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09/21/84 Equal Employment v. Federal Labor


September 21, 1984





Petition for Review and Cross-Application for Enforcement of an Order of the Federal Labor Relations Authority. 1984.CDC.252


Wright and Tamm, Circuit Judges, and MacKinnon, Senior Circuit Judge. Opinion for the court filed by Circuit Judge TAMM. Dissenting opinion filed by Senior Circuit Judge MacKinnon.


This is an appeal from a decision of the Federal Labor Relations Authority (the Authority) ordering petitioner Equal Employment Opportunity Commission to bargain over a union contract proposal that requires compliance with applicable laws and regulations regarding "contracting-out." EEOC contends that is has no duty to bargain because the proposal concerns a subject exclusively reserved to management. The Authority has cross-petitioned for enforcement. For the reasons stated below, we enforce the Authority's order. I. BACKGROUND

A. Statutory Framework

Title VII of the Civil Service Reform Act of 1978 (the Act), 5 U.S.C. 7101-7135 (1982), substantially revised labor-management relations in the federal sector. The Act was designed to balance the right of federal employees to engage in concerted activity with the need of federal managers to achieve an "effective and efficient [federal] Government." 5 U.S.C. §§ 7101(b). To administer the Act and establish labor-management relations policy, Congress created the Federal Labor Relations Authority. The Authority's responsibilities include resolving issues relating to the duty to bargain.

The Act established a system of collective bargaining that requires federal agencies and employee unions to bargain in good faith "with respect to . . . conditions of employment." 5 U.S.C. § 7103(a)(12). The term "conditions of employment" is expansively defined in the Act as "personnel policies, practices, and matters, whether established by rule, regulation, or otherwise, affecting working conditions." 5 U.S.C. § 7103(a)(14).

This broad duty to bargain is subject to certain limitations. Specifically, the Act contains a management rights clause that reverses certain prerogatives to management. 5 U.S.C. § 7106(a). Most important, for this case, the management rights clause reserves to management the authority "to make determinations with respect to contracting-out." 5 U.S.C. § 7106(a)(2). The procedures used in exercising these reserved management rights are subject to negotiation. 5 U.S.C. § 7106(b). *fn1

B. The Facts

The facts in this case are undisputed. During contract negotiations with the EEOC, the union*fn2 advanced the following proposal:

"The EMPLOYER agrees to comply with OMB Circular A-76 and other applicable laws and regulations concerning contracting-out."*fn3

Joint Appendix at 2. EEOC declared the proposal nonnegotiable and refused to bargain over it. To resolve the dispute, the union filed a petition for review with the Authority. J.A. at 1.*fn4

EEOC argued before the Authority that the union proposal was nonnegotiable primarily for two reasons. *fn5 First, it contended that the proposal conflicted with the Act's express reservation to management of the right "to make determinations with respect to contracting out." 5 U.S.C. § 7106(a)(2). Second, the EEOC argued that OMB Circular A-76 (the Circular) itself prohibited negotiation over the proposal.*fn6 J.A. at 12-13.

On September 2, 1982, the Authority issued a decision holding that the union proposal was a mandatory subject of bargaining. American Federation of Government Employees, AFL-CIO National Council of EEOC Locals and Equal Employment Commission, 10 F.L.R.A. 3 (1982). The Authority concluded that the proposal did not impair EEOC's statutory right to make contracting-out decisions because it recognized only existing limitations on EEOC's power. By its terms, ruled the Authority, the proposal established no substantive limitations on management discretion. Id.

The Authority further concluded that the proposal was not rendered nonnegotiable by the terms of the Circular. EEOC apparently asserted that adoption of the proposal would result in subjecting all contracting-out disputes to the negotiated grievance procedure, thus conflicting with the Circular's intent to allow EEOC to resolve such disputes internally.*fn7 The Authority rejected EEOC's underlying assumption that contracting-out disputes are not grievable in the absence of the proposed contract language. 10 F.L.R.A. at 4-5. Rather, the Authority found that such disputes were already grievable under section 7121 of the Act and that the Circular alone could not limit the statutorily prescribed scope of the grievance procedure.*fn8 10 F.L.R.A. at 4-5. Concluding that the contract proposal was not prohibited by either the Act or the Circular, the Authority ordered EEOC to bargain. Id. at 5.

EEOC filed a timely petition for review in this court.*fn9 The FLRA filed a cross-petition for enforcement. We have jurisdiction pursuant to 5 U.S.C. § 7123.*fn10 II. STANDARD OF REVIEW

The Act provides that the Authority's rulings are reviewable in accordance with section 10(e) of the Administrative Procedure Act , 5 U.S.C. § 706 (1982). See 5 U.S.C. § 7123(c) (1982). The Authority's determinations will thus be upheld "if they are supported by substantial evidence. . . are not arbitrary, capricious, or an abuse of discretionand are otherwise in accordance with law." National Treasury Employees Union v. FLRA, 232 U.S. App. D.C. 241, 721 F.2d 1402, 1405 (1983). Review is further circumscribed where, as here, the Authority has construed its enabling legislation. Indeed, the Authority is entitled to "considerable deference" when interpreting and applying the Act's provisions to specific situations. Bureau of Alcohol, Tobacco and Firearms v. FLRA, 464 U.S. 89, 104 S. Ct. 439, 444, 78 L. Ed. 2d 195 (1983). Accordingly, we will uphold the Authority's interpretation of the Act if it is "reasonably defensible," Department of Defense v. FLRA, 212 U.S. App. D.C. 256, 659 F.2d 1140, 1162 n.121 (1981), cert. denied, 455 U.S. 945, 102 S. Ct. 1443, 71 L. Ed. 2d 658 (1982]A; Bureau of Alcohol, Tobacco and Firearms v. FLRA, 104 S. Ct. at 444 (1983), and not inconsistent with any congressional mandate or policy.*fn11 III. ANALYSIS

EEOC asserts that the Authority improperly construed the terms of the management rights clause, as well as the probable effect of the disputed proposal. EEOC suggests first that the plain text of the management rights clause insulates from collective bargaining all proposals regarding contracting-out. Second, EEOC contends that the proposal is nonnegotiable because its adoption would subject contracting-out decisions to the statutorily prescribed grievance procedure, thus infringing on EEOC's reserved authority to make contracting-out decisions. Finally, EEOC argues that the proposal is inconsistent with the Circular.


EEOC asserts that the management rights clause gives management unfettered authority to make contracting-out determinations. Apparently assuming that any proposal regarding contracting-out will restrict this authority, EEOC suggests that the management rights clause renders nonnegotiable all proposals regarding contracting-out.

EEOC's argument is untenable in light of the plain text of the clause. The management rights clause provides that "nothing in [Title VII] shall affect the authority of any management official of any agency -- . . . in accordance with applicable laws -- . . . to make determinations with respect to contracting out." 5 U.S.C. § 7106(a)(2). This language plainly restricts the authority reserved to management by requiring that it be exercised "in accordance with applicable laws." In addition, section 7106(b) provides that procedures used to exercise rights are negotiable. See supra note 1. Because the Act does not grant to management unqualified authority to contract-out, union proposals touching upon that authority are not automatically rendered nonnegotiable. Rather, management may refuse to bargain over only those proposals that would expand upon the restrictions contained in the Act. See infra note 12.

The union proposal here suggests contract language that essentially echoes the statutory requirement that contracting-out determinations be made in accordance with applicable laws. Any restriction imposed by the proposal on management's contracting-out authority thus stems from the Act's mandate. EEOC, of course, must comply with these requirements regardless of whether the proposal is adopted as part of the collective agreement. The union proposal at issue here thus does not of itself establish any substantive criteria guiding management's contracting-out determinations. We therefore agree with the Authority's conclusion that the proposal does not affect management's reserved authority, within the meaning of the statutory language, to make contracting-out decisions.*fn12

EEOC points to no expression of intent in the legislative history that contradicts this conclusion. Though far from conclusive, the legislative history indicates that the management rights clause should not be interpreted to negate the Act's broad duty to bargain. In adopting the management rights clause, Congress sought to reserve to management the authority necessary to achieve an effective and efficient government. At the same time, however, Congress intended to broaden the scope of bargaining beyond that sanctioned under the previous labor-management relations system.*fn13 Thus, as one member explained, the clause was designed to protect "genuine managerial prerogatives."*fn14 Indeed, Congress directed that the clause was to "be read to favor collective bargaining whenever there is doubt as to the negotiability of a subject or a proposal."*fn15

In sum, neither the text nor the legislative history mandates a conclusion other than that reached by the Authority. We cannot say, therefore, that the Authority acted arbitrarily in concluding that the proposal does not affect EEOC's reserved rights. We reject EEOC's argument that the management rights clause renders the proposal nonnegotiable.


EEOC argues next that even if the text of the proposal does not impose additional restrictions, its adoption would effectivEly hinder EEOC's ability to make contracting-out decisions. Specifically, the EEOC contends that the proposal would invade its reserved management rights by making compliance with the Circular a contractual prerequisite of any decision regarding contracting-out. The union could then challenge EEOC's decisions to contract-out by alleging that EEOC violated the collective agreement in failing to comply with appropriate procedures. Any contracting-out decision would then be subject to grievance procedures and ultimately to arbitral review. According to EEOC, contracting-out decisions could thus become the prerogative not of management but of the arbitrator. In this way, EEOC implies, the union would be able to achieve precisely what the management rights clause was intended to prevent.

EEOC's argument assumes that a complaint asserting that a contracting-out determination was not made in accordance with applicable laws, including the Circular, would not be grievable in the absence of the contract proposal. This assumption, however, is contrary to the text of the Act.

The Act expansively defines the subjects covered under the statutory grievance procedure. Grievances include complaints concerning "any claimed violation, misinterpretation, or misapplication of any law, rule, or regulation affecting conditions of employment" as well as complaints "concerning any matter relating to the employment of the employee." 5 U.S.C. § 7103(a)(9).*fn16 Only five subjects, not including the subject of contracting-out, are expressly excluded from coverage under the grievance mechanism.*fn17 An allegation that the EEOC failed to comply with the OMB Circular, or with any other law or rule governing contracting-out, plainly falls within this expansive definition.*fn18

EEOC maintains, however, that in addition to the five subjects expressly designated in section 7121 of the Act, all prerogatives reserved to management under the management rights clause are excluded from the scope of matters grievable. EEOC asserts that because the management rights clause provides that "nothing in this chapter shall affect" management's authority to contract-out, such decisions are removed from grievance procedures. 5 U.S.C. § 7106(a) (emphasis added). A grievance alleging noncompliance with the Circular, however, does not affect management's substantive authority, within the meaning of the statutory language, to contract-out. Rather, it provides a procedure for enforcing the Act's requirement that contracting-out decisions be made in accordance with applicable laws.*fn19 Any substantive limitation on management's authority stems from the externally established criteria contained in the Circular. See supra text accompanying note 12. We therefore find that a grievance asserting that management failed to comply with its statutory or regulatory parameters in making a contracting-out decision is not precluded by the management rights clause. *fn20

The statutorily defined grievance procedure therefore encompasses a claim that a contracting-out determination was not made in accordance with law. EEOC's initial assumption that including the proposal in the collective bargaining agreement would expose for the first time EEOC's contracting-out determinations to employee grievance challenges, and arbitral review, is contradicted by the plain text of the Act. We thus conclude that adoption of the proposal in no way expands an employee's right to challenge management's contracting-out decisions under the grievance procedure. *fn21 Accordingly, we reject EEOC's contention that the proposal will impair its management rights by making compliance with the Circular a contractual prerequisite of contracting-out decisions.


Finally, EEOC argues that the language of the OMB Circular renders the proposal nonnegotiable. As noted, the Circular states that its provisions "shall not be construed to create" any right of appeal except as provided in the Circular itself. J.A. at 37. EEOC maintains that the Authority's ruling that the proposal is negotiable conflicts with the Circular's limiting language because it allows alternative enforcement actions through the gri e vance mechanism. Two considerations compel us to reject this argument.

First, the proposal is not inconsistent with the Circular's limiting language. The proposal does not "create" any new right of appeal. Rather, as we have already determined, the right to file grievances regarding contracting-out decisions is created by the Act.

Second, and more important, the Circular's restrictive language cannot be construed to limit the statutory right to file grievances asserting a violation of contracting-out regulations. There is no indication in the Act or elsewhere of a congressional intent to allow agencies to limit by regulation the statutorily defined grievance procedure. To allow the text of the Circular to restrict the scope of grievances would place "limitations in the statute not placed there by Congress." Colgate-Palmolive Peet Co. v. NLRB, 338 U.S. 355, 363, 94 L. Ed. 161, 70 S. Ct. 166 (1949). Accordingly, we reject EEOC's argument that the Circular bars negotiation over the proposal. *fn22 IV. HOLDING

For the reasons stated herein, we conclude that the Authority's interpretation should be upheld and that its order should be enforced.

Judgment accordingly.


MacKINNON, Senior Circuit Judge, dissenting.

Because I believe that the majority opinion seriously misreads the statute which controls this case, I consider it my duty to dissent. The opinion of the majority holds that the EEOC must bargain over a proposal which, under the Federal Labor Relations Authority's (FLRA's) interpretation of the statute, is a total nullity. The majority holds that incorporation into the collective bargaining agreement of a promise to comply with applicable regulations, including OMB Circular A-76, does require that all "contracting-out" decisions be subject to grievance determinations, but that such a provision affects neither management's authority to contract out nor the existing union remedies for violations of that regulation.1

The FLRA essentially held that (1) management has a right to make determinations regarding contracting-out; (2) such determinations must be made in accordance with applicable regulations; (3) violations of such regulations are already grievable under the Civil Service Reform Act of 1978 without regard to the necessity of making them grievable in a collective bargaining agreement; and thus (4) a provision in a collective bargaining agreement requiring adherence to such regulations does not infringe the agency's specific, existing right to "contract out" because it does not make nongrievable matters grievable. The essential flaw in the FLRA's reasoning -- and the one adopted by the majority -- is that, contrary to its assertion, violations of Circular A-76 and other regulations regarding substantive contracting-out decisions are not statutorily grievable. Hence, inclusion in a collective bargaining agreement of a promise to comply with the Circular's terms would permit the union to seek arbitration on issues that are not now grievable, and would create arbitral review of determinations specifically entrusted by Congress to the EEOC and all other federal agencies. This far-reaching decision potentially affects every non-exempt federal agency.

The union plainly recognized this; why else does it seek so strenuously to impose a collective bargaining provision that -- the majority implicitly asserts -- gives it nothing it did not already possess? Far from being a nullity, the decision of the majority seriously infringes on the authority, specifically reserved to the EEOC and all other agencies by Congress, "to make determinations with respect to contracting out." 5 U.S.C. § 7106(a)(2). I. STANDARD OF REVIEW

The majority recognized that "review of the Authority's order shall be on the record in accordance with

The reviewing court shall --

. . .

(2) hold unlawful and set aside agency action, findings, and conclusions found to be --

arbitrary, capricious, and abuse of discretion, or otherwise not in accordance with law; [or]

. . .

in excess of statutory jurisdiction, authority, or limitations, or short of statutory right. . . .

(Emphasis added.) Thus, the standard of review for FLRA decisions was spelled out recently by Justice Brenan in Bureau of Alcohol, Tobacco and Firearms v. FLRA, 464 U.S. 89, 104 S. Ct. 439, 444, 78 L. Ed. 2d 195 (1983):

Like the National Labor Relations Board, . . . the FLRA was intended to develop specialized expertise in its field of labor relations and to use that expertise to give content to the principles and goal set forth in the Act. . . . Consequently, the Authority is entitled to considerable deference when it exercises its "special function of applying the general provisions of the Act to the complexities" of federal labor relations. . . .

On the other hand, the "deference owed to an expert tribunal cannot be allowed to slip into a judicial inertia which results in the unauthorized assumption by an agency of major policy decisions properly made by Congress." . . . Accordingly, while reviewing courts should uphold reasonable and defensible constructions of an agency's enabling Act, . . . they must not "rubber stamp . . . administrative decisions that they deem inconsistent with a statutory mandate or that frustrate the congressional policy underlying a statute."

(Emphasis added.) Applying this standard, the Court unanimously reversed the FLRA's own construction of its enabling statute. The same principle calls for reversal here.

Courts should be especially cautious about giving undue deference to agency construction of enabling legislation when the particular provision being construed is one designed to act as a limitation on the agency. As this court recently pointed out,

When Congress' intent is to delegate to the agency the task of supplying the meaning of the statutory standard in question, we are bound to accept the agency view if it is not arbitrary or capricious or inconsistent with underlying congressional intent. When Congress has not delegated this function to the agency, we must undertake full interpretive responsibility ourselves, and we look to the agency view as a relevant, but not controlling, principle. It remains for this court initially to exercise its responsibility to interpret the statute to determine whether Congress delegated the definitional function to the agency.

Vanguard Interstate Tours v. ICC, 236 U.S. App. D.C. 325, 735 F.2d 591, 596 (1984); Trailways, Inc. v. ICC, 234 U.S. App. D.C. 185, 727 F.2d 1284, 1288 (1984).

If Congress intended a particular provision to limit the authority of an agency, deferring to an agency decision which eviscerated that provision would foil that legislative intent. When Congress limits the discretion of an agency, a court is remiss if it permits the agency to circumvent that limitation through construction of the statute.2 It is doubly remiss if in doing so it violates a clear grant of specific management discretion to another agency.

In Chapter 71 of Title 5 ("Labor-Management Relations"), which creates the FLRA, Congress specifically provided that "nothing in [Chapter 71] shall affect the authority of any management official of any agency . . . in accordance with applicable laws . . . to make determinations with respect to contracting out." 5 U.S.C. § 7106(a)(2)(emphasis added). This specific recognition of authority in all federal agencies affirmatively denies to the FLRA any authority to "affect" the authority of an agency to "contract out." An FLRA decision which encroached on this specifically recognized power would thus violate the plain intent of Congress. Since Congress cannot have intended to give the FLRA discretion to erode the limitations it specifically placed on that Authority by statute, it cannot have intended that courts give great deference to the FLRA's construction of such limitations.3 To the extent, then, that the FLRA's decision exceeds its "statutory jurisdiction, authority, or limitations," 5 U.S.C. 706(2), it is not entitled to deference. This court "must undertake full interpretive responsibility [itself], and . . . look to the agency view as a relevant, but not controlling, principle." Vanguard Interstate (supra) 735 F.2d at 596. II. ANALYSIS

Although the majority asserts that the plain language of the relevant statutory provisions supports its construction, see Maj. [Slip Op.] at 9, 16, the relevant language points plainly to exactly the opposite interpretation.


Section 7106 provides:

(a) Subject to subsection (b) of this section, nothing in this chapter shall affect the authority of any management official of any agency -- (1) to determine the mission, budget, organization, number of employees, and internal security practices of the agency; and

(2) in accordance with applicable laws --

. . .

to assign work, to make determinations with respect to contracting out, and to determine the personnel by which agency operations shall be conducted. . . .

(b) Nothing in this section shall preclude any agency and any labor organization from negotiating --

(1) at the election of the agency, on the numbers, types, and grades or employees or positions assigned to any organizational subdivision, work project, or tour of duty, or on the technology, methods, and means of performing work;

(2) procedures which management officials of the agency will observe in exercising any authority under this section; or

(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 (emphasis added). In other words, this section of the Act on its face specifically provides that nothing in Chapter 71 can circumscribe management's authority to make decisions regarding contracting-out, except for the limitations in § 7106(b).Subsection 7106(b) provides that management may negotiate (1) "procedures which . . . the agency will observe in exercising [its reserved] authority," (2) "appropriate arrangements for employees adversely affected by the exercise of [such] authority" (emphasis added), and (3) at its election, assignment of employees to particular work projects and the means of carrying out such projects.

Significantly, the FLRA did not attempt to construe the contract proposal at issue as relating to "procedures . . . the agency will observe" in implementing its contracting-out decisions, a fact which the majority recognizes. See Maj. [Slip Op.] at n.12. Indeed, it is difficult to comprehend how OMB Circular A-76 could fit under the provisions of § 7106(b). The purpose and scope of that Circular are spelled out in its first paragraph:

Purpose. This Circular establishes Federal policy regarding the performance of commercial activities. The Supplement to the Circular sets forth procedures for determining whether commercial activities should be performed under contract with commercial sources or in-house using Government facilities and personnel.

OMB Circular No. A-76 (rev. Aug. 4, 1983) (emphasis added). In other words, the Circular and its accompanying Supplement are designed to offer guidance to agencies in making the decision to contract out -- i.e., to provide substantive policy-making criteria -- not procedures for carrying out decisions already made. If (1) the Circular provides substantive criteria for contracting out, and (2) bargaining over substantive criteria for contracting out is prohibited by law, then (3) a collective bargaining proposal which purports to require an agency to meet substantive criteria is not negotiable. It therefore does not appear that the FLRA could rationally have based its decision on the "procedures" provision of § 7106(b). In any event -- even assuming that the language could be twisted into supporting that position -- the FLRA did not do so, and this court is prohibited from relying on a ground not advanced by the agency. See SEC v. Chenery Corp., 318 U.S. 80, 95, 87 L. Ed. 626, 63 S. Ct. 454 (1943) ("administrative order cannot be upheld unless the grounds upon which the agency acted in exercising its powers were those upon which its action can be sustained"); NLRB v. Enterprise Association of Pipefitters, 429 U.S. 507, 51 L. Ed. 2d 1, 97 S. Ct. 891, 522 n.9 (1977) (Chenery rule "has not been disturbed" by subsequent decisions).

The majority attempts to escape this problem by arguing that, while the FLRA did not specifically find that this provision was procedural, it nevertheless used "similar" analysis to that used in cases involving procedures, i.e., its "direct interference" test. Maj. at n.12. The simple answer to this is that a test for determining the validity of procedural provisions is entirely irrelevant to the validity of substantive restrictions. Under § 7106, restrictions on procedures which indirectly affect contracting-out by management may well be proper because they fall within § 7106, but non-procedural restrictions which affect that right -- whether directly or indirectly -- are clearly not.

Moreover, the limited scope of the term "procedures" in subsection (b)(2) is emphasized by subsection (b)(1), in which Congress provided for bargaining over "the employees or positions assigned to any . . . work project, . . . or on the . . . methods, and means of performing work," but only "at the election of the agency." Congress recognized the right of any agency to elect to bargain on some subjects that are not mandatory. Congress' specific treatment of work projects belies the majority's construction of the status.4 It makes little sense to suggest that "contract[ing] out" any specific work project is a mandatory subject of negotiation when this subsection clearly provides that negotiation on "any work project" is "at the election of the agency."

It may be that the key to the majority's opinion is its footnote 12. Although the Authority itself did not hold that the proposal at issue was only "a procedure" under § 7106(b), the majority finds in that footnote that the proposal really is merely procedural, and hence the management rights provisions do not apply at all.5 But neither the Authority's opinion -- despite the majority's divination of what that agency meant but did not say -- nor the language and history of the statute lends any support to the notion that requiring compliance with substantive decision-making criteria, and subjecting such substantive decisions to aRbitral review, is nothing more than a "procedure" for exercising authority to contract out.


The majority, however, does not attempt to rely solely on a sua sponte finding that the provision at issue is procedural. Instead, it rests heavily on another limitation it finds in § 7106: the requirement that decisions regarding contracting-out be made "in accordance with applicable laws." The majority perforce construes this to mean "in accordance with the other provisions of Chapter 71."

It should first be pointed out that ther FLRA in its opinion did not offer this interpretation of the statute as a basis for its decision, and thus the majority is not only speculating in relying on this as a ground, but is also ignoring the principles of Chenery (supra). The FLRA, in fact, heretofore has recognized that substantive decisions regarding management rights are not reviewable under the grievance procedure:

Under the plain language of section 7106(a), of course, "nothing" in the Statute shall "affect the authority" of an agency to exercise the rights enumerated therein. Hence, no matter could be grieved under a procedure negotiated pursuant to section 7121 of the Statute which would deny the authority of an agency to exercise its statutory rights under section 7106. AFGE Local 2782, 6 F.L.R.A. 314, 319-21 (1981) (footnote omitted). There is no suggestion in Local 2782 that the phrase "in accordance with applicable laws" can be used to permit grievance review of non-negotiable substantive decisions.6

But even assuming that the FLRA had proffered this interpretation,7 it could not withstand scrutiny. Congress provided that, except for 7106(b), nothing in Chapter 71 shall affect management's authority, "in accordance with applicable laws," to make determinations with respect to contracting-out. To reach its conclusion that the whole grievance procedure is somehow excluded from that sweep, the majority must read the phrase "applicable laws" to include the remainder of Chapter 71. Thus, it in effect reads the statute as follows: "Nothing in this chapter

It may be that the majority is not reading the statute that broadly, that not all of the remainder of Chapter 71 falls under "applicable laws." It may, perhaps, be suggesting simply that Comgress' (unarticulated) intent in § 7106(a) was to shield the decision-making process from negotiation, but not from subsequent review by labor arbitrators and the FLRA. Again, there is no shred of legislative history which indicates that Congress intended contracting-out decisions to be grievable. But the intent of Congress can be inferred from what it wrote. It did not say that contracting-out decisions (and the other management rights) are "non-negotiable." Had it done so, grievance review arguably would still remain. Instead, it said that, except for 7106(b), nothing in Chapter 71 can affect the right of the agency to make contracting-out decisions. The latter phrase would be singularly inept if what Congress meant was the former, and at least in the absence of clear Congressional intent or a manifestly unsound result this court should refrain from directly violating the express language adopted by Congress.


Next, even if we assume that (1) the term "applicable laws" does include all the rest of Chapter 71, and (2) the exercise of a non-negotiable management right is subject to the grievance provisions, it is far from clear that a failure to comply with Circular A-76 would meet the definition of a "grievance" for purposes of 5 U.S.C. § 7121.

The term "grievance" is defined restrictively by Congress in 5 U.S.C. 7103(a]A(9) (ii), as here relevant, to mean8 "any claimed violation, misinterpretation, or misapplication of any law, rule, or regulation affecting conditions of employment" (emphasis added).9 The term "conditions of employment" is also restrictively defined to mean "personnel policies, practices, and matters . . . affecting working conditions." 5 U.S.C. § 7103(a)(14) (emphasis added). Thus, even under the majority's interpretation of the statute, a violation of agency regulations is a "grievance" under § 7103 (a)(9)(ii) only to the extent that such violation involves personnel policies and practices or the working conditions of the employees. These are plainly words of limitation -- i.e., not all violations are grievable -- and there is no indication that such limitation was inserted inadvertently.

The majority's footnote suggestion that Circular A-76 may have something to do with personnel policies or practices is insubstantial.10 It must, then, be fitted (if anywhere) under the phrase "matters . . . affecting working conditions." But a contracting-out decision, even when it results in a loss of jobs, is not necessarily a decision affecting the working conditions of the employees. While ordinarily the term "working conditions" is to be broadly interpreted, see Independent Federation of Flight Attendants v. Trans World Airlines, Inc., 655 F.2d 155, 157 (8th Cir. 1981), it nevertheless "has a . . . specific meaning in the language of industrial relations," Corning Glass Works v. Brennan, 417 U.S. 188, 202, 94 S. Ct. 2223, 41 L. Ed. 2d 1 (1974), and clearly means "something less than the employment relationship in its entirely." Southern Railway Co. v. OSHRC, 539 F.2d 335, 339 (4th Cir.), cert. denied, 429 U.S. 999, 50 L. Ed. 2d 609, 97 S. Ct. 525 (1976). In interpreting the same term in another statute, the Supreme Court explained that "the element of working conditions encompasses two subfactors: 'surroundings' and 'hazards.'" Corning Glass (supra) 417 U.S. at 202 (interpreting the Equal Pay Act). This court subsequently noted that only "surroundings" and "hazards" fall within the labor relations meaning of "working conditions," Laffey v. Northwest Airlines, Inc., 185 U.S. App. D.C. 322, 567 F.2d 429, 452 n. 153 (D.C. Cir. 1976), and in the FLRA we are dealing with a "labor relations" act. With reference to the term "working conditions" in yet another act, other circuits have held that the term refers to the "environmental area in which an employee customarily goes about his daily tasks." Columbia Gas of Pennsylvania, Inc., v. Marshall, 636 F.2d 913, 916 (3d Cir. 1980]A; Southern Railway (supra) 539 F.2d at 339. There is no indication that the term "working conditions" in the statute at issue here (which was used by Congress several years after the Corning Glass decision, presumably with knowledge of the meaning assigned to those words by the Court) was intended to have a different, much broader meaning that it enjoys in other labor relations statutes passed by Congress.11

It might be argued, on analogy to the National Labor Relations Act , that contracting-out decisions do fall within the term "conditions of employment." In one NLRA case, Fibreboard Paper Products Corp. v. NLRB, 379 U.S. 203, 210, 13 L. Ed. 2d 233, 85 S. Ct. 398 (1964), the Supreme Court interpreted the term -- which is not defined in the NLRA -- to include contracting-out. However, in the Federal Labor Relations Act, unlike the NLRA, Congress -- which presumably was aware of both Fibreboard Paper and Corning Glass -- chose to define the term strictly in a much narrower fashion: it means only personnel policies and practices and matters affecting "working conditions." The meaning attached to a term in one statute, where Congress has not defined it, is irrelevant to its meaning in another statute where Congress has defined it. It is the phrase working conditions, not conditions of employment, which acts to narrow the scope of grievances under the FLRA.12

Since a violation of the regulation involved in this case would be grievable only to the extent it affected the enviroNmental conditions under which employees work, it is difficulty to see what sort of violation of Circular A-76 could have any effect on the working conditions -- as opposed to the continued employment -- of the bargaining unit employees. The Circular governs decisions regarding when agencies should contract out; it does not specify the internal agency personnel policies which would implement such decisions. It conceivably could result in the termination of an employee, but would have little or no effect on conditions in the workplace.


The FLRA itself apparently recognizes that some claimed violations of the Circular will turn out To be non-grievable, but insists that each claimed violation must in the first instance go to an arbitrator.13 Under that approach, the arbitrator would decide whether or not the violation is grievable, subject to FLRA review.14 The FLRA has flatly refused to supply any guidance as to which parts (if any) of the Circular it thinks might be grievable. The EEOC sought such guidance in its petition for reconsideration,15 but the FLRA, finding that the request presented no "extraordinary circumstances," curtly denied it.16 Hence, under the FLRA's construction, every alleged violation of the Circular, the basic purpose of which is to provide SUBSTANTIVE guidance for management decisions regarding contracting-out, must go to an arbitrator.

The FLRA's cavalier, conclusory treatment of the EEOC's legitimate request can be seen as an implicit admission that disclosure of the parts it considers might be grievable would amount to such an extreme denial of elementary managerial authority as to make it perfectly obvious that its construction is a plain violation of the intent expressed by Congress. The same conclusion can be reached with respect to the construction adopted by the majority here. The majority's construction assures that every managerial decision with respect to "contracting-out," if questioned, will ultimately be made, not by the agency, but by an arbitrator, subject to very limited review. This results in a complete negation of the intent expressed by Congress.

This interpretation of the grievance procedure offers the union a fertile source of weapons for obstructing or delaying contracting-out decisions, a situation Congress specifically sought to prevent. It is not difficult to visualize what will happen. The union can file a grievance, claiming that one of the technical standards of the Circular (wholly unrelated to working conditions) was not complied with. The claim as to that particular project must go to an arbitrator, who on a case-by-case basis will evaluate it. Assuming that the arbitrator correctly follows the law, the grievance will be denied. The union then will file exceptions to the award with the FLRA, and months -- or, drawing on the experience of the National Labor Relations Board, even years -- later, the FLRA may deny the exceptions. Review in the court of appeals may follow.17

Even if the grievance is eventually denied, and that denial is affirmed, the prolonged litigation will have c A st a cloud over the agency's contracting-out decision, subject the decision to considerable delay, and wasted valuable agency assets on an essentially frivol o us claim. This extraordinary potential for vexatious litigation will significantly infringe upon management's specifically designated right to make contracting-out decisions.18 The majority's construction thus fails to comply with Congress' admonition that Chapter 71 "be interpreted in a manner consistent with the requirement of an effective and efficient government." 5 U.S.C. § 7101(b). IV. Conclusion

All of the above was recognized by the union; its apparent goal was to incorporate substantive contracting-out criteria (over which neither it nor management may bargain), into the collective bargaining agreement, which would make tham grievable and hence would subject them to arbitral review. The union's pursuit of this case is utterly inexplicable on any other basis.19 Yet the FLRA and the majority hold that contracting out and the other reserved rights already are covered by the grievance mechanism, and that the processes and criteria used by an agency in making contracting-out determinations must be reviewed by arbitrators and the FLRA through that mechanism. For the reasons set forth above, it is my view that such holding is completely contrary to the language of the applicable statutes, drastically undercuts the specific statutory right of management to contract out, and effectively guts the specific reserved limitations that Congress placed on the agency's duty to bargain and the authority of the FLRA.

I accordingly dissent.

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