101 F.4th 707
10th Cir.2024Background
- President Biden’s EO 14,026 raised the federal-contractor minimum wage to $15/hr and rescinded a Trump-era exemption for recreational services performed under federal permits; DOL promulgated implementing regulations.
- Plaintiffs (outfitter Duke Bradford, Arkansas Valley Adventure (AVA), and trade group CROA) operate guided-recreation businesses that use special-use permits/CUAs on federal lands and challenged the rule.
- Plaintiffs sought a preliminary injunction alleging (1) the rule exceeds statutory authority under the Federal Property and Administrative Services Act (FPASA) and (2) the rule is arbitrary and capricious under the APA for rescinding the 2018 recreational exemption without adequate analysis.
- The district court denied the preliminary injunction; a motions panel briefly enjoined application to seasonal recreational services pending appeal. The Tenth Circuit (majority) affirmed the denial.
- The majority held FPASA likely authorizes the rule (permits qualify as contract-like instruments supplying nonpersonal services and the rule furthers economy and efficiency) and rejected the APA arbitrary-and-capricious challenge; Judge Eid dissented on nondelegation grounds.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether FPASA authorizes applying the contractor-minimum-wage rule to recreational permittees | FPASA covers procurement/supply to the Government, not services that permittees supply to the public; permits are not government procurement | FPASA broadly authorizes presidential policies governing procurement and supply of nonpersonal services; permits are contract-like instruments that further government-supplied access to services | Court: FPASA likely authorizes the rule as applied to permittees; permits fall within FPASA’s scope |
| Whether the rule has a sufficient nexus to FPASA’s objectives of economy and efficiency | Raising wages will increase costs and reduce access; rule undermines economy/efficiency | DOL reasonably concluded higher wages can improve productivity, reduce turnover, and raise service quality—advancing economy/efficiency even if short-term costs rise | Court: DOL’s judgment is within FPASA’s broad delegation and meets the lenient ‘sufficiently close nexus’ test |
| Whether the Major Questions / clear-statement principle blocks DOL’s action (i.e., whether clear congressional authorization is required) | The rule is economically significant and transformative; clear congressional statement required | Action is an exercise of longstanding proprietary authority under FPASA, not a transformative new regulatory power; historical practice supports the interpretation | Court: Major-questions doctrine inapplicable here; FPASA’s textual delegation and historical practice counsel against invoking it |
| Whether rescission of the 2018 recreational exemption was arbitrary and capricious under the APA | DOL failed to consider alternatives, reliance interests, and prior findings supporting the exemption | EO 14,026 expressly rescinded the exemption, leaving DOL no discretion to retain it; DOL nevertheless acknowledged concerns and explained why benefits likely offset harms | Court: No APA violation—DOL had no discretion to preserve the exemption and provided a reasoned explanation for the change |
Key Cases Cited
- City of Albuquerque v. U.S. Dep’t of Interior, 379 F.3d 901 (10th Cir. 2004) (FPASA authorizes broad presidential policies to promote economy and efficiency in procurement)
- Chao v. Rother? (D.C. Cir. case cited as Chao), 325 F.3d 360 (D.C. Cir. 2003) (upholding contractor labor-related order under FPASA principles cited by the court)
- Am. Fed’n of Lab. & Cong. of Indus. Orgs. v. Kahn, 618 F.2d 784 (D.C. Cir. 1979) (requirement of a sufficiently close nexus to economy and efficiency for FPASA orders)
- Motor Vehicle Mfrs. Ass’n v. State Farm Mut. Auto. Ins. Co., 463 U.S. 29 (1983) (arbitrary-and-capricious/APA standard)
- Whitman v. Am. Trucking Ass’ns, 531 U.S. 457 (2001) (interpretive principles; limits on reading broad delegations)
- Utility Air Regul. Grp. v. EPA, 573 U.S. 302 (2014) (Major Questions Doctrine guidance)
- Encino Motorcars, LLC v. Navarro, 579 U.S. 211 (2016) (agency may change policy but must give reasoned explanation)
- Dep’t of Homeland Sec. v. Regents of Univ. of Cal., 140 S. Ct. 1891 (2020) (agency rescission must consider alternatives and reliance interests)
(Notes: majority opinion affirms district court’s denial of a preliminary injunction; Judge Eid’s dissent would hold FPASA an unconstitutional delegation.)