U.S. Dept. of Health and Human Services v. Federal Labor Relations Authority
| Decision Date | 23 September 1987 |
| Docket Number | L,No. 86-2619,AFL-CI,86-2619 |
| Citation | 822 F.2d 430 |
| Parties | 125 L.R.R.M. (BNA) 2976 U.S. DEPARTMENT OF HEALTH AND HUMAN SERVICES, Petitioner, v. FEDERAL LABOR RELATIONS AUTHORITY, Respondent, American Federation of Government Employees,ocal 1923, Intervenor. |
| Court | U.S. Court of Appeals — Fourth Circuit |
Harold K. Krent, Civ. Div., Dept. of Justice (Richard K. Willard, Asst. Atty. Gen., William Kanter, Civil Div., Dept. of Justice, Washington, D.C., on brief), for petitioner.
Ruth E. Peters, Sol. (William E. Persina, Deputy Sol., Arthur A. Horowitz, Associate Sol., Robert J. Englehart, Federal Labor Relations Authority, Washington, D.C., on brief), for respondent.
Stuart A. Kirsch, American Federation of Government Employees, AFL-CIO (Mark Roth, Gen. Counsel, Washington, D.C., on brief), for intervenor.
Before WINTER, Chief Judge, and MURNAGHAN and WILKINSON, Circuit Judges.
The United States Department of Health and Human Services (HHS) has petitioned for review of a Federal Labor Relations Authority ("FLRA") decision ordering HHS to bargain over a proposal by the American Federation of Government Employees (the "Union"). The proposal would require HHS to comply with OMB Circular A-76 1 (the "Circular") when making "contracting-out" decisions. HHS contends that it has no duty to bargain because the proposal concerns a subject exclusively reserved to management. The FLRA has cross-petitioned for enforcement, and the union intervened on the FLRA's behalf. We enforce the FLRA's order because the Union's proposal does not usurp the authority reserved to management under 5 U.S.C. Sec. 7106.
During contract negotiations between HHS and the Union, which represents clerical employees in the office of HHS General Counsel in Baltimore, the Union proposed the following provision:
The decision by the employer to contract out work presently being performed by bargaining unit employees will be made in accordance with OMB Circular A-76 (unless application of the Circular is prohibited or not required by the Circular).
After negotiations, an HHS agency head reviewing the proposal refused to approve it on the grounds that, if the proposed provision became part of the collective bargaining agreement, it would violate: (1) the management rights clause of the Act, which bars negotiation over proposals limiting management's power to make determinations with respect to contracting-out work, 5 U.S.C. Sec. 7106(a)(2)(B); and (2) 5 U.S.C. Sec. 7117(a)(1), which precludes bargaining over proposals that would create an inconsistency with any federal law or government-wide regulation. The Union petitioned the FLRA to review HHS's determination that the proposed provision was nonnegotiable. The FLRA determined that the proposed provision was negotiable, because it was not inconsistent with management's right under section 7106 of the Act to make determinations with respect to contracting-out or with applicable law or regulations. See American Federation of Government Employees, AFL-CIO, Local 1923 and Department of Health and Human Services, 22 FLRA No. 106, at 6 (1986).
HHS filed a motion for reconsideration, dated October 1, 1986, of the FLRA's July 31, 1986 decision. In the motion HHS argued for the first time that the Circular is not an "applicable law" for purposes of section 7106(a)(2) of the Act and that it is not a "law, rule or regulation affecting conditions of employment," the violations of which can be resolved in accordance with sections 7103(a)(9) and 7121(a), through the negotiated grievance procedure. The FLRA denied the HHS motion for reconsideration as untimely, noting that under FLRA rules (5 C.F.R. Sec. 2429.17) a motion for reconsideration is due within ten days of the FLRA decision in a particular case. This appeal followed. We have jurisdiction pursuant to 5 U.S.C. Sec. 7123 2 over the issues raised in the Union's original petition to the FLRA and discussed in the FLRA's July 31, 1986 decision. As discussed in part D of this opinion, however, we have no jurisdiction over the issues HHS raised for the first time in its October 1, 1986 motion for reconsideration.
The Act provides that the FLRA's decisions are reviewable in accordance with section 10(e) of the Administrative Procedure Act, 5 U.S.C. Sec. 706 (1982). See 5 U.S.C. Sec. 7123(c) (1982). The scope of our review "is limited to whether the agency's [action] is arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law." United States Army Engineer Center v. FLRA, 762 F.2d 409, 414 (4th Cir.1985). Furthermore,
[T]he authority is entitled to considerable deference when it exercises its special function of applying the general provisions of the Act....
On the other hand, the deference owed to an expert tribunal cannot be allowed to slip into a judicial inertia which results in the unauthorized assumption by an agency of major policy decisions properly made by Congress ... Accordingly, while reviewing courts should uphold reasonable and defensible constructions of an agency's enabling Act ... they must not rubber stamp ... administrative decisions that frustrate the congressional policy underlying a statute.
Thus, the FLRA's decision should be upheld if it is reasonably defensible, Id., and not inconsistent with any congressional mandate or policy. EEOC v. FLRA, 744 F.2d 842, 847 (D.C.Cir.1984), cert. dismissed, --- U.S. ----, 106 S.Ct. 1678, 90 L.Ed.2d 19 (1986). On the other hand, enforcement of the decision should be denied if the decision is contrary to congressional intent.
Title VII of the Civil Service Reform Act of 1978 (the Act), 5 U.S.C. Secs. 7101-7135 (1982) established a collective bargaining system to govern labor-management relations in the federal sector. Under the act, federal agencies and employee unions are required to bargain in good faith over "Conditions of employment." 5 U.S.C. Sec. 7103(a)(12). The term "Conditions of employment" is defined in the Act as "personnel policies, practices, and matters, whether established by rule, regulation, or otherwise, affecting working conditions." 5 U.S.C. Sec. 7103(a)(14).
The duty to bargain is limited by a management rights clause contained in the Act. 5 U.S.C. Sec. 7106(a). In particular, the management rights clause provides that management has the authority "in accordance with applicable laws ... to make determinations with respect to contracting out." 5 U.S.C. Sec. 7106(a)(2)(B). The procedures used in exercising these rights, however, are subject to negotiation. 3
HHS argues that the management's rights clause gives management complete discretion in making contracting-out decisions. HHS points to the introductory language of the clause which states that "subject to subsection (b) of this section nothing" in Title VII "shall effect the authority of any management official of any agency" to make decisions reserved to management. 5 U.S.C. Sec. 7106(a). The FLRA itself has recognized that the Act reserves to management as nonnegotiable the substantive exercise of its authority to make contracting-out determinations. NFFE, Local 1167 and Department of the Air Force, Headquarters, 31st Combat Support Group (TAC), Homestead Air Force Base, Florida, 6 F.L.R.A. 574 (1981), aff'd sub nom. NFFE, Local 1167 v. FLRA, 681 F.2d 886 (D.C.Cir.1982).
We believe the proposed provision would not establish any additional substantive limits on management's right to make contracting-out decisions. The FLRA found that HHS is required to adhere to the provisions of the Circular regardless of whether the Union's proposal is adopted as part of the collective bargaining agreement. The Union's proposal simply restates HHS's obligation to adhere to existing legal and regulatory requirements. Before this court, in fact, counsel for HHS indicated that the Department intends to comply with the Circular in making any contracting-out decisions. As a result, we agree with the FLRA's conclusion that the Union's proposal would not impair HHS's statutory right to make contracting-out decisions "in accordance with applicable laws."
Incorporating the Circular into the collective bargaining agreement would subject disputes over violations of the Circular to the arbitration procedures contained in the Act. 5 U.S.C. Sec. 7103(a)(9)(C)(i). Subjecting such disputes to arbitration does not render the Union's proposal nonnegotiable for two reasons. First, the management rights clause exempts from its coverage any bargaining proposal concerning procedures governing agency contracting-out decisions. Second, contracting-out decisions are currently subject to grievance arbitration under section 7121 of the Act. We will discuss those issues seriatim.
HHS asserts that adoption of the Union's proposal would permit arbitral review of HHS's contracting-out decisions, and that such review would adversely affect the exercise of management's contracting-out authority. 4 This argument overlooks section 7106(b) of the Act. Arbitration is a procedure, and management's authority to contract-out under section 7106(a) of the statute is "[s]ubject to" section 7106(b)(2), which provides for the negotiation of procedures which management will observe in exercising its right to contract-out. 5 U.S.C. Sec. 7106(b)(2) HHS, while admitting that subjecting management's contracting-out decisions to arbitral review is procedural in nature, contends that such review will have a substantive effect, because management will be forced to consider the potential impact of arbitration before making its contracting-out decisions.
The Ninth Circuit adopted HHS's position in Defense Language Institute v. FLRA, 767 F.2d 1398 (9th Cir.1985), cert....
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