121 F.4th 1
9th Cir.2024Background
- Executive Order 14026 (Apr. 27, 2021) directed federal agencies to require covered federal contractors to pay employees a $15/hour minimum; the DOL promulgated a notice-and-comment rule to implement it.
- Five states (Nebraska, Idaho, Indiana, Arizona, South Carolina) sued to enjoin and vacate the Order and DOL rule, alleging violations of the Federal Property and Administrative Services Act (FPASA), the APA, and the major questions doctrine; district court dismissed and denied a preliminary injunction.
- Appellants challenge (on appeal) that the EO and DOL rule exceed FPASA authority, violate the major questions doctrine, and that the DOL rule is arbitrary and capricious under the APA.
- The Ninth Circuit panel reversed the dismissal, vacated the district court’s denial of preliminary injunction, and remanded for further proceedings.
- The panel held: (a) the FPASA’s broad statement of purpose (§101) cannot, by itself, authorize the President or DOL to impose a nationwide contractor minimum wage; (b) none of the FPASA’s operative provisions cited by the Government authorizes the $15 mandate; and (c) the DOL rule is reviewable under the APA and was arbitrary and capricious for failing to consider alternatives.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the FPASA authorizes the President/DOL to impose a nationwide federal-contractor minimum wage | The FPASA’s §101 purpose clause is not an operative grant; President may act only to carry out an operative provision and no operative provision authorizes this mandate | §101 read with §121(a) and certain operative sections gives broad procurement authority allowing the President to prescribe policies to promote economy and efficiency | FPASA §101 (statement of purpose) is not an operative grant; the President may act only to carry out an operative provision, and none of the cited operative sections authorizes the $15 mandate |
| Whether the major questions doctrine blocks reliance on the FPASA absent a clear statement from Congress | The wage mandate is economically and politically significant and FPASA lacks clear statement, so major questions doctrine should apply | The FPASA has long been used to govern contract terms; the action is within historical executive practice; doctrine doesn’t bar the Order | Court found the action was not a "transformative" expansion of authority (because prior presidents used FPASA for contractor wage/terms), so the major questions doctrine did not apply to bar reliance on FPASA here |
| Whether DOL’s implementing rule is reviewable under the APA when it ‘‘implements’’ a presidential directive | Agency action implementing an EO remains a final agency action subject to APA review; DOL must consider alternatives and explain choices | Franklin v. Massachusetts insulates presidential action from APA review; implementing a binding EO leaves agencies no discretion to consider alternatives | The rule is reviewable under the APA; DOL acted arbitrarily and capriciously by failing to consider reasonable alternatives (e.g., different rates, phase-in, timing), so the rule must be vacated pending further proceedings |
Key Cases Cited
- Util. Air Regul. Grp. v. EPA, 573 U.S. 302 (2014) (major questions doctrine: courts require clear congressional authorization for extraordinary agency assertions of power)
- Food & Drug Admin. v. Brown & Williamson Tobacco Corp., 529 U.S. 120 (2000) (statutory interpretation canon: Congress does not hide major policy decisions in ambiguous statutory text)
- Bennett v. Spear, 520 U.S. 154 (1997) (final agency action test for APA review)
- Chrysler Corp. v. Brown, 441 U.S. 281 (1979) (interpreting §121(a) and noting limits on FPASA-based executive orders)
- Youngstown Sheet & Tube Co. v. Sawyer, 343 U.S. 579 (1952) (executive action must rest on congressional delegation or Constitution)
- Perkins v. Lukens Steel Co., 310 U.S. 113 (1940) (Government’s wide power to fix terms and conditions of procurement)
- RadLAX Gateway Hotel, LLC v. Amalgamated Bank, 566 U.S. 639 (2012) (specific-governs-general canon in statutory construction)
- Bilski v. Kappos, 561 U.S. 593 (2010) (avoid interpreting statutory provisions to render others superfluous)