STATE OF LOUISIANA; STATE OF INDIANA; STATE OF MISSISSIPPI v. JOSEPH R. BIDEN, JR., IN HIS OFFICIAL CAPACITY AS PRESIDENT OF THE UNITED STATES; UNITED STATES OF AMERICA; FEDERAL ACQUISITION REGULATORY COUNCIL; GENERAL SERVICES ADMINISTRATION; ROBIN CARNAHAN, IN HER OFFICIAL CAPACITY AS ADMINISTRATOR OF GENERAL SERVICES, ET AL
No. 22-30019
United States Court of Appeals for the Fifth Circuit
December 19, 2022
Lyle W. Cayce, Clerk
Before GRAVES, WILLETT, and ENGELHARDT, Circuit Judges.
The President asks this Court to ratify an exercise of proprietary authority that would permit him to unilaterally impose a healthcare decision on one-fifth of all employees in the United States. We decline to do so. Thus, we AFFIRM the preliminary injunction issued by the district court.
I. Background
As part of his efforts to combat the COVID-19 pandemic, President Biden issued a series of sweeping vaccination mandates. This Court has had occasion to consider at least two of them – namely, the OSHA-issued mandate which covered private employers with more than 100 employees, heard in BST Holdings, L.L.C. v. Occupational Safety & Health Admin., United States Dep‘t of Lab., 17 F.4th 604 (5th Cir. 2021),1 and the President‘s mandate covering government employees (which this Court recently heard en banc in Feds for Medical Freedom v. Biden, Case No. 22-40043). This case
This challenge concerns four actions that together constitute the “federal contractor mandate.” The first is an Executive Order issued by the President on September 9, 2021.2 President Biden ordered that “in order to promote economy and efficiency in procurement by contracting with sources that provide adequate COVID-19 safeguards for their workplace,” government contracts must include a clause specifying “that the contractor and any subcontractors ... shall, for the duration of the contract, comply with all guidance for contractor or subcontractor workplace locations published by the Safer Federal Workforce Task Force [the “Task Force“] ... , provided that the Director of the Office of Management and Budget ... approves the Task Force Guidance.”3
The second challenged action consists of guidance issued by the Task Force on September 24, 2021, which required “[c]overed contractors [to] ensure that all covered
As required by the Executive Order, the OMB Director issued a short finding that the Task Force guidance “will improve economy and efficiency by reducing absenteeism and decreasing labor costs for contractors and subcontractors working on or in connection with a Federal Government contract.”5 This finding was issued on September 28, 2021. Shortly after this lawsuit was filed, OMB rescinded its initial finding and issued instead a longer finding (the “OMB Determination“) which reached the same conclusion with far more support.6 This latter OMB Determination constitutes the third action herein challenged.
The fourth challenged action is a memorandum issued by members of the Federal Acquisition Regulation (FAR) Council (the “FAR Memo“) in which federal agencies were urged to “act expeditiously to issue deviations [to their prescribed contractual clauses] so that their contracting officers may begin to apply the clause on or before October 15[, 2021].”7 In line with the President‘s Executive Order, the example clause suggested in the FAR Memo requires the signatory to “comply with all guidance, including guidance conveyed through Frequently Asked Questions, as amended during the performance of this contract, ... published by the Safer Federal Workforce Task Force.”8
Together, these four actions require nearly all federal contractors, either immediately (in the case of new contracts or by consented-to changes to old contracts) or at the soonest opportunity, to consent to a contractual clause obliging them to follow guidance from the Task Force. The primary element of that guidance – at least for the moment, as the guidance is subject to amendment – is a mandate that contractors ensure that their employees become fully vaccinated against COVID-19.
The President‘s Executive Order purports to exercise authority given to the President under the Federal Property and Administrative Services Act of 1949, known as the “Procurement Act.”9 The Procurement Act states that its purpose “is to provide the Federal Government with an economical and efficient system” for procurement, contracting, and other related activities.10 It also enables the President to “prescribe policies and directives that the President considers necessary to carry out this subtitle,” provided that “[t]he policies must be consistent with this subtitle.”11
The Congressionally-created FAR Council, meanwhile, “assist[s] in the direction and coordination of Government-wide procurement
II. Procedural History
Three states – Louisiana, Indiana, and Mississippi (the “Plaintiff States“) – brought suit in the Western District of Louisiana against President Biden in his official capacity to seek invalidation of this mandate. These states brought suit in their capacities as federal contractors themselves. They sought and were granted a preliminary injunction and stay by the district court.
In evaluating the request for a preliminary injunction, the district court first found that the states had Article III standing as they faced a choice between complying with the mandate and potentially losing members of their workforce or becoming ineligible to bid on or renew federal contracts.
Next, the district court reviewed the familiar four factors which govern grants of a preliminary injunction: “(1) a likelihood of success on the merits; (2) a substantial threat of irreparable injury; (3) that the threatened injury if the injunction is denied outweighs any harm that will result if the injunction is granted; and (4) that the grant of an injunction will not disserve the public interest.” Ladd v. Livingston, 777 F.3d 286, 288 (5th Cir. 2015) (quoting Trottie v. Livingston, 766 F.3d 450, 451 (5th Cir. 2014)).
In finding that the states’ suit was likely to succeed, the district court first expressed its concern “that EO 14042 conflicts with the Tenth Amendment,” as “EO 14042, although supported upon a nexus of economy and efficiency, was clearly and unequivocally motivated by public health policy first and foremost.” “Our Constitution principally entrusts ‘[t]he safety and the health of the people’ to the politically accountable officials of the states.” S. Bay United Pentecostal Church v. Newsom, 140 S. Ct. 1613 (2020) (mem.) (Roberts, C.J., concurring) (quoting Jacobson v. Massachusetts, 197 U.S. 11, 38 (1905)). Thus, the district court explained, this mandate falls afoul of the Tenth Amendment‘s reservation of such power to the states.
The district court also found that the elements of the mandate are procedurally invalid. First, the district court found that there were no “urgent and compelling circumstances”15 to justify dispensing with the otherwise required notice-and-comment period. Even assuming, arguendo, that the notice-and-comment requirement could be overruled, the district court held that the FAR Memo “clearly and unequivocally appl[ied] beyond EO 14042‘s authorized scope” and was thus unlawful. And while the OMB
Determination included a shortened notice-and-comment period which arguably “adhere[d] to the text” of the statute, the district court found that
The district court then held that the states had shown irreparable harm in the form of “nonrecoverable compliance costs,” Texas v. United States Env‘t Prot. Agency, 829 F.3d 405, 433 (5th Cir. 2016) (quoting Thunder Basin Coal Co. v. Reich, 510 U.S. 200, 221 (1994) (Scalia, J., concurring in part and in the judgment)), such as “diversion of resources necessary to identify covered employees and manage their vaccination status.” The district court also identified as irreparable harm the choice the states would have to make if an employee refused to get vaccinated: a choice between “releasing the employee and all accompanying efficiency, institutional memory, and operational know-how or foregoing federal contracts.” Moreover, employees would have to undertake an irreversible decision – vaccination – in order to be compliant with this mandate. Finally, the district court identified the threat to the states’ sovereign interests as potentially irreparable harm.
In evaluating the balance of harms, the district court found simply: “[w]ithout denying the existence of the pandemic or the potential risk it imposes, ... EO 14042, the OMB determination[,] and the FAR Memo present a greater risk to the rights of covered employees and contractors and to the interests of the Plaintiff States to defend constitutionally reserved police powers from federal overreach.” Finally, the district court found that this Court‘s analysis of the public interest factors in BST Holdings was applicable to this case as well.
Having established that an injunction was warranted, the district court set out that the injunction would only apply “to all contracts, grants, or any other like agreement by any other name between the Plaintiff States and the national government.” It then stayed the case pending appellate review.
III. Standard of Review
“We review a preliminary injunction for abuse of discretion, reviewing findings of fact for clear error and conclusions of law de novo.” Texans for Free Enter. v. Tex. Ethics Comm‘n, 732 F.3d 535, 537 (5th Cir. 2013). “Under the clearly erroneous standard, this court upholds findings by the district court that are plausible in light of the record as a whole.” Moore v. Brown, 868 F.3d 398, 403 (5th Cir. 2017). And as this Court has often said, “it is an elementary proposition, and the supporting cases too numerous to cite, that this court may affirm the district court‘s judgment on any grounds supported by the record.” Texas v. United States, 809 F.3d 134, 178 (5th Cir. 2015) (quoting Palmer ex rel. Palmer v. Waxahachie Indep. Sch. Dist., 579 F.3d 502, 506 (5th Cir. 2009)).
To obtain or uphold a preliminary injunction, a movant must show: “(1) a likelihood of success on the merits; (2) a substantial threat of irreparable injury; (3) that the threatened injury if the injunction is denied outweighs any harm that will result if the injunction is granted; and (4) that the grant of an injunction will not disserve the public interest.” Ladd, 777 F.3d at 288 (quoting Trottie, 766 F.3d at 451).
IV. Discussion
A. Validity of the Executive Order
The first issue presented in this appeal is whether or not the Executive Order is within the bounds of the President‘s
1. Historical Practice
In its relative infancy, the Procurement Act‘s “most prominent use ... [was] a series of anti-discrimination requirements for Government contractors.” Am. Fed‘n of Lab. & Cong. of Indus. Organizations v. Kahn, 618 F.2d 784, 790 (D.C. Cir. 1979) (en banc). However, the executive orders promulgating these requirements did not themselves cite the Procurement Act as the source of their authority. That reliance was instead a creature of case law. In evaluating a later executive action that did claim Procurement Act authority, the D.C. Circuit noted of the anti-discrimination requirements that “the early anti-discrimination orders were issued under the President‘s war powers and special wartime legislation, but for the period from 1953 to 1964 only the [Procurement Act] could have provided statutory support for the Executive action.” Id. at 790-91 (footnotes omitted). None of these orders, it appears, were “tested in the courts until 1964,” id. at 791, at which point the Third Circuit held without analysis that “we have no doubt that the applicable executive order and regulations have the force of law.” Farmer v. Phila. Elec. Co., 329 F.2d 3, 8 (3d Cir. 1964).19 This Circuit was next to
economical and efficient system for ... the procurement and supply’ of property and services that the order should be treated as issued without statutory authority.” Id. at 632 n.2 (quoting
The first case to tackle this issue directly is Contractors Association of Eastern Pennsylvania v. Secretary of Labor, 442 F.2d 159 (3d Cir. 1971), which involved a challenge to an order by the Secretary of Labor purporting to implement an executive order by “requir[ing] that bidders on any federal or federally assisted construction contracts for projects in a five-county area around Philadelphia, the estimated total cost of which exceeds $500,000, shall submit an acceptable affirmative action program which includes specific goals for the utilization of minority manpower.” Id. at 163 (footnote omitted). In finding that the order could be upheld as an exercise of the President‘s Procurement Act authority, the court held: “[n]o less than in the case of defense procurement it is in the interest of the United States in all procurement to see that its suppliers are not over the long run increasing its costs and delaying its programs by excluding from the labor pool available minority workmen.” Id. at 170. However, the court also impliedly found a significant limitation on the President‘s authority in this area:
While all federal procurement contracts must include an affirmative action covenant, the coverage on federally assisted contracts has been extended to construction contracts only. This ... demonstrates that the Presidents were not attempting by the Executive Order program merely to impose their notions of desirable social legislation on the states wholesale. Rather, they acted in the one area in which discrimination in employment was most likely to affect the cost and the progress of projects in which the federal government had both financial and completion interests.
It was with this jurisprudential backdrop in mind that the D.C. Circuit made its ruling in Kahn. That case concerned an
The next major case to give serious consideration to the President‘s authority under the Procurement Act was also heard by the D.C. Circuit.22 In UAW-Labor Employment & Training Corp. v. Chao, 325 F.3d 360 (D.C. Cir. 2003), the court held that an executive order requiring contractors to “include a provision requiring contractors to post notices at all of their facilities informing employees of what are commonly known as General Motors and Beck rights” was lawfully promulgated as an exercise of Procurement Act power. Id. at 362. The executive order in question claimed a nexus to economy and efficiency based on the notion that “[w]hen workers are better informed of their rights, including their rights under the Federal labor laws, their productivity is enhanced.”23 While recognizing that “[t]he link may
seem attenuated,” the D.C. Circuit held that “under Kahn‘s lenient standards, there is enough of a nexus.” Chao, 325 F.3d at 367.
The Supreme Court has had little occasion to review presidential authority under the Procurement Act, and even its most direct consideration is not particularly direct. In Chrysler Corp. v. Brown, 441 U.S. 281 (1979), the Supreme Court considered the validity of a regulation adjacent to an anti-discrimination executive order; the latter “prohibit[ed] discrimination on the basis of ‘race, creed, color, or national origin’ in federal employment or by Government contractors.” Id. at 286 n.1. However, the Court held that, “[f]or purposes of this case, it is not necessary to decide whether [the executive order] as amended is authorized by the [Procurement Act]” or another statute. Id. at 304. Nonetheless, the Supreme Court noted in a footnote that “[l]ower courts have suggested that [the Procurement Act] was the authority for predecessors of [the executive order].” Id. at 304 n.34 (citing Farmer, 329 F.2d 3; Farkas, 375 F.2d 629; and Contractors Assn., 442 F.2d 159). The nearest the Court came to evaluating the scope of the Procurement Act was as follows: “The Act explicitly authorizes Executive Orders ‘necessary to effectuate [its] provisions.’ However, nowhere in the Act is there a specific reference to employment discrimination.”24 Id. (citation omitted).
In sum, while there is no direct, binding authority on the scope of presidential authority under the Procurement Act, courts have generally landed
on a “lenient” standard, Chao, 325 F.3d at 367, under which the President must demonstrate a “sufficiently close nexus” between the requirements of the executive order and “the values of ‘economy’ and ‘efficiency.‘” Am. Fed., 618 F.2d at 792.25
2. Modern Practice
In the years between these cases and now, the Procurement Act has been utilized by multiple presidents in a manner not dissimilar to that of President Biden. Two executive orders in particular merit discussion, one of which a district court reviewed and another of which has not been squarely presented for judicial review.
The first, Executive Order 13465, was issued by President George W. Bush.26 The Order mandated that all federal contractors
contract.”27 The Chamber of Commerce of the United States of America, among others, brought suit in the District Court of Maryland to challenge the legality of the executive order and its implementing documents. Chamber of Com. of U.S. v. Napolitano, 648 F. Supp. 2d 726 (D. Md. 2009). Finding that “President Bush explained how requiring contractors to use E-Verify would promote efficiency and economy in procurement,” the court held that the order was consistent with the Procurement Act and noted that “[t]he President and his Administration are in a better position than this Court to make such determinations.” Id. at 738.28
More recently, President Barack Obama issued Executive Order 13706, by which he sought “to increase efficiency and cost savings in the work performed by parties that contract with the Federal Government by ensuring that employees on those contracts can earn up to 7 days or more of paid sick leave annually, including paid leave allowing for family care.”29 The President justified the order by stating: “[p]roviding access to paid sick leave will improve the health and performance of employees of Federal contractors and bring benefits packages at Federal contractors in line with model employers, ensuring that they remain competitive employers .... These savings and quality improvements will lead to improved economy and efficiency in
Government procurement.”30 However, it appears that the order was never challenged in federal court, with only passing references present in the case law.31
3. Limitations
The “close nexus” test combined with appropriate deference to presidential determinations leaves the President with nearly unlimited authority to introduce requirements into federal contracts. Hypothetically, the President could mandate that all employees of federal contractors reduce their BMI below a certain number on the theory that obesity is a primary contributor to unhealthiness and absenteeism. Under the Government‘s theory of the case, the only practical limit on presidential authority in this sphere is the executive‘s
It bears considering, therefore, whether there are other extra-statutory limitations on the President‘s authority under the Procurement Act. The district court found one such limitation in the form of the Tenth Amendment. The President‘s authority is undoubtedly circumscribed by the bounds of the Constitution. President Biden could not, for example, require that all federal contractors be Catholic.33 But given the Supreme Court‘s general admonition to avoid finding constitutional problems where unnecessary, see Harmon v. Brucker, 355 U.S. 579, 581 (1958) (“[i]n keeping with our duty to avoid deciding constitutional questions presented unless essential to proper disposition of a case, we look first to petitioners’ nonconstitutional claim“), and given the existence of another potential limitation by which this case may be decided, this Court does not address the Tenth Amendment argument today.
Another theoretical limitation suggested but not explored in the case law is the notion that market forces will prevent overreach. If private corporations and individuals believe this mandate to be a bridge too far, they can choose not to contract with the federal government. After all, “no one has a right to a Government contract.” Kahn, 618 F.2d at 794. However, this argument does not withstand serious inquiry; the federal government is no ordinary market participant subject to the same whims of free enterprise as others, if for no other reason than its aims are greater than profit.34 To its credit, the Government does not advance this argument.
When considering the related vaccination mandate imposed by the Occupational Safety and Health Administration (“OSHA“), the Supreme Court suggested that another limitation may apply. The Court ruled that the OSHA mandate was “no ‘everyday exercise of federal power.‘” NFIB, 142 S. Ct. at 665 (quoting In re MCP No. 165, 20 F.4th at 272 (Sutton, C. J., dissenting)). More than that, the Court continued, “[i]t is instead a significant encroachment into the lives – and health – of a vast number of employees. ‘We expect Congress to speak clearly when authorizing an agency to exercise powers of vast economic and political significance.’ There can be little doubt that OSHA‘s mandate qualifies as an exercise of such authority.” Id. (quoting Alabama Assn. of Realtors v. Department of Health and Human Servs., 141 S. Ct. 2485, 2489, (2021) (per curiam)). OSHA‘s mandate may have been larger in scope than the mandate at issue in this case, but not perhaps by as much as may be expected. The Department of Labor has suggested that roughly “one-fifth of the entire U.S. Labor Force” is “employed by federal contractors.”35
This so-called “Major Questions Doctrine” – that is, that “[w]e expect Congress to speak clearly when authorizing an agency to exercise powers of vast economic and political significance,” id. – serves as a bound on Presidential authority. The Government submits that the Major Questions Doctrine does not apply here as it applies only to interpretations of statutes that result in “enormous and transformative expansion[s] in ... regulatory authority without clear congressional authorization.” Util. Air Regul. Grp. v. E.P.A., 573 U.S. 302, 324, (2014). As this federal contractors mandate is neither an “enormous and transformative expansion” nor an exercise of “regulatory authority,” the Government suggests, the major questions doctrine is inapplicable. Instead, the Government would have us say that as this is an exercise of the President‘s “proprietary authority, as purchaser of services,” it is not subject to the major questions doctrine. The Government suggests this is more akin to the vaccine mandate imposed on Medicare and Medicaid facilities than the OSHA mandate. The Supreme Court upheld the former in a per curiam decision that did not mention the major questions doctrine. Biden v. Missouri, 142 S. Ct. 647 (2022) (per curiam). There, the Court held that “a vaccination requirement under these circumstances is a straightforward and predictable example of the ‘health and safety’ regulations that Congress has authorized the Secretary to impose.” Missouri, 142 S. Ct. at 653.
In stark contrast, this federal contractor mandate is neither a straightforward nor predictable example of procurement regulations authorized by Congress to promote “economy and efficiency.” The Government notes that “large numbers of private employers – including AT&T, Bank of America, Google, Johnson & Johnson, and Microsoft – have established vaccination requirements for their workforces.” At issue in this case, though, is not whether the federal government may (analogously) force its employees to get vaccinated against COVID-19,37 but whether the federal government may place such a requirement in its contracts with third parties, including the
Plaintiff States. The Government has provided no examples of such contracts in the private sector.
Nor is the Government‘s analogy to the mandate upheld as to employees of Medicare and Medicaid facilities apt. The decision in Missouri rested in part on ordinary practices: “Vaccination requirements are a common feature of the provision of healthcare in America: Healthcare workers around the country are ordinarily required to be vaccinated for diseases such as hepatitis B, influenza, and measles, mumps, and rubella.” Missouri, 142 S. Ct. at 653. The Supreme Court likewise emphasized “the longstanding practice of Health and Human
At best, it is questionable, however, whether the historical record supports the Government‘s contention that this mandate is within the longstanding practice and construction of the President‘s Procurement Act authority. As the D.C. Circuit noted in the first major Procurement Act case, “the early anti-discrimination orders were issued under the President‘s war powers and special wartime legislation.” Kahn, 618 F.2d at 790. It was not until the 2001 executive order at issue in Chao that it appears Presidents routinely and explicitly relied upon Procurement Act authority to issue social-policy oriented procurement orders to contracting entities. See Chao, 325 F.3d at 367.
Even assuming, arguendo, that as a matter of historical practice and judicial construction that the Procurement Act has been used to advance policy positions, this argument fails to account for the dramatic difference between this mandate and other exercises of Procurement Act authority. The nearest analogue to this mandate is President Obama‘s Paid Sick Leave executive order, which sought to impose a sick leave requirement on federal contractors in order to “improve the health and performance of employees of Federal contractors and bring benefits packages at Federal contractors in line with model employers, ensuring that they remain competitive employers in the search for dedicated and talented employees.”38 Again, though, the Sick Leave order was never considered by a federal court. More significantly, a vaccine mandate is “strikingly unlike” the sick leave policy or any other Procurement Act exercises for several reasons, not least of which is that “[a] vaccination ... ‘cannot be undone at the end of the workday.‘” NFIB, 142 S. Ct. at 665 (quoting In re MCP, 20 F.4th at 274) (Sutton, C. J., dissenting)). Most significantly, unlike the non-discrimination, E-Verify, Beck rights, and sick leave orders, which govern the conduct of employers, the vaccine mandate purports to govern the conduct of employees — and more than their conduct, purports to govern their individual healthcare decisions.39
4. Effectively Boundless Scope
Imagine that the President had issued an alternative but similar executive order. In this order, to “decrease worker absence, reduce labor costs, and improve the efficiency of contractors and subcontractors at sites where they are performing work for the Federal Government,”41 the President instructed executive agencies to incorporate a clause into all contracts specifying that all contractors and subcontractors “comply with all guidance for contractor or subcontractor workplace locations published by the Safer Federal Workforce Task Force.”42 This hypothetical order, however, would instruct the Task Force to issue guidance relating to the dangers of tobacco, and this Task Force would issue guidance requiring that all covered contractors ensure that all covered contractor employees refrain from smoking or from being in the presence of smoking. As we now know better than ever, smoking and exposure to second-hand smoke contribute to significant and lasting health issues. It is no stretch at all to say that contractual requirements that all employees of federal contractors refrain from smoking or being in the presence of smoking at all times would result in a gain to economy and efficiency in federal contracting.43 Nor would it be much different than this mandate, which likewise makes demands of individuals inside and outside the workplace. This order could certainly pass the “close nexus” test already discussed, and yet it would undoubtedly strike reasonable minds as too great a stretch under the Procurement Act.
At oral argument, the Government dismissed such hypotheticals as outlandish and suggested that they would not be upheld in a court of law. We agree that no court would uphold them, but the Government provided no dividing line by which a court might rule out the one and uphold the other. Though the government suggests that the “close nexus” test provides such a line, respectfully, that line is no line at all. The President would have little difficulty, under the close nexus test, finding a
The difference here, the Government suggested, is at least in part that we are facing a “once-in-a-century” pandemic. The
As to the distinction between regulatory and non-regulatory power, on which the Government relied in its briefing to distinguish this action from the OSHA mandate, it is here a distinction without a difference. Certainly, “the Government has a much freer hand in dealing ‘with citizen employees [and government contractors] than it does when it brings its sovereign power to bear on citizens at large.‘” NASA v. Nelson, 562 U.S. 134, 148 (2011) (quoting Engquist v. Oregon Dept. of Agriculture, 553 U.S. 591, 598 (2008)). And were this mandate to apply only to federal contractors on, for example, federal job sites, this distinction may carry more weight. As it is, though, the mandate covers any and all employees — full-time or part-time — who work for a contractor at any location “at which any employee of a covered contractor working on or in connection with a covered contract is likely to be present during the period of performance for a covered contract.”46 “This includes employees of covered contractors who are not themselves working on or in connection with a covered contract.”47 The Government seeks to paint this mandate as “the Government act[ing], not as a regulator, but as the manager of its internal affairs.” NASA, 562 U.S. at 153. The vast scope of its mandate belies that contention. There is little internal about a mandate which encompasses even employees whose sole connection to a federal contract is a cubicle in the same building as an employee working “in
This is not an exercise in determining what type of power is being used by evaluating “practical effects” of the order, as the Government suggests. Nor are we blind to the effect of political accountability on a president‘s decisions. By its own terms, this mandate and its implementing documents require immense action not just from internal contract employees but also from an all-but-boundless number of employees whose employer has at least one federal contract. No matter what else is or is not regulatory, this certainly is.
5. Conclusion
“When an agency claims to discover in a long-extant statute an unheralded power to regulate ‘a significant portion of the American economy,’ we typically greet its announcement with a measure of skepticism. We expect Congress to speak clearly if it wishes to assign to an agency decisions of vast ‘economic and political significance.‘”49 Util. Air Regul. Grp., 573 U.S. at 324 (quoting Food & Drug Admin. v. Brown & Williamson Tobacco Corp., 529 U.S. 120, 123 (2000)). As the Government‘s brief makes clear, questions surrounding the vaccine and the pandemic generally are undoubtedly of “vast economic and political significance.” Id. Congress has not spoken clearly to authorize such a dramatic shift in the exercise of the President‘s power under the Procurement Act. Nor are historical exercises of that power sufficient to demonstrate a long-standing understanding that the Procurement Act could be used in this way. The President‘s use of procurement regulations to reach through an employing contractor to force obligations on individual employees is truly unprecedented. As such, Executive Order 14042 is unlawful, and the Plaintiff States have consequently demonstrated a strong likelihood of success on the merits.50
B. Equitable Factors
1. Irreparable Harm
The district court found that the Plaintiff States had carried their burden to show irreparable harm in the form of “nonrecoverable compliance costs,” Texas v. EPA, 829 F.3d 405, 433 (5th Cir. 2016) (quoting Thunder Basin Coal, 510 U.S. at 221), such as “diversion of resources necessary to identify covered employees and manage their vaccination status.” The district court also identified as irreparable harm the choice the states would have to make if an employee refused to get vaccinated against COVID-19: a choice between “releasing the employee and all accompanying efficiency, institutional memory, and operational know-how or foregoing federal contracts.” A showing of irreparable harm requires a demonstration of “harm for
The Government suggests, first, that to hold compliance costs as irreparable harm “would encompass every case in which a litigant complains of a new contract requirement” and thereby impermissibly broaden the scope of irreparable harm. But not all compliance costs are “nonrecoverable“; to the extent that compliance costs are recoverable, they are not irreparable. The loss of an employee and the associated costs — monetary and otherwise are nonrecoverable costs. Should an employee be fired and a new employee hired due to this mandate, it is undisputed that the Plaintiff States would be harmed and would have no recourse for this harm. The Government‘s second contention also serves as a sort of retort to their own argument: “Plaintiffs similarly failed to introduce evidence substantiating their claim that the Executive Order will cause mass disruptions to their labor forces.”52 The Government points to a study which noted that “only ‘1% of all adults ... say they left a job because an employer required them to get vaccinated.‘”53 The district court appears to have credited the testimony of at least one Louisiana employee that she expected the State to fire her alongside as many as 96 other state employees in her department after each of them had a religious accommodation request denied. In any case, as this Circuit has previously noted, “[w]hen determining whether injury is irreparable, ‘it is not so much the magnitude but the irreparability that counts.‘” Texas v. EPA, 829 F.3d at 433-34 (quoting Enter. Int‘l, Inc. v. Corporacion Estatal Petrolera Ecuatoriana, 762 F.2d 464, 472 (5th Cir. 1985)). Even if the Government is right and only one percent54 of, for example, the state of Louisiana‘s employees left their job because of this mandate, Louisiana alone would lose nearly 700
employees.55
2. Balance of Harms and the Public Interest
The Government summarily dismisses the district court‘s analysis of the balance of harms and the public interest, noting that “[d]elaying implementation of the Executive Order will lead to productivity losses in the performance of federal contracts from schedule delays as well as leave and health care costs for workers who are sick, isolating, or quarantined.” As “the virus continues to pose complex and dynamic challenges to the delivery of services to the American people,” the Government continued, “[h]ow to address the evolving challenges the virus poses ... is a question best left to the President ... not to unelected courts.” In the eyes of the President, however: “The pandemic is over. If you notice, no one‘s wearing masks. Everybody seems to be in pretty good shape.”56 Regardless, we have noted before that “‘[t]here is generally no public interest in the perpetuation of unlawful agency action.‘” State v. Biden, 10 F.4th 538, 560 (5th Cir. 2021) (quoting League of Women Voters of U.S. v. Newby, 838 F.3d 1, 12 (D.C. Cir. 2016)). And, as with the OSHA mandate, “any abstract ‘harm’ a stay might cause the Agency pales in comparison and importance to the harms the absence of a stay threatens to cause countless individuals and companies.” BST Holdings, 17 F.4th at 618. The balance of harms and the public interest favors an injunction.
V. Conclusion
We do not, and cannot, rule on the efficacy of any vaccine, the wisdom of the President‘s action, or even whether or not this action would, in fact, increase economy and efficiency in federal contracting. Today, we are asked, where Congress has not authorized the issuance of this mandate, whether the President may nonetheless exercise this power. We hold that he may not. Accordingly, we AFFIRM the district court‘s grant of an injunction.
JAMES E. GRAVES, JR., Circuit Judge, dissenting:
The majority conjures up the most extreme and unlikely scenarios to deny the President his authority under the Procurement Act. But it is important to ask where the Procurement Act began. It began with anti-discrimination requirements, See, e.g., Exec. Order No. 11,246, 30 Fed. Reg. 12,319, 12,319 (Sept. 24, 1965) (forbidding civilian contractors from discriminating on the basis of race, creed, color, or national origin). It is also indisputable that it allowed the President to require contractors to inform their employees that they have a right to not pay union dues. Exec. Order
I.
The Procurement Act states that “[t]he President may prescribe policies and directives that the President considers necessary” to ensure the “economical and efficient administration and completion of Federal Government contracts.”
The majority tries to make a distinction between this use of the Procurement Act and all the others (each upheld by federal courts). The majority argues that “[m]ost significantly, unlike the non-discrimination, E-Verify, Beck rights, and sick leave orders, which govern the conduct of employers, the vaccine mandate purports to govern the conduct of employees — and more than their conduct, purports to govern their individual healthcare decisions.” But this is not quite true. For example, the E-Verify system mandated that federal contractors use E-Verify to electronically verify the employment eligibility of employees working under covered federal contracts. Exec. Order No. 13,465, 73 Fed. Reg. 33,285, 33,285 (June 6, 2008). In turn, the COVID-19 Procurement Act Order directs federal agencies to include in certain contracts a clause requiring covered contractor employees to follow COVID-19 safety protocols, which include vaccination requirements. Exec. Order No. 14,042. 86 Fed. Reg. 50,985 (Sept. 14, 2021). Neither of these necessarily govern the conduct of employees, or, taking the majority‘s logic, they both govern the conduct of employees. Both Executive Orders require something of employers, namely that the employer use the E-Verify system to verify the immigration eligibility of its workers, and that the employer uses a system to verify the vaccine eligibility of its workers.
II.
In Am. Fed‘n of Lab. & Cong. of Indus. Organizations v. Kahn, 618 F.2d 784, 790 (D.C. Cir. 1979) (en banc), a case analyzing a challenge to an executive order which was issued under the Procurement Act, the District of Columbia Circuit Court held that Section 205(a)‘s language “recognizes that the Government generally must have some flexibility to seek the greatest advantage in various situations.” Id. at 788-89. The court continued, “‘‘[e]conomy’ and ‘efficiency’ are not narrow terms; they encompass those factors like price, quality, suitability, and availability of goods or services that are involved in all acquisition decisions.” Id. at 789. And in Kahn, the court recognized that “there may be occasional instances where a low bidder will not be awarded a contract.” Id. at 793. That was acceptable for the court because there was “no basis for rejecting the President‘s conclusion that any higher costs incurred in those transactions will be more than offset by the advantages gained in negotiated contracts and in those cases where the lowest bidder is in compliance with the voluntary standards and his bid is lower than it would have been in the absence of standards.” Id. This was permitted because “it is important to consider the procurement compliance program in its real-world setting.” Id. at 792.
Courts after Kahn consistently upheld the President‘s broad authority under the Procurement Act. In UAW-Labor Employment & Training Corp. v. Chao, 325 F.3d 360 (D.C. Cir. 2003), President George H.W. Bush‘s executive order “sought to connect its requirements to economy and efficiency as follows”
[w]hen workers are better informed of their rights, including their rights under the Federal labor laws, their productivity is enhanced. The availability of such a workforce from which the United States may draw facilitates the efficient and economical completion of its procurement contracts.
Id. at 366. The court was clearly skeptical of this reasoning; “[t]he link may seem attenuated (especially since unions already have a duty to inform employees of these rights), and indeed one can with a straight face advance an argument claiming opposite effects or no effects at all.” Id. at 366-67. Yet the court recognized Kahn‘s “lenient standards” and found “enough of a nexus.” Id. at 367.
The majority notes that some of “the executive orders promulgating these [anti-discrimination] requirements did not themselves cite the Procurement Act as the source of their authority.” Rather, they contend, “[t]hat reliance was instead a creature of case law.” But Executive Orders are not required to lay out the specific statute that the President‘s authority falls under. For example, Executive Order No. 11,246, 30 Fed. Reg. 12,319, 12,319 (Sept. 24, 1965) bases its authority “[u]nder and by virtue of the authority vested
III.
The majority seems to anchor its decision on the major question‘s doctrine. This reliance, however, is misplaced. The major questions doctrine provides that “[w]e expect Congress to speak clearly if it wishes to assign to an agency decisions of vast ‘economic and political significance.‘” Util. Air Regul. Grp. v. EPA (UARG), 573 U.S. 302, 324 (2014) (quoting Food & Drug Admin. v. Brown & Williamson Tobacco Corp., 529 U.S. 120, 160 (2000)). Additionally, the major questions doctrine has been described as a skepticism of agency interpretations that “would bring about an enormous and transformative expansion in ... regulatory authority without clear congressional authorization.” Id. The doctrine requires that an agency “must point to ‘clear congressional authorization’ for the power it claims.” West Virginia v. EPA, 142 S. Ct. 2587, 2609 (2022) (quoting UARG, 573 U.S. at 324). As Judge Anderson points out in his concurrence in Georgia v. President of the United States,
[w]hile I agree this is a question of major economic and political significance, we are not dealing with delegation to an agency. Instead, the delegation is to the President who does not suffer from the same lack of political accountability that agencies may, particularly when the President acts on a question of economic and political significance. Cf. Free Enter. Fund v. Public Co. Accounting Oversight Bd., 561 U.S. 477, 513-14 (2010) (holding that the structure of an independent agency violated the Constitution because the President, “who is accountable to the people for executing the laws,” did not have the ability to hold the independent agency accountable).
Id. at 1308-17 (Anderson, J. concurring/dissenting opinion). It is important to note that the major questions doctrine is only invoked when there are potential anti-delegation issues to agencies, and that is not the situation here. Free Enter. Fund v. Pub. Co. Acct. Oversight Bd., 561 U.S. 477, 513 (2010). Furthermore, as pointed out above, this is not an “enormous and transformative expansion in” regulatory authority, but rather is a standard exercise of the federal government‘s proprietary authority. Therefore, the injunction cannot be
IV.
Regardless, the majority decides that this must be the first executive order under the president‘s Procurement Act authority to be struck down. Even in doing so, it recognizes that analyzing the text of the statute could lend the President the power to issue the Executive Order in question: “[t]he statute introduces no serious limit on the President‘s authority and, in fact, places discernment explicitly in the President‘s hands: ‘[t]he President may prescribe policies and directives that the President considers necessary to carry out this subtitle.‘” But, according to the majority, “[i]t bears considering, therefore, whether there are other extra-statutory limitations on the President‘s authority under the Procurement Act.”
It is true that there must be limiting principles to the President‘s authority under the Procurement Act. But it must be fact specific to the precise issue before the court. When actions taken are in the mainstream of American businesses, that points towards permitting the executive order. Economic factors would prevent the President from handicapping the contractor workforce with extreme contractual terms. If the President attempted to insert into contracts forced abortions, BMI restrictions, or other draconian measures outside the mainstream of American companies, he or she would hear from the people or from Congress. The majority conjures up an example where the President could
instruct the Task Force to issue guidance relating to the dangers of tobacco, and this Task Force would issue guidance requiring that all covered contractors ensure that all covered contractor employees refrain from smoking or from being in the presence of smoking. As we now know better than ever, smoking and exposure to second-hand smoke contribute to significant and lasting health issues. It is no stretch at all to say that contractual requirements that all employees of federal contractors refrain from smoking or being in the presence of smoking at all times would result in a gain to economy and efficiency in federal contracting.
The government can and certainly does have the authority to prohibit smoking on federal facilities. See
The majority dismisses the argument that “market forces will prevent overreach.” After all, “no one has a right to a Government contract.” Kahn, 618 F.2d at 794. To the majority, “this argument does not withstand serious inquiry; the federal government is no ordinary market participant subject to the same whims of free enterprise as others, if for no other reason than its aims are greater than profit.” (footnote omitted). But it deserves further inquiry. Again, no company has a right to a federal contract. If the company does not want to abide by the clauses of the government
Additionally, the largest workforce in the United States — the employees of the federal government — achieved over 97% compliance with the COVID-19 vaccine requirement, with every government agency having at least a 95% compliance rate.5 Roughly 40% of employers in the United States have some type of vaccine mandate for their employees.6 These include American companies such as AT&T, Bank of America, Google, Johnson & Johnson, and Microsoft. The largest airline in the United States, American Airlines, achieved a 99.7% vaccination rate and fired only 232 employees out of its 67,000 U.S. based employees.7 Some agencies also require employees and contractors be vaccinated for diseases such as influenza.8 And other Department of Defense contractors are required to get vaccines for overseas assignments. See, e.g., Griffin v. Sec‘y of Health & Hum. Servs., No. 13-280V, 2014 WL 1653427, at *2 (Fed. Cl. Apr. 4, 2014), aff‘d, 602 F. App‘x 528 (Fed. Cir. 2015). While the government does not exist to make a profit, it does favor the “economical and efficient administration and completion of Federal Government contracts.”
V.
The Procurement Act authorizes the President‘s action in issuing Executive Order 14042. Therefore, the States fail to establish a substantial likelihood of success on the merits. The district court abused its discretion in granting the injunction.
Even if the States showed a likelihood of success on the merits, there is no irreparable harm. A showing of irreparable harm requires a demonstration of “harm for which there is no adequate remedy at law.” Daniels Health Scis., L.L.C. v. Vascular Health Scis., L.L.C., 710 F.3d 579, 585 (5th Cir. 2013) (citing Winter v. Natural Res. Def. Council, Inc., 555 U.S. 7, 20 (2008)). The district court identified irreparable harm as the choice the states would have to make if an employee refused to get vaccinated: a choice between “releasing the employee and all accompanying efficiency, institutional memory, and operational know-how or foregoing federal contracts.” The loss of an employee is typically not a nonrecoverable cost, save for certain types of contracts where institutional knowledge might be necessary, such as large research and development contracts. More importantly, the monetary cost would be recoverable. First, this Executive Order does not apply to any existing contracts. Any future contract modification here would be a bilateral modification under
“[T]he irreparable harm and the public interest inquiries are intertwined, and we consider them jointly.” Mississippi Power & Light Co. v. United Gas Pipe Line Co., 760 F.2d 618, 623 (5th Cir. 1985). Delaying the implementation of the Executive Order will lead to widespread economic harm in the economical and efficient administration and completion of federal government contracts. Absenteeism will affect the cost and progress of all federal contracts, regardless of the type. Increased delays necessarily equal increased costs to the government because it either delays a program or delays other contractors. Absenteeism from contractors with COVID-19 causes delays or non-performance in government contracts, which will cost the government — and therefore citizens and taxpayers — unnecessary time and money. The balance of harms weighs against the States. The district court abused its discretion in granting the injunction.
Respectfully, I dissent.