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National Treasury Employees Union v. Chertoff

August 12, 2005


The opinion of the court was delivered by: Rosemary M. Collyer United States District Judge


The terrorist attacks on September 11, 2001, elevated to preeminence existing concerns regarding a federal system that diffused the responsibility for domestic security among numerous separate and independent agencies. Because "[t]he United States needs a homeland security establishment that can help prevent catastrophic attacks, mobilize national resources for an enduring conflict, and assist in recovery efforts all the while protecting this Nation's values and liberties," Congress created the Department of Homeland Security ("DHS") and gave its executive leadership the unenviable task of melding into a cohesive whole 22 agencies and parts of agencies that had previously been spread across the federal government. H.R. Rep. No. 107-609, at 63-64 (2002), reprinted in 2002U.S.C.C.A.N. 1352, 1353; see Homeland Security Act of 2002 ("HSA"), Pub. L. No. 107-296 (Nov. 25, 2002) (codified as amended at 6 U.S.C. § 101, et seq. (2005)). Congress gave the Secretary of DHS ("Secretary") and the Director of the Office of Personnel Management ("OPM") (collectively "Agencies") extraordinary authority to develop a separate human resources management system ("HR System") for DHS without regard to many of the constraints imposed by the civil service laws that normally govern employees in the competitive service of the federal government.

Congress set out specific system requirements for the new HR System, mandating that it be flexible, contemporary, and ensure the ability of employees to bargain collectively. The National Treasury Employees Union, American Federation of Government Employees, National Federation of Federal Employees, National Association of Agriculture Employees, and Metal Trades Department of the AFL-CIO ("Unions"), which collectively represent approximately 60,000 DHS employees, challenge the regulations implementing DHS's new HR System for allegedly failing to comply with these requirements and for exceeding the authority of the Agencies. The Agencies move to dismiss and the Unions move for summary judgment.

As detailed below, the Court concludes that significant aspects of the HR System fail to conform to the express dictates of the Homeland Security Act. Implementation of Subpart E and 5 C.F.R. § 9701.706(k)(6) of Subpart G will be enjoined. Should the Agencies wish to submit an order that more selectively enjoins Subpart E in a manner otherwise comporting with this memorandum opinion, the Court would be willing to entertain it. A memorializing order accompanies this memorandum opinion.


A. This Litigation

DHS resulted from the largest reorganization of the federal government in decades.

This behemoth and complex department was established by the HSA, an equally behemoth and complex statute.*fn1 The primary missions of DHS are to prevent terrorist attacks in the United States, reduce our vulnerability to attack, and minimize damage from terrorist attacks, while simultaneously carrying out all of the functions of the agencies and subdivisions within the Department that are not related directly to securing the United States. See HSA § 111(b)(1). DHS employs approximately 110,000 people, many of whom are directly engaged in intelligence, counterintelligence, or investigative work related to terrorism investigations. Employees in such positions, among others, are not represented by the Unions and are not covered by the regulations under challenge. See HSA § 842(b), (e).

Given the enormity of the task of creating a cohesive whole out of all these disparate parts, Congress specifically authorized the Agencies to establish a new HR System at DHS "[n]otwithstanding any other provision" of Title 5, United States Code, which governs federal employment, except as noted. See 5 U.S.C. § 9701(a). The extraordinary nature of this grant of authority is described below.

The Agencies worked diligently to develop a new HR System that would meet the System Requirements set by law. There is no dispute here that, as part of that process, the Agencies fulfilled the "provisions to ensure collaboration with employee representatives"*fn2 and provided written descriptions of the proposed changes to each employee representative; gave them time to review and make recommendations; considered their comments; and engaged in pre-implementation congressional notification, consultation, and mediation. At the end of this lengthy process, the Secretary determined "that further consultation and mediation [was] unlikely to produce agreement," and published final regulations on February 1, 2005. Department of Homeland Security Human Resources Management System, 70 Fed. Reg. 5272 (February 1, 2005) ("Regulations"). The Plaintiff Unions sued immediately, pursuant to Section 112(e) of the HSA, which states that regulations issued by the Secretaryshall be subject to challenge under the Administrative Procedure Act. See 5 U.S.C. § 702.While briefing progressed on the parties' motions to dismiss and for summary judgment, the Unions moved for a preliminary injunction to forestall the effective date of the new HR System, scheduled for August 1, 2005. The Court held two hours of oral argument on the motions on July 14, 2005, and then asked for, and received, the Government's assurance that it would postpone the effective date until after August 15, 2005, so that the Court could rule on the merits in the first instance and not on the motion for a preliminary injunction. With thanks for this courtesy, the Court has carefully considered the arguments of the parties, and the entire record, and issues its opinion on an expedited basis.

B. Federal Labor Relations

The Federal Sector Labor Management Relations Act ("FSLMRA"), 5 U.S.C. §§ 7101-7106, 7111-7135 (2000), extends the right to bargain collectively through union representatives to most federal employees, with important caveats. If a union is elected by majority vote to represent an appropriate bargaining unit of employees, the employing agency must meet with union representatives to negotiate a collective bargaining agreement in good faith. Id. § 7114(a)(4). The parties bargain concerning "conditions of employment," id. § 7102(2), defined as those "personnel policies, practices, and matters . . . affecting working conditions," id. § 7103(a)(14). While management retains its rights to make decisions without bargaining concerning wages and other subjects commonly negotiated in private-sector bargaining, see 5 U.S.C. § 7106(a), a federal-sector union can demand that the agency negotiate concerning the "impact and implementation" of most management rights, see Dep't of the Navy v. FLRA, 962 F.2d 48, 50 (D.C. Cir. 1992); 5 U.S.C. § 7106(b)(2)-(3), unless the impact is de minimis. See Nat'l Weather Serv. Employees' Org. v. U.S. Dep't of Commerce, 37 F.L.R.A. 392, 396 (1990).

Subjects for bargaining in the federal sector are divided into three categories. "Mandatory" subjects are those over which management is required to bargain upon request. "Permissive" subjects are those over which management can lawfully bargain but a union cannot force bargaining; any contract reached covering permissive terms is fully enforceable. "Prohibited" subjects are those over which management of an agency is not allowed by law to bargain. "[T]he phrase 'conditions of employment' in turn is defined to include essentially all 'personnel policies, practices, and matters . . . except . . . to the extent such matters are specifically provided for by federal statute.'" U.S. Dep't of Health and Human Servs. v. FLRA, 858 F.2d 1278, 1283 (7th Cir. 1988) (citing 5 U.S.C. § 7103(a)(14)); see also FLRA v. U.S. Dep't of Justice, 994 F.2d 868, 872 (D.C. Cir. 1993) ("[B]y case law and statutory reference, the term 'impact and implementation' includes only the 'procedures which management officials of the agency will observe in exercising' management rights and 'appropriate arrangements for employees adversely affected by the exercise'" of the management rights defined by 5 U.S.C. § 7106(a).) (citation omitted). Even when bargaining is prohibited because issues are covered by a statute, the parties still "negotiate anything that complements, supplements, or explains the matter covered by federal statute." Henry H. Robinson, Negotiability in the Federal Sector 13-14 (1981).

Negotiations are prohibited on matters covered by a federal statute and specified management rights, including, inter alia, the mission, budget, and organization of the agency, the right to manage an agency's workforce and fill positions from certain pools of candidates, and the right to take "whatever actions may be necessary to carry out the agency mission during emergencies." 5 U.S.C. § 7106(a)(2)(A)-(D). A federal-sector union can demand bargaining over agency rules and regulations as long as the rule or regulation "is not a Government-wide rule or regulation." Id. § 7117(a)(1). However, if an agency can demonstrate a "compelling need" for the rule or regulation, id. § 7117(a)(2), it need only bargain about its impact and implementation and not about the decision to adopt the rule in the first place. Whether an agency has demonstrated a compelling need for a non-negotiated rule or regulation is determined by the Federal Labor Relations Authority ("FLRA"). Id. § 7117(b).

When good faith negotiations fail to produce a collective bargaining agreement, the parties submit their dispute to the Federal Service Impasses Panel ("FSIP") or another form of binding arbitration approved by the FSIP. Id. The FSIP "is an entity within the [FLRA], the function of which is to provide assistance in resolving negotiation impasses between agencies and exclusive representatives." Id. § 7119(c). The FSIP is composed of a Chairman and six other members, appointed by the President. Id. § 7119(c)(2). The FSIP will investigate the parties' impasse and assist in its resolution, including making a determination of contract terms that the parties must accept as binding.

C. The DHS HR System

Because of the nature of the crisis that led to its establishment and because of the immensity of the task of coordinating the new Department, Congress gave the Agencies a five-year window in which they might establish a new HR System that is flexible, contemporary, and "ensure[s] that employees may organize, bargain collectively, and participate through labor organizations of their own choosing in decisions which affect them, subject to any exclusion from coverage or limitation on negotiability established by law." 5 U.S.C. § 9701(b) (system requirements);*fn3 5 U.S.C. § 9701(h) (sunset provision). In this effort, the Agencies were freed from the requirements of Title 5, Chapters 71 (collective bargaining), 75 (adverse actions) and 77 (appeals).*fn4 Pursuant to these authorities and the Secretary's authority to issue regulations, see HSA § 102(e) (issuance of regulations), and after extensive consultations with the Plaintiff Unions and others, the Agencies issued Final Regulations on February 1, 2005.

1. Collective Bargaining Provisions

The Regulations emphasize the Department's need to have "flexibility to carry out its vital mission." See 70 Fed. Reg. at 5274; see also id. at 5278-79 ("The ability to act quickly is central to the Department's mission . . . . This ability to act quickly is necessary . . . . [The] HR system must provide the flexibility DHS needs . . . ."); id. at 5279 ("[N]egotiated procedures have hindered day-to-day operations . . . . [T]he Department's managers and supervisors must be able to make split-second decisions to deal with operational realities . . . ."); id. at 5305 ("[T]hese regulations provide the Department with the flexibility necessary to accomplish its vital mission. In so doing, they also provide that interpretations of these regulations by the Secretary and the Director be accorded great deference."); id. ("This section of the regulations recognizes and stresses the fundamental purpose underlying the Homeland Security Act and the statutory mandate to build a flexible personnel system . . . .").

As a result, the Regulations contain an expansive management rights provision and severely restrict collective bargaining to issues that affect individual employees. Because of its importance to this litigation, this part of the Regulations will be quoted in full:

9701.511 Management Rights

(a) (1) To determine the mission, budget, organization, number of employees, and internal security practices of the Department;

(2) To hire, assign and direct employees in the Department; to assign work, make determinations with respect to contracting out, and determine the personnel by which Department operations may be conducted; to determine the numbers, types, grades or occupational clusters and bands of employees or positions assigned to any organizational subdivision, work project or tour of duty, and the technology, methods and means of performing work; to assign and deploy employees to meet any operational demand; and to take whatever other actions may be necessary to carry out the Departments's mission; and

(3) To lay off and retain employees, or to suspend, remove, reduce in grade, band or pay, or take other disciplinary action against such employees or, with respect to filling positions, to make selections for appointments from properly ranked and certified candidates for promotion or from any other appropriate source.

(b) Management is prohibited from bargaining over the exercise of any authority under paragraph (a) of this section or the procedures that it will observe in exercising the authorities set forth in paragraphs (a)(1) and (2) of this section.

(c) Notwithstanding paragraph (b) of this section, management will confer with an exclusive representative over the procedures it will observe in exercising the authorities set forth in (a)(1) and (2) of this section . . .

(d) If an obligation exists under § 9701.518 to bargain, confer, or consult regarding the exercise of any authority under paragraph (a) of this section, management must provide notice to the exclusive representative concurrently with the exercise of that authority and an opportunity to present its views and recommendations regarding the exercise of such authority under paragraph (a) of this section. [Management is allowed to give earlier notice.] . . . Further, nothing in paragraph (d) of this section establishes an independent right to bargain, confer or consult.

(e) To the extent otherwise required by § 9701.518 and at the request of an exclusive representative, the parties will bargain . . . over --

(1) Appropriate arrangements for employees adversely affected by the exercise of any authority under paragraph (a)(3) of this section and procedures which management officials and supervisors will observe in exercising any authority under paragraph (a)(3) of this section; and

(2)(i) Appropriate arrangements for employees adversely affected by the exercise of any authority under paragraph (a)(1) or (2) of this section, provided that the effects of such exercise have a significant and substantial impact on the bargaining unit, or on those employees in that part of the bargaining unit affected by the action or event, and are expected to exceed or have exceeded 60 days. Appropriate arrangements within the duty to bargain include proposals on matters such as --

(A) Personal hardships and safety measures; and

(B) Reimbursement for out-of-pocket expenses incurred by employees as the direct result of the exercise of authorities under this section . . . .

(ii) Appropriate arrangements within the duty to bargain do not include proposals on such matters as --

(A) The routine assignment to specific duties, shifts, or work on a regular or overtime basis; and

(B) Compensation for expenses not actually incurred, or pay or credit for work not actually performed.

(f) Nothing in this section will delay or prevent the Department from exercising its authority. Any agreements reached with respect to paragraph (e)(2) of this section will not be precedential or binding on subsequent acts, or retroactively applied, except at the Department's sole, exclusive, and unreviewable discretion.

5 C.F.R. § 9701.511. Translated into English, this Regulation would give management full discretion over all aspects of the Department except those that might be seen as personal employee grievances: management would engage in collective bargaining concerning procedures by which it makes its decisions and "appropriate arrangements" for employees affected by its decisions to lay off, discharge, discipline, and promote. Notice of any specific layoff, discharge, discipline, or promotion would not need to be given until such time as the Department actually took action, although the Regulations contemplate that the Unions may seek, and management might agree to give, prior notice. Collective bargaining*fn5 over any other subject would be prohibited. Management would "confer" -- but not bargain -- with Union representatives concerning procedures for its exercise of all other management rights.*fn6

Under the new HR System, a collectively bargained agreement at DHS would become effective and binding if not disapproved by the Secretary or his designee within 30 days after its submission for review, "but only if consistent with law, the regulations in this part, Governmentwide rules and regulations, Departmental implementing directives and other policies and regulations, and Executive orders." Id. § 9701.515(d)(3). "Provisions in existing collective bargaining agreements are unenforceable if an authorized agency official determines that they are contrary to law, the regulations in this part, Governmentwide rules and regulations, Departmental implementing directives (as provided by § 9701.506) and other policies and regulations, or Executive orders." Id. § 9701.515(d)(5). The Agencies acknowledge that these provisions would allow DHS to reject any term of a collective bargaining agreement negotiated under the new HR System if a subsequent implementing directive or other policy or regulation were deemed inconsistent.*fn7

Collective bargaining under the new HR System would be of relatively short duration: 60 days to bring extant collective bargaining agreements into compliance with the new Regulations, 70 Fed. Reg. at 5306; 90 days for bargaining for a new collective bargaining agreement, id. at 5338; and 30 days for mid-term bargaining, id. at 5339. The Regulations allow for assistance with bargaining from the Federal Mediation and Conciliation Service or another acceptable neutral. Id. Should such negotiation sessions reach impasse, the impasse would be resolved (and terms set for a new contract) by a new entity established by the HR System, called the Homeland Security Labor Relations Board ("HSLRB"). 5 C.F.R. § 9701.508(f)(11).

2. Role of Federal Labor Relations Authority

The role of the FLRA under the FSLMRA would be largely supplanted by the HSLRB in the HR System. The HSLRB is to have three or more members, appointed by the Secretary from a list of nominees to which the Plaintiff Unions can make recommendations. Id. § 9701.508(c)(1). Whenever the Secretary believes that additional members of the HSLRB are needed, s/he could appoint two or more new members. Id. § 9701.508(d). The Secretary alone would decide if members of the HSLRB should be relieved from duty or not reappointed. The HSLRB is to make all decisions on the scope of bargaining and the duty to bargain in good faith;*fn8 requests for information; exceptions to arbitration awards involving the exercise of management rights and the duty to bargain; and the resolution of all bargaining impasses. Id. § 9701.509. Individual members of the HSLRB would be allowed to investigate, hear, and decide any case brought before it*fn9 although in cases involving unfair labor practices and/or negotiability disputes, a party could seek review of a single member's decision by appealing to the full HSLRB; in all other respects, decisions of the HSLRB would be final and binding. 5 C.F.R. § 9701.508(g). The HSLRB could issue binding Department-wide opinions that might affect unions and employees not parties to a specific dispute before it. See id. § 9701.509(b). The HSLRB would also be authorized to assume jurisdiction over any matter that was submitted to FLRA if the matter affects homeland security, a decision to be made by the HSLRB that would be final and not subject to review by the FLRA. Id. § 9701.509(a)(7). This broad jurisdiction is premised on the "imperative that HSLRB retain jurisdiction over each matter for which an understanding and appreciation of the Department's mission is necessary." 70 Fed. Reg. at 5307.

In contrast, the powers and duties of the FLRA would be limited to certain of its normal activities: the determination of the appropriateness of bargaining units and conducting elections; ruling on exceptions to arbitration awards (unless the arbitrator addressed management rights or the duty to bargain); and adjudicating certain unfair labor practices.*fn10 FLRA would have no authority to review and rule on information requests, impasses, or unfair labor practice charges involving management rights or the duty to bargain.

The Regulations do state that FLRA shall "review HSLRB decisions and issue final decisions," subject to review in the federal courts of appeals under 5 U.S.C. § 7123, which is a provision of Title 5 that is not waived. However, in its review, the FLRA

must defer to findings of fact and interpretations of this part made by the HSLRB and sustain the HSLRB's decision unless the requesting party shows that the HSLRB's decision was --

(i) Arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law;

(ii) Based on error in applying the HSLRB's procedures that resulted in substantial prejudice to a party affecting the outcome; or

(iii) Unsupported by substantial evidence.

(2) The [FLRA] must complete its review of the record and issue a final decision within 30 days after receiving the party's timely response to such a request for review. This 30-day time limit is mandatory, except that the [FLRA] may extend its time for review by a maximum of 15 additional days if it determines that . . .

(i) The case is unusually complex; or

(ii) An extension is necessary to prevent any prejudice to the parties that ...

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