U.S. Department of the Treasury, Internal Revenue Service, Washington, D.C., (Agency) and National Treasury Employees Union, (Union)

[ v56 p393 ]

56 FLRA No. 54

U.S. DEPARTMENT OF THE TREASURY
INTERNAL REVENUE SERVICE
WASHINGTON, D.C.
(Agency)

and

NATIONAL TREASURY EMPLOYEES UNION
(Union)

0-AR-3172

_____

DECISION

May 10, 2000

_____

Before the Authority: Donald S. Wasserman, Chairman and Dale Cabaniss, Member.

Decision by Chairman Wasserman for the Authority.

I.     Statement of the Case

      This matter is before the Authority on exceptions to an award of Arbitrator Roger P. Kaplan filed by the Agency under section 7122(a) of the Federal Service Labor-Management Relations Statute (the Statute) and part 2425 of the Authority's Regulations. The Union filed an opposition to the Agency's exceptions.

      The Arbitrator determined that the Agency had agreed to a contractual election to bargain over matters covered under section 7106(b)(1) of the Statute and that this election obligated the Agency to proceed to the Federal Service Impasses Panel (the Panel) or other third-party impasse procedures to resolve the parties' bargaining impasse. We conclude that the Agency fails to establish that the award is deficient. Accordingly, we deny the Agency's exceptions.

II.     Background and Arbitrator's Award

      According to the Arbitrator, in 1993, the parties entered into a partnership agreement, which obligated the parties to engage in partnership activities to enhance their relationship. After the issuance of Executive Order 12871, the parties started negotiating a second partnership agreement. According to the Arbitrator, the union president and the Agency's chief of management and finance engaged in collective bargaining to reach accord on a second partnership agreement, which was signed on May 9, 1994. The agreement provided, as follows:

C.     Responsibilities:     Create and implement policies which . . . 2. Encourage a labor management relationship which . . . holds the organization at all levels responsible for negotiating over the subjects set forth in 5 U.S.C. 7106(b)(1).

      Subsequently, the parties engaged in bargaining over matters covered under section 7106(b)(1). When they were unable to reach agreement, the Union claimed that the parties were obligated to submit the matter to third-party impasse resolution procedures, but the Agency disagreed. Consequently, the Union filed a grievance, which was submitted to arbitration on the following stipulated issue:

When the parties negotiated the Total Quality Organization Partnership Agreement, Second Edition, in May, 1994, did the Internal Revenue Service elect to negotiate permissive subjects of bargaining, under 5 U.S.C. 7106(b)(1), and thus obligate the agency to impasse procedures under the Federal Service Impasses Panel, and/ or binding arbitration?

Award at 2.

      Before the Arbitrator, the Agency argued that the disputed provision of the second partnership agreement simply restated Executive Order 12871 and that it had not elected to bargain over any matters covered under section 7106(b)(1). The Agency maintained that absent the mandate of the executive order, it would not have included in the agreement the language pertaining to section 7106(b)(1).

      The Arbitrator found that when the parties negotiated the second partnership agreement, the Agency had agreed to a contractual election to bargain over matters covered under section 7106(b)(1) and that this election obligated the Agency to proceed to the Panel or other third-party procedures to resolve the impasse.

      The Arbitrator concluded that the Agency's position was unpersuasive for three reasons. First, he found that the "experienced negotiators understood the definition of collective bargaining under the Statute and the ramifications of the language set forth in the Agreement." Award at 7-8. Second, he found that the Union was seeking to enforce the agreement, and not Executive Order 12871. Third, he found that the evidence supported a determination that the Agency had agreed to a contractual election to bargain over matters covered under section 7106(b)(1). He noted that the Authority had explained in U.S. Department of Commerce, Patent and Trademark Office, 54 FLRA 360 (1998), review denied, 179 F.3d 946 (D.C. Cir. 1999) (PTO) that Executive [ v56 p394 ] Order 12871 "clearly anticipates that agency heads and subordinates will elect to bargain." Id. at 8 (quoting PTO, 54 FLRA at 377-78 (footnote omitted)). In the Arbitrator's view, the Agency did just that in the second partnership agreement. In addition, the Arbitrator noted that use of the Panel or other third-party procedures to resolve impasses over such matters was consistent with the guidance of the Office of Personnel Management (OPM) on the implementation of Executive Order 12871.

      Accordingly, the Arbitrator sustained the grievance.

III.     The Agency's exceptions relating to arbitrability and jurisdiction are barred from consideration.

A.     Positions of the Parties

      In its exceptions, the Agency contends that the award is deficient because the grievance was not arbitrable. The Agency maintains that this is a dispute over Executive Order 12871, which is "not subject to administrative review[,]" and that consequently, the Arbitrator, the Panel, and the Authority do not have jurisdiction to decide the matter. Exceptions at 14. The Agency asserts that PTO conclusively ruled that questions concerning compliance with Executive Order 12871 are internal management matters. In addition, the Agency claims that because this issue is jurisdictional, it may raise this issue in its exceptions even though it did not raise this issue to the Arbitrator.

      The Agency also argues that the "[p]artnership [a]greement is not subject to administrative review since it is not a collective bargaining agreement." Id. at 17. The Agency asserts that the partnership agreement was not a collective bargaining agreement because it was created under the provisions of Executive Order 12871. The Agency further asserts that the partnership agreement was not a collective bargaining agreement because it did not contain procedures for the settlement of grievances and was not submitted for agency-head review.

B.     Analysis and Conclusions

      Under section 2429.5 of the Authority's Regulations, the Authority will not consider issues that could have been, but were not, raised before the arbitrator. See, e.g., U.S. Department of the Interior, National Park Service, Golden Gate National Recreation Area, San Francisco, California and Laborers' International Union of North America, Local 1276, 55 FLRA 193, 195 (1999) (National Park Service). The Agency concedes that the issues raised in its exceptions concerning arbitrability and jurisdiction, including the issue that the partnership agreement was not a collective bargaining agreement subject to administrative review, were not presented to the Arbitrator. As these issues clearly could, and should, have been presented to the Arbitrator, we are barred by section 2429.5 from considering them. See id.

      Although the Agency concedes that these issues were not presented to the Arbitrator, the Agency argues that because they concern jurisdiction, it may raise them at any time. This argument is without merit. The Authority has held that its subject-matter jurisdiction is an issue that may be raised at any stage of the Authority's proceedings. See American Federation of Government Employees, Council of Prison Locals, Local 171 and U.S. Department of Justice, Federal Bureau of Prisons, Federal Correctional Institution, El Reno, Oklahoma, 52 FLRA 1484, 1489 n.7 (1997). However, the Agency is not questioning the subject-matter jurisdiction of the Authority under section 7122(a) of the Statute to issue a decision resolving its exceptions. Instead, the Agency is questioning for the first time in its exceptions whether the dispute is subject to any "administrative review" by the Arbitrator, Panel, or Authority. Exceptions at 14, 17. Such matters must be presented to the arbitrator in order not to be barred by section 2429.5. See National Park Service, 55 FLRA at 195 (refusing to consider an exception questioning for the first time the jurisdiction of the arbitrator to consider the grievance).

IV.     The award does not fail to draw its essence from the agreement.

A.     Positions of the Parties

      The Agency contends that the award fails to draw its essence from the partnership agreement. The Agency maintains that the agreement is silent on how impasses are to be resolved and that it clearly was not the intent of the parties to involve the Panel in their partnership disputes. The Union argues that the Arbitrator's interpretation of the agreement is supported by the record.

B.     Analysis and Conclusions

      For an arbitrator's award to be found deficient as failing to draw its essence from a collective bargaining agreement, the appealing party must establish one of the following: (1) the award cannot in any rational way be derived from the agreement; (2) the award is so unfounded in reason and fact and so unconnected with the wording and purpose of the collective bargaining agreement as to manifest an infidelity to the obligation of the arbitrator; (3) the award does not represent a plausible [ v56 p395 ] interpretation of the agreement; or (4) the award evidences a manifest disregard of the agreement. See United States Department of Labor (OSHA) and National Council of Field Labor Locals, 34 FLRA 573, 575 (1990).

      No basis is provided for finding that the award is deficient. The Arbitrator found that when the parties negotiated the second partnership agreement, the Agency had agreed to a contractual election to bargain over matters covered under section 7106(b)(1) and that this election obligated the Agency to proceed to the Panel or other third-party procedures to resolve impasses. The Agency's claims that the agreement is silent on how impasses are to be resolved and that the parties did not intend to involve the Panel fail to establish that the Arbitrator's interpretation and application of the agreement is unfounded, irrational, or implausible or disregards the agreement. Accordingly, we deny this exception.

V.     The award is not contrary to law.

A.     Positions of the Parties

      The Agency contends that the award is contrary to the Statute for several reasons. The Agency argues that the Arbitrator's order to submit a dispute over a matter covered under section 7106(b)(1) to the Panel is deficient because the Arbitrator misapplied the legal standards relating to the obligation to bargain over a matter covered under section 7106(b)(1). The Agency maintains that Authority precedent clearly states that an agency may withdraw from bargaining under section 7106(b)(1) at any time prior to reaching agreement. The Agency also argues that the award is deficient because the Arbitrator determined that the partnership agreement constituted a waiver of its right under section 7106(b)(1) to elect not to bargain over matters covered under section 7106(b)(1). The Agency asserts that the award does not support a determination of waiver and that the Authority must review the conclusion de novo to determine whether the award abrogates the exercise of a management right. The Agency also asserts that the Arbitrator was obligated to have applied the framework set forth in Department of the Treasury, U.S. Customs Service and National Treasury Employees Union, 37 FLRA 309 (1990) (Customs Service) and that the award must be set aside because the Arbitrator failed to apply Customs Service.

      In disputing that the award is contrary to the Statute, the Union maintains that the law in this case is very simple: the Statute allows an agency to reach a binding agreement on a matter covered under section 7106(b)(1) and allows enforcement of that agreement.

B.     Analysis and Conclusions

      When a party's exception challenges an arbitration award's consistency with law, we review the question of law raised in the exception and the arbitrator's award de novo. In applying a de novo standard of review, we assess whether the arbitrator's legal conclusions are consistent with the applicable standard of law, based on the underlying factual findings.

      We have specifically held that a contractual election to bargain over matters covered under section 7106(b)(1) is a matter of contract interpretation. As we recently explained in Social Security Administration, Baltimore, Maryland and American Federation of Government Employees, 55 FLRA 1063, 1068 (1999) (SSA), matters covered under section 7106(b)(1) are negotiable only at the election of the agency. However, when an agency does elect to bargain and a provision that concerns a matter covered under section 7106(b)(1) is included in an agreement, the provision is enforceable through grievance arbitration. We ruled that a contractual provision constituting an election to bargain over matters covered under section 7106(b)(1) is, itself, a matter covered under section 7106(b)(1) and is enforceable by an arbitrator. See id. at 1069. Accordingly,

[o]nce the parties have defined their bargaining obligation through an agreement, the issue of whether the parties have complied with the agreement becomes a matter of contract interpretation for the arbitrator.

See id. at 1068.

      Notwithstanding SSA, the Agency argues that this case concerns waiver of a statutory right and not contract interpretation. For the reasons that follow, we reject the Agency's argument.

      Section 7106(b)(1) is an exception to section 7106(a) such that bargaining over matters encompassed by section 7106(b)(1) is permitted notwithstanding that such matters also affect rights under section 7106(a). See PTO, 54 FLRA at 374. This interpretation is consistent with relevant judicial precedent. See Association of Civilian Technicians, Montana Air Chapter No. 29 v. FLRA, 22 F.3d 1150, 1155 (D.C. Cir. 1994) ("§ 7106(b) is indisputably an exception to § 7106(a)"). Moreover, it is compelled by the plain wording of the Statute, which expressly makes section 7106(a) "subject to" section 7106(b) and provides that "nothing in" section 7106 [ v56 p396 ] prevents an agency from electing to bargain over matters encompassed by section 7106(b)(1). See PTO, 54 FLRA at 374.

      Black's Law Dictionary 536 (7th ed. 1999) defines "election" as the exercise of choice. It defines "waive" as abandoning, renouncing, or surrendering of a claim, privilege, or right and defines "waiver" as the voluntary relinquishment or abandonment of a right. Id. at 1574. Management's right set forth in section 7106(b)(1) is a right to elect to bargain. In our view, an election to bargain constitutes the exercise of the right and the choice to bargain, not an abandonment or relinquishment of the right.

      Once the parties have negotiated a collective bargaining agreement that is submitted to arbitration on the issue of whether the parties have agreed to matters covered under section 7106(b)(1), the meaning of the agreement determines whether there has been an election to bargain. That is, whether there has been bargaining and agreement on any matters covered under section 7106(b)(1) rests entirely on the arbitrator's construction of the agreement. In SSA, we also made clear that viewing these cases as contract interpretation matters was consistent with our decision in PTO because we specified in PTO that the decision did "not address, and should not be read to call into question, the enforceability of agreements to bargain over section 7106(b)(1) subjects." 54 FLRA at 387 n.27. As the Arbitrator in this case was simply enforcing such a contractual election to bargain, the award is not contrary to the Statute. See SSA, 55 FLRA at 1069.

      The Agency's reliance on a right to withdraw from bargaining over matters covered under section 7106(b)(1) prior to agreement is misplaced because the Arbitrator found that the Agency had already agreed on matters covered under section 7106(b)(1). Award at 8.

      The Agency's reliance on the application of the framework set forth in Customs Service is similarly misplaced. In U.S. Department of Health and Human Services, Social Security Administration, Kansas City, Missouri and American Federation of Government Employees, Local 1336, 37 FLRA 816, 824 (1990), the Authority specifically held that it would not apply the framework set forth in Customs Service to cases involving section 7106(b)(1). The Authority explained that the abrogation standard of Customs Service was not applicable to section 7106(b)(1) because an agency may elect to bargain over matters covered under section 7106(b)(1). Accordingly, the Authority advised that it would not find an award contrary to section 7106(b)(1) when the arbitrator has merely enforced a provision of the parties' agreement, which, as interpreted by the arbitrator, constitutes the parties' agreement on a matter covered under section 7106(b)(1). Although the Authority set forth a new framework for determining when an arbitration award conflicts with a management right under section 7106 in U.S. Department of the Treasury, Bureau of Engraving and Printing, Washington, D.C. and National Treasury Employees Union, Chapter 201, 53 FLRA 146 (1997) (BEP), nothing in the two-prong test of BEP requires the application of the abrogation standard of Customs Service to a matter involving an arbitrator's enforcement of a contractual election to bargain over matters covered under section 7106(b)(1).

VI.     The award is not contrary to the OPM guidance.

A.     Positions of the Parties

      The Agency contends that the award is deficient as a result of the Arbitrator's reliance on the OPM guidance because the guidance does not have the force and effect of law and because it does not require the use of Panel procedures for impasses involving matters covered under section 7106(b)(1). The Union does not address this exception.

B.     Analysis and Conclusions

      Although the Arbitrator quoted the guidance, the Agency has not shown that the Arbitrator relied on the guidance or that, if he did, such reliance was precluded. The Agency fails to establish that the advisory status of the guidance precluded the Arbitrator's reference to the guidance. Consequently, the Arbitrator's reference to the guidance does not render the award deficient. Cf. U.S. Department of Justice, Immigration and Naturalization Service, Honolulu District Office, Honolulu, Hawaii and American Federation of Government Employees, Local 2886, National Immigration and Naturalization Council, 41 FLRA 207, 211 (1991) (although arbitrators are not required to apply the harmful-error rule to suspen