § 7103(a)(14)—section 7106 "reserv[es] to management officials the authority to, inter alia, make budget, organization, and work assignments."² FLRA v. United States Dep't of Justice, 994 F.2d 868, 871-72 (D.C.Cir.1993). Nonetheless, these rights of unilateral action, which are permissive subjects of bargaining, see Nat'l Treasury Employees Union v. FLRA, 399 F.3d 334, 340 & n. 5 (D.C.Cir.2005), are not unqualified. An agency exercises management rights subject to bargaining over the "impact and implementation" of the rights. Dep't of the Navy v. FLRA, 962 F.2d 48, 50 (D.C.Cir.1992). "Nothing in this section," the Statute says, "shall preclude any agency and any labor organization from negotiating" over either "procedures which management officials of the agency will observe in exercising any authority under this section . . . or appropriate arrangements for employees adversely affected by the exercise of any authority under this section by such management officials." 5 U.S.C. § 7106(b)(2)-(3). Thus, "although an agency is not required to bargain with respect to its management rights per se, it is required to negotiate about the impact and implementation of those rights." Dep't of the Navy, 962 F.2d at 50 (internal quotation marks omitted & emphasis in original). Under the Statute, all bargaining must be carried out in "good faith." Id. § 7114(a)(4), (b).

The distinction between an agency's exercise of management rights and its obligation to engage in impact and implementation bargaining is the crux of this controversy, which has its genesis in Customs' revised policy governing the assignment of Customs inspectors to tours of duty and overtime work known as the National Inspection Assignment Policy (NAIP). Customs and the NTEU, which represents "a nationwide unit" of Customs Service employees, including Customs inspectors, have negotiated a series of national level collective bargaining agreements (NLAs). The most recent NLA (and the one the parties were abiding by when this dispute arose) expired in 1999.

In 1993, the Congress passed the Customs Officers Pay Reform Act (COPRA), which overhauled the overtime system applicable to Customs inspectors. See Pub.L. No. 103-66, § 13811(a), 107 Stat. 312 (1993) (codified at 19 U.S.C. § 267). To implement COPRA, that same year Customs and the NTEU formed a joint labor-management committee, whose work culminated, two years later, with the NIAP. See J.A. 272. The NIAP was developed independently of the 1999 NLA.

At the time the NIAP was formulated, Customs, along with all other federal agencies, was required under Executive Order 12871 to negotiate over the permissive subjects of bargaining set forth in section 7106(b)(1) of the FSLMRS. See 58 Fed.Reg. 52,201 (Oct. 1, 1993). Section 7106 identifies the subjects as "the numbers, types, and grades of employees or positions assigned to any organizational subdivision, work project, or tour of duty, or on the technology, methods, and means of performing work." 5 U.S.C. § 7106(b)(1). In 2001, however, President George W. Bush revoked Executive Order 12871 by issuing Executive Order 13203. See 66 Fed.Reg. 11,227 (Feb. 17, 2001).

Following Executive Order 13203, Customs advised the NTEU that it no longer intended to negotiate over permissive subjects of bargaining as previously required by article 5, section 2, of the NLA. In that section of the NLA, Customs agreed, "[i]n the interest of partnership, . . . to bargain with the Union over the numbers, types and grades of employees or positions assigned to any Customs Service organizational subdivision, work project or tour of duty, and the technology, methods and means of performing work within the Service." J.A. 273. Customs further advised the NTEU that it no longer considered itself bound by provisions of agreements—including the NLA and the NIAP—relating to permissive subjects of bargaining. Customs transmitted to the NTEU a draft of a revised NIAP that it planned to implement on September 30, 2001.

A correspondence battle ensued during August and September of 2001, only the salient aspects of which we recount now. On August 6, the NTEU invoked its right to bargain over the impact and implementation of the revised NIAP and served notice of its intent to renegotiate the expired NLA. Customs responded on August 16 by repeating its planned implementation of the revised NIAP on September 30, 2001. The following day, the NTEU iterated its intent to "open the entire term agreement," highlighting various provisions which, it claimed, bore a "direct connection" to the NIAP and to its section 7106 rights. On August 22, Customs informed the NTEU that it was prepared to "work out" ground rules to govern renegotiation of the expired NLA but that, as to the proposed revised NIAP, Article 37 of the expired NLA "establishes standard ground-rules for the negotiation of interim topics such as the revised NIAP." J.A. 46-47. The NTEU replied the next day, stating that "actual negotiations" could not begin on any topic "until the parties have reached agreement on ground rules." J.A. 47A. On August 27, Customs again declared that the ground rules set forth in Article 37 of the expired NLA governed negotiations over the revised NIAP.

On August 29, Customs and the NTEU met to discuss ground rules but to no avail. They exchanged correspondence the following day: Customs stated it did not "agree to merge," as the NTEU had proposed, negotiations over the revised NIAP with those regarding the expired NLA, while the NTEU said it "continues to believe that concerns associated with" the NIAP "should be addressed as part of the overall negotiations" on the expired NLA. J.A. 53-54. In its letter, the NTEU also proposed that the existing NIAP be "rolled-over," subject to a few specified revisions. J.A. 55. Customs responded that it did not intend to delay the implementation of the revised NIAP until the parties renegotiated the NLA. On September 6, 2001, Customs had the last word in this exchange: It notified the NTEU that any delay in implementing the revised NIAP "is unacceptable" and, consequently, it "decline[d] to accept the NTEU's suggestion that [it] forego revision and implementation of the NIAP in order to address it during renegotiation of the national agreement." J.A. 56-57.

Believing the parties had reached an impasse over its proposal to negotiate the NIAP and NLA simultaneously, the Union sought assistance from the Federal Mediation and Conciliation Service the day it received Custom's last letter.³ Customs proceeded to implement the revised NIAP on October 1, 2001, insisting in a letter to the NTEU that day that, in light of new requirements imposed after the catastrophic attacks by foreign terrorists against our nation's citizens on September 11, 2001, immediate implementation was "critical . . . to ensure the necessary functioning of Customs." J.A. 65. The Union responded with a letter of its own and also filed a grievance with the Authority alleging that, by implementing the revised NIAP, Customs violated section 7116(a)(1) and (5) of the FSLMRS. Following...