UNITED STATES DISTRICT COURT FOR THE DISTRICT OF COLUMBIA
April 8, 1996
ASSOCIATED BUILDERS & CONTRACTORS, INC., et al., Plaintiffs,
ROBERT REICH, et al., Defendants.
The opinion of the court was delivered by: RICHEY
MEMORANDUM OPINION OF CHARLES R. RICHEY UNITED STATES DISTRICT JUDGE
Before the Court in the above-captioned case are the parties' cross-motions for summary judgment. The plaintiffs Associated Builders & Contractors, Inc. ("ABC"), Grinnell Fire Protection Systems Corp. ("Grinnell"), and a number of employees of Grinnell have sued the Secretary of Labor and the Director of the Bureau of Apprenticeship and Training ("BAT") at the Department of Labor ("DOL"), challenging policies adopted by the BAT, specifically, BAT Circular 95-06, issued on April 24, 1995, and a July 12, 1995 policy statement by BAT Director Anthony Swoope. The Building and Construction Trades Department, AFL-CIO, has entered an appearance as amicus curiae and has filed a brief in support of the defendants' motion for summary judgment and in opposition to the plaintiffs' motion for summary judgment.
Based on the pleadings, the entire record herein, the law applicable thereto, and for the reasons expressed below, the Court shall grant the plaintiffs' motion for summary judgment. The defendants' actions constitute legislative, as opposed to interpretative rule making and, thus, required notice and comment prior to promulgation. Therefore, in accordance with the mandate of National Family Planning & Reproductive Health Assoc. v. Sullivan, 298 U.S. App. D.C. 288, 979 F.2d 227 (D.C. Cir. 1992), the Court shall enjoin the defendants from enforcing the new policies encompassed in BAT Circular 95-06 and the June 12, 1995 policy statement until and unless they are adopted in a notice and comment rule making.
Pursuant to the National Apprenticeship Act, the Secretary of Labor is authorized and directed to
formulate and promote the furtherance of labor standards necessary to safeguard the welfare of apprentices,
to extend the application of such standards by encouraging the inclusion thereof in contracts of apprenticeship, to bring together employers and labor for the formation of programs of apprenticeship, to cooperate with State agencies engaged in the formulation and promotion of standards of apprenticeship . . . .
29 U.S.C. § 50. Accordingly, the Secretary has promulgated implementing regulations covering, inter alia, the registration, cancellation, and deregistration of apprenticeship programs through the BAT. See 29 C.F.R. Part 29.
In 23 states, apprenticeship programs are registered and monitored through the BAT. In the remaining states and the District of Columbia, the BAT has delegated its authority to register and monitor apprenticeship programs to a recognized State Apprenticeship Agency or Council ("SAC"). St. of Mat'l Facts not in Dispute P 7. To register a program with either the BAT or a SAC ("registration agency"), a sponsor
may designate an "apprenticeship committee," to administer the program. 29 C.F.R. § 29.2(i). A committee may be "joint," i.e., composed of an equal number of representatives of the employer(s) and of the employees represented by a bona fide collective bargaining agent(s). A committee also may be "unilateral" or "non-joint," i.e., a program sponsor in which a bona fide collective bargaining agent is not a participant. 29 C.F.R. § 29.2(i).
Regardless of who administers an apprenticeship program, it must conform to regulatory standards. 29 C.F.R. § 29.5. And, any modification or change to a registered program first must be submitted to an appropriate registration agency for approval. 29 C.F.R. § 29.3(g).
Whenever a sponsor seeks the registration of an apprenticeship program in any state, it must first meet the eligibility requirements of 29 C.F.R. § 29.3. The eligibility requirements include a provision regarding a union's right to comment on a program proposed by an employer for registration:
(h) Under a program proposed for registration by an employer or employers' association, where the standards, collective bargaining agreement or other instrument, provides for participation by a union in any manner in the operation of the substantive matters of the apprenticeship program, and such participation is exercised, written acknowledgment of union agreement or no objection to the registration is required. Where no such participation is evidenced and practiced, the employer or employers' association shall simultaneously furnish to the union, if any, which is the collective bargaining agent of the employees to be trained, a copy of its application for registration and of the apprenticeship program. The registration agency shall provide a reasonable time period of not less than 30 days nor more than 60 days for receipt or union comments, if any, before final action on the application for registration and/or approval.
29 C.F.R. § 29.3(h).
On December 14, 1983, the BAT issued Circular 84-10 to "set forth policies regarding actions taken on requisition for approval of unilateral programs involving labor disputes." BAT Circular 84-10. BAT Circular 84-10 is attached hereto as Appendix A, and is incorporated herein by reference the same as if herein written.
On April 24, 1995, the BAT issued Circular 95-06, to "provide supplemental guidance regarding registering unilateral apprenticeship programs during labor disputes [as a supplement to] Circular 84-10, December 14, 1983, and 84-10 (Modification), January 16, 1984." BAT Circular 95-06. BAT Circular 95-06 is attached hereto as Appendix B, and is incorporated herein by reference the same as if herein written.
By letter dated June 2, 1995, counsel for Grinnell asked the DOL how it would apply BAT Circular 95-06 in the context of its strike with the Road Sprinkler Fitters Local Union No. 669 ("Local 669"). (Letter from Rosenthal to Raymond of 6/2/95, at 1.) Grinnell informed the DOL that it had replacement employees who wished to register for training in one of ABC's apprenticeship programs. The letter failed to advise the DOL that Local 669 had filed an unfair labor practice charge against Grinnell. Based on that charge, the National Labor Relations Board ("NLRB") issued a complaint against Grinnell, alleging that Grinnell had failed to bargain to impasse and that Grinnell had made a number of changes to the terms and conditions of employment unilaterally and illegally. In a response dated July 12, 1995, BAT Director Anthony Swoope informed Grinnell's counsel that
an employer would be precluded from participating in a program if it has failed to bargain to impasse and the union objects. Such would be the case if the union, or some other entity, advises BAT that the NLRB has filed a complaint against the employer finding that it has failed to bargain to impasse. Under these circumstances, BAT would not approve the registration of the unilateral program.
(Letter from Swoope to Rosenthal of 7/12/95, at 2.)
The plaintiffs filed the above-captioned case on December 26, 1995, alleging that the policies encompassed in BAT Circular 95-06 and the July 12, 1995 policy statement "depart without explanation from previously established Department precedent and are inconsistent with published regulations regarding apprenticeship training." Plaints' Mot. for Summ. Jud. at 1-2. These policies, according to the plaintiffs, violate the National Apprenticeship Act ("Act"), 29 U.S.C. § 50, the National Labor Relations Act ("NLRA") 29 U.S.C. § 158, the Davis-Bacon Act, 40 U.S.C. § 276a, and the Administrative Procedures Act ("APA"), 5 U.S.C. § 701. The plaintiffs now move for summary judgment.
The defendants cross-move for summary judgment that their actions were reasonable and are due deference by the Court; that the defendants are reasonably deferring to the expertise of the NLRB; that there is no violation of the Davis-Bacon Act; and that their actions were not arbitrary, capricious, or otherwise contrary to law under the APA.
Summary Judgment is appropriate when there is no genuine issue as to any material fact and the moving party is entitled to a judgment as a matter of law. Fed. R. Civ. P. 56(c); Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 89 L. Ed. 2d 538, 106 S. Ct. 1348 (1986); Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 91 L. Ed. 2d 202, 106 S. Ct. 2505 (1986); Celotex Corp. v. Catrett, 477 U.S. 317, 91 L. Ed. 2d 265, 106 S. Ct. 2548 (1986). Here, as the parties agree, there are no genuine issues of material fact in dispute and the above-captioned case is ripe for determination as a matter of law. Because the Court concludes that the defendants' actions constituted legislative, as opposed to interpretative, rule making and, thus, required notice and comment prior to promulgation, the Court need not address the parties' alternative contentions.
THE DEFENDANTS' ACTIONS CONSTITUTE LEGISLATIVE, AS OPPOSED TO INTERPRETATIVE RULE MAKING AND, THUS, REQUIRED NOTICE AND COMMENT PRIOR TO PROMULGATION.
The plaintiffs argue that the defendants' actions violate the APA in that they constitute an arbitrary and capricious departure without explanation from previously existing published policies or regulations and that they so depart from established policy as to create a new substantive rule subject to the notice and comment provisions of the APA. The defendants counter that their actions are not arbitrary or capricious and do not require notice and comment because they amount to an "interpretative rule making." To resolve this dispute, the Court is guided by the principles expressed in National Family Planning & Reproductive Health Assoc. v. Sullivan, 298 U.S. App. D.C. 288, 979 F.2d 227 (D.C. Cir. 1992).
In National Family Planning, the plaintiffs brought suit against the Secretary of the Department of Health and Human Services ("HHS"), asserting that the process by which certain HHS directives were adopted did not comply with the notice and comment provisions of the APA, and that the new policy embodied in the directives was arbitrary and capricious. The Court noted that an agency is free to alter the interpretative and policy views reflected in regulations construing an underlying statute as long as any changed construction of the statute is consistent with express congressional intent or embodies a "permissible" reading of the statue and is otherwise "reasonable." National Family Planning, 979 F.2d at 231 (quoting Chevron U.S.A., Inc. v. Natural Resources Defense Council, Inc., 467 U.S. 837, 81 L. Ed. 2d 694, 104 S. Ct. 2778 (1984) and Motor Vehicle Mfrs. Ass'n v. State Farm Mut. Auto. Ins. Co., 463 U.S. 29, 77 L. Ed. 2d 443, 103 S. Ct. 2856 (1983)). On review of the District Court's determination that the HHS directives constituted legislative, as opposed to interpretative rule making, and thus required notice and comment prior to promulgation, the Court of Appeals declined to decide whether the agency's revised interpretation of the statute was permissible under Chevron or was reasonable under State Farm. Instead, the Court confined its review to the more limited administrative law issue whether HHS followed the proper procedure in implementing the change.
The APA sets forth the proper procedure:
(b) General notice of proposed rule making shall be published in the Federal Register. . . . Except when notice or hearing is required by statute, this subsection does not apply--
(A) to interpretative rules, general statements of policy, or rules of agency organization, procedure, or practice. . . .
(c) After notice required by this section, the agency shall give interested persons an opportunity to participate in the rule making through submission of written data, views, or arguments with or without opportunity for oral presentation. After consideration of the relevant matter presented, the agency shall incorporate in the rules adopted a concise general statement of their basis and purpose.
5 U.S.C. 553. Under the APA, a "rule" is defined as "the whole or a part of an agency statement of general or particular applicability and future effect designed to implement, interpret, or prescribe law or policy or describing the organization, procedure, or practice requirements of an agency . . . ." 5 U.S.C. 551(4). Neither party disputes that the defendants' actions here constitute a "rule making" within the meaning of the APA; rather, the parties dispute the characterization of that rule making as "legislative," on the one hand, or "interpretative," on the other.
The label that the agency puts on its given exercise of administrative power is not conclusive; rather it is what the agency does in fact. National Family Planning, 979 F.2d at 237. As explained in National Family Planning, interpretative rules are those which clarify statutory or regulatory terms, explain existing law, and remind parties of existing duties under the law; whereas legislative rules accomplish more than that. Id. at 236-37. For example, "a rule is legislative if it attempts 'to supplement [a statute], not simply to construe it.'" Id. at 237 (quoting Chamber of Commerce v. Occupational Safety & Health Admin., 204 U.S. App. D.C. 192, 636 F.2d 464, 469 (D.C. Cir. 1980)). Rules are legislative when they fill in gaps and resolve inconsistencies left by statute. See Citizens to Save Spencer County v. Environmental Protection Agency, 195 U.S. App. D.C. 30, 600 F.2d 844, 876 n. 153 (D.C. Cir. 1979). Rules that "effect a change in existing law or policy," Powderly v. Schweiker, 704 F.2d 1092, 1098 (9th Cir. 1983), or "grant rights, impose obligations, or produce other significant effects on private interests," Batterton v. Marshall, 208 U.S. App. D.C. 321, 648 F.2d 694, 701-02 (D.C. Cir. 1980), are legislative. Rules are legislative if they finally determine rights to which they are addressed and do not leave the agency free to exercise discretion. American Bus Assoc. v. United States, 201 U.S. App. D.C. 66, 627 F.2d 525 (D.C. Cir. 1980).
Before the agency took the actions complained of here, its policy with respect to registering apprenticeship programs was set forth in 29 C.F.R. 29.3(h) and BAT Circular 85-10. Section 29.3(h) provides for union participation in registering an apprenticeship program. Specifically, the regulation provides for written acknowledgment or no objection from the union when union participation in an apprenticeship program is provided for and exercised. When no union participation is evidenced and practiced, the regulation requires an employer to furnish to the union a copy of its application for registration, and the registration agency is required to provide an opportunity for union comments before taking final action on the application. See 29 C.F.R. 29.3(h).
BAT Circular 85-10 addressed actions taken on requisition for approval of unilateral programs involving labor disputes. Interalia, Circular 85-10 provides that registration is not to be denied solely on the basis of a labor dispute and, if an agreement between an employer and a union has terminated, an employer's unilateral request for approval is to be considered on its own merits without requiring labor concurrence.
With these specific policies in place, on April 24, 1995 the DOL issued BAT Circular 95-06. On its face, BAT Circular 95-06 did not purport to interpret or construe the existing policies; rather, its express purpose was "to provide supplemental guidance regarding registering unilateral apprenticeship programs during labor disputes" and to provide "additional guidance and procedures to be followed (emphasis added) . . . ." In fact, along with providing some interpretation of existing policy, the BAT Circular did just that.
Circular 95-06 provides, in the paragraphs numbered 1 and 2, that, under certain circumstances, a registration agency must raise the issue of registration with the union before registering a unilateral program, a procedural obligation on the registration agency that had not been expressed in section 29.3(h) or BAT Circular 85-10. In the June 12, 1995 policy letter, Director Swoope reiterated a registration agency's affirmative duty pursuant to BAT Circular 95-06 to determine whether the union has the right to object to and block the proposed apprenticeship program. Moreover, the letter stated: "An employer would be precluded from participating in a program if it has failed to bargain to impasse and the union objects. Such would be the case if the union, or some other entity, advises the BAT that the NLRB has filed a complaint against the employer finding that it has failed to bargain to impasse. Under these circumstances, BAT would not approve the registration of the unilateral program."
The above-mentioned policy announced in BAT Circular 95-06 and the June 12, 1995 policy letter constitute legislative rules. They have the stated purpose of "supplementing," not "interpreting," existing policy and procedures. The rules, in fact, fill in a gap in former policy recognized by the DOL, that is, they address the situation where an employee may have failed to bargain to impasse. Furthermore, the rules impose new obligations on registration agencies. Finally, the rules remove agency discretion under certain circumstances, setting forth a rule of ineligibility when the NLRB has filed a complaint against the employer.
While these rules may be perfectly permissible and reasonable ones, they constitute legislative rule making, which requires notice and comment under the APA. Because the Court must set aside the agency action for this reason, the Court does not reach the challenges to the agency action under the National Apprenticeship Act, the National Labor Relations Act, and/or the Davis-Bacon Act.
For the above reasons, the plaintiffs' motion for summary judgment shall be granted and the defendants' motion for summary judgment shall be denied. The defendants shall be enjoined to the extent that the new policies encompassed in BAT Circular 95-06 and the June 12, 1995 policy statement may not be enforced until and unless they are adopted in a notice and comment rule making. The Court shall issue an Order of even date herewith consistent with the foregoing Memorandum Opinion.
April 8, 1996
CHARLES R. RICHEY
UNITED STATES DISTRICT JUDGE
For the reasons set forth in the Court's Memorandum Opinion of even date herewith, it is, by the Court, this 8 day of April, 1996,
ORDERED that the plaintiffs' Motion for Summary Judgment shall be, and hereby is, GRANTED; and it is
FURTHER ORDERED that the defendants' Motion for Summary Judgment shall be, and hereby is, DENIED; and it is
FURTHER ORDERED that the defendants shall be enjoined to the extent that the new policies encompassed in BAT Circular 95-06 and the June 12, 1995 policy letter may not be enforced until and unless they are adopted in a notice and comment rule making.
CHARLES R. RICHEY
UNITED STATES DISTRICT JUDGE
December 14, 1983
U.S. DEPARTMENT OF LABOR Distribution: SUBJECT: CODE: 450
EMPLOYMENT AND TRAINING
ADMINISTRATION A-339 All Tech. Registering Unilateral
Hdqtrs. Apprenticeship Programs
Bureau of Apprentice- During Labor Disputes
ship and Training
Washington, D.C. 20213 A-547 SD䐿쌨
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