Petition — Building & Construction Trades Department v. Donovan

8 3 pe 6 9 v4 Office - Supreme Court, U.S.

FILED

OCT 26 1006

No.

PPE ER |. STEVAS,

Qe CLERK

IN THE

Supreme Court of the United States

OCTOBER TERM, 1983

BUILDING AND CONSTRUCTION TRADES DEPARTMENT,

AFL-CIO, et al.,

Petitioners,

Vv.

RAYMOND J. DONOVAN, SECRETARY OF LABOR, et al.,

Responuents.

PETITION FOR A WRIT OF CERTIORARI TO THE

UNITED STATES COURT OF APPEALS

FOR THE DISTRICT OF COLUMBIA CIRCUIT

LAURENCE J. COHEN

TERRY R. YELLIG

1125 15th Street, N.W.

Washington, D.C. 20005

ROBERT J. CONNERTON

PHILLIS PAYNE

1899 L Street, N.W.

Washington, D.C. 20036

LAURENCE GOLD

815 16th Street, N.W.

Washington, D.C. 20006

(202) 637-5390

(Counsel of Record)

=a

WILSON - EPES PRINTING Co., INC. - 789-0096 - WASHINGTON, D.C. 20001

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QUESTIONS PRESENTED FOR REVIEW

1. Whether it is contrary to this Court’s decisions in

Motor Vehicle Mfgrs. Assn. v. State Farm Mutual, ——-

U.S. ——, 51 U.S.L.W. 4935 and BankAmerica Corp. v.

United States, —— U.S. ——, 51 U.S.L.W 4685 for a

Court of Appeals to accord extreme deference to an ad-

ministrator who overturns longstanding regulations that

construe quite specific statutory directives adopted con-

temporaneously with the enactment of the enabling stat-

ute and repeatedly reviewed and reaffirmed since and who

does so without showing that the prior regulations

wrongly construe the statute or have proved defective

in operation?

2. Whether the regulations challenged here, whose

stated justification is cost savings to Government, and

which attain that objective by undermining the minimum

wages of workers on federal construction projects, are

contrary to the Davis-Bacon Act whose purpose is to en-

sure fair wages for construction workers even where pay-

ing such wages may tend to increase short term con-

struction costs?

(i)

ii

PARTIES TO THE PROCEEDINGS BELOW

Building and Constuction Trades Department,

AFL-CIO;

American Federation of Labor and Congress

of Industrial Organizations (AFL-CIO) ;

Laborers’ International Union of North America,

AFL-CIO;

International Association of Heat and Frost Insulators

and Asbestos Workers, AFL-CIO;

International Brotherhood of Boilermakers,

Iron Ship Builders, Blacksmiths, Forgers

and Helpers, AFL-CIO;

International Union of Bricklayers

and Allied Craftsmen, AFL-CIO;

United Brotherhood of Carpenters

and Joiners of America, AFL-CIO;

International Brotherhood of Electrical Workers,

AFL-CIO;

International Union of Elevator Constructors,

AFL-CIO;

International Union of Operating Engineers,

AFL-CIO;

International Association of Bridge, Structural and

Ornamental Iron Workers, AFL-CIO;

Tile, Marble, Terrazzo Finishers and

Shopmen International Union, AFL-CIO;

International Union of Painters

and Allied Trades, AFL-CIO;

Operative Plasterers’ and Cement Masons’

International Association of the United States

and Canada, AFL-CIO;

iii

United Union of Roofers, Waterproofers

and Allied Workers, AFL-CI0;

Sheet Metal Workers’ International Association,

AFL-CIO;

United Association of Journeymen and Apprentices

of the Plmbing and Pipe Fitting Industry of the

United States and Canada, AFL-CIO; and

International Brotherhood of Teamsters, Chauffeurs,

Warehousemen and Helpers of America;

Raymond J. Donovan,

Secretary of Labor;

Robert B. Collyer,

Deputy Secretary of Labor for

Employment Standards; and

William M. Otter,

Administrator of the Wage and Hour Division,

United States Department of Labor.

TABLE OF CONTENTS

Page

QUESTIONS PRESENTED FOR REVIEW ............... i

PARTIES TO THE PROCEEDINGS BELOW .......... ii

TABLE OF CONTENTS 2c.-cccscccccccsccsccccccoeeeeeeecooe v

TABLE OF AUTHORITIES @...-..----sscccccccesesesseccsseeeee vi

epee WOW 1

EE ee Ne ATO ae 1

STATUTORY PROVISION INVOLVED ........0::00000-- 2

STATEMENT OF THE CASE .o....cccccccecssccscsseessessseee 2

REASONS FOR GRANTING THE WRIT ......... 6

I. The Court of Appeals Applied The Wrong Legal

— In Passing On The Validity Of A

ical Change In Administrative Course .......... 6

II. The Court Of Appeals’ Decision Will Eliminate

The Central Worker Protection Provided By The

Davis-Bacon Act—That Wage Determinations

Be Based Upon Wages Prevailing For Discrete

Corresponding “Classes Of Laborers And

PIII os scsinraliccccitanbiasicsehebitcenbieiaiillcanidaatise 15

SOIT -sisdscsssvishciisnsinenn hstiidihmtiniccseaseieccaciibeiabanipltiiacel 23

(v)

vi

TABLE OF AUTHORITIES

Cases: Page

American Ship Bldg. v. NLRB, 380 U.S. 300

RIP AE ar, A ad a 15

BankAmerica Corp. v. United States, —— US.

, 51 U.S.L.W. 4685 (June 9, 1983) ~............. 12, 13

Batterton v. Francis, 432 U.S. 416 (1977) .............. 10, 11

Coler v. Corn Exchange Bank, 250 N.Y. 136, 164

N.E. 882 (1928), aff’d, 280 U.S. 218 (1930) -....... 10

Motor Vehicle Mfgrs. Assn. v. State Farm Mutual,

— US. ——, 51 U.S.L.W. 49385 (June 24,

SAL A RT Re Ee cee aoe 11, 12, 13, 15

Norwegian Nitrogen v. United States, 288 U.S. 294

a cdemetinatimenbarerd 9,10

Social Security Board v. Nierotko, 327 U.S. 358

Ne a cacibonsbebeeunbbmenesbietesanienanl 8

United States v. Binghampton Construction Co.,

RE RI Re ae ee 14

Statutes:

Act of August 21, 1941, 55 Stat. 664 2.00. 3

Act of March 23, 1941, 55 Stat. 58 ............................ 3

Davis-Bacon Act, ch. 411, 46 Stat. 1494, 40 U.S.C.

EES EE NTR SR etn Rae passim

Copeland Act, 40 U.S.C. § 276c ..................--cc--seee--- 3

Walsh-Healey Act, 41 U.S.C. § 35 et seq. ................ 7

Service Contract Act, 41 U.S.C. § 351 et seq. ......... 7

Regulations:

Reorganization Plan No, 14 of 1950, 15 Fed. Reg.

876 (May 24, 1950), 64 Stat. 1267, 5 U.S.C. App.

a sole aemsiceanpabdanaintanees

A (I aincndcosnsvodemninennandainpeapsustopesendopooesioome

Sn

sas capirerenanontaiinonstnoanauanslofenasss

46 Fed. Reg. 11258 .................... ... siaciasjhaladgesnabaphias

I 6 ccenacenssenmsvecsnnovescensensameeinatinens

and setrreneeisontuneemnenseinasenees

I nsec cereeentinenndninandinneetene

46 Fed. Reg. 36140

er he POW W P WC

vii

TABLE OF AUTHORITIES—Continued

Page

a dusancinhecies 4

Ne oc vusemnsennaen 4

Se Ra 4

A ee 8,14

a7 Pee eeeewmeeee Qe... 8,14

a Te Sn 3,4

a SR ee 3,4

UE I ot 5

a) ta 2 OLS) ............ OL URS PACER oa en mR a 3

Legislative History:

75 Cong. Rec. 12863-12890 ..........................,............. 20

Hearings on H.R. 12 Before the House Committee

on Labor, 72nd Cong., 1st Sess. (1932) ............... 18

Hearings on S.8847 and H.R. 11865 Before the

House Committee on Labor, 72nd Cong., Ist

a NS a mS 18

Hearings on S. Res. 228 Before the Senate Subcom-

mittee of the Committee on Education and Labor,

78rd Cong., 2nd Sess. (1984) ................................. 18

S. Rep. 332, 74th Cong., Ist Sess. (1935) .......... 18, 19, 20

Other Authorities:

Comptroller General Opinion No. B-147847 (De-

ES. “a een 22

In re Brezina Construction Co., WAB No. 68-10

EEO SES I 2K Sve ee tree aE 22

Donahue, “The Davis-Bacon Act and ihe Walsh-

Healey Public Contracts Act: A Comparison of

Coverage and Minimum Wage Provisions,” 29

Law and Contemporary Problems 488 (1964)... 21

IN THE

Supreme Court of the United States

OCTOBER TERM, 1983

No.

BUILDING AND CONSTRUCTION TRADES DEPARTMENT,

AFL-CIO, et al.,

° Petitioners,

RAYMOND J. DONOVAN, SECRETARY OF LABOR, et al.,

Respondents.

PETITION FOR A WRIT OF CERTIORARI TO THE

UNITED STATES COURT OF APPEALS

FOR THE DISTRICT OF COLUMBIA CIRCUIT

Petitioners, Building and Construction Trades Depart-

ment, AFL-CIO, et al., pray that a writ of certiorari is-

sue to review the judgment of the United States Court of

Appeals for the District of Columbia Circuit in the above-

titled case.

OPINIONS BELOW

The opinions of the United States District Court for

the District of Columbia are reported at 543 F. Supp.

1282 and 553 F. Supp. 352 and are reproduced in the

separately bound Appendix to this Petition at 49a and

68a. The opinion and judgment of the United States

Court of Appeals for the District of Columbia Circuit is

reported at 712 F.2d 611 and is reproduced in the Ap-

pendix at la.

JURISDICTION

The Court of Appeals’ judgment was rendered on July

5, 1983. A Petition for Rehearing and a Petition for Re-

hearing en banc were denied by the Court of Appeals on

2

September 16, 1985. The Order denying the Petitions

for Rehearing and for Rehearing en banc are reproduced

at 46a and 47a. On October 4, 1983, the Court of Ap-

peals issued an Order for stay of the issuance of the

mandate until October 26, 1983 that also is reproduced

at 48a. The jurisdiction of this Court is invoked pur-

suant to 28 U.S.C. § 1254(1).

STATUTORY PROVISION INVOLVED

The statutory provision involved in this case is § l(a)

of the Davis-Bacon Act, 40 U.S.C. § 276a, as amended.

This provision is set forth immediately below.

STATEMENT OF THE CASE

Section 1(a) of the Davis-Bacon Act, ch. 411, $1, 46

Stat. 1494, as amended, 40 U.S.C. § 276a, provides, in

pertinent part, that:

(a) The advertised specifications for every con-

tract in excess of $2,000, to which the United States

. is a party, for construction, alteration, and/or

repair, ... of public buildings or public works of the

United States . . . and which requires or involves the

employment of mechanics and/or laborers shall con-

tain a provision stating the minimum wages to be

paid various classes of laborers and mechanics which

shall be based upon the wages that will be deter-

mined by the Secretary of Labor to be prevailing for

the corresponding classes of laborers and mechanics

employed on projects of a character similar to the

contract work in the city, town, village, or other civil

subdivision of the State, in which the work is to be

performed... .

And the Act goes on to provide that a contract based

upon these specifications must contain a stipulation that

the contractor shall pay wages not less than those stated

in the contract specifications.

3

By the Act of March 23, 1941, 55 Stat. 53, and the Act

of August 21, 1941, 55 Stat. 664, 40 U.S.C. § 276a-7, the

foregoing requirements also apply to negotiated construc-

tion contracts of the same character. Moreover, the

Davis-Bacon Act’s requirements are incorporated into a

number of other federal statutes covering federally fi-

nanced construction. A list of these “related statutes” is

contained in 29 C.F.R. §5.1(a) (1981). See also, Reor-

ganization Plan No. 14 of 1950, 15 Fed. Reg. 376 (May

24, 1950), 64 Stat. 1267, 5 U.S.C. App. 242.

The regulatory proceeding that led to the instant case

began on December 28, 1979, when Secretary of Labor

Ray Marshall published two related proposals in 44 Fed.

Reg. 77026: the first to make certain revisions to 29

C.F.R. Part 1, Procedures for Predetermination of Wage

Rates Under the Davis-Bacon and Related Acts; and the

second to make certain revisions to 29 C.F.R. Part 5,

Labor Standards Provisions Applicable to Contracts Cov-

ering Federally Financed and Assisted Construction.'

As an outgrowth of those notices, “final regulations”

were published in 46 Fed. Reg. 4306 and 46 Fed. Reg.

4380 (Jan. 16, 1981), with a scheduled effective date of

1 That rulemaking proceeding concerned not only the Davis-

Bacon Act but also the Copeland Anti-Kickback Act, ch. 482, § 2, 48

Stat. 948, as amended, 40 U.S.C. § 276c, which provides:

The Secretary of Labor shall make reasonable regulations for

contractors and subcontractors engaged in the construction,

prosecution, completion or repair of public buildings, public

works or buildings or works financed in whole or in part by

loans or grants from the United States, including a provision

that each contractor and subcontractor shall furnish weekly a

statement with respect to the wages paid each employee during

the preceding week. Section 1001 of Title 18 shall apply to such

statements.

The sole Copeland Act issue resulting from the rulemaking raised

in this suit was decided in the Unions’ favor both by the District

Court and by the Court of Appeals and is therefore not treated at

length in this petition.

4

February 17, 1981. However, pursuant to President

Reagan’s Memorandum to the Heads of All Agencies of

January 29, 1981, the Secretary of Labor published a no-

tice in 46 Fed. Reg. 11253 (Feb. 6, 1981) delaying im-

plementation of these regulations unti] March 30, 1981.

Then Secretary of Labor Raymond J. Donovan four

times delayed the implementation of the regulations to

allow reconsideration pursuant to Executive Order 12291,

46 Fed. Reg. 13193. See, 46 Fed. Reg. 18973 ‘March 27,

1981): 46 Fed. Reg. 23739 (April 28, 1981); 46 Fed.

Reg. 33514 (June 30, 1981); and 46 Fed. Reg. 36140

(May 14, 1981).

On August 14, 1981, Secretary of Labor Donovan pub-

lished new proposed Parts 1 and 5 in the Federal Register

for comment (46 Fed. Reg. 41444 and 46 Fed. Reg.

41456), and the previously published regulations were

further postponed (46 Fed. Reg. 41043). The new pro-

posals differed substantially from both the then-current

regulations and from the January 16, 1981 “final regu-

lations” and in every instance the charge decreased the

wage protections afforded to construction workers.

Finally, on May 28, 1982, the Secretary of Labor is-

sued final regulations to be codified in 29 C.F.R. Parts 1

and 5 which were to become effective on July 27, 1982.

This action challenging the validity of portions of these

regulations (hereafter “the challenged regulations”)

was thereupon filed by the Building and Construction

Trades Department, AFL-CIO, the AFL-CIO, fifteen

national and international unions affiliated with the lat-

ter organizations and the Teamsters Union (hereafter

“the Unions”) against the Secretary of Labor (hereafter

“the Secretary”), the Deputy Under Secretary of Labor

for Employment Standards and the Administrator of the

Department of Labor’s Wage and Hour Division as de-

fendants. The suit sought to overturn the portions of the

challenged regulations that:

5

would alter the present regulatory scheme by (1)

eliminating the so-called “thirty-percent rule” by

which a locally prevailing rate could be set at the

rate paid to a thirty-percent plurality of local work-

ers; (2) combining data from adjacent rural coun-

ties but excluding any nearby urban counties when

wage data in a given rural county is insufficient to

determine a locally prevailing wage; (3) excluding

from the prevailing-wage calculation for most build-

ing projects wages paid on similar local projects that

were subject to the Davis-Bacon Act; (4) expanding

the permitted use of semiskilled helpers in a number

of ways including permitting such a classification

in areas where it is only an “identifiable” practice

rather than a “prevailing” one and eliminating the

requirement that helpers may do only tasks distinct

from those undertaken by other classes of workers;

and (5) allowing contractors to submit a weekly

statement certifying compliance with Davis-Bacon

wage requirements, instead of requiring the submis-

sion of the actual weekly payrolls. [Pet. App. 6a.]

The Unions promptly filed motions for a temporary re-

straining order, a preliminary injunction, and summary

judgment and the Secretary filed a cross-motion for sum-

mary judgment.

On July 22, 1982, the District Court issued a prelimi-

nary injunction restraining the enforcement of the chal-

lenged regulations, pending final disposition of the cross

motions for summary judgment. Subsequently, the Dis-

trict Court granted the Unions’ motion for summary

judgment with one exception—that court ruled that the

definition of “prevailing wage” to be codified in 29 C.F.R.

§1.2(a) (1) is in accord with law. Pet. App. 68a.

On appeal the C rt of Appeals affirmed the District

Court on the Copeland Act “reporting” issue and on the

“prevailing wage” definition issue, affirmed the District

Court in part and reversed in part on the “helpers” issue

6

and reversed the District Court on the “Davis-Bacon

projects” issue and on the “rural wage determination”

issue. Pet. App. 44a. Overall, then, after the Court of

Appeals’ decision, three of the five challenged regulations

had been upheld in full and one more upheld in substan-

tial part.

REASONS FOR GRANTING THE WRIT

I. THE COURT OF APPEALS APPLIED THE WRONG

LEGAL STANDARD IN PASSING ON THE VALID-

ITY OF A RADICAL CHANGE IN ADMINISTRA-

TIVE COURSE.

The maturation of the system of federal administrative

law put in place in the 1930’s is bringing to the fore the

question of the proper legal standard for judicial review

of attempts by administrators to reverse well-settled

rules. Indeed, in many areas of administrative law, the

reconsideration of regulations is as common as replacing

new regulatory initiatives. Such reconsiderations pose a

substantial threat to the rule of law. It is the accepted

postulate of our legal system that administrators are not

to make law but 'rather to implement the law Congress

has made in the enabling statute. And, all other things

being equal, radical changes in longstanding regulations,

particularly those issued contemporaneously with the

statute’s passage, and frequently reviewed and reap-

proved since, are particularly likely to be instances of

forbidden administrative law making. Moreover, the

justified suspicion that the administrator is seeking to

substitute his values for the values Congress wrote into

the statute is accentuated if the new regulation is not

supported by a fully reasoned explanation or if the ex-

planatory materials show that the administrator’s pre-

mises are not the statute’s premises. But all other things

may not be equal. The enabling statute may leave large

areas of discretion and contemplate a continual process

of adaptation to new circumstances or a careful restudy

7

may persuade that the original regulation is unsound

when measured against the statute or has proved defec-

tive in operation as a means of carrying out the statute.

Precisely for these reasons, the process of reconsidering

longstanding regulations is a particularly delicate one for

the administrator and for the courts in reviewing the ad-

ministrator’s actions.

This case presents the important and recurring legal

questions generated by such reconsiderations in a partic-

ularly clear-cut fashion. And, the approaches taken by

two such able jurists as District Judge Harold Greene

and Senior Circuit Judge Carl McGowan are polar op-

posites. Moreover, the approach of the Court of Appeals

—the federal court with the heaviest administrative law

docket—is contrary to the approach mandated by this

Court in two decisions issued contemporaneously with the

decision below. Finally, the Court of Appeals’ view that

the judiciary is to show extreme deference to administra-

tors who seek to substantially alter settled rules as to

what a statute means without explaining why those rules

are mistaken and are not to give substantial weight to

the prior administrator’s understanding of the statute

invites the kind of ill-considered changes that occurred

here and that can only bring administrative law into

disrepute.

Of equal importance, the result of the Court of Ap-

peals’ error is to undermine the protections of the Davis-

Bacon Act, one of the first federal labor standards stat-

utes in the United States Code, which has served as the

model for the Walsh-Healey Act, 41 U.S.C. § 35 et seq.

(1936) (which sets labor standards on federal supply

and manufacturing contracts), for the Service Contract

Act, 41 U.S.C. § 351 et seg. (1965) (which sets labor

standards for federal service contracts), and for some

forty state “little Davis-Bacon acts.” Moreover, as we

noted at the outset, Congress has incorporated the

Davis-Bacon Act into some sixty other federal laws fund-

ing construction in almost every American community

8

for schools, hospitals, highways, mass transportation,

libraries, water systems and housing, the most recent of

which is the Federal-Aid Highway Act of 1982. This

statutory complex establishes the minimum labor stand-

ards of workers employed in a substantial segment of

the nation’s largest industry—construction. In 1982, the

total dollar volume of construction covered by the Davis-

Bacon Act was approximately $30 billion. Regulatory

Impact Analysis, 47 Fed. Reg. 23648-51 and 23661-64.

In 1980, the Department of Labor issued 1412 wage de-

terminations and 13,311 project determinations (id.),

setting the labor standards for 758,000 to 1 million work-

ers (id. at 23663). At stake here, therefore, is the con-

tinued vitality of a fifty year old law which affects up to

a million workers annually and which is a critical com-

ponent in an important segment of the economy.

Given the nature of the Court of Appeals’ error and

the adverse effects of that error on the proper function-

ing of the administrative process generally and on the

proper implementation of the Davis-Bacon Act in par-

ticular, this is a classic case of a decision of a federal

question in a way that is in conflict with applicable de

cisions of this Court that calls for the grant of a writ of

certiorari.

(a) The District Court’s Approach

The District Court, in carrying out the “judicial func-

tion” of assuring that “[a]dministrative determinations

must have a basis in law and must be within the granted

authority” (Social Security Board v. Nierotko, 327 U.S. 358,

369 (1946), proceeded from the premise that the regula-

tions challenged here “are essentially exercises in statutory

construction” of specific Congressional directives and not

“exercises of broad public interest-type discretion.” Pet.

App. 62a. Moreover, the District Court found that in

“every significant respect” the challenged regulations are

inconsistent with an “[a]dministrative construction that

was contemporaneous with the adoption of the Davis-

Bacon Act” issued “by the administrators” who “knew

best what Congress intended” and that the regulations

9

have “stood without substantial alteration” from 1935 to

1983, Pet. App. 61a.

Against that background, the District Court paid special

attention to the present Secretary’s reasons for the chal-

lenged regulations. And that court concluded both that

the Secretary had failed to show that the “earlier under-

standing of the statute was wrong or that experience has

proved it to be defective” and that the Secretary had

relied on a “cost-savings” to the Government justification

even though the Act is one in which “the wage floor phi-

losophy prevailed over that which required low cost to the

government as the prime consideration.” Pet. App. 64a.

The District Court accorded substantial weight to con-

temporaneous administrative practice on the recognition

that such practice is a uniquely informative guide to

statutory construction. As Justice Cardozo put the point

in Norwegian Nitrogen v. United States, 288 U.S. 294,

315 (1933):

. . . [Administrative] practice has peculiar weight

when it involves a contemporaneous construction by

the men charged with the responsibility of setting

[statutory] machinery in motion, of making the

parts work efficiently and smoothly while they are

yet untried and new.

And the District Court took into account, too, that:

[F]or forty-seven years thereafter, through the ad-

ministrations of eight Presidents and fifteen Secre-

taries of Labor of many political and ideological per-

suasions, those [contemporaneous] interpretations

and those regulations stood without substantive al-

teration. During that period none of the administra-

tors effected the kinds of fundamental changes that

are brought about by the regulations adopted two

months ago; instead, the various Secretaries of Labor

continued to interpret and enforce the laws precisely

in accordance with the original understanding. Nor

can this stability and consistency in construction by

those charged with the laws’ enforcement be attrib-

uted to inattention, oversight, or neglect (as is some-

10

times true when relatively obscure laws or regula-

tions are involved). The Davis-Bacon Act is and

always has been a well-known law, aifecting millions

of employers and wage-earners throughout the

United States, and it has frequently been the subject

of political and other controversy. [Pet. App. 61a.]

In sum, in the District Court’s view, the rule of judi-

cial deference to contemporaneous regulations adopted by

the executive officers who are involved in the legislative

process rests on a sound appreciation of those officers’

unique opportunity to understand every nuance of the

enabling legislation and of the legislative intent embodied

in the statute’s literal language. The rule of deference to

long-standing administrative interpretations also rests on

the unassailable logic that a regulation that is accepted

by executive officers of different viewpoints and different

parties and is left unchanged by a sucession of Con-

gresses is likely to be in accordance with the enabling

statute. Jusiice Cardozo captured the essence of this

logic some years prior to his Norwegian Nitrogen opinion

when he stated, “Not lightly vacated is the verdict of

quiescent years.” Coler v. Corn Exchange Bank, 250

N.Y. 186, 141, 164 N.E. 882, 884 (1928), aff'd, 280 U.S.

218 (1930).

(b) The Court of Appeals’ Approach

The Court of Appeals’ view of an administrator’s re-

sponsibility in making a change of the kind at issue here

and the judicial role in reviewing such a change could

not have been more different. That approach is stated at

the outset in the section upholding the Secretary’s “pre-

vailing wage” definition: “. . . [O]ur task is limited to

ensuring that the new definition is not one ‘that bears no

relationship to any recognized concept of [the statutory

term] or that would defeat the purpose of the [statu-

tory] program.’” Pet. App. 10a quoting Batterton v.

Francis, 432 U.S. 416, 428 (1977).* That standard of ex-

2 Batterton, we note, is not in point even if it is assumed that for

the purpose of judicial review, a change in a long-standing rule is

11

treme deference was followed throughout. Of equal im-

portance, at no point did the Court of Appeals accord

any dispositive weight to the prior regulatory record. In-

deed, that court expressly “disagree[d] with the District

Court’s heavy reliance on [prior contrary long-standing]

administrative practice... .” Pet. App. 15a.

(c) This Court’s Precedents

Two decisions by this Court last Term demonstrate

that the Court of Appeals’ approach in this case is wrong.

In Motor Vehicle Mfgrs. Assn. v. State Farm Mutual,

— U.S. ——, 51 U.S.L.W. 4935, 4956 (June 24, 1983),

the Court stated:

[T]he revocation of an extant regulation is substan-

tially different than a failure to act. Revocation con-

stitutes a reversal of the agency’s former views as to

no different than the initial promulgation of a rule. For, the delega-

tion to the Secretary of Labor in the Davis-Bacon Act bears no rela-

tion to the all but unlimited authority of the HEW Secretary under

§ 407(a) of the Social Security Act, 42 U.S.C. § 607(a), as con-

strued in Batterton, 432 U.S. at 417-418, 424-426. The language of

42 U.S.C. § 607(a) provides:

(a) the term “dependent child” shall, notwithstanding section

606(a) of this title, include a needy child who meets the re-

quirements of section 606(a)(2) of this title who has been

deprived of paternal support or care by reason of the unemploy-

ment (as determined in accordance with standards prescribed

by the Secretary) of his father, and who is living with any of

the relatives specified in section 606(a)(1) of this title in a

place of residence maintained by one or more of such relatives

as his (or their) own home.

The critical language is that in the parenthesis: “as determined

in accordance with standards prescribed by the Secretary.” Con-

gress thereby expressly authorized the HEW Secretary to estab-

lish standards according to which the states were to determine

claimants’ “unemployment” status in particular cases. No such

authority to prescribe standards is contained in the provisions of

the Davis-Bacon Act. Rather, Congress set the standards in the

statute itself and the Secretary of Labor in determining prevailing

wages must proceed in accordance with those standards just as the

states must proceed in accordance with the HEW Secretary’s stand-

ards in determining who is an “unemployed father.”

12

the proper ccurse. A “settled course of behavior em-

bodies the agency’s informed judgment that, by pur-

suing that course, it will carry out the policies com-

mitted to it by Congress. There is, then, at least a

presumption that those policies will be carried out

best if the settled rule is adhered to.” Atchison, T.

& S.F.R. Co. v. Wichita Bd. of Trade, 412 U.S. 800,

807-808 (1973).

Even where the only statutory limitation on the ad-

ministrator is the arbitrary and capricious standard of

judicia! review stated in the Administrative Procedure

Act, to overcome that presumption:

[T]he agency must examine the relevant data and

articulate a satisfactory explanation for its action

including a “rational connection between the facts

found and the choice made.” Burlington Truck

Lines v, United States, 371 U.S. 156, 168 (1962)....

Normally, an agency rule would be arbitrary and

capricious if the agency has relied on factors which

Congress has not intended it to consider, entirely

failed to consider an important aspect of the prob-

lem, offered an explanation for its decision that runs

counter to the evidence before the agency, or is so

implausible that it could not be ascribed to a differ-

ence in view of the product of agency expertise. [51

U.S.L.W. at 4956. ]

Moreover, just two weeks earlier in BankAmerica

Corp. v. United States, U.S. ——, 51 U.S.L.W. 4685

(June 9, 1983), the Court had emphasized that the pre-

sumption later reaffirmed in Motor Vehicle Mfgrs. is far

more binding when the administrative practice goes to

the correct interpretation of the enabling statute and

does not merely canalize administrative discretion. Be-

cause of its importance we set out the relevant portion of

that opinion at some length:

[T]he Government does not come to this case with a

consistent history of enforcing or attempting to en-

force Section 8 in accord with what it urges now.

On the contrary, for over 60 years, the Government

13

made no attempt, either by filing suit or by seeking

voluntary resignations, to apply Section 8 to inter-

locks between banks and nonbanking corporations,

even though interlocking directorates between banks

and insurance companies were widespread and a

matter of public record throughout the period... .

“{J]ust as established practice may shed light on

the extent of power conveyed by general statutory

language, so the want of assertion of power by those

who presumably would be alert to exercise it, is

equally significant in determining whether such

power was actually conferred.” FTC v. Bunte Broth-

ers, Inc., supra, [312 U.S. 349, 353).

* o * *

When a court reaches the same reading of the stat-

ute as the practical construction given it by the en-

forcing agencies over a 60 year span, that is a

powerful weight supporting such reading. Here,

moreover, the business community directly affected

and the enforcing agencies and the Congress have

read this statute the same way for 60 years... .

While these views are not binding on this Court, the

weight of informed opinion over the years strongly

supports the District Court holding that Congress in-

tended the statute to be interpreted according to its

plain meaning. [51 U.S.L.W. at 4687-4688 (empha-

sis added) }.

(d) The Consequences of the Court of Appeals’ Error

The Court of Appeals’ deferential approach which ac-

cords no dispositive weight to the prior contrary long-

standing reading of the statute and requires nothing

in the way of reasoned explanation of the need for a

change cannot be squared with the presumption described

in Motor Vehicle Mfgrs. and in BankAmerica. And that

erroneous approach was decisive below since the Secre-

tary’s explanation of the challenged regulations is plainly

insufficient to overcome that presumption and, in fact, by

its lack of fidelity to the Davis-Bacon Act’s purpose

shows that the challenged regulations are not an attempt

14

to carry out the statutory mandate but rather an attempt

to change that mandate to fit the Secretary’s own view

of what the statutory purpose should be.

The Secretary explained those regulations in the pre-

amble thereto, 47 Fed. Reg. 23644-23651 and 47 Fed.

Reg. 23658-23664, and in the Regulatory Impact Analysis

(RIA) which was summarized in the preamble. Both

focus on the cost aspects of the new regulations and the

extent to which regulatory changes will succeed in lower-

ing wage rates paid on public construction and in that

fashion save money for the Federal Government. But,

the basic purpose of the Davis-Bacon Act and its related

statutes is to ensure fair wages and working conditions

or laborers and mechanics employed on federally-funded

construction, and not to save money for the Government.

United States v. Binghampton Construction Co., 347 U.S.

171 (1954). Asthe District Court recognized:

The basic purpose of the Davis-Bacon Act is to pro-

tect the wages of construction workers even if the

effect is to increase the costs of construction to the

federal government. In 1931 and 1935—notwith-

standing such opposition as that of President Hoover

who cited a “great increase in expense to the tax-

payer” as one of his principal grounds—the wage-

floor philosophy prevailed over that which regarded

low cost to the government as the prime considera-

tion .... Under our constitutional system, policy

decisions are not made by government administra-

tors; they are made by the Congress. In this in-

stance Congress made its decision, first in 1935 by

the enactment of the Davis-Bacon Act, and then

again in the forty-seven years since that time by the

failure and refusal of succeeding Congresses either

to change the law or to suggest that in all these

years it had been improperly interpreted and ap-

plied. [543 F. Supp. at 1290-91] (footnote omitted).

Thus, the Secretary’s explanation fails to provide a

rationale consistent with the Act for any of the adminis-

trative changes incorporated in the challenged regula-

tions.

15

In sum, the Court of Appeals, by its failure to follow

this Court’s directions in Motor Vehicle Mfgrs. and in

BankAmerica, allowed “{t]he deference owed to an ex-

pert tribunal .. . to slip into a judicial inertia which

results in the unauthorized assumption by an agency of

major policy decisions properly made by Congress”

(American Ship Bldg. v. NLRB, 380 U.S. 300, 318

(1965) ).°

IL THE COURT OF APPEALS’ DECISION WILL

ELIMINATE THE CENTRAL WORKER PROTEC-

TION PROVIDED BY THE DAVIS-BACON ACT—

THAT WAGE DETERMINATIONS BE BASED

UPON WAGES PREVAILING FOR DISCRETE COR-

RESPONDING “CLASSES OF LABORERS AND

MECHANICS.”

The most critical adverse consequence of the Court of

Appeals’ decision is to undermine a central component of

the protections for construction workers Congress wrote

into law in 1935. In that year, after extensive hearings,

Congress determined that the 1931 Davis-Bacon Act was

insufficient to protect those workers and, therefore, in-

structed the Secretary to base his wage determinations

on those prevailing for “classes of laborers and mechan-

ics.” That critical statutory term was understood by the

1935 Congress and has been uniformly understood by the

Secretary from 1935 to 1982 to require that each such

class be discrete and distinguishable. Throughout that

period, it has been understood as well that a blurring of

the line between “classes of laborers and mechanics”

would destroy the integrity of the statutory scheme and,

indeed, in practical terms would read this critical protec-

tive requirement out of the Act. The Secretary’s new

interpretation of “classes of laborers and mechanics”

* While, as we have stressed, the District Court did follow the

correct standard of judicial review, that court, we believe, misap-

plied that standard in upholding the challenged regulation defining

the critical statutory term “prevailing wage’. Thus, if the writ is

granted we will seek the invalidation of all of the challenged Davis-

Bacon regulations.

16

will, in effect, revive the very abuses of overlapping clas-

sifications which destroyed the 1931 Act as a practical

protection for construction workers and which Congress

intervened to correct in passing the 1935 Act.

Congress recognized in writing the Davis-Bacon Act

that the construction industry work force is made up of

groups of workers—denominated in the statute as

“classes of laborers and mechanics’—and that wages are

set separately for each separate class; and Congress’ pur-

pose in that Act was to maintain the minimum wage for

each such class. It is inherent in the nature of things

that such a statutory minimum wage scheme cannot

achieve its intended purpose if employers are free to as-

sign duties to a lower paid class that overlaps with higher

paid classes. The District Court was entirely correct in

holding:

[T]he integrity of the statutory scheme requires

that each ‘class of laborers and mechanics’ be com-

prised of ‘members’ who perform ‘well-defined tasks’

and do not perform traditional craft work of an-

other, higher paid class... [I]n practice that dis-

tinction can be maintained only if the tasks of the

helper class are defined as discrete and distinguish-

able from those of mechanics and laborers. .. . (Pet.

App. 72a).

[I]f contractors could thus assign a helper to per-

form the tasks of any and all classes of laborers and

mechanics and they could do so at lesser pay, they

would do just that, and the requirement that wages

be based on “corresponding classes’ will be effec-

tively read out of the law. (Pet. App. 52a).

Nevertheless, the Court of Appeals approved the Sec-

retary’s new interpretation of “classes of laborers and

mechanics” which embraces a helper who “undertakes

tasks that overlap with those of higher paid journeymen

and laborers” (Pet. App. 22a) and whose “essential func-

tional distinction would not be the nature of the task

17

done but rather the subordinate position of the helper

vis-a-vis a journeyman.” (Pet. App. 23a) .*

For the first time, the Secretary of Labor will be per-

mitted to base wage determinations on duplicitous and

overlapping “classes of laborers and mechanics” so that

the helper “may perform any task throughout the entire

construction field. . . .” Pet. App. 52a. Thus, under

the new interpretation of “classes of laborers and me-

chanics,”’ a helper paid at a lower rate will be allowed to

perform the duties of the various classes of higher paid

journeymen so long as the helper does so under the

supervision of a journeyman.

We submit that the Secretary’s new definition of

“classes of laborers and mechanics” is: (a) plainly con-

trary to the statute and, indeed, revives the very classi-

fication abuses that arose under the 1931 statutory

scheme and that the 1935 Congress expressly intended to

eliminate; and (b) inconsistent with the Secretary’s rec-

ognition from 1935 to 1982 that “classes of laborers and

mechanics” must be distinct from one another and that

tasks assigned to each class may carry with them but one

wage rate.

The Secretary’s decision to now abandon this long-

standing interpretation of “classes of laborers and me-

chanics” is incorrectly characterized by the Court of Ap-

peals as an enforcement decision as to which “our defer-

ence to his choice is properly near its greatest.” Pet.

App. 37a. We respectfully disagree. The issue is one of

statutory interpretation. The central enforcement ques-

tions were answered by Congress in 1935 when the legis-

lature amended the Davis-Bacon Act to put “teeth” into

the prevailing wage principle.

4The Court of Appeals did invalidate the Secretary of Labor’s

new regulation insofar as the regulation would permit the recogni-

tion of helpers where only “identifiable” in the area, rather than

“prevailing,” as has previously always been required. Pet. App. 26a.

18

The original 1931 Act simply provided that “the rate

of wage for all laborers and mechanics employed by the

contractor or any subcontractor ... shall be not less

than the prevailing rate of wages for work of a similar

nature ....’’ While there was no quarrel with the pre-

vailing wage principle in theory, its unenforceability in

practice gave rise to immediate Congressional hearings.

Those hearings showed that these enforcement problems

existed, in part, because the 1931 Act did not include a

concept of “classes of workers.” Thus, in 1932, Secretary

of Labor William Doaks described the types of disputes

arising under the 1931 Act, emphasizing those arising:

as to the classification of work—that is using

men of a lesser classification frequently to do the

work of journeymen while receiving pay as helpers

or skilled laborers. [Hearings on H.R. 12 Before the

House Committee on Labor, 72nd Cong., lst Sess. at

163 (1932).]

There were additional hearings in 1932 that led to the

enactment of amendments which President Hoover

vetoed. Hearings on S. 3847 and H.R. 11865 Before the

House Committee on Labor, 72nd Cong., lst Sess. (1932).

Then further extensive congressional hearings spurred

by the same enforcement concerns followed in 1934.

These too are replete with examples of the problem of

improper classification under the original Act. Hearings

on S. Res. 228 Before the Senate Subcommittee on Edu-

cation and Labor, 73rd Cong., 2nd Sess. (1934). Follow-

ing these hearings, the Senate Committee on Education

and Labor issued its extensive Senate Report 332. S. Rep.

332, 74th Cong., 1st Sess. (1935). The Report described

in vivid detail the “variety of matters [which] came to

the attention of the Committee at the open hearings,

embracing al] known methods used or devices contrived to

underpay labor ....”’ The Committee found that these

“devices,” including those of misclassification, flourished

because of “defects ... in substantive portions of the

statutes.” Jd. at 5. The statutory “defects” leading to

19

the problem of misclassification were described clearly by

the Committee:

... The act also fails to be explicit on the matter of

classification, with the result that many contractors

were able to circumvent the law by hiring mechanics

as common laborers, and then assigning them to

tasks which fell within the purview of one of the

skilled crafts. Both these points should be clarified

by new legislation [ (emphasis added) 7d. at 5.]

The Report described by way of examples and by way

of criticizing the classification practices under other pub-

lic works statutes the nature of the evil it had found:

. . . The revised Public Works Administration zone

rates in favor of which much can be said, since they

seek to take into account conditions in living and

wage standards in various parts of the country, have

been largely broken down by intermediate classifica-

tions of labor and failure te retain the strict lines of

demarcation intended to be drawn and maintained

between skilled and unskilled labor. The whole tend-

ency has been for wages of the skilled group to de-

scend toward the level of the unskilled group, this

by reason of intermediate classification devices.

[ (emphasis added) Jd. at 13, 16-17.]

It is clear that the Committee was expressing its

understanding that when the lines between classes of

workers were allowed to blur, viz., if there was a failure

to retain “strict lines of demarcation’, then enforcement

of the prevailing wage principle becomes impossible be-

cause work assignments inevitably flow down to the

lower wage classification. It is in this context that the

1935 amendments added the requirement that the pre-

vailing wage be based upon the wages paid “correspond-

ing classes of laborers and mechanics.” The Congress

had found a “substantive defect in the statute” and acted

to correct that defect.

The Court of Appeals refers to the addition of this

language as an “unexplained change.” Pet. App. 38a.

20

In so doing, that court disregarded the 1935 legislative

materials that explain that change with great lucidity.

Congress recognized and was clearly seeking a remedy

for the “tendency . . . of wages of the skilled group to

descend toward the level of the unskilled group and this

by reason of the failure to retain the strict lines of de-

marcation intended to be drawn and maintained between

skilled and unskilled labor.” S. Rep. 332 at 13, 16-17.

And the Court of Appeals compounded its error by

reaching back to a few lines of colloquy during the 1932

debates having nothing to do with the intended meaning

of “classes of mechanics and laborers” and granting that

colloquy controlling significance. Pet. App. 34a.°

*The Court of Appeals relied upon a colloyguy between Rep.

Connery and Rep. Johnson to establish that Congress did not in-

tend to implement a “union” classification scheme. An examination

of the 22 lines of colloquy in the context of 27 pages of House debate

shows it was wholly unrelated to what classification practices the

Congress intended to adopt or not adopt. Rather, the colloquy was

part of a description of the procedures utilized by the Secretary of

Labor beginning in 1931 to ascertain the prevailing rate. An ex-

amination of the full debate shows that Rep. Connery frequently

stated his familiarity with the procedures being utilized by the

Secretary of Labor and explicated those procedures to his colleagues.

75 Cong. Rec. 12363-90. Thus, because there was no concept of

classes of workers in the 1931 Act, any discussion between members

of the 1932 Congress concerning the manner in which the Secretary

of Labor was ascertaining the prevailing rate at that time can shed

no light on the intended meaning of the phrase “classes of laborers

and mechanics” which was not added to the Act until 1935.

Moreover, the Court of Appeals’ concern with whether Congress

mandated a “union classification” system does not address the perti-

nent issue. Rather, the question is whether Congress contemplated

a statutery scheme which permits overlapping classes of workers

doing the same work and receiving different wage rates or whether

Congress mandated a prevailing wage system based on “strict lines

of demarcation” between classes. We submit that the Congress was

not concerned with ew it was sanctioning a union or non-

union classification system in 1935, but did intend to establish a

classification system based upon divtinct and discrete classes of

construction workers.

21

The clear message of the 1935 Act and its back-

ground—that the phrase “classes of laborers and me-

chanics” reflected the Congressional intention to “retain

the strict lines of demarcation’’ between crafts—was uni-

formly recognized from 1935 to 1982. Charles Donahue,

Solicitor of Labor from 1961 to 1965, provided a descrip-

tion of the origins of the principle of distinct and exclu-

sive classes in the 1935 Act:

The term [classes and corresponding classes of labor-

ers and mechanics] ... [was] not included in the

original Davis-Bacon Act of March 3, 1931, which

simply provided that “the rate of wage for all labor-

ers and mechanics employed by the contractor or any

subcontractor ... shali be not less than the prevail-

ing rate of wages for work of a similar nature... .”

The investigation of the Walsh Committee, which

contributed to the enactment of the act in its present

form, disclosed that under the original act, there had

been a failure to retain strict lines of demarcation

between skilled and unskilled labor. As a conse-

quence, the tendency had been for wages of the

skilled group to descend toward the level of the un-

skilled group. As a result, the “work of a similar

nature” standard was deleted, and in lieu thereof

provision was made for wage determinations for

“classes” of laborers and mechanics from the Jocally

prevailing wages paid “corresponding classes of la-

borers and mechanics employed on projects of a char-

acter similar to the contract work. Donahue, The

Davis-Bacon Act and the Walsh-Healey Public Con-

tracts Act: A Comparison of Coverage and Mini-

mum Wage Provisions, 29 Law and Contemporary

Problems 488, 508 (1964), cite’ at Pet. App. 35a.

Successive Department of Labor administrators and

the Comptroller General have repeatedly reaffirmed that

even where prevailing in the area, a helper may not be

recognized unless “exclusive” work differences exist be-

tween helpers and other classes:

22

We do not think, however, that the Davis-Bacon Act

authorizes the imposition of work classifications on

the sole basis that a local practice does exist. Unless

local practices clearly establish actual differences in

work classifications, or unless they are exclusive, it

seems clear that this adoption in the designation of

classifications is neither required nor permitted by

the terms of the Davis-Bacon Act. (emphasis added)

Comptroller General Opinion No. B-147847 (Decem-

ber 17, 1964).

The principle that the same work does not belong in

two wage rate classifications has not been confined to

helpers alone. The Department of Labor also examines

classes of skilled workers to determine that their tasks

are not overlapping. Jn re Brezina Construction Com-

pany, WAB No. 68-10 (1969).

In sum, because the proper interpretation of the term

“classes of laborers and mechanics” is so central to the

statutory scheme; because as shown above the Secretary’s

new reading of that term is contrary to the Act’s pur-

pose of protecting construction workers; because the

Court of Appeals’ opinion rests on the unduly restrictive

standard of review and a failure to accord proper weight

to the 1935 legislative history and the uniform practice

from 1935 to 1982; and because these errors all but re-

move a limitation on the Secretary the 1935 Congress

deemed critical to provide, we submit that the decision of

the Court of Appeals should not be permitted to stand.

23

CONCLUSION

For the foregoing reasons, this Petition for a Writ of

Certiorari should be granted.

Respectfully submitted,

LAURENCE J. COHEN

TERRY R. YELLIG

1125 15th Street, N.W.

Washington, D.C. 20605

ROBERT J. CONNERTON

PHILLIS PAYNE

1899 L Street, N.W.

Washington, D.C. 20036

LAURENCE GOLD

815 16th Street, N.W.

Washington, D.C. 20006

(202) 637-5390

(Counsel of Record)