Is the Federal Property & Administrative Services Act Unconstitutional?

In Bradford v. U.S. Department of Labor, a divided panel of the U.S. Court of Appeals for the Tenth Circuit rejected a challenge to a Labor Department rule requiring federal contractors, including some permittees, to pay their workers a $15 per hour minimum wage. The majority found that this requirement was authorized by the Federal Property and Administrative Services Act (FPASA), which grants the President broad authority to impose requirements on federal contractors. The third judge, however, concluded that FPASA violates existing nondelegation doctrine precedent and is thus unconstitutional. The case is interesting because the Supreme Court has had little to say about FPASA.

The majority opinion, by Judge Holmes and joined by Judge Ebel, summarized the case and affirmed the District of Colorado’s order denying a motion to preliminarily enjoin the DOL rule. The rule was promulgated under Executive Order 14,026, issued by President Biden, which imposed the minimum wage requirement on most federal contractors and rescinded an exemption for recreational services outfitters operating on federal lands. The majority held that FPASA likely authorized the minimum wage rule as it regulated the supply of nonpersonal services and advanced the objectives of economy and efficiency.

Judge Allison Eid dissented, arguing that FPASA has a nondelegation problem as it grants the President unfettered power without an intelligible principle to guide its use. She believed that FPASA violated the nondelegation doctrine established in Panama Refining and Schechter Poultry. Eid explained that under the doctrine, Congress must provide a standard for the President’s action, which FPASA lacked. She concluded that FPASA ran afoul of the nondelegation doctrine and respectfully dissented from the majority’s decision. United States, 321 U.S. 414, 426 (1944); . . .. Only then could a court be confident of what “general policy” a delegee “must pursue” and the “boundaries of [his] authority.” Gundy, 139 S. Ct. at 2129 (plurality) . . . Because if not—if “an absence of standards” makes it “impossible in a proper proceeding to ascertain whether the will of Congress has been obeyed”—a nondelegation violation occurs. Yakus, 321 U.S. at 426. Such permissible, testable standards have taken the form of mandatory “factors” that the executive must conform to in acting. . . . Lastly, the Supreme Court has noted that the more power a law delegates, the more the law must limit that delegation. Indeed, “the degree of agency discretion that is acceptable varies according to the scope of the power congressionally conferred.” Whitman, 531 U.S. at 475; . . . The bottom line is that courts must examine statutes for an intelligible principle. That is because a law delegating power must have one to withstand Article I. As aptly summarized from “over two centuries worth of caselaw,” looking for an intelligible principle in turn “requires a court to analyze a statute for two things: (1) a fact-finding or situation that provokes executive action or (2) standards that sufficiently guide executive discretion—keeping in mind that the amount of detail governing executive discretion must correspond to the breadth of delegated power.” Allstates Refractory Contractors, LLC, 79 F.4th at 776 (Nalbandian, J., dissenting) (cleaned up). This is an interesting take on a very broad delegation of authority, the aggressive exercise of which has prompted significant litigation (as with the vaccine mandate requirements for federal contractors I discussed here and here). I am not sure I am convinced by Judge Eid’s analysis. Unlike in most cases in which nondelegation concerns are raised, the government here is imposing rules governing those who choose to contract with or engage with the federal government. Thus exercises of FPASA do not raise the same concerns as do regulations governing purely private conduct. Insofar as the regulation here raises such concerns by imposing requirement on those who cannot really be said to be federal contractors, or reaching operations that are unrelated to federal contracts, it would seem that FPASA is readily subject to a narrowing construction that would eliminate the constitutional concern (and which is arguably more consistent with the power Congress actually delegated. It would do no harm to FPASA’s text to recognize that it only confers authority on the President to impose conditions that meaningfully relate to the efficiency and efficacy of the performance of federal functions, and not the authority to use federal contracts (or, in this case, permits) as a lever with which to reach private conduct more broadly. That said, Judge Eid’s opinion makes an interesting case, and one that I suspect may catch the attention of one or more of the justices.

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