On April 30, the U.S. Court of Appeals for the Tenth Circuit affirmed a lower court's ruling denying a bid from two outdoor recreation companies asking for a preliminary injunction on a 2021 Department of Labor (DOL) rule that increased the minimum wage paid by government contractors to $15 an hour.
The decision was a boon for the Biden administration as it represents another cleared hurdle for the rule and signifies widening discretion given to the president to make changes under the Federal Property and Administrative Services Act (FPASA).
Federal Property and Administrative Services Act
The FPASA was enacted in 1949 to "provide the Federal Government with an economical and efficient system for . . . [p]rocuring and supplying property and nonpersonal services." The Act authorizes the president to "prescribe policies and directives that the President considers necessary to carry out" the FPASA and that are "consistent with" the Act. Therefore, to fall within the authority granted, mandates ordered pursuant to FPASA authority must have a "sufficiently close nexus' to the values of [economy and efficiency]."
Here, Arkansas Valley Adventure LLC and the Colorado River Outfitters Association appealed a lower court ruling denying their effort to get a preliminary injunction. The outdoor recreation companies argued that the directive violated the Administrative Procedures Act because the FPASA did not authorize the DOL rule and therefore, it was promulgated "in excess of statutory . . . authority," it was "arbitrary and capricious," and it violated the separation of powers as it unconstitutionally delegated legislative power to the president and DOL.
The Tenth Circuit disagreed with the appellants' argument, finding that the 2021 rule had a sufficiently close nexus to the values of economy and efficiency. The court cites the government's argument that it would "promote[] economy and efficiency" by "enhance[ing] worker productivity and generat[ing] higher-quality work by boosting workers' health, morale, and effort; reducing absenteeism and turnover; and lowering supervisory and training costs." The court stated that "even if the rule could plausibly increase costs for the government and the public, enhancing worker productivity and higher quality work—standing alone—are sufficient justifications to invoke FPASA."
U.S. Circuit Court Judge Allison Eid disagreed with the majority as she believes the FPASA is unconstitutional under the nondelegation doctrine because it lacks an "intelligible principle." She argues the legislation unconstitutionally "grants the President nearly unfettered power to create any policy he considers necessary to carry out nonpersonal services under the guise of economy and efficiency."
Going Forward
The Supreme Court has yet to delineate the outer bounds of presidential authority under the FPASA. For years, presidents have leveraged the FPASA to circumvent Congress and test social policies on the government contracting community. In fact, President Biden used the FPASA to implement a vaccination mandate for federal contractor employees and promulgate a proposed rule requiring covered federal contractors to disclose and report their greenhouse gas emissions.
It looks increasingly likely that, at some point, there will be a Supreme Court review as there may be a developing split amongst jurisdictions' opinions on the matter. Last year, a federal judge in Texas blocked the DOL rule from being applied in Louisiana, Missouri, and Texas; the government has appealed that decision to the Fifth Circuit. Likewise, the Ninth Circuit heard oral arguments in February on a challenge to the broader minimum wage increase. It would be beneficial to the government contracting community, an industry historically responsive to the directives of presidents seeking to import their preferred social policies, if the Supreme Court provided guidance on the outer limits of presidential authority under the FPASA.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.