National Treasury Employees Union v. Chertoff

452 F.3d 839

NATIONAL TREASURY EMPLOYEES UNION, et al., Appellees/Cross-Appellants v. Michael CHERTOFF, Secretary, United States Department of Homeland Security and Linda M. Springer, Director of the Office of Personnel Management, Appellants/Cross-Appellees.

No. 05-5436.

No. 05-5437.

United States Court of Appeals, District of Columbia Circuit.

Argued April 6, 2006.

Decided June 27, 2006.

COPYRIGHT MATERIAL OMITTED

Thomas M. Bondy, Attorney, U.S. Department of Justice, argued the cause for appellants/cross-appellees. With him on the briefs were Peter D. Keisler, Assistant Attorney General, Kenneth L. Wainstein, U.S. Attorney, Gregory G. Katsas, Deputy Assistant Attorney General, William G. Kanter, Deputy Director, Tara Leigh Grove, Attorney, Leland E. Beck, Counsel, Department of Homeland Security, and Mark A. Robbins, David B. Scholl, and Robin M. Richardson, Counsel, Office of Personnel Management.

Gregory O'Duden argued the cause for appellees/cross-appellants. With him on the briefs were Elaine D. Kaplan, Larry J. Adkins, Robert H. Shriver, III, Mark D. Roth, Susan Tsui Grundmann, Kim D. Mann, Sally M. Tedrow, Robert Matisoff, and Keith R. Bolek. Charles A. Hobble entered an appearance.

Before: RANDOLPH and GRIFFITH, Circuit Judges, and EDWARDS, Senior Circuit Judge.

Opinion for the Court filed by Senior Circuit Judge EDWARDS.

ACRONYMS & ABBREVIATIONS IN OPINION

Act           Homeland Security Act
Authority     Federal Labor Relations
              Authority
Chapter 71    Codifies the Federal Services
              Labor-Management Statute
Chertoff I    The first District Court opinion
              at 385 F.Supp.2d 1 (D.D.C
              2005)
Chertoff II   The second District Court
              opinion at 394 F.Supp.2d 137
              (D.D.C.2005)
Department    Department of Homeland
              Security
DHS           Department of Homeland
              Security
Final Rule    DHS Human Resources Management
              System (at 5 C.F.R
              Part 9701)
FLRA          Federal Labor Relations
              Authority
FSLMS         Federal Services Labor-Management
              Statute
              (codifying "Chapter 71")
HR system     The human resources management
              system adopted in Final
              Rule
HSA           Homeland Security Act
HSLRB         Homeland Security Labor
              Relations Board
MRP           Mandatory Removal Panel
              under the HR system
MSPB          Merit Systems Protection
              Board
OPM           Office of Personnel
              Management
regulations   The Final Rule (at 5 C.F.R
              Part 9701)
Secretary     Secretary of Homeland
              Security
§ 9701        Statutory authorization for a
              human resources management
              system at DHS

TABLE OF CONTENTS

  I. Background ..................................................................845
     A. The Homeland Security Act ................................................845
     B. The Final Rule Adopting the HR System ....................................846
        1. Collective Bargaining .................................................846
        2. The Roles of the Homeland Security Labor Relations Board and the
            Federal Labor Relations Authority ....................................848
        3. The Role of the Merit Systems Protection Board ........................850
     C. Litigation Before the District Court .....................................850
 II. Analysis ....................................................................852
     A. Standing and Ripeness ....................................................852
     B. Standard of Review .......................................................855
     C. The Duty to Ensure Collective Bargaining .................................856
        1. DHS's Asserted Power to Unilaterally Abrogate Collective
            Bargaining Agreements ................................................858
        2. The Scope of Bargaining ...............................................860

        3. The Final Rule Fails to "Ensure Collective Bargaining" for DHS
            Employees in Two Critical Respects — Therefore No Deference is
            Due the Department's Interpretation of the HSA .......................864
     D. The Role of the HSLRB ....................................................865
     E. DHS's Attempt to Regulate FLRA ...........................................865
     F. The Role of MSPB .........................................................866
     G. The Scope of the Injunction ..............................................867
III. Conclusion ..................................................................867

EDWARDS, Senior Circuit Judge.

When Congress enacted the Homeland Security Act of 2002 ("HSA" or the "Act") and established the Department of Homeland Security ("DHS" or the "Department"), it provided that "the Secretary of Homeland Security may, in regulations prescribed jointly with the Director of the Office of Personnel Management, establish, and from time to time adjust, a human resources management system." 5 U.S.C. § 9701(a) (Supp. II 2002). Congress made it clear, however, that any such system "shall — (1) be flexible; (2) be contemporary; (3) not waive, modify, or otherwise affect [certain existing statutory provisions relating to, inter alia, merit hiring, equal pay, whistleblowing, and prohibited personnel practices], [and] (4) ensure 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." Id. § 9701(b)(1)-(4). The Act also mandated that DHS employees receive "fair treatment in any appeals that they bring in decisions relating to their employment." Id. § 9701(f)(1)(A). Section 9701 does not mention "Chapter 71," which codifies the Federal Services Labor-Management Statute ("FSLMS"), 5 U.S.C. §§ 7101-7106, 7111-7123, 7131-7135 (2000), and delineates the framework for collective bargaining for most federal sector employees.

In February 2005, the Department and Office of Personnel Management ("OPM") issued regulations establishing a human resources management system. See Department of Homeland Security Human Resources Management System, 70 Fed. Reg. 5272 (Feb. 1, 2005) (codified at 5 C.F.R. Chapter XCVII and Part 9701) ("Final Rule" or "HR system"). The Final Rule, inter alia, defines the scope and process of collective bargaining for affected DHS employees, channels certain disputes through the Federal Labor Relations Authority ("FLRA" or the "Authority"), creates an in-house Homeland Security Labor Relations Board ("HSLRB"), and assigns an appellate role to the Merit Systems Protection Board ("MSPB") in cases involving penalties imposed on DHS employees.

Unions representing many DHS employees (the "Unions") filed a complaint in District Court raising a cause of action under the Administrative Procedure Act, 5 U.S.C. § 701 et seq., to challenge aspects of the Final Rule. In a detailed and thoughtful opinion, Nat'l Treasury Employees Union v. Chertoff, 385 F.Supp.2d 1 (D.D.C.2005) ("Chertoff I"), the District Court found that the regulations would not ensure collective bargaining, would fundamentally and impermissibly alter FLRA jurisdiction, and would create an appeal process at MSPB that is not fair. Based on these rulings, the District Court enjoined DHS from implementing § 9701.706(k)(6) and all of Subpart E (§ 9701.501 et seq.) of the regulations. However, the District Court rejected the Unions' claims that the regulations impermissibly restricted the scope of bargaining and that DHS lacked authority to give MSPB an intermediate appellate function in cases involving mandatory removal offenses. The Government filed a motion to alter or amend the judgment, but the District Court denied that motion. See Nat'l Treasury Employees Union v. Chertoff, 394 F.Supp.2d 137 (D.D.C.2005) ("Chertoff II"). The case is now before this court on appeal by the Government and cross-appeal by the Unions. We affirm in part and reverse in part.

We hold that the regulations fail in two important respects to "ensure that employees may . . . bargain collectively," as the HSA requires. First, we agree with the District Court that the Department's attempt to reserve to itself the right to unilaterally abrogate lawfully negotiated and executed agreements is plainly unlawful. If the Department could unilaterally abrogate lawful contracts, this would nullify the Act's specific guarantee of collective bargaining rights, because the agency cannot "ensure" collective bargaining without affording employees the right to negotiate binding agreements.

Second, we hold that the Final Rule violates the Act insofar as it limits the scope of bargaining to employee-specific personnel matters. The regulations effectively eliminate all meaningful bargaining over fundamental working conditions (including even negotiations over procedural protections), thereby committing the bulk of decisions concerning conditions of employment to the Department's exclusive discretion. In no sense can such a limited scope of bargaining be viewed as consistent with the Act's mandate that DHS "ensure" collective bargaining rights for its employees. The Government argues that the HSA does not require the Department to adhere to the terms of Chapter 71 and points out that the Act states that the HR system must be "flexible," and from this concludes that a drastically limited scope of bargaining is fully justified. This contention is specious. Although the HSA does not compel the Government to adopt the terms of Chapter 71 as such, Congress did not say that Chapter 71 is irrelevant to an understanding of how DHS is to comply with its obligations under the Act. "Collective bargaining" is a term...