Document ID: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-caDC-11-01102/USCOURTS-caDC-11-01102-0/pdf.json

Parties Involved:
Federal Labor Relations Authority
Respondent
National Treasury Employees Union
Intervenor for Respondent
United States Department of the Treasury
Petitioner

Document Text:

United States Court of Appeals

FOR THE DISTRICT OF COLUMBIA CIRCUIT

Argued December 8, 2011 Decided February 7, 2012

No. 11-1102

UNITED STATES DEPARTMENT OF THE TREASURY,

BUREAU OF THE PUBLIC DEBT WASHINGTON, D.C.,

PETITIONER

v.

FEDERAL LABOR RELATIONS AUTHORITY,

RESPONDENT

NATIONAL TREASURY EMPLOYEES UNION,

INTERVENOR

On Petition for Review of a Final Decision 

of the Federal Labor Relations Authority

Howard S. Scher, Attorney, United States Department of

Justice, argued the cause for the petitioner. Tony West, Assistant

Attorney General, and William Kanter and Thomas M. Bondy,

Attorneys, were on brief. 

Rosa M. Koppel, Solicitor, Federal Labor Relations

Authority, argued the cause for the respondent.

Peyton H.N. Lawrimore argued the cause for intervenor

National Treasury Employees Union. Gregory O'Duden and

Larry J. Adkins were on brief.

Before: HENDERSON, ROGERS and TATEL, Circuit Judges.

USCA Case #11-1102 Document #1356898 Filed: 02/07/2012 Page 1 of 11
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Opinion for the Court filed by Circuit Judge HENDERSON.

KAREN LECRAFT HENDERSON, Circuit Judge: The United

States Department of the Treasury (Department) petitions for

review of a decision of the Federal Labor Relations Authority

(FLRA, Authority) that adopted a new standard to determine

when a negotiated contract provision is an “appropriate

arrangement” under 5 U.S.C. § 7106(b)(3) and an agency head’s

disapproval thereof will therefore be set aside. Nat’l Treasury

Emps. Union, 65 F.L.R.A. 509 (2011). Because the Department

did not object to the new standard before the Authority—as

required under 5 U.S.C. § 7123(c)—we dismiss the

Department’s petition for lack of jurisdiction.

I.

Negotiators for the Department’s Bureau of Public Debt

(BPD) and the National Treasury Employees Union (NTEU)

signed a new collective bargaining agreement on April 7, 2010. 

The agreement was submitted to the agency head for review

pursuant to 5 U.S.C. § 7114(c), which provides in relevant part:

(c)(1) An agreement between any agency and an

exclusive representative shall be subject to approval by

the head of the agency.

(2) The head of the agency shall approve the

agreement within 30 days from the date the agreement

is executed if the agreement is in accordance with the

provisions of this chapter and any other applicable law,

rule, or regulation (unless the agency has granted an

exception to the provision).

(3) If the head of the agency does not approve or

disapprove the agreement within the 30-day period, the

agreement shall take effect and shall be binding on the

agency and the exclusive representative subject to the

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provisions of this chapter and any other applicable law,

rule, or regulation.

The agency head disapproved the agreement on May 7, 2010,

finding that sixty-two of its provisions “d[id] not conform to

law, rule, or regulation.” Memorandum for Angela Jones,

Human Resource Officer, BPD, from Nicole A. Johnson,

Associate Chief Human Capital Officer for Human Capital

Strategic Management, U.S. Department of the Treasury (May

7, 2010) (JA 7). Before NTEU petitioned the FLRA for review

of the disapproval, the parties reduced the number of disputed

provisions to fifty-five, of which only three now remain.

Each of the first two disputed provisions sets out a

performance-appraisal process for BPD employees who are

detailed or temporarily promoted for fewer than 120 days,

requiring, inter alia, that “performance expectations shall be

confirmed in writing by the temporary supervisor before the

employee can be held responsible for such performance

expectations.” NTEU, 65 F.L.R.A. at 509-10. The third

disputed provision requires that a BPD employee who abuses

emergency annual leave be “counseled concerning such abuse”

before he may be disciplined therefor. Id. at 515. The agency

head determined each of the provisions was nonnegotiable

because it interfered with a management right accorded a federal

agency under 5 U.S.C. § 7106(a)(2), namely the rights to direct

and to discipline employees.1

 See Statement of Agency

1

Section 7106(a) provides in relevant part:

(a) Subject to subsection (b) of this section, nothing in

this chapter shall affect the authority of any management

official of any agency—

. . .

(2) in accordance with applicable laws— 

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Position, Legal Analysis, NTEU, Case No. 0-NG-3076, at 3, 5

(FLRA July 6, 2010) (JA 125, 127) (performance-appraisal

provisions “not negotiable” because each “imposes a burden on

management’s right to direct employees under

§ 7106(a)(2)(A)”); id. at 7 (JA 129) (leave abuse provision “not

negotiable because it excessively interferes with management’s

right to discipline under § 7106(a)(2)(A)”).

The Federal Service Labor-Management Relations Act

(Act), 5 U.S.C. §§ 7101 et seq., generally requires a federal

agency to bargain in good faith with a public employee union

over conditions of employment. See Ass’n of Civilian Techs. v.

FLRA, 534 F.3d 772, 776 (D.C. Cir. 2008); NTEU v. FLRA, 550

F.3d 1148, 1150 (D.C. Cir. 2008). Section 7106(a), however,

exempts certain “management rights”—such as the duties to

direct and discipline employees—from the agency’s duty to

bargain, making them ordinarily nonnegotiable. NTEU v. FLRA,

550 F.3d at 1150. Section 7106(b) nonetheless requires an

agency to bargain over a proposal that affects a management

right if the proposal constitutes an “ ‘appropriate arrangement[]

for employees adversely affected’ by the exercise of

management rights.” Nat’l Ass’n of Gov’t Emps., Inc. v. FLRA.,

179 F.3d 946, 948 (D.C. Cir. 1999) (quoting 5 U.S.C.

§ 7106(b)(3)). 

The FLRA uses a two-part test to determine whether a

negotiated provision is an “appropriate arrangement” subject to

bargaining notwithstanding it affects a protected management

(A) to hire, assign, direct, layoff, and retain

employees in the agency, or to suspend, remove,

reduce in grade or pay, or take other disciplinary

action against such employees; 

. . . . 

5 U.S.C. § 7106(a)(2)(A).

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right. First, the Authority considers whether the provision is

“intended to be an ‘arrangement’ for employees adversely

affected by the exercise of a management right” guaranteed

under section 7106(a)(2); if so, it next evaluates whether the

arrangement is appropriate within the meaning of section

7106(b)(3)2

 and therefore subject to bargaining. See NTEU v.

FLRA, 437 F.3d 1248, 1253 (D.C. Cir. 2006). Until now, the

Authority has made the second determination using an

“excessive interference” standard, i.e., finding a negotiated

provision to be inappropriate if it “ ‘excessively interferes’ with

management’s rights” as enumerated in section 7106(a). NTEU,

65 F.L.R.A. at 511 (quoting Am Fed’n of Gov’t Emps., Local

1770, 64 F.L.R.A. 953, 959 (2010)).3 In this case, however,

2

Section 7106(b)(3) provides:

(b) Nothing in this section shall preclude any agency and

any labor organization from negotiating—

. . . 

(3) 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)(3) .

3

The Authority adopted the “excessive interference” in 1983 in

response to our decision in American Federation of Government

Employees, Local 2782 v. FLRA, 702 F.2d 1183 (D.C. Cir. 1983).

There, we rejected the Authority’s use of a “direct interference” test

(making inappropriate any arrangement that directly interferes with

a management right, regardless of the degree of interference) but we

observed: “To say that the word ‘appropriate’ (in the phrase

“appropriate arrangements” of paragraph (b)(3)) cannot bear this much

weight is not to say that it can bear no weight at all. Undoubtedly,

some arrangements may be inappropriate because they impinge upon

management prerogatives to an excessive degree.” 702 F.2d at 1188

(emphasis in original).

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relying on its recent decision in U.S. Environmental Protection

Agency, 65 F.L.R.A. 113 (2010), in which it replaced the

excessive interference standard with an “abrogation” standard

when reviewing arbitral awards,4 the Authority similarly

substituted the abrogation standard for review of an agency

head’s disapproval of a negotiated agreement. Under the

abrogation standard, the Authority “will find that a contractual

arrangement is an ‘appropriate’ arrangement within the meaning

of § 7106(b)(3) . . . —and that an agency head may not

disapprove such an arrangement on § 7106 grounds—unless the

arrangement abrogates, or waives, a management right,” that is,

unless it “ ‘precludes [the] agency from exercising’ the affected

management right.” 65 F.L.R.A. at 515 (quoting U.S. Dep’t of

Transp., Fed. Aviation Admin., 65 F.L.R.A. 171, 174 (2010)).

Finding that the three contested provisions “limit”

management’s ability to exercise its rights but “do not preclude”

their exercise altogether, two of the Authority’s members

concluded the provisions “are appropriate arrangements within

the meaning of § 7106(b)(3)” and are therefore “not contrary to

§ 7106(a)(2)(A) and (B)” nor subject to agency head

disapproval. Id. at 515. Accordingly, the Authority majority

ordered the Department to “rescind its disapproval of the

provisions.” Id. at 519. The third member dissented from the

majority’s adoption of the abrogation standard and would have

applied the excessive interference standard to invalidate the

provisions as inappropriate arrangements.5

4

Over twenty years ago, the Authority adopted the abrogation

standard in reviewing arbitral awards, see Dep’t of the Treasury, U.S.

Customs Serv., 37 F.L.R.A. 309, 313-14 (1990), but returned to the

excessive interference standard in 2002. See U.S. Dep’t of Justice,

Fed. Bureau of Prisons, 58 F.L.R.A. 109, 115 (2002).

5

The Authority majority premised its adoption of the abrogation

standard on the “plain wording” of the Act, contrasting the language

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The Department filed a timely petition for review. 

II.

Before reaching the merits of the Department’s arguments,

we must satisfy ourselves that we have subject-matter

jurisdiction. Chamber of Commerce v. EPA, 642 F.3d 192, 199

(D.C. Cir. 2011) (citing Steel Co. v. Citizens for a Better Env’t.,

523 U.S. 83 (1998)). Intervenor NTEU contests the court’s

jurisdiction on the ground the Department did not challenge the

Authority’s use of the abrogation standard before the Authority

of section 7114(c)(2)—which requires that an agency head approve a

negotiated agreement “if the agreement is in accordance with the

provisions of this chapter and any other applicable law, rule, or

regulation”—with that of 5 U.S.C. § 7117(c)—which authorizes a

union to appeal to the Authority an agency’s claim that “the duty to

bargain in good faith does not extend to any matter.” 65 F.L.R.A. at

512. It determined that the difference between the two italicized

phrases meant they were intended to bear different meanings so that

a proposal’s subject matter may be outside the duty to bargain (and

therefore subject to negotiability challenge under section 7117(c)) and

yet still be “in accordance with the provisions of this chapter and any

other applicable law, rule, or regulation” and therefore not subject to

disapproval by the agency head. Relying on its decision in U.S. EPA,

it then concluded a contract provision is not contrary to section

7106—and therefore may not be disapproved by the agency head on

that basis—unless it abrogates a management right accorded

thereunder. The dissenting member responded that a proposal that is

prohibited by section 7106(a) because it “impermissibly interferes

with a management right” may “properly be characterized as being

both outside the duty to bargain and not ‘in accordance with the

provisions of [the Act]’ ” so as to be “subject to agency head rejection

under § 7114(c)(2).” 65 F.L.R.A. at 521 (Member Beck dissenting)

(emphasis in original) (alteration added). The dissent also questioned

the logic of “applying a different test for negotiability at the stage of

agency head review than is applied at bargaining table.” Id. We

express no opinion on the merits of the abrogation standard.

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itself as required by 5 U.S.C. § 7123(c). We agree with NTEU

that we lack subject matter jurisdiction under section 7123(c).

Section 7123(c) provides: “No objection that has not been

urged before the Authority, or its designee, shall be considered

by the court, unless the failure or neglect to urge the objection

is excused because of extraordinary circumstances.” Where, as

here, the Authority raises an issue sua sponte in its decision,

section 7123(c) “precludes us from considering a pertinent

objection if the petitioner has not raised the objection before the

Authority in a request for reconsideration.” Nat’l Ass’n of Gov’t

Emps., Local R5-136 v. FLRA, 363 F.3d 468, 479 (D.C. Cir.

2004) (citing U.S. Dep’t of Commerce v. FLRA, 7 F.3d 243,

245-46 (D.C. Cir. 1993)); see 5 C.F.R. § 2429.17 (authorizing

motion for reconsideration). The Department acknowledges it

failed to move for reconsideration of the new abrogation

standard but argues the omission should be excused for three

reasons.

First, the Department invokes the “futility” exception to

section 7123(c) which applies “when a request for

reconsideration would be ‘patently futile’ in light of recent

Authority decisions squarely addressing the issue in question.”

Local R5-136, 363 F.3d at 479. In particular, the Department

relies on the Authority’s decision in U.S. EPA in which “the

Authority decided to return to the ‘abrogation’ standard, which

had been used from 1990 to 2002, to decide cases involving the

review of arbitration decisions under Section 7122(a).” Reply

Br. at 19; see supra note 3. According to the Department, “in

EPA the Authority had already made up its mind that it would

apply ‘abrogation’ in the agency head review context, and no

motion for reconsideration would have budged the Authority

from that position.” Reply Br. 19; see also Pet’r’s Opening Br.

26 n.11. The Department overstates the Authority’s decision in

U.S. EPA. There, the Authority simply “note[d] that [its]

analysis call[ed] into question whether abrogation also should be

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the standard applied in negotiability cases involving contract

provisions (where agreement has been reached and subsequently

disapproved).” U.S. EPA, 65 F.L.R.A. at 118 n.11 (citing U.S.

Dep’t of Justice, Bureau of Prisons, 57 F.L.R.A. 158, 162

(2001)). Because U.S. EPA involved review of an arbitration

and not of an agency head disapproval, the Authority expressly

“le[ft] [the question] for another day.” Id. Thus, U.S. EPA did

not, as the Department claims, “squarely address[]” what

standard applies to review of an agency head disapproval or

indicate it had “already made up its mind” on the issue. Pet’r’s

Opening Br. 26 n.11; Reply Br. 19. Given the different contexts

and the Authority’s tentative tone in U.S. EPA, we cannot

conclude it would have been patently futile for the Department

to file the required reconsideration motion here. Cf. W & M

Props. of Conn., Inc. v. NLRB, 514 F.3d 1341, 1346 (D.C. Cir.

2008) (to establish patent futility as “extraordinary

circumstance[]” excusing failure to move for reconsideration

under analogous provision of National Labor Relations Act,

petitioner must “show that a motion for reconsideration was

‘clearly doomed’ by the agency’s rejection of identical

arguments” (emphasis added)); NLRB v. FLRA, 2 F.3d 1190,

1196 (D.C. Cir. 1993) (reconsideration motion challenging

Authority’s determination that proposal was arrangement would

have been futile where it “seem[ed] clear that the FLRA would

have rejected” it given Authority had “repeatedly held

negotiable” similar proposals, “including two proposals that

[court] view[ed] as indistinguishable” from proposal at issue

(emphasis added)); U.S. Dep’t of the Interior Minerals Mgmt.

Serv. v. FLRA, 969 F.2d 1158, 1161 (D.C. Cir. 1992)

(reconsideration motion disputing proposal was arrangement

“would have been futile given that the Authority had just found

an identical proposal negotiable under § 7106(b)(3)” (emphasis

added)).

The Department also argues that moving for reconsideration

would have been futile in light of the “vigorous” dissent, which

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argued the Department’s case for it—albeit to no avail. Reply

Br. 20. The Department acknowledges that we considered and

rejected the same argument in Local R5-136, 363 F.3d at 479-

80; it attempts to distinguish this case, however, based on its

“facts,” asserting that “[f]utility is a case-by-case matter.” 

Reply Br. 20 n.11, 21. According to the Department, Local R5-

136 “made the point that a dissenting opinion does not

automatically satisfy Section 7123(c)’s requirements because a

party must make clear to the Authority what its own arguments

are” but, the Department argues, such “guidance” is inapplicable

here because “the dissent raised all of the issues that the agency

could have raised.” Reply Br. 20 n.11 (emphasis in original). 

In Local R5-136, however, we rejected the petitioners’ futility

claim not only because it “presuppose[d] that a party’s position

is always coterminous with a dissenting opinion” but also

because it “appear[ed] to assume that the persuasive power of a

party’s argument can never exceed the quality of a dissenting

opinion,” Local R5-136, 363 F.3d at 479 (emphases added)—a

consideration that applies whether or not the substance of the

party’s arguments would have mirrored the dissent’s. Because

the Department made no objection to the new standard before

the Authority, we cannot know how persuasive its hypothetical

arguments might have been. Moreover, in Local R5-136, based

on both the need to hear from the parties themselves and our

precedent interpreting “virtually identical” language in the

National Labor Relations Act, we did more than simply offer

“guidance”—we established a jurisdictional prerequisite, stating:

“Section 7123(c) requires a party to present its own views to the

Authority in order to preserve a claim for judicial review.” Id.

(citing Contractors’ Labor Pool, Inc. v. NLRB, 323 F.3d 1051,

1061 (D.C. Cir. 2003) (interpreting 29 U.S.C. § 160(e))

(emphasis added). Because the Department ignored this

jurisdictional requirement, the Authority was left to make its

decision and articulate its rationale without the views of either

the Department or NTEU. For these reasons, here, as in Local

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R5-136, “the dissent below did not excuse the [agency’s] failure

to raise its objections in a request for reconsideration.” Id. at

480.6

Finally, we reject the Department’s claim of “extraordinary

circumstance” based on its assertions that (1) the abrogation

standard will inevitably come up for review in “the very next

agency head review case” and (2) “delay in resolving the issue

will only cause confusion and uncertainty.” Reply Br. 22. As

an initial matter, the cited circumstances seem anything but

“extraordinary”—they are, we think, a commonplace of

litigation. Moreover, that the issue will arise again soon—and

likely be resolved when it does—argues against the need for an

irregular, accelerated resolution in this proceeding. Any

“confusion and uncertainty” resulting from our adherence to

section 7123(c)’s jurisdictional requirement will be speedily

dispelled should the issue again arise in “the very next agency

head review case.” 

Because the Department failed to move for reconsideration

objecting to the Authority’s use of the abrogation standard to

review the agency head’s disapproval of the negotiated

agreement, we dismiss the Department’s petition for lack of

subject matter jurisdiction pursuant to 5 U.S.C. § 7123(c).

So ordered.

6

The Department asserts that the FLRA’s “failure to challenge the

Court’s jurisdiction here reflects the Authority’s apparent agreement

with the agency that a motion for reconsideration would have been

futile.” Reply Br. 21. We decline to draw so speculative an inference

from the Authority’s silence; in fact, at oral argument counsel for the

FLRA assured the court its silence manifested no such agreement. In

any event, the Authority can no more divine how it might have reacted

to arguments not made than can the party that did not make them.

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