Internal Revenue Service v. Federal Labor Relations Authority, and National Treasury Employees Union, Intervenor

BAUER, Circuit Judge.

The issue in this appeal is whether the Internal Revenue Service (IRS) committed an unfair labor practice by refusing to negotiate with the National Treasury Employees Union (NTEU) regarding the design and location of IRS office space. We hold that it did not.

The IRS and the NTEU are parties to a collective bargaining agreement which recognizes the NTEU as the exclusive bargaining agent for IRS employees in Chicago. This controversy arose in 1978 when the IRS reorganized its appeals procedure. As a result, twelve employees were relocated to the Chicago Regional Appeals Office. In order to accommodate these transferred employees, the IRS made plans to modify its existing office space by constructing four conference rooms, reorganizing the legal research and record area, and adding work stations for the new employees. The IRS notified the NTEU of the changes; the NTEU responded with a request to negotiate the substance, impact, and implementation of these changes and a proposal that the IRS either look for new office space or convert the existing space into private offices. Asserting that the Federal Service Labor-Management Relations Statute, 5 U.S.C. § 7106, did not require it to negotiate changes in office space, the IRS implemented the changes without union approval.

Thereafter the union filed unfair labor practice charges with the Federal Labor Relations Authority (FLRA). The regional director issued a complaint which alleged that the IRS violated its statutory duty by refusing “to enter into negotiations on the impact and implementation of the decision to change the physical structure of the office and/or location of the office.” Complaint, § VI, Appendix at 20.

After a one-day hearing, the Administrative Law Judge ruled that the proposals were nonnegotiable because they concerned the technology of performing work. The FLRA reversed. Relying on American Federation of State, County and Municipal Employees, AFL-CIO, Local 2477 and Library of Congress (Library of Congress), 7 F.L.R.A. No. 89 (1982), aff’d sub nom. Library of Congress v. Federal Relations Authority, 699 F.2d 1280 (D.C.Cir.1983), the FLRA held that changes in office space are nonnegotiable only if the agency can show that the office design has a technological relationship to the performance of agency work and that the particular union proposals would interfere with the purpose for which the design was adopted. The FLRA concluded that the IRS had failed to make this showing and, accordingly, reversed the ALJ’s holding. It ordered the agency to honor union requests to negotiate the proposed changes and to cease and desist from instituting changes in office design without affording the union an opportunity to negotiate. The IRS’s requests for reconsideration were denied.

The IRS contends that the design and location of agency office space is excluded from mandatory bargaining under the management rights provision of the Federal Service Labor-Management Relations Statute, 5 U.S.C. § 7106(b)(1). It contends that the FLRA’s construction to the contrary is inconsistent with FLRA authority, the legislative history, and the statute’s mandate that its provisions be interpreted in a manner consistent with the requirements of efficient government. Alternatively, the IRS argues that even if the statute requires negotiation of office design and location, the changes were not sufficiently material to trigger the duty to bargain. Finally, the IRS argues that the FLRA abused its discretion in refusing to remand the case to permit the IRS to meet the evidentiary-standards established in Library of Congress.

The Federal Service Labor-Management Statute, 5 U.S.C. § 7101 et seq., balances the right of public employees to organize and bargain collectively with the need of federal management to exercise exclusive authority to render those decisions necessary to insure effective public services. The Act imposes a broad duty to bargain over conditions of employment, but subjects this duty to express statutory exceptions. 5 U.S.C. §§ 7103(a)(12), 7106. The management rights section enumerates specific rights which are reserved to the federal agency, unless the agency elects to submit these rights to negotiation. 5 U.S.C. § 7106. Any right not specifically reserved to the agency is subject to negotiation, although the agency need not negotiate the substance of management decisions. Sections 7106(b)(2) and (3) impose an obligation to bargain over the impact and implementation of such decisions.

Among the rights reserved exclusively to the agency is the right to determine “the technology, methods, and means of performing work.” 5 U.S.C. § 7106(b)(1). The parties maintain that resolution of this controversy turns on whether a change in the physical structure and location of the office is a decision involving the technology, means, and methods of performing work. If it is, the decision is an exercise of a reserved management right and not subject to the duty to bargain. If it is not, the agency must negotiate.

The FLRA rejected the ALJ’s conclusion of law that the IRS changes were excepted from the duty to bargain on the basis of a construction of “technology” adopted by the agency after the initial decision in the case was rendered. Applying the Library of Congress construction of “technology,” the FLRA held that the IRS had failed to show that its office design had any technological relationship to accomplishing or furthering the performance of its work.

Before the enactment of the Federal Service Labor-Management Relations Statute, federal labor relations were governed by Executive Order 11491. Cases decided under this order consistently upheld the agency’s right to determine unilaterally the location and design of agency workspace. National Treasury Employees Union and Chapter 22, National Treasury Employees Union and United States Department of the Treasury, Internal Revenue Service, Philadelphia District, 4 F.L.R.C. 598 (1976); National Treasury Employees Union Chapter No. 010 and Internal Revenue Service, Chicago District, 4 F.L.R.C. 126 (1976). The IRS maintains that by incorporating the Executive Order’s language concerning technology almost verbatim into the statute, Congress evidenced its intention to perpetuate the existing law in this area. The IRS contends that the more restrictive interpretation of “technology,” adopted by the Library of Congress court after the statute had been enacted, is contrary to the statute’s language, purpose, and legislative history and not entitled to deference.

We are aware that our standard of review is narrow. FLRA orders must be upheld unless found to be “arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law[.]” 5 U.S.C. § 706. But while the construction of a statute by the agency charged with administering it is entitled to deference, courts are nevertheless the final authorities on issues of statutory construction. United States Department of Agriculture v. Federal Labor Relations Authority, 691 F.2d 1242, 1243 (8th Cir.1982). Thus, “[reviewing courts are riot obliged to stand aside and rubber-stamp their affirmance of administrative decisions that they deem inconsistent with a statutory mandate or that frustrate the congressional policy underlying a statute. Such review is always properly within the judicial province .... ” NLRB v. Brown, 380 U.S. 278, 291, 85 S.Ct. 980, 988, 13 L.Ed.2d 839 (1964).

The parties raise numerous issues of statutory construction many of which are issues of first impression. Resolution of this controversy, however, does not require consideration of all these issues. Accordingly, we decline to review those questions unnecessary to our determination of whether the FLRA order was “arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with the law[.]” 5 U.S.C. § 706.

The parties believe this appeal turns on the definition of “technology, methods, and means of performing work.” We cannot agree, for even if office design and location are properly characterized as conditions of employment which are subject to negotiation, no duty to negotiate has been triggered in this case.

The obligation to bargain over conditions of employment arises only when there is a material change in those conditions. See National Federation of Federal Employees, Local 1863 v. Headquarters, U.S. Army Garrison, Yongsan, Korea, 8 F.L.R.A. 39 (1982). Neither the Agency nor the union, which submitted an amicus curiae brief, cite any cases holding that modification of a large regional office to accommodate some transferred employees constitutes a material change in working conditions. We conclude that the changes initiated by the IRS were minor changes which cannot trigger the duty to negotiate.

Our conclusion is supported by the statute’s mandate that its provision be interpreted in a manner consistent with the requirement of efficient government. 5 U.S.C. § 7101(b). Adopting the position that changes of the kind involved here are subject to negotiation would fly in the face of that mandate, preventing the IRS from streamlining its appeals procedure if the change would necessitate employee transfers or office modifications unless or until the union agreed. Logic dictates that Congress did not intend to restrict agency operations in this cumbersome way.

Because our conclusion that the changes in office design and location were not material, and, thus, did not trigger the duty to bargain, we need not address the issues of whether Library of Congress correctly construed “technology” or whether the union’s proposals are “impact” proposals subject to negotiation pursuant to 5 U.S.C. § 7106(b)(3). Accordingly, the FLRA’s decision and order is set aside and the cross-application for enforcement is denied.

Enforcement Denied.