[00:00:01] Speaker 01:
Good morning, Your Honor.

[00:00:02] Speaker 01:
May it please the Court, Daniel Winnick, for the Department of Labor.

[00:00:06] Speaker 01:
The District Court enjoined the Department from relying on PEPRA as a basis to deny the certification of grants to California transit agencies under Section 13C.

[00:00:15] Speaker 01:
That ruling was incorrect on its procedural and its substantive grounds, and we don't think the Court can affirm it without reaching the substantive grounds.

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But before turning to the substance, I want to start with the questions the Court raised in its order.

[00:00:26] Speaker 01:
on Friday.

[00:00:27] Speaker 01:
So as an initial matter, the premise of the court's first question is that final agency action is a matter of subject matter of jurisdiction.

[00:00:34] Speaker 01:
We don't actually think that's correct.

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And there's a split among this court's cases on that question.

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So I'm aware that there are cases where the court has said it is jurisdictional.

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There's also cases where the court has said it isn't.

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I'll cite just one, Friends of Yosemite Valley versus Norton 348 F3rd 789.

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And that cites another case.

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There's also a split among the courts of appeals on this.

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The D.C.

[00:00:55] Speaker 01:
Circuit, notably, has said since a case called Trudeau v. FTC in 2006 that it's not jurisdictional.

[00:01:01] Speaker 01:
And we think the sounder view is that it's not jurisdictional because the Supreme Court made clear in Califano v. Sanders that subject matter jurisdiction to review agency action stems from the General Federal Questions Statute, Section 1331, not from the APA.

[00:01:16] Speaker 01:
If finality is not a matter of jurisdiction, then the Court doesn't need to decide it because the parties

[00:01:20] Speaker 01:
stipulated in district court that this was final agency action.

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The stipulation is at 4ER568.

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If it is jurisdictional, we think the sounder view under circuit precedent is that this action was final.

[00:01:32] Speaker 01:
Non-binding statements of policy often will not be final because they will leave unclear how the principles articulated in the statement may apply to a particular

[00:01:42] Speaker 02:
So if there is final agency action that expresses a policy, if there's a change, as I understand the Supreme Court's law on this, it has to be explained.

[00:01:56] Speaker 02:
So this policy, if it's just a letter, they could change their mind tomorrow without explanation, correct?

[00:02:04] Speaker 01:
Correct, and that's why we think it's a non-binding statement of policy.

[00:02:07] Speaker 02:
Well, if it's a non-binding statement of policy, why should courts entertain?

[00:02:16] Speaker 02:
I mean, precedent obviously will potentially dictate the outcome, but I'm looking for an explanation about why a court should entertain a lawsuit that says, I got a letter, and I don't like what's in the letter.

[00:02:34] Speaker 02:
Agencies send out thousands of letters.

[00:02:38] Speaker 02:
So it just seems to me an oddity to say that a letter can be, without finality to it, can be the basis of an action.

[00:02:51] Speaker 01:
The thing about this letter, Your Honor, that we think sets it apart from many other statements of policy that wouldn't be final agency action and as to which litigation wouldn't be ripe.

[00:03:01] Speaker 01:
is that this letter was definitive in saying how under the department's view, it would treat future section 13C- Unless it changed its mind.

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Unless it changed its mind, which is universally true of final agency action, or universally true, rather, of agency action.

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And this court and the Supreme Court have explained that the fact that an agency can change its mind doesn't on its own mean an agency action isn't final.

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What's distinct about this letter, I think, and the reason we, the government, think it finally even went in plenty of cases, we take the opposite view.

[00:03:30] Speaker 01:
is that this letter is definitive in saying how the Department of Labor regards PEPRA.

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So barring some unanticipated change of heart from the secretary, the letter makes pretty clear that the department would deny future applications, at least those that don't raise particularized reliance concerns.

[00:03:49] Speaker 04:
Even assuming all that were true, I still have a problem with ripeness under the analysis of the court in CSS, where at issue were actual rules that had gone through the rulemaking process.

[00:04:04] Speaker 04:
So you think these were finalized rules that were being challenged and the court said those claims weren't right because the agency had not yet applied them to

[00:04:16] Speaker 04:
to applicants, right?

[00:04:18] Speaker 04:
So even though the application on the rule would most likely result in a determination that the applicant wasn't eligible for relief, the court said because it's an administrative action or seeking injunctive relief, it's a benefit.

[00:04:34] Speaker 04:
The rule itself, just the existence of the rule doesn't

[00:04:37] Speaker 04:
cause any detriment, and so the claim wouldn't be ripe until the application was actually filed and denied on the basis of the challenged rule.

[00:04:48] Speaker 04:
So why wouldn't this claim not be ripe until an agency or transit agency actually applied for the certification and was denied the certification on the ground of the letter being challenged here?

[00:05:05] Speaker 01:
The answer, I think, is again that the letter is definitive about how the department regards pepper.

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What was, I think, distinctive about the policy in CSS is that it left considerable discretion, case-by-case discretion, for the agency to decide whether in a particular case it was going to do one thing or the other.

[00:05:22] Speaker 01:
CSS presents a useful contrast with the recent DACA litigation, right?

[00:05:26] Speaker 01:
So the DACA memo and the rescission of DACA, those were policies sort of like the one in CSS, enforcement priorities, but they were definitive about what the criteria were.

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And this court, you know, treated them as reviewable.

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This court said that the DACA memo and the DACA rescission memo were nonbinding statements of policy.

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but did not question their reviewability.

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The court has in other cases also treated non-binding statements of policy as reviewable.

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Gill versus DOJ, for example, that's 913, F3rd, 1179.

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And I think on, I realize the question was about rightness, but on finality, which raises, I think, overlapping issues, another relevant case is Havasupai Tribe versus Provencio, 906, F3rd, 1155.

[00:06:09] Speaker 01:
So in that case, there was a Forest Service opinion letter about

[00:06:12] Speaker 01:
mining rights in a particular piece of public land, and everybody agreed that that didn't actually resolve the property rights.

[00:06:20] Speaker 01:
The property rights stemmed from property law, but the court looked to the practical implications of the letter and the fact that everybody agreed that the mine wouldn't reopen until the Forest Service issued it.

[00:06:29] Speaker 01:
So again, I realized that in many cases, the government would take a different view.

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In many cases, non-binding statements of policy are not final and challenges to them are not ripe.

[00:06:37] Speaker 01:
What we think is different about this one is that it's definitive about how the department views PEPRA, and there's no reason.

[00:06:44] Speaker 04:
Well, I thought the letter itself, though, I mean, it might be definitive about how the department views PEPRA, but it wasn't definitive about how it would decide specific applications, right?

[00:06:57] Speaker 04:
I mean, it said basically the department needs to get an application and then consider all the factors and make a decision about whether to grant the certification or not.

[00:07:07] Speaker 01:
So I think the one respect in which that's true as to PEPRA itself is that it leaves open room for reliance concerns to be raised in individualized cases.

[00:07:16] Speaker 01:
Now, we don't think that's a reason it isn't ripe.

[00:07:18] Speaker 01:
We think that the court can and should resolve the California's challenge to the interpretation of Section 13C set forth in the letter and to the department's overall views about how PEPRA precludes the continuation of collective bargaining.

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and that it can leave for future cases a resolution whether a transit agency's particular reliance concerns compel the grant of a Section 13C application, notwithstanding these views.

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We don't think that precludes the entire challenge from being right.

[00:07:49] Speaker 01:
We agree, and we've said in our briefs, that we don't think the court should reject this particular interpretation on the ground that hypothetically a reliance concern could arise in a future case.

[00:08:00] Speaker 01:
I'm wary of my time, and so I might turn just briefly to the other issues if I may.

[00:08:06] Speaker 01:
First, on the substance, assuming the court concludes that there is jurisdiction here, we do think it has to get to the substance.

[00:08:14] Speaker 01:
It can't affirm the injunction solely on procedural grounds because

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the procedural grounds would be a basis only for a much narrower form of relief.

[00:08:21] Speaker 02:
I have a question for you about the merits.

[00:08:23] Speaker 02:
Yes.

[00:08:24] Speaker 02:
Many labor law statutes enacted by states have mandatory terms of employment in them, parental leave, meal breaks, whatever.

[00:08:36] Speaker 02:
And in a sense, those enactments disallow collective bargaining to undermine what's in the statute.

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Why is this any different?

[00:08:51] Speaker 01:
So those are exactly the sorts of statutes that states do have background policy, background rights to enact.

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And what distinguishes them from this, the two factors the department noted in the letter.

[00:09:01] Speaker 01:
First, they set minimum standards instead of caps.

[00:09:04] Speaker 01:
And second, generally speaking, they apply to the labor force as a whole, not to public employment in particular.

[00:09:09] Speaker 01:
Here, by contrast, California set a cap on rights, not a floor, and it enacted a law specific to public employment.

[00:09:17] Speaker 01:
And so this was really an example of California.

[00:09:20] Speaker 02:
Those are descriptively true.

[00:09:23] Speaker 02:
But I don't understand in theory why that's any different from any other statute from a state that says here are the required terms and you can bargain around these as much as you want, but these are the terms that are required.

[00:09:43] Speaker 02:
And I don't understand why in theory that is a different effect on bargaining.

[00:09:52] Speaker 01:
As a matter of first principles, what the state is doing within enact statutes like that is in the exercise of its police power, it's saying, here are things we need for workers in this state to be protected.

[00:10:03] Speaker 01:
And the Supreme Court has held in a series of cases.

[00:10:05] Speaker 02:
So if the public is being protected instead of the workers, which I think is probably what the legislature has in mind, that that principle can't apply?

[00:10:14] Speaker 01:
It's inconsistent with federal labor policy to allow a state

[00:10:18] Speaker 01:
to undercut collective bargaining rights by passing laws like this in itself.

[00:10:21] Speaker 02:
That's tautological though.

[00:10:23] Speaker 02:
I mean, you're assuming that it undercuts collective bargaining differently than the other kinds of statutes.

[00:10:34] Speaker 01:
I don't mean to be tautological.

[00:10:35] Speaker 01:
The reason we think it's different from the other kinds of statutes is that it's specific to the public sector workforce and that it sets a cap.

[00:10:41] Speaker 01:
Those are the things that we believe makes it inconsistent with federal labor policy.

[00:10:47] Speaker 02:
I'd like to pursue this, and I know I'm going over your time, and we won't take it out of the other council, I hope.

[00:10:54] Speaker 02:
Let's say that a state passes a law that's more protective of public employees saying because these are public servants and they are not working for as much money, we're going to give them longer rest breaks and longer meal breaks and, you know, maybe even a better minimum wage.

[00:11:14] Speaker 02:
Is that forbidden also?

[00:11:16] Speaker 01:
I don't have the department's view on that.

[00:11:18] Speaker 01:
Certainly nothing in this letter suggests that that's forbidden.

[00:11:20] Speaker 01:
And again, I think the difference is it is a matter of the state exercising its police power in the interest of workers.

[00:11:27] Speaker 01:
And it's, I think, pretty easy to see why that might be different as a matter of federal labor policy.

[00:11:32] Speaker 01:
from a statute that restricts workers' rights in the service of the state's own interests.

[00:11:36] Speaker 02:
Okay, but in my hypothetical, I was cutting out only the question about whether it matters that a statute is specific to certain kinds of workers.

[00:11:44] Speaker 02:
What if there's a statute about agricultural workers and another one about public employees?

[00:11:50] Speaker 02:
I don't understand why that makes a difference.

[00:11:53] Speaker 01:
I understand the hypothetical to be differentiating between the part of the workforce it affects and whether it's a cap or a floor.

[00:12:00] Speaker 01:
My point is nothing in this letter suggests that something that affected only public sector workers but that set a floor instead of a cap would be inconsistent with federal labor policy.

[00:12:09] Speaker 01:
Again, I don't have the department's view on that.

[00:12:11] Speaker 01:
The department would have to decide in an appropriate situation whether that precluded Section 13C certification, but I think it's different from this sort of statute and different from anything the department's talking about in the letter because it does set a floor and it's therefore not this sort of situation where the state is legislating in its own financial interests and against the interests of workers.

[00:12:29] Speaker 01:
and the department concluded that that was inconsistent with federal labor policy.

[00:12:36] Speaker 01:
Just briefly on the procedural issues, I'm happy to take any questions the court may have about them.

[00:12:40] Speaker 01:
Again, we don't think that the injunction could be affirmed solely on that ground because it would be the basis only for a narrower remedy.

[00:12:46] Speaker 01:
And so if the court concludes that there is jurisdiction here, we do think it needs to decide the substantive question.

[00:12:52] Speaker 01:
And we would suggest that if it reverses on the substance, it could then decide the procedural issues to determine whether some

[00:12:58] Speaker 01:
narrower form of relief could be appropriate on remand.

[00:13:00] Speaker 01:
And with that, unless the Court has further questions, I will.

[00:13:04] Speaker 04:
No, I'll give you one minute time for rebuttal.

[00:13:06] Speaker 01:
Thank you, Your Honor.

[00:13:14] Speaker 00:
May it please the Court, Andy Roth on behalf of the ATU parties.

[00:13:18] Speaker 00:
Your Honors, I want to start out.

[00:13:19] Speaker 00:
I think a lot of confusion has been created here in terms of finality and rightness and statutory authority.

[00:13:28] Speaker 00:
This is not, this document that was issued in 2021 by the Department of Labor is not a policy statement.

[00:13:34] Speaker 00:
There's not a word in here that says we have been granted policymaking discretion to see if it's a good idea, whether states have to maintain collective bargaining rights in order to get their transit agencies to become eligible for grants.

[00:13:49] Speaker 00:
This is on its face.

[00:13:50] Speaker 00:
It uses the word interpretation.

[00:13:53] Speaker 00:
It is, it returns to what it characterizes as a longstanding interpretation.

[00:13:58] Speaker 00:
This is not a policy statement.

[00:14:00] Speaker 00:
It's an interpretive rule.

[00:14:02] Speaker 00:
It's saying, and it's saying with greater definitiveness than Council for DOL is willing to acknowledge, that this precludes us as a matter of statutory interpretation, not as a matter of policy.

[00:14:17] Speaker 00:
It effectively, this is, I'm quoting from page two of the determination, effectively precludes us

[00:14:24] Speaker 00:
from granting from from certifying grants and it says we will therefore it is as about definitive as an interpretive rule could be we therefore will follow that preclusion approach and we will

[00:14:40] Speaker 00:
There were grants pending at the time.

[00:14:41] Speaker 00:
In terms of rightness, it was coming up one month.

[00:14:44] Speaker 00:
It would be elevating form over a substance to send it back.

[00:14:48] Speaker 00:
The only reason the grants weren't denied was because the district court enjoined the DOL from following through on its determination that it was required.

[00:14:59] Speaker 00:
This is not the only part in the determination where they say precluded.

[00:15:02] Speaker 00:
If you look at page seven, it's even clearer there.

[00:15:05] Speaker 00:
We cannot.

[00:15:07] Speaker 00:
on page seven at the end of the second full paragraph.

[00:15:09] Speaker 00:
We cannot make the conclusion that Congress demanded as a prerequisite to certifying grants, and they said it as a matter of interpretation.

[00:15:21] Speaker 00:
I'll quote.

[00:15:22] Speaker 00:
Because there is this diminution of collective bargaining rights, in the department's assessment, this constitutes a significant interference with transit workers' collective bargaining rights such that they are not, quote, continued within the meaning of Section 13C, and the department cannot certify those grants.

[00:15:44] Speaker 00:
Now, the department tries to put a gloss on this, not the department, excuse me, DOR council.

[00:15:51] Speaker 00:
tries to put a gloss on this by saying, well, we left open the small possibility, left a little room that a transit agency might have a reliance interest on getting the grant, and so it's not 100% definitive.

[00:16:11] Speaker 00:
But that actually is not true either.

[00:16:13] Speaker 00:
In the sentence before, it says we will deny these grants,

[00:16:18] Speaker 00:
It says, well, we didn't make provision for de-oblicating grants that were previously given based on the prior determination interpretation that they're overruling.

[00:16:30] Speaker 00:
It says, the department's conclusion that it's not going to go back to try to get clawback money accounts for any reliance interests that the state of California and its transit agency may have based on the prior 2019 determination.

[00:16:47] Speaker 00:
So it fully accounts for any reliance interest.

[00:16:49] Speaker 00:
And as a matter of law, there is no reliance interest.

[00:16:56] Speaker 00:
I think the court has to understand the structure of this statute.

[00:17:01] Speaker 00:
This statute says, and as it's been interpreted, both by the DC Circuit and ATU v. Donovan and the Supreme Court, although it was dicta, I'm citing footnote 10 in the Jackson Transit Authority case.

[00:17:16] Speaker 00:
It says this statute demands that the Secretary of Labor ensure that state law preserves collective bargaining rights before federal aid can be dispersed.

[00:17:27] Speaker 00:
The D.C.

[00:17:27] Speaker 00:
Circuit said it and four times in text and once in footnote nine that the DOL has no discretion.

[00:17:35] Speaker 00:
This is not a policy.

[00:17:36] Speaker 00:
This is what Congress, what Congress determined is required in these circumstances.

[00:17:45] Speaker 00:
In that context, why did Congress say that?

[00:17:49] Speaker 00:
This is a labor protective statute.

[00:17:54] Speaker 00:
This says, as a condition of financial insistent, the interests of employees affected by this assistance shall be protected by these arrangements.

[00:18:03] Speaker 00:
And these arrangements, in order to protect it, shall include provisions that are necessary for the continuation of collective bargaining rights, among other things.

[00:18:14] Speaker 00:
The structure of the statute as such is by forcing the Department of Labor to say, it's not a general grant of equity or policy.

[00:18:22] Speaker 00:
So the department can't say, well, they haven't preserved collective bargaining rights, but poor transit authorities, they're going to lose out on money that they were expecting and they need for projects.

[00:18:36] Speaker 00:
They don't have the power to do that.

[00:18:38] Speaker 00:
They have to deny certification.

[00:18:42] Speaker 00:
The reason that Congress said that is because that creates an incentive.

[00:18:47] Speaker 00:
That creates, this is not a regulatory program, it's a spending clause program.

[00:18:52] Speaker 00:
And if the DOL says, if you don't preserve, if they have a 100% condition, you must preserve these collective bargaining rights.

[00:18:59] Speaker 00:
And they don't, and the state prevents the transit agencies from doing that by enacting a statute like PEPRA says, you don't have the authority to bargain over this.

[00:19:08] Speaker 00:
These pensions can't go that high anymore.

[00:19:11] Speaker 00:
So you're precluded from bargaining.

[00:19:13] Speaker 00:
So the transit agencies,

[00:19:17] Speaker 00:
They can't do anything.

[00:19:20] Speaker 00:
Their hands are tied.

[00:19:23] Speaker 00:
There is no reliance interest.

[00:19:24] Speaker 00:
They're not the acting parties.

[00:19:26] Speaker 00:
The acting party here is the state of California.

[00:19:35] Speaker 00:
What this statute does is say, all right, California, and what this DOL determination does is it does its job.

[00:19:42] Speaker 00:
This is what Congress said the DOL has to do to force these protective rights to be granted.

[00:19:49] Speaker 00:
So now the ball turns to California's court.

[00:19:53] Speaker 00:
And California needs to do what it did the first time around.

[00:19:57] Speaker 00:
There's no reason for a reliance interest to be recognized.

[00:20:00] Speaker 00:
There's no authority for reliance interest to be recognized.

[00:20:03] Speaker 00:
The harm to these transit agencies can be fully accounted for and must be under the structure of the statute by the state of California removing the prohibition on these transit agencies from bargaining over this.

[00:20:20] Speaker 00:
And that's what happened the first time around when the DOL issued a determination like this.

[00:20:25] Speaker 00:
California rushed in.

[00:20:27] Speaker 00:
They passed emergency legislation.

[00:20:30] Speaker 00:
And the emergency legislation, it basically set up a test case.

[00:20:33] Speaker 00:
That's why we're here 10 years later.

[00:20:35] Speaker 00:
It set up a test case.

[00:20:37] Speaker 00:
It said, all right, you're temporarily precluded from transit agencies.

[00:20:42] Speaker 00:
You're temporarily exempted from PEPRA.

[00:20:45] Speaker 00:
You can bargain over this.

[00:20:47] Speaker 00:
If the district court rules that this exemption from PEPRA doesn't disqualify us from grants, this application of PEPRA to transit agencies doesn't disqualify us from grants, then the exemption will go away.

[00:21:07] Speaker 00:
And the district court did hold that, and that's why it went away.

[00:21:11] Speaker 00:
But interestingly, it said, if,

[00:21:15] Speaker 00:
the district court disagrees and upholds on the merits, the DOL's position that PEPRA precludes certification, the exemption will be permanent.

[00:21:23] Speaker 00:
That's why this case is final.

[00:21:25] Speaker 00:
I mean, finality, there are two requirements.

[00:21:28] Speaker 00:
It's gotta be definitive, and it's gotta have legal consequences.

[00:21:32] Speaker 00:
Absent the injunction, this was gonna have a legal consequence, very direct legal consequence.

[00:21:38] Speaker 00:
These grants were gonna be denied, and that was gonna create

[00:21:42] Speaker 00:
if it hadn't been enjoined, exactly what Congress intended here, that it puts the onus on the state of California to remove this diminution of collective bargaining agreements, to vindicate these rights, which have to be granted as a condition of, have to be protected as a condition for this.

[00:22:00] Speaker 00:
That's what the D.C.

[00:22:01] Speaker 00:
Circuit held in A.T.U.V.

[00:22:02] Speaker 00:
Donovan.

[00:22:03] Speaker 00:
That's what the D.O.L.

[00:22:04] Speaker 00:
is saying in this determination.

[00:22:06] Speaker 00:
And in terms of rightness,

[00:22:07] Speaker 00:
I mean, if anything, this case is overwrite.

[00:22:09] Speaker 00:
This case, these rights have been protected.

[00:22:12] Speaker 00:
These rights have been denied that the statute protects as a condition for the grants for over a decade now.

[00:22:19] Speaker 02:
And what this... But all of the existing certifications remain good.

[00:22:23] Speaker 02:
There's no pending certification that's involved in this litigation.

[00:22:28] Speaker 00:
This is reversing a policy under which the DOL

[00:22:31] Speaker 00:
Right, but when you're saying it's overripe, I don't understand that because... It's overripe because the ripeness under the Whitman case that we cite at page 26, there are basically two conditions for ripeness.

[00:22:42] Speaker 00:
One is fitness for judicial review.

[00:22:44] Speaker 00:
This issue has been out there 10 years.

[00:22:47] Speaker 00:
OK, it hasn't been definitive.

[00:22:48] Speaker 00:
This is the only court that can definitively resolve this issue.

[00:22:51] Speaker 00:
It's a straightforward, what the court said, the Supreme Court said in Whitman, this is a straightforward issue of statutory interpretation, so it's fit for judicial review.

[00:23:00] Speaker 00:
And I say it's overwrite because it hasn't been decided by the only court that has jurisdiction over the state of California that can definitively decide it.

[00:23:07] Speaker 00:
It's been decided by the district court, but wrongly, we believe.

[00:23:10] Speaker 02:
Well, suppose there's never another certification request.

[00:23:14] Speaker 02:
We'd be giving an advisory opinion.

[00:23:17] Speaker 00:
These certification requests come in 10 to 15 times a year.

[00:23:22] Speaker 00:
The state of California has 20, 25 agencies.

[00:23:27] Speaker 02:
None of that is in front of us on this record.

[00:23:29] Speaker 00:
But Your Honor, it's a straightforward issue of statute of interpretation because there's no factual issue.

[00:23:35] Speaker 04:
Right, but we don't normally just issue opinions interpreting statutes without an actual case or controversy.

[00:23:41] Speaker 00:
There is a case of controversy.

[00:23:42] Speaker 00:
Their legal consequences are going to flow from

[00:23:45] Speaker 00:
would have followed if the district court had not enjoined it, the district court said we're about to reject these grants.

[00:23:56] Speaker 00:
And there's no fact, it's fit for interpretation from a statutory interpretation standpoint because the issue of statutory interpretation is whether PEPRA precludes its transit agencies from maintaining collective bargaining rights.

[00:24:13] Speaker 00:
The answer is yes, and it doesn't turn, it's not unique to any specific transit agency.

[00:24:20] Speaker 00:
Every application that came in would be defective under PEPRA, because PEPRA says you can no longer bargain, you have to pay 50% of the employees who are protected here have to pay 50% of

[00:24:38] Speaker 00:
of a pension.

[00:24:39] Speaker 00:
So it cuts back right there on that one requirement of the ability to bargain over not paying anything for your pension, which is traditionally what had happened in California.

[00:24:49] Speaker 00:
So there's no factual variations.

[00:24:51] Speaker 00:
The court has all the facts it needs from the operation of the statute.

[00:24:56] Speaker 00:
That's the way the statute operates.

[00:24:58] Speaker 00:
It doesn't operate differently as to any transit authority.

[00:25:01] Speaker 00:
And that's why under the prior determination, when the Trump Department of Labor said,

[00:25:07] Speaker 00:
Well, the statute isn't read that way.

[00:25:09] Speaker 00:
You don't have to protect collective bargaining rights in this fashion.

[00:25:13] Speaker 00:
Every application that came in was routinely denied based on that interpretation.

[00:25:19] Speaker 00:
There wasn't any factual.

[00:25:21] Speaker 00:
It's a legal issue.

[00:25:25] Speaker 00:
It's a straightforward legal issue.

[00:25:28] Speaker 00:
The court has everything in front of it.

[00:25:32] Speaker 00:
It's been fully briefed up and down.

[00:25:35] Speaker 00:
We've written a 40-page brief that shows that this is the correct interpretation of the statute, and it doesn't vary by transit agency.

[00:25:43] Speaker 00:
Every transit agency has been precluded from bargaining in any meaningful way over pensions for the past decade.

[00:25:51] Speaker 00:
And this case is ripe.

[00:25:53] Speaker 00:
It's overripe because the district court has issued

[00:25:57] Speaker 00:
Now, a set of this, over 10 years, these rights have been, in terms of hardship, which is the second prong of the ripeness test, the hardship is these rights have been denied for 10 years.

[00:26:10] Speaker 00:
And the Department of Labor said, we're going back to our original interpretation.

[00:26:16] Speaker 00:
It's a straightforward issue for the court.

[00:26:17] Speaker 00:
Is this interpretation a correct interpretation?

[00:26:21] Speaker 00:
Does this court agree with ATU v. Donovan?

[00:26:24] Speaker 00:
Well, this case is on all fours with ATU v. Donovan.

[00:26:27] Speaker 00:
And in fact, on page seven, when the Department of Labor says that, of their determination, when the Department of Labor says that we cannot do this, that's straight out of ATU v. Donovan.

[00:26:39] Speaker 00:
That's exactly what ATU v. Donovan said.

[00:26:41] Speaker 00:
As a matter of law, the state of Georgia has passed a statute which cuts back on collective bargaining rights.

[00:26:47] Speaker 00:
Therefore, the Department of Labor is prohibited.

[00:26:50] Speaker 00:
They may not.

[00:26:52] Speaker 00:
Look at footnote nine, the proceeding part of footnote nine.

[00:26:55] Speaker 00:
The Department of Labor has no discretion.

[00:26:57] Speaker 00:
This is a straightforward, the court said this is a straightforward issue of statutory interpretation.

[00:27:01] Speaker 00:
Doesn't turn on any facts with regard to any, there there was only one transit agency, MARTA.

[00:27:07] Speaker 00:
California happens to have 15 transit agencies or 20, I don't know how many, that are covered by PEPRA that get billions of dollars of aid.

[00:27:15] Speaker 00:
They have not preserved collective bargaining rights by virtue of PEPRA.

[00:27:19] Speaker 00:
And they all haven't done that.

[00:27:21] Speaker 00:
Now, no California agency can come in and say, well, you should treat our application differently, because we are maintaining collective bargaining rights.

[00:27:31] Speaker 00:
PEPRA precludes them from maintaining collective bargaining rights.

[00:27:33] Speaker 00:
No factual issue whatsoever, Your Honor.

[00:27:36] Speaker 00:
I see I've already, I probably won't get any rebuttal time at this point, and I haven't reserved any, but if the court would allow me some, I would greatly appreciate it.

[00:27:46] Speaker 00:
Thank you.

[00:27:58] Speaker 03:
Good morning, and may it please the court, Anna Ferrari for the State of California.

[00:28:03] Speaker 03:
Public pensions, like other forms of trusts, are regulated by states, as they have been since before the UMTA's enactment, in accordance with states' authority and duty to ensure that their pension systems are stable, solvent, and not prone to abuse.

[00:28:21] Speaker 03:
California enacted PEPRA under this authority for these specific purposes, and the Supreme Court recognized in its Malone decision that this authority does not conflict with federal labor policy and it does not interfere with the process of collective bargaining.

[00:28:38] Speaker 03:
In determining that PEPRA's reforms prevent the continuation of collective bargainings, the 2021 determination is construing Section 13C2 in ways that Congress never intended.

[00:28:52] Speaker 03:
Section 13C2 was intended to create a provisional protection to ensure that the rights of

[00:28:59] Speaker 03:
unionized workers at failing private transit operators were not destroyed, to use the Supreme Court's language from Jackson Transit, after local public agencies assumed controls.

[00:29:10] Speaker 03:
Now, California transit employees already enjoy robust collective bargaining rights under state law, and Section 13C2 provides an additional protection to the process of collective bargaining, but critically, it does not guarantee any particular substantive outcome

[00:29:28] Speaker 03:
And we learned that from the DC Circuit's decision in Donovan.

[00:29:32] Speaker 03:
PEPRA establishes modest parameters that prevent the outcomes of bargaining from reaching extremes that would impinge upon the state's responsibility to ensure that benefits promised equal benefits paid.

[00:29:45] Speaker 02:
I'd like to- Council, do we have to agree with your view that it's a good policy for you to prevail?

[00:29:52] Speaker 03:
You do not, your honor.

[00:29:54] Speaker 03:
PEPRA's policy and purpose is relevant to analyzing whether it conflicts with federal labor policy, and it is relevant to understanding whether the department considered all relevant issues in this case, but the department has positioned this question for determination based on interpretation of the statute alone, and the court can

[00:30:18] Speaker 03:
find that Pepra does not interfere with collective bargaining rights without endorsing the policies underlying Pepra.

[00:30:26] Speaker 03:
I'd like to address the timing doctrines in the court's order of last week.

[00:30:31] Speaker 03:
California agrees with the Department of Labor that finality is not a jurisdictional issue here because jurisdiction's conferred by statute and so that is not necessary to reach.

[00:30:41] Speaker 03:
And I just remind the court that both parties, both appellants have conceded finality before the lower court at ER 568 and also in ECF 106 at page two.

[00:30:55] Speaker 03:
The test for finality, as counsel has already reiterated, has been recently set forth in the Supreme Court's decision in Sackett versus EPA.

[00:31:04] Speaker 03:
It requires a consummation of an agency process and legal consequences.

[00:31:08] Speaker 03:
So here, the 2021 determination is an undisputedly final action.

[00:31:13] Speaker 03:
It purports to nullify other final grant certification decisions.

[00:31:18] Speaker 03:
And in it, the department commits fully to its interpretation of Section 13C on a prospective basis.

[00:31:27] Speaker 03:
It uses mandatory language that contemplates no exceptions.

[00:31:31] Speaker 03:
It says on a prospective basis, it is not appropriate to deny grants so long as Pepper is in the backdrop.

[00:31:40] Speaker 03:
And it is similar to the department's prior determinations on this issue in terms of the content and the level of formality.

[00:31:48] Speaker 03:
Now the department alludes in its briefing to a possibility that it might conceivably change its mind down the road.

[00:31:55] Speaker 03:
But the second opinion makes clear that that future possibility does not disturb finality.

[00:32:01] Speaker 03:
It's too speculative.

[00:32:04] Speaker 03:
As far as the legal consequences that flow from the 2021 determination, they are immediate, they are concrete, and they are severe.

[00:32:14] Speaker 03:
The 2021 determination was different from prior determinations in that it was directed to the regional administrator for the FTA.

[00:32:23] Speaker 03:
It was in effect, it was not a communication to the public, it was not a communication to California transit agencies letting them know how rights would be interpreted in the future.

[00:32:33] Speaker 03:
It was a directive to the FTA regional administrator

[00:32:36] Speaker 03:
to cease processing grants that otherwise would have been approved under the regime that had been in place since the 2019 determination.

[00:32:45] Speaker 03:
And the fact of this immediate effect is, to follow up on Judge Graber's earlier question, it is in the record.

[00:32:54] Speaker 03:
It's set forth in the Auerbach Declaration, which is at ER 204.

[00:32:59] Speaker 03:
This is a declaration that was submitted at the direction of the district court

[00:33:03] Speaker 03:
after California moved to stay implementation of the 2021 determination.

[00:33:08] Speaker 03:
The court wanted to know what is the effect of this determination and what grants are ripe for decision in the two months following its issuance.

[00:33:19] Speaker 03:
The Department of Labor identified 16 grant applications that were pending at the time, totaling more than $2 billion in funding that would have been denied

[00:33:30] Speaker 03:
had California not obtained a stay under section 705.

[00:33:34] Speaker 03:
So I agree with the department and with ATU that this matter is ripe for review in that regard.

[00:33:42] Speaker 03:
The harms, I will not belabor the point because it's in our briefing, but the harms that would have flowed immediately to the transit agency include denial of

[00:33:52] Speaker 03:
assistance that would fund capital projects that are long-term expensive plans that transit agencies embark on with an understanding that they will be completed from a financial perspective.

[00:34:04] Speaker 03:
It also includes operational assistance to transit agencies that they have come increasingly in California to rely on to offset diminishing

[00:34:16] Speaker 03:
receipts on account of diminished ridership due to the pandemic.

[00:34:21] Speaker 03:
Just as a few examples, in 2020 the losses to ridership were so severe that the Golden Gate Bridge and Highway Transit District served warning notices to its employee anticipating that it would not have sufficient funding

[00:34:37] Speaker 03:
to pay 20% of its workforce.

[00:34:40] Speaker 03:
And those layoffs were only averted because of emergency federal COVID relief that is subject to Section 13C certification requirement that issued in 2020 and that would have been denied to this agency were it not for the stay that California obtained.

[00:34:57] Speaker 03:
In addition to the harms to the transit agencies, there were also immediate legal consequences for the parties to the litigation.

[00:35:02] Speaker 03:
California and the department were up until that point defending the 2019 determination as co-parties.

[00:35:10] Speaker 03:
And when the Department of Labor withdrew its pending motion for summary judgment to issue the 2021 determination taking the opposite position with respect to PEPRA, it became an adverse party to California.

[00:35:23] Speaker 03:
So that is an additional legal consequence that flowed from the issuance of the 2021 determination.

[00:35:30] Speaker 03:
As far as ripeness, the test, again, is fitness for judicial review and hardship to a party if judicial review is denied.

[00:35:41] Speaker 03:
The Reno case cited in the court's order frames this as concreteness rather than hardship, but it's effectively the same analysis.

[00:35:50] Speaker 03:
So we're now on the fourth iteration of DOL's attempt to tee up a determination on this issue for judicial review.

[00:35:59] Speaker 03:
And unlike the Reno decision where there were factual issues about the status and eligibility of undocumented residents who were in the plaintiff class as to whether they were eligible for removal, here there's nothing to clarify on remand.

[00:36:14] Speaker 03:
The department has presented this as a question of statutory interpretation.

[00:36:19] Speaker 03:
So there is nothing that would be clarified from that standpoint through remand.

[00:36:27] Speaker 03:
The Sackett case that I mentioned earlier is instructive on this point.

[00:36:31] Speaker 03:
The plaintiffs in that case had dumped, they had placed fill on their property in a wetland and they received a notice that their actions violated the Clean Water Act.

[00:36:48] Speaker 03:
The Supreme Court recognized that technically the most final determination on whether they had violated the Clean Water Act would be triggered by the denial of their permit application for a permit approving the fill that they had already engaged in.

[00:37:04] Speaker 03:
But the Supreme Court found that it wasn't necessary to wait for the agency

[00:37:10] Speaker 03:
to take the additional step to find finality because the compliance order operated as an effective denial.

[00:37:16] Speaker 03:
And so to hear the 2021 determination is an effective denial and nothing will be changed by waiting for individual grants to be denied.

[00:37:27] Speaker 03:
Nothing in the 2021 determination contemplates that DOL would do anything differently based on the individual circumstances of the case.

[00:37:37] Speaker 03:
And importantly, if the court were to remand the case for that purpose for further grants to be denied, the effect on California transit agencies would be immediate and catastrophic.

[00:37:52] Speaker 03:
It would place them in the position of needing to apply to district courts and then this court for relief.

[00:37:58] Speaker 03:
Every time there was a denial, it would be inefficient, it would be difficult, it would be decentralized, and here all parties agree that this issue is ripe for review.

[00:38:07] Speaker 03:
If the court has no questions on ripeness and sorry for going on for so long, I'd like to turn to the substantive issues in the case.

[00:38:18] Speaker 03:
Section 13C uses the ambiguous language when it refers to protections for the continuation of collective bargaining rights.

[00:38:26] Speaker 03:
But we can glean from the circuit courts that have interpreted the statute that that phrase is used generically to mean without interruption as the court decided in the Brock case in the DC Circuit, and that it protects the process of collective bargaining, not the outcomes.

[00:38:40] Speaker 03:
If Congress intended for it to perpetuate individual substantive employment terms, it surely would have said that.

[00:38:46] Speaker 02:
And instead can still... But Counsel, there's kind of an in-between ground because at the time of the enactment of the federal law, presumably it would have required the continuation in effect of existing collective bargaining agreements at that time, which would have had a substantive effect.

[00:39:10] Speaker 02:
That's a long time ago, and it doesn't affect these collective bargaining agreements specifically, but that's how I would read that piece of the statute.

[00:39:23] Speaker 02:
The rest of it is procedural, as you say.

[00:39:27] Speaker 03:
Well, I disagree.

[00:39:29] Speaker 03:
I think that section, you know, there's a number of individual rights protected by section 13C, and section 13C1 is directed at the substantive rights.

[00:39:39] Speaker 03:
Section 13C2 is directed at the procedural rights, the process of collective bargaining.

[00:39:45] Speaker 03:
And substantive firms, you know, I think the Donovan case is illustrative as to how that operates because

[00:39:54] Speaker 03:
It found that a state law, a substantive employment law, offends 13C to only where it places the entire subject of bargaining within management's exclusive control.

[00:40:07] Speaker 03:
Contrary to what my friend from the union just argued, it didn't hold that a law that places parameters on outcomes offends Section 13C.

[00:40:15] Speaker 02:
I don't understand.

[00:40:16] Speaker 02:
I guess I'm just looking at 13B to A, which is not what's at issue here, but it preserves the continuation of rights under existing collective bargaining agreements.

[00:40:32] Speaker 02:
That's the part I was referring to.

[00:40:34] Speaker 03:
Yes, that that aspect of section 13 C to or sorry I'm sorry that aspect of section 13 C is aimed at the protection of Substantive employment rights.

[00:40:45] Speaker 02:
That's what I was trying to get at Yes, and the department has not seeking relief under that provision Both they and the okay and are only seeking relief under section 13 C. All right That's I'm sorry my question was kind of vague, but I wanted to just be sure that we were all talking about the same sub paragraph

[00:41:03] Speaker 03:
I appreciate that and thank you for the clarification.

[00:41:06] Speaker 03:
So knowing what we know about 13C2's text and what we can glean from it, we now look to Pepper's text and what it requires and what it leaves open as far as bargaining with Pepper as a backdrop.

[00:41:22] Speaker 03:
Bargaining continues over base wages, which are an important factor in calculating the level of benefits that a retiree will receive.

[00:41:30] Speaker 03:
It leaves open bargaining over the contribution rate.

[00:41:33] Speaker 03:
so long as employees contribute at least half of the actual cost.

[00:41:37] Speaker 03:
And I'll make a quick digression there because there was some discussion during Mr. Winnick's presentation that PEPRA imposes only floors on pension rights and not ceilings.

[00:41:48] Speaker 03:
And this is an example of how PEPRA actually establishes both floors and ceilings.

[00:41:52] Speaker 03:
The contribution rate requirement under PEPRA is that an employee must, a miscellaneous employee, which is the category at issue here, must contribute up to 50% or must contribute at least 50% of the actual cost

[00:42:06] Speaker 03:
but subject to an 8% limit, 8% being the measure of their base wages.

[00:42:12] Speaker 03:
And so PEPR works both ways, both as a floor and a ceiling.

[00:42:21] Speaker 03:
I'd like to just touch on the record evidence that California submitted, which was critically left out of the department's presentation.

[00:42:31] Speaker 03:
PEPRA was enacted 12 years ago, so we have at this point 12 years of bargaining experience to look to as evidence of PEPRA's supposed impact on collective bargaining rights.

[00:42:42] Speaker 03:
The department's view is that it's not necessary to address this, but California did canvas collective bargaining agreements to determine what had happened in the years since Pepper's inactive, and what we found was a robust bargaining continues both within and around Pepper's restraints.

[00:43:00] Speaker 03:
There are a number of examples in the record of wage increases that were negotiated specifically to offset increased pension contribution rates.

[00:43:08] Speaker 03:
There are also structural changes to pension plans.

[00:43:11] Speaker 03:
So we're not just trying to get a dollar for dollar offset of PEPRA's added costs.

[00:43:18] Speaker 03:
The San Joaquin Regional Transit District proposed closing an underfunded plan.

[00:43:22] Speaker 03:
And ATU proposed some concessions that would allow them to keep that plan

[00:43:27] Speaker 03:
in place including narrowing the definition of pensionable compensation and excluding overtime among other things and what this shows is that both floors and ceilings are relevant to bargaining and it's possible to bargain under a ceiling just as easily as it is to bargain over a floor.

[00:43:44] Speaker 03:
There are one other thing I'd like to touch on as far as the substantive invalidity.

[00:43:52] Speaker 03:
The department argues in its reply brief that that PEPRA was

[00:43:57] Speaker 03:
enacted as an exercise of California's authority as an employer.

[00:44:01] Speaker 03:
And it points to PEPRA's scope, applying only to public workers.

[00:44:06] Speaker 03:
This argument is unsupported.

[00:44:07] Speaker 03:
So PEPRA was enacted within the scope of California's authority as a regulator, as a broad, generally applicable reform.

[00:44:18] Speaker 03:
It applies to union and non-union workers.

[00:44:21] Speaker 03:
It applies to state and local government.

[00:44:23] Speaker 03:
And DOL questioned

[00:44:27] Speaker 03:
PEPRA's validity as a broad regulation by posing why it didn't also apply to private sector workers.

[00:44:37] Speaker 03:
But that is an impossibility under ERISA, which would have preempted any state law attempting to regulate private pensions.

[00:44:48] Speaker 03:
The state's authority is limited to public pensions, and so it's not correct to look to PEPRA as

[00:44:57] Speaker 03:
a reform that was enacted in California's exercise of its authority as an employer.

[00:45:03] Speaker 03:
Malone is more apropos in discussing the, in its discussion of the authority to regulate public pensions as being within state authority.

[00:45:19] Speaker 03:
And I think that addresses Judge Graber your earlier questions about whether it matters that Pepper treats public employees differently.

[00:45:26] Speaker 03:
It does so for a very specific reason.

[00:45:35] Speaker 03:
I would just add, unless the court has further questions, that in addition to the incredible stakes that are present for California transit agencies, as noted in our brief, California is one of 40 states to have reduced its pension benefits for public employees since 2009, and so the court's holding in this case may potentially have impacts for those states as well if the court were to affirm the department and the union's reasoning.

[00:46:02] Speaker 03:
If the court has no further questions.

[00:46:05] Speaker 03:
That concludes my presentation.

[00:46:12] Speaker 04:
I'll give counsel each one minute for rebuttal.

[00:46:16] Speaker 01:
Thank you, Your Honor.

[00:46:17] Speaker 01:
Two quick points.

[00:46:18] Speaker 01:
First, on the substance, the distinction California draws between substance and process just isn't meaningful.

[00:46:24] Speaker 01:
Everybody agrees this law would violate Section 13C if it said you are forbidden from bargaining over pensions.

[00:46:31] Speaker 01:
The fact that what it instead says is you can bargain but you can't agree on these outcomes isn't a material difference.

[00:46:37] Speaker 01:
We're certainly not saying substantive outcomes are guaranteed.

[00:46:40] Speaker 01:
We agree with California that's not what the law means.

[00:46:42] Speaker 01:
Our point is that as a matter of federal labor policy, California cannot stop employees from bargaining for the outcomes that they want in this regard.

[00:46:49] Speaker 01:
And the fact that people have bargained around PEPRA isn't enough.

[00:46:52] Speaker 01:
Under that theory, California could forbid all pensions and then say, well, it's enough that you can bargain for higher wages.

[00:46:59] Speaker 01:
federal labor policy works.

[00:47:00] Speaker 01:
And then just briefly on the advisory opinion question, we agree with both Ms.

[00:47:04] Speaker 01:
Ferrari and Mr. Roth that certification requests come up regularly.

[00:47:08] Speaker 01:
That's clear in the record from the Auerbach Declaration.

[00:47:11] Speaker 01:
And for that reason, we agree that this is right both constitutionally and prudentially.

[00:47:16] Speaker 01:
It's constitutionally right because

[00:47:18] Speaker 01:
We agree California had concrete and imminent injuries at stake if the letter were to go forward, and we agree it's prudentially right because the issues are, I think, crystallized for the Court's consideration, which is not true with many non-binding statements of policy, and because there would be a hardship to all parties from having to litigate it in the context of individual denials for, I think, the reasons Ms.

[00:47:41] Speaker 01:
Ferrari explained.

[00:47:42] Speaker 01:
Thank you, Your Honors.

[00:47:48] Speaker 04:
Yeah, one minute.

[00:47:50] Speaker 00:
I think my one minute just because I think it's critical because it cuts to both the substantive and the finality, rightness, procedural arguments that the court has raised is this argument that the department and ATU's interpretation is flawed because it ignores evidence about the bargaining that's actually taking place under PEPRA.

[00:48:10] Speaker 00:
That's not relevant evidence under the statute because the district court, where the district court got this wrong, most fundamentally, is to say that 13C doesn't enshrine a right to bargain over all individual rights, individual terms.

[00:48:32] Speaker 00:
So the focus has to be on individual terms of bargaining and the fact that

[00:48:37] Speaker 00:
it cuts way back on one right, one bargaining right, is not saved by the fact that it preserves other bargaining rights.

[00:48:47] Speaker 00:
That's the whole point.

[00:48:48] Speaker 00:
And that's why it's irrelevant for rightness purposes and finality purposes as well.

[00:48:57] Speaker 04:
Thank you, counsel, for your helpful arguments.

[00:48:59] Speaker 04:
This matter is submitted.