42:0587(37)NG - - AFSCME Local 3097 and Justice, Justice Management Division - - 1991 FLRAdec NG - - v42 p587



[ v42 p587 ]
42:0587(37)NG
The decision of the Authority follows:


42 FLRA No. 37

FEDERAL LABOR RELATIONS AUTHORITY

WASHINGTON, D.C.

AFSCME LOCAL 3097

(Union)

and

DEPARTMENT OF JUSTICE

JUSTICE MANAGEMENT DIVISION

(Agency)

0-NG-1372

(31 FLRA 322 (1988))

DECISION AND ORDER ON REMAND

September 27, 1991

Before Chairman McKee and Members Talkin and Armendariz.

I. Statement of the Case

This case is before the Authority pursuant to a remand of the Authority's decision concerning Proposal 1 in AFSCME Local 3097 and Department of Justice, Justice Management Division, 31 FLRA 322 (1988) (Justice), by the United States Court of Appeals for the District of Columbia Circuit. Department of Justice, Justice Management Division v. FLRA, No. 88-1316 (D.C. Cir. July 27, 1990) (order).

In Justice, the Authority determined that Proposal 1, which requires the Agency to comply with Office of Management and Budget (OMB) Circular A-76 in making contracting-out decisions, was negotiable. The Agency petitioned for review of this determination in the District of Columbia Circuit.

While the Agency's petition for review in this case was pending before the court, the United States Supreme Court decided Department of the Treasury, Internal Revenue Service v. FLRA, 110 S. Ct. 1623 (1990) (IRS v. FLRA). In IRS v. FLRA, the Court reversed and remanded a decision by the District of Columbia Circuit, Department of the Treasury, Internal Revenue Service v. FLRA, 862 F.2d 880 (D.C. Cir. 1988), sustaining an Authority finding in National Treasury Employees Union and Department of the Treasury, Internal Revenue Service, 27 FLRA 976 (1987) (NTEU), that a different proposal addressing agency compliance with OMB Circular A-76 was negotiable. The D.C. Circuit subsequently remanded that case to the Authority. Department of the Treasury, Internal Revenue Service v. FLRA, No. 87-1439 (D.C. Cir. May 11, 1990) (order). Shortly thereafter, the case now before us also was remanded to the Authority.

For the following reasons, we conclude on remand that Proposal 1 is negotiable.

II. Proposal 1

The Agency agrees to comply with OMB Circular A-76 and other applicable laws and regulations in conducting the library study and making decisions on contracting out.

III. Background

A. The Authority's Decision in Justice

In Justice, the Authority concluded that OMB Circular A-76 was a "rule or regulation" within the meaning of section 7103(a)(9)(C)(ii) of the Federal Service Labor-Management Relations Statute (the Statute), which defines "grievance." Therefore, the Authority decided that alleged violations of the Circular "may be included in a grievance procedure negotiated under section 7121." Justice at 337. The Authority rejected the Agency's argument that the proposal interfered with management's right to make determinations with respect to contracting out under section 7106(a)(2)(B) of the Statute. Noting that agency officials must follow the policies established by OMB Circular A-76, the Authority found that Proposal 1 constituted a negotiable procedure, under section 7106(b)(2) of the Statute.

The Authority further held that subjecting the Agency's contracting-out decisions to arbitral review was consistent with section 7106(a)(2)(B) of the Statute. Citing Newark Air Force Station and American Federation of Government Employees, Local 2221, 30 FLRA 616 (1987), the Authority stated that "[t]he Agency's concern with arbitrators 'substituting their judgment' for that of management presents no basis on which to find this proposal nonnegotiable." Justice, 31 FLRA at 343.

Finally, the Authority rejected the Agency's argument that Proposal 1 was inconsistent with OMB Circular A-76 and its Supplement and, therefore, was nonnegotiable under section 7117 of the Statute. The Authority found that nothing in the proposal affected the right of an independent contractor or its employees to challenge contracting-out decisions under the procedures established by the OMB issuances. Further, even assuming a conflict between the appeals procedure in OMB Circular A-76 and the proposal, the Authority stated that "the language of the Circular cannot limit the statutorily prescribed scope of a negotiated grievance procedure." Justice, 31 FLRA at 346.

B. The Supreme Court's Decision in IRS v. FLRA

In IRS v. FLRA, the Supreme Court reversed the Authority's holding that compliance with OMB Circular A-76 could be enforced through a negotiated grievance procedure because the Circular constituted a rule or regulation within the meaning of section 7103(a)(9) of the Statute. The Court stated that the holding was "flatly contradicted by . . . § 7106(a)'s command that 'nothing in this chapter' . . . shall affect the authority of agency officials to make contracting-out determinations in accordance with applicable laws." 110 S. Ct. at 1627 (emphasis omitted). The Court stated that "there are no 'external limitations' on management rights, insofar as union powers under § 7106(a) are concerned, other than the limitations imposed by 'applicable laws.'" Id. at 1629 (emphasis in original).

The Court also held that the term "applicable laws" in section 7106(a)(2) is not synonymous with the phrase "any law, rule, or regulation," in section 7103(a)(9) of the Statute. The Court stated that "[i]t cannot be true . . . that all actions not in accordance with a 'law, rule, or regulation' under § 7103(a)(9) are, by definition, also actions not 'in accordance with applicable laws' in § 7106(a)." Id. (emphasis in original). However, the Court stated that it is a "permissible (though not an inevitable) construction of the [S]tatute that the term 'applicable laws' in § 7106(a) extends to some, but not all, rules and regulations . . . ." Id. (footnote omitted). Because the scope of the term "applicable laws" in section 7106(a)(2) was not considered by the United States Court of Appeals for the District of Columbia Circuit, the Supreme Court remanded the case to the District of Columbia Circuit to consider that issue, or "await [the Authority's] specification, on remand, of the particular permissible interpretation of 'applicable laws' (if any) it believes embraces the Circular." Id. at 1630.

Following the District of Columbia Circuit's remand of NTEU to us, we examined the scope of the term "applicable laws" and whether it encompasses OMB Circular A-76 in our decision and order on remand in National Treasury Employees Union and U.S. Department of the Treasury, Internal Revenue Service, 42 FLRA No. 31 (1991) (Treasury).

C. The Authority's Decision in Treasury.

In Treasury, we held that, insofar as management rights under section 7106(a)(2) are concerned, proposals that require compliance with applicable laws do not directly interfere with the exercise of such rights. Compare American Federation of Government Employees, Department of Education Council of AFGE Locals and U.S. Department of Education, 38 FLRA 1068, 1075-76 (1990) (Department of Education), request for reconsideration denied, 39 FLRA 1241 (1991), petition for review filed sub nom. United States Department of Education v. FLRA, No. 91-1219 (D.C. Cir. May 10, 1991) (proposals requiring management to exercise its rights under section 7106(a)(1) of the Statute in accordance with applicable laws directly interfere with the exercise of such rights).

We also held in Treasury that the term "applicable laws" in section 7106(a)(2) includes, among other things, provisions of the United States Code as well as rules and regulations having "the force and effect of law." Id., slip op. at 15. As relevant here, we held that regulations must have certain substantive and procedural characteristics in order to constitute regulations having the force and effect of law. Specifically, regulations have the force and effect of law, so as to constitute "applicable laws," if they: (1) are promulgated pursuant to an explicit or implicit delegation of legislative authority by Congress; (2) affect individual rights and obligations; and (3) are promulgated in accordance with applicable procedural requirements. Id., slip op. at 15-17. For reasons fully set forth in Treasury, we concluded that OMB Circular A-76 constituted a regulation having the force and effect of law and, therefore, constituted an applicable law within the meaning of section 7106(a)(2) of the Statute.

IV. Analysis and Conclusions

Proposal 1 requires the Agency to comply with OMB Circular A-76, which is an applicable law within the meaning of section 7106(a)(2) of the Statute. As the proposal imposes no limitation on management's exercise of its right to make determinations with respect to contracting out other than that already imposed by section 7106(a)(2) of the Statute, Proposal 1 does not directly interfere with the Agency's right under section 7106(a)(2).

There is no dispute that the practical effect of Proposal 1 is to authorize the processing of alleged violations of OMB Circular A-76 through the negotiated grievance procedure. See Justice, 31 FLRA at 323-24. Although the Agency argued in Justice that Proposal 1 is inconsistent with the appeal procedures in the Circular, an identical argument was addressed and rejected in Treasury. We stated that "grievances enforcing the Circular are within the scope of the negotiated grievance procedure under section 7103(a)(9) of the Statute[,]" and that "OMB cannot preclude grievances enforcing the Circular by issuing regulations that limit the scope of the statutory grievance procedure." Treasury, slip op. at 28 (citation om