# United States Court of Appeals

FOR THE DISTRICT OF COLUMBIA CIRCUIT

Argued October 1 4 , 2016 Decided December 30, 2016

No. 15

- 1208

U NITED S TATES D EPARTMENT OF THE A IR F ORCE
, L UKE A IR F ORCE B ASE
, A RIZONA
, P ETITIONER

v.

F EDERAL L ABOR R ELATIONS A UTHORITY
, R ESPONDENT

A MERICAN F EDERATION OF G OVERNMENT E MPLOYEES
, L OCAL 1547,
I NTERVENOR

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

Mark W. Pennak , Attorney, U.S. Department of Justice, argued the cause for petitioner. With him on the brief were Benjamin C. Mizer , Principal Deputy Assistant Attorney General, and Leonard Schaitman and H. Thomas Byron

, Attorneys.

Zachary R. Henige , Deputy Solicitor , Federal Labor Relations Authority, argued the cause for respondent. With
him on the brief were Fred B. Jacob , Solicitor, and Stephanie
J. Fouse , Attorney.2

David A. Borer

, Andres M. Grajales , and Mark L. Vinson
were on the brief for intervenor American F ederation of Government Employees, Local 1547 in support of respondent.
Judith D. Galat entered an appearance.

Before: T ATEL
, Circuit Judge , and E DWARDS and
G INSBURG
, Senior Circuit Judges

.

Opinion for the Court filed by Circuit Judge T ATEL

.

T ATEL
, Circuit Judge : The Federal Labor Relations Authority ordered the Air Force to bargain collectively with its civilian employees over access to an on

- base shoppette

— a gas station and convenience store that forms part of the military ’ s network of commissaries and exchanges. The Air Force challenges that decision, arguing, among other things, that the issue is not a proper subject of bargaining because Congress has given the military unfettered discretion to
determine whether civilians may patronize commissarie s and exchanges . For the reasons set forth below, we agree and grant the Air Force’s petition for review

. I.

The Federal Service Labor

- Management Relations Statute, enacted in 1978 as Title VII of the Civil Service Reform Act, governs collective bargainin g in the federal workplace. The statute grants federal employees the right to collectively bargain over “conditions of employment.” 5 U.S.C. § 7102(2). Under Authority and D.C. Circuit precedent, however, employees have no right to bargain over
matters tha t Congress has committed to an agency ’ s “unfettered discretion.” Illinois National Guard v. FLRA , 854 F.2d 1396, 1401 (D.C. Cir. 1988); see Patent Office Professional Association & U.S. Department of Commerce

,3

59 F.L.R.A. 331, 346 (Sept. 30, 2003) (holding that the Authority may not order an agency to bargain over matters
within the agency ’ s “sole and exclusive discretion” (inte rnal quotation marks omitted) )

.

The dispute here began when some 800 civilian employees of Luke Air Force Base, Arizona, represent ed by their exclusive bargaining agent, Local 1547 of the American Federation of Government Employees, sought access to the
Base ’ s commissaries and exchanges

— stores run by the Defense Department that sell reduced

- price food and
merchandise to members of th e uniformed services, National Guardsmen and reservists, and certain retirees, dependents,
and survivors. See 10 U.S.C. §§ 2481(a), 1061

– 1064. Commissaries are similar to grocery stores

. S ee id. § 2484(a)

. E xchanges take a variety of forms, from department

- store

- like retail outlets to laundromats, gas stations, flower shops, and
fast

- food franchises. See Department of Defense Instruction 1330.21, Enclosure 3.1.1 (July 14, 2005). If accepted, Local 1547’s proposal would have significantly expanded shopping

p rivileges for civilian employees, who, under existing rules, were allowed to buy only food and beverages from “ any exchange foo d activity, if consumed on post. ” See id.

, Enclosure 6, Tabl e E6.T2.6

.

In response, the Air Force filed with the FLRA what is
kn own as a nego tiability appeal

, in which it argued that the proposal was nonnegotiable because it lacked a connection to employee working conditions. The FLRA disagreed and
order ed the Air Force to negotiate with the union. See American Federation of Govern ment Employees, Local 1547 & U.S. Department of the Air Force, Luke Air Force Base, Arizona (“ Local 1547 I ”), 64 F.L.R.A. 642, 646

– 47 (Apr. 7, 2010).4

The parties resumed discussions but soon reached impasse. The union brought the matter to the Federal Service Impasses Panel, which ordered the parties to participate in
mediation

- arbitration before an arbitrator, who the Panel empowered to issue a binding decision if the parties were
unable to reach a settlement. B efore mediation began, however, the union circulated a revised proposal seeking shopping privileges only at the Base ’ s Shoppette, a 24

- hour gas station and convenience store that sells such things as fresh and frozen food, gas, and certain hea lth and household
items. After mediation over this more limited proposal failed,
the arbitrator sided with the union and orde r ed the Air Force to give its civilian employees access to the Shoppette

.

When the Air Force refused to implement the arbitrator’ s decision

, the union file d a second negotiability appeal with
the FLRA. Although the Air Force again insisted that the proposal had nothing to do with employee working conditions, it added a second argument: that the proposal was not a proper subject of b argaining because Title 10 of the U.S. Code, which governs all military operations, gives the Secretary of Defense “unfettered discretion” over commissaries and exchanges

. See

, e .g. , Illinois National
Guard , 854 F.2d at 1401. Unpersuaded, the FLRA ordered the Air Force to implement the proposal. See American Federation of Government Employees, Local 1547 & U.S. Department of the Air Force, Luke Air Force Base, Arizona (“ Local 1547 II ”), 67 F.L.R.A. 523, 525

– 30 (July 29, 2014). One member dissented, reasonin g that Title 10, when “read in its entirety and in its historical context,” leaves the question of “authoriz[ing] access to military exchanges

. . . to the sole discretion of the Secretary of Defense.” Id. at 532

– 33 (Member Pizzella, Dissenting). The Air F orce sought reconsideration, which the FLRA denied

. American Federation of Government Employees, Local 1547 & U.S.5

Department of the Air Force, Luke Air Force Base, Arizona

, 68 F.L.R.A. 557, 558

– 61 (May 13, 2015).

The Air Force petitions for review . It ar gues, as it did before the FLRA, that it has no duty to bargain over the Shoppette proposal because Title 10 grants the Secretary of Defense complete discretion to decide whether civilian employees may shop at commissaries and exchanges. It also argues tha t the Authority failed to point to any record
evidence in support of its conclusion that the proposal concerns employee working conditions.

II

.
We begin with the Air Force ’ s first argument, and because it relies on a particular interpretation of several provisions of Title 10, we think it best to proceed by first exploring the parties ’ understanding of these provisions and then setting forth our own interpretation of the statute ’ s meaning. In doing so, we owe the Authority no deference, as we “review[] de novo the FLRA ’ s interpretation of a statute it is not charged with administering.” U.S. Department of the
Air Force v. FLRA , 648 F.3d 841, 846 (D.C. Cir. 2011).

A.

The Air Force anchors its unfettered

- discretion argument in 10 U.S.C. § 2481, which provides that “[t]he Secretary of Defense shall operate, in the manner provided by this chapter and other provisions of law, a world

- wide system of commissary stores and a separate world

- wide system of exchange stores.” Id. § 2481(a). Both systems may “sel l, at reduced prices, food and other merchandise ” to a closed set of military and military

- related patrons

— i.e.

, “members of the uniformed services on active duty, members of the uniformed services entitled to retired pay, dependents of such members,6

and p ersons authorized to use the system under chapter 54 of
this title.” Id. ; see id. § 101(a)(5) (defining “uniformed services”). Chapter 54 extends shopping privileges to members of the Guard and R eserve, along with certain retirees, dependents, and survivor s

. See id. §§ 1061

– 1064.
S ection 2481 also sets forth Congress ’ s reasons for creating
these stores , explaining that they are “intended to enhance the quality of life of members of the uniformed services, retired members, and dependents of such members, and to support military readiness, recruitment, and retention.” Id. § 2481(b). As the Air Force points out, missing from section 2481’s list of authorized patrons and beneficiaries is any mention of civilian employees of the Defense Department.

T he Air Force then moves to a more specific provision of
Title 10

, section 2484, which prescribes in subsection (b) an exacting list of goods that may be sold in commissaries : “[m]eat, poultry , seafood, and fresh

- water fish

, ” etcetera. Id. § 2484(b) . Subsection (c)(1) provides that the Secretary may
add additional items to that list

, so long as he notifies Congress, see id. § 2484(c)(1), and s ubsection (c)(2) then explains that “[n]otwithstanding [subsection (c)](1 ), the Department of Defense military resale system sha ll continue
to maintain the exclusive right to operate convenience stores, shopettes , and troop stores

. . . [,] ” i d. § 2484(c)(2) (emphases added).

The Air Force argues that the phrase “exclusive right to operate

. . . shopettes,” id. , mean s what it says : that the military has unfettered d iscretion to operate “shopettes ” like the one at Luke AFB. And because, in its view, “common

usage [ of] the term ‘operate’ includes access determinations,”
Petitioner’ s Br. 33 , Congress conferred “unfettered discretion” on the military to determine who may patronize commissaries and exchanges, thereby exempting the Air7

Force from barga ining over the union’s proposal, s ee Illinois
National Guard , 854 F.2d at 1402

.

For its part, the Authority argues that section 2484(c)(2)’s reference to the Secretary’s “e xclusive right to operate

. . . shopettes” relates not to who can patronize them, but rather only to the selection of merchandise and the setting of prices.
T he Authority also points out that the commissary

- and

exchange provisions nowhere state that the Secretary has authority to control access “‘notwithstanding’ other provisions of law”

— language that , according to the Authority, this court has found signals congressional intent to exempt an agency from the duty to bargain. See Respondent’s Br. 38 (quoting Colorado Nurses Association v. FLRA , 851 F.2d 1486, 1488 (D.C. Cir. 1988)

, superseded by statute

, Department of Veterans Affairs Labor Relations Improvement Act of 1991, Pub. L . No. 102

– 40, title II, § 202, 105 Stat. 187,
200

, as recognized in National Federation of Federal Employees Local 589 v. FLRA , 73 F.3d 390, 390

– 91 (D.C. Cir. 1996)

.
B

.

We agree that Congress has given the military unfettered
discretion to determine whethe r civilians may patronize commissaries and exchanges, though for reasons that are slightly different from those offered by the Air Force. Our starting point is section 113(b) of Title 10, which gives the Secretary of
Defense “ the authority, direction, and control over the Department of Defense .” 10 U.S.C. § 113 (b). Sections 3013, 5013, and 8013, in turn, grant the S ecretaries of the Army, Navy, and Air Force “the authority necessary to conduct[] all affairs of the[ir respective] Department[s],” including th e “functions [of]

. . . R ecruiting[,]

. . . A dministering (including the morale and welfare of personnel)[,]

. . . and M aintaining” Department personnel. Id. §§ 3013(b); 5013(b); 8013(b).8

Those sections also authorize the Branch S ecretaries to “prescribe r egulations to carry out [their] functions, powers

, and duties under this title,” subject only to “the authority, direction, and control of the Secretary of Defense.” Id. §§ 3013(b), (g); 5013(b), (g); 8013(b), (g).

These three enumerated duties

— recruitin g, administering, and maintaining

— appear in almost identical form in section 2481, in which Congress explain ed that it
“intended [ commissaries and exchanges ]

. . . to support military readiness, recruitment, and retention .” Id. § 2481(b) (emphasis added)

. The symmetry between these purposes and the functions delineated in sections 3013, 5013, and 8013 is unmistakable, and we draw from it two basic conclusions.
First , Congress intended commissaries and exchanges to
advance the objectives of recruiting, admin ister ing, and maintaining the armed forces. S econd , Congress gave the
Branch S ecretaries authority to decide how best to achieve those objectives, subject only to direction by the Secretary of
Defense

. S ee 10 U.S.C. §§ 3013(b), ( g); 5013(b), (g); 8013(b), (g).

Given these legislative directives , we cannot imagine that Congress intended to empower a civilian agency like the
Federal Labo r Relations Authority to second

- guess the military’s judgment about non

- military access to commissaries and exchanges

. As t he Supreme Court has made clear, “ [i]n construing a statute that touches on” matters of internal military governance, like troop morale or discipline, “courts must be careful not to circumscribe the authority of military commanders to an extent never inten ded by Congress.” Brown v. Glines , 444 U.S. 348, 360 (1980) (citation and internal quotation marks omitted)

. We have
taken this concern seriously in the federal

- labor

- relations context, declining to require bargaining over proposals that9

could potentially undermine military judgment even where the relevant statute never expressly shields the military from bargaining. In National Federation of Federal Employees,
Local 1623 v. FLRA

, 852 F.2d 1349 (D.C. Cir. 1988)

, for example, we found “unbargainable” a propo sal by dual

- status guard technicians that would have required civilian supervisors to attempt to “convince military officials to assign personnel in some manner other than the one they originally thought best.” Id. at 1352. Although the proposal would not have led to civilians directly interfe ring with military

management choices, and although the Technician Act “d[id]

not specifically countermand the Local’s proposal,” we concluded that it fell outside the duty to bargain because it would “subject [milita ry personnel decisions] to civilian influence

. ” Id. at 1352

– 53 ( second emphasis added); see also American Federation of Government Employees , Local 2953

v. FLRA , 730 F.2d 1534, 154 4

– 46 (D.C. Cir. 1984) (rejecting

a proposal requiring military leaders to di sregard National Guard technicians’ military evaluations in favor of civilian evaluations when conducting layoffs, where the statute’s purpose was “to assure that the military mission of the Guard would be carried out effectively and efficiently”).

In th is case, by requiring negotiation over the Shoppette proposal, the Authority has similarly second

- guessed the Secretary’s judgment in deciding how best to use a military benefit to achieve military purposes. The panel arbitrator required civilian access to the Shoppette because , in her view, “it is illogical that it is acceptable to have civilians enter a store to buy hot dogs, but damaging to [troop] morale if they are allowed to purchase aspirin, batteries, or tissues.” Panel
Arbitrator’s Decision

, at Joi nt Appendix 23. Agreeing with the arbitrator, the Authority reasoned that nothing in Title 10

“ suggests that the in cremental extension of benefits

. . . from hot dogs to aspirin, batteri es, [and] tissues

. . . is unlawful. ”10

Local 1547 II , 67 F.L.R.A. at 530 (internal quotations marks omitted) (alteration in original) . But the Air Force Secretary, exercising his delegated “ authority

. . . to conduct[] all affairs of the Department” subject only to review by the Defense Secretary, 10 U.S.C. § 8013(b), decid ed otherwise

. Contrary to both the arbitrator and the Authority, this case is not about hot dogs and aspirin, but rather whether the military retains its unfettered authority to determine if and under what
circumstances non

- military persons may enjoy acces s to commissaries and exchanges

.

To be sure, in American Federation of Government Employees, Local 2761 v. FLRA , 866 F.2d 1443 (D.C. Cir. 1989) , we concluded that access to a military exchange fell within the duty to bargain

. Id. at 1447. But that decisio n predated by fifteen years Congress’s enactment of Title 10’s commissary

- and

- exchange provisions which, as we have explained, vest the Secretary with sole discretion over
civilian

- employee access to commissaries and exchanges. See Ronald W. Reagan Nationa l Defense Authorization Act for Fiscal Year 2005, Pub. L. No. 108

– 375, § 651, 118 Stat. 1811, 1964

– 73 (2004).

The Authority nonetheless argues that the Shoppette proposal is negotiable because nothing in Title 10 expressly precludes civilian employees fro m bargaining over access to commissaries and exchanges. In support, it points to Illinois
National Guard , in which we held that the Technician Act gives the Army Secretary unfettered discretion to determine
National Guard technicians ’ work schedules because the statute provides that, “[n]otwithstanding [the scheduling and overtime provisions] of title 5 or any other provision of law, the Secretary concerned may

. . . prescribe the hours of duty
for technicians.” 854 F.2d at 1401 (quoti ng 33 U.S.C. § 709(g)(2) (1988) (emphasis omitted) ); see , e.g. , National11

Tr easury Employees Union (NTEU) v. FLRA

, 435 F.3d 1049,
1051 (2006) ( holding that Comptroller of the Currency had
sole and exclusive discretion over bank

- examiner salaries where Congr ess provided that the “‘employment and compensation of examiners

. . . shall be without regard to the provisions of other laws applicable to officers or employees
of the United States ’” (quoting 12 U.S.C. § 481 (2006) ) ).
S ince Title 10 contains no similar carve

- out for commissaries and exchanges

, the FLRA reasons, Congress must have
intended them to be a proper subject of collective bargaining.

The Authority’s argument suffers from two flaws. First,

a lthough it is true that the Authority “consider[ s ] the absence of such preemptive language

. . . to be a strong indication that Congress did not intend [an agency] to have unfettered discretion” over a given matter, Department of Veterans Affairs Veterans Administration Medical C enter, Veterans
Canteen Service , 44 F.L.R.A. 162, 164

– 65 (Feb. 28, 1992),
neither it

— nor for that matter this Court

— has ever held that a

statute must contain phrases like “notwithstanding any law” to place a subject outside an agency ’ s duty to bargain.

Second, i n each of the cases cit ed by the Authority

, the

agency argued that the statute it administered

— a statute that expressly addressed employment matters, such as hours, pay, and benefits, for a defined category of federal employees

— exempted it from Title 5’s broadly applicable civil

- service rules, including collective

- bargaining requirements. See National Treasury , 435 F.3d at 1051 (interpreting statute giving the Treasury Secretary authority to employ and compensate bank examiners); Illinois National Guard , 854 F.2d at 1403 (interpr eting statute giving the Army Secretary authority to set work schedules for dual

- status guard technicians); Colorado Nurses Association , 851 F.2d at 1488 (interpreting statute giving the Secretary of Veterans Affairs12

authority to control hours and working conditions of medical personnel)

. In this case, however, the Air Force is not seeking to exempt itself from collective bargaining; it merely seeks to limit the scope of bargaining with respect to a matter that it
believes Congress has committed to its unfettered discretion

.

Moreover , Title 10’s commissary

- and

- exchange provisions differ significantly from the statutes at issue in the case cited by the Authority. T hose statute s all directly addressed an agency ’ s employment

- related authority, so it
makes sense that the FLRA would describe its interpretive task as “ascertain[ing] whether Congress has clearly expressed an intent to deprive employees of their rights under the [FSLMRS] .” Respondent ’s Br. 31 (emphasis added); see Colorado Nurses , 851 F.2d at 1 489 (court must determine whether Congress intended to “exempt [a federal employer] from all laws governing the terms and con ditions of federal employment”). Title 10 ’s commissary

- and

- exchange provisions stand on wholly different footing, as they have
abso lutely nothing to do with civilian employment and everything to do with creating a military benefit designed to “support military readiness, recruitment, and retention.” 10
U.S.C. § 2481(b). Given Congress’s focus on defining a military benefit , which has nothing at all to do with terms and conditions of civilian employment

, it would have had no

reason to include a “notwithsta nd ing” clause exempting that
benefit from “ ‘ other laws applicable to [civilian] officers or employees of the United States

. ’ ” Nationa l Treasury , 435 F.3d

at 1051 (quoting 12 U.S.C. § 481).

For all of these reasons, we hold that civilian access to commissaries and exchanges is not a proper subject of
collective bargaining because Congress has vested the military with “unfettered discre tion” over the matter. See
Illinois National Guard , 854 F.2d at 1401. Although this is13

sufficient to resolve this case, we think it nonetheless helpful to consider the Air Force’s alternative argument

— that the Authority failed to make any factual findings in support of its conclusion that the proposal concerns unit employee’s conditions of employment

— since that issue is likely to arise again in cases where collective bargaining is not barred by legislation giving the agency unfettered discretion over the

su bject of negotiations.

III.

As the Authority has itself explained, in evaluating whether a proposal concerns conditions o f employment, it must, among other things, determine if “the record
establishes

. . . a direct connection between the proposal and
the work situation or employment relationship of bargaining unit employees.” Antilles Consolidated Education Association
& Antilles Consolidated School System , 22 F.L.R.A. 235, 2 37 ( June 24, 1986). T he Authority must also, as this Court has held, “ point to evidence in the record establishing this link.” U.S. Department of the Air Force, Griffis Air Force Base v.
FLRA , 949 F.2d 1169, 1174 (D.C. Cir. 1991)

. And as with all Authority fact

- finding, our role is limited to ensuring that its

“ findings of f act [are] supported by substantial evidence on
the record considered as a whole .” Pension Benefit Guarantee Corp. v. F LRA , 967 F.2d 658, 665 (D.C. Cir. 1992)

.

Consider a few examples. In one case, we upheld an Authority decision that declined to require t he Department of Defense Dependents Schools to bargain over a proposal that would have extended into retirement a benefit allowing teachers to travel for free aboard military aircraft. Overseas
Education Association , Inc. v. FLRA

, 858 F.2d 769 , 770, 772 (D .C. Cir. 1988). Although we recognized the clear link between free travel and working conditions for active employees

, who were “called upon

. . . to situate14

themselves

. . . abroad

, ” we agreed with the Authority that nothing in the record showed that exte nding the free

- travel benefit into “the golden years of retirement” would have had a “direct impact on an employee ’ s day

- to

- day allegiance to his or her job.” Id. at 772

– 73. In another case, civilian employees sought to bargain over an Air Force decision requiring them to challenge disciplinary actions, not on base, as they had been permitted to do for years, but rather before a magistrate

court forty

- two miles away. Griffis Air Force Base , 949 F.2d at 1171. Ruling for the employees, the Authority found a
direct connection between the change in policy and the employee’s working conditions

, citing record evidence showing “that the [new] policy would cause employees to expend annual leave time to travel

. . . , appear before the Magistrate, and prepare for tr ial.” Id. at 1172. Given those findings, we had little difficulty deciding that the Authority’s
direct

- connection conclusion rested “on firm ground.” Id. at 1174.

In its brief on appeal here, the Authority acknowledges that its obligation to “ ascertain wh ether there is a direct
connection

. . . is a factual determination, dependent on the record evidence in each individual case, and reviewed for substantial evidence supporting [its] conclusion.” Respondent’s Br. at 21

– 22. Surprisingly, however, the
Authori ty engaged in no such fact

- finding in this case. Instead of pointing to the circumstances at Luke AFB that tie Shoppette access to employee working conditions, the Authority simply cited its earlier decision in this case for the proposition that “access to military exchange and exchange

related facilities

. . . concerns employees’ conditions of employment.” Local 1547 II , 67 F.L.R.A. at 525.

Of course, this would not be a problem had the earlier decision established the required factual link between15

Shopp ette access and employee working conditions. But it did no such thing. Even though the Air Force insisted that
conditions at Luke AFB did not justify civilian access, the Authority made no contrary findings, instead rejecting the Air Force’s arguments by s imply citing its own precedent. For instance, the Air Force argued that nothing in the record supported allowing civilians to purchase groceries

“ not

. . . ready for consumption.” Local 1547 I , 64 F.L.R.A. at 646. In response, instead of describing the cir cumstances that, in its judgment, made it necessary for civilian employees to purchase such groceries, the Authority simply stated that its

“ precedent does not support finding that only proposals involving prepared foodstuffs concern conditions of employme nt.” Id. T he Air Force also argued that civilian employees had no need to shop during non

- duty hours. Id. But

r ather than identifying the conditions on base that warranted
off

- duty access to the Shoppette, the Authority simply
declared that “ no decisions

. . . support [the Air Force’s]
assertion .” Id.

We could go on and on with more examples, but we think the point is clear: the Authority has entirely failed to establish a factual link between Shoppette access and base

- employee working conditions. Althoug h our role in reviewing negotiability determinations is limited , the Authority must find facts to give us something to review. Because it failed to do so in this case, we would grant the Air Force’s petition for review on this ground were we not granting i t on the antecedent ground that access to commissaries and exchanges
falls outside the scope of collective bargaining.

IV

. We grant the petition for review and vacate the Authority’s order.

So ordered.