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April 24, 2023 - Coronavirus

Ninth Circuit Dissolves Preliminary Injunction of EO 14042 Contractor Vaccine Mandate

Another Ticking Clock: Additional District Court Preliminarily Enjoins EO 14042 | Increasing Need for OMB Update on GA Court Clarification Order

On April 19, 2023, the U.S. Court of Appeals for the Ninth Circuit deviated from its sister circuits and reversed the Arizona district court’s preliminary injunction of the contractor COVID-19 vaccine mandate issued pursuant to Executive Order 14042 (“Contractor Mandate”). This decision has created a circuit split over not only the enforceability of the Contractor Mandate, but also the scope of the president’s authority to impose requirements on federal contractors under the Federal Property and Administrative Services Act (FPASA).

The Fifth, Sixth, and Eleventh Circuits have all upheld lower courts’ preliminary injunctions of Executive Order 14042, as we reported here. Unlike its sister circuits, the Ninth Circuit rejected application of the major questions doctrine to the Contractor Mandate; the major questions doctrine addresses the notion that “Congress [must] speak clearly when authorizing an agency to exercise powers of vast economic and political significance.” Instead, the court found that Congress “delegated to the President”—as opposed to agencies—the “authority to ‘prescribe policies and directives that the President considers necessary’ to ‘provide the Federal Government with an economical and efficient system’ for ‘procuring . . . property and nonpersonal services, and performing related functions including contracting,’” which is what occurred here. (Emphasis in original.)

The Ninth Circuit further found that even if the major questions doctrine applied, the doctrine itself would not bar the Contractor Mandate because the Mandate was not a “transformative expansion” of the president’s authority that might otherwise be prohibited under Supreme Court precedent. Contrary to the district court’s findings, the Ninth Circuit held that “nothing in the Mandate constitutes a regulation,” even if its applicability is broad in scope. Rather, the court explained, “the conduct the Contractor Mandate seeks to regulate is related to the government’s proprietary interest here: efficient and economic procurement of services.”  In the court’s view, simply because the Contractor Mandate might be considered overinclusive, underinclusive, or both, “that would not mean it is unrelated to efficient and economic procurement of services.” (Emphases in original.)

Importantly, the Ninth Circuit rejected the other courts’ concerns over whether the federal government had previously sought to regulate the health decisions of American workers or to reduce absenteeism as improperly “equat[ing] inactivity with forbidden activity.” Relying on the circuit courts’ historical practice of upholding executive orders that promote antidiscrimination, regulate wage and price guidelines to combat economic inflation, and ensure compliance with immigration law as within the scope of FPASA, the court concluded that the requirement for federal contractors to take vaccination-related steps already required by many private employers was not a “transformative expansion,” particularly when, in the midst of an unprecedented global pandemic, those steps promoted economy and efficiency by reducing absenteeism, project delays, and cost overruns.

The court also rejected the Fifth Circuit’s holding that the Contractor Mandate was “strikingly unlike” prior Executive Orders because “a vaccination cannot be undone at the end of the workday.” According to the Ninth Circuit, the “impacts of anti-discrimination or affirmative action programs, wage and price policies, and immigration law compliance mechanisms also do not end with the workday.” (Emphases added.)

Last, applying the D.C. and Fourth Circuits’ tests, the Court held that the president acted within his authority in issuing the Contractor Mandate because the Office of Management and Budget’s determination showed there was a “sufficiently close nexus” and a “reasonable relationship” between the Contractor Mandate and FPASA’s goals of economy and efficiency. Unlike the Sixth and Eleventh Circuits, which each held that the government lacked authority to regulate contractor conduct, the Ninth Circuit adopted an interpretation of FPASA that allows the president to “prescrib[e] requirements that address contractors’ operations” and how those services are rendered.

The Ninth Circuit’s decision has created a clear circuit split over the scope of the government’s authority to impose requirements on government contractors that go beyond the commercial terms for the product or service being acquired. The Ninth Circuit is the fourth appellate court to weigh in on the Contractor Mandate and the scope of the government’s power under FPASA. The Fifth, Sixth, and Eleventh Circuits have limited this scope, but this decision hands the government a lifeline to impose similar requirements on federal contractors, at least in the Ninth Circuit. Under the Ninth Circuit’s broad interpretation of economy and efficiency, so long as there is a sufficient nexus or reasonable relationship between the requirement and FPASA’s purpose, the government can impose certain social, health, and other requirements on federal contractors that are not strictly limited to the four corners of the product or service being acquired from those contractors.

This decision presents an opportunity for the Supreme Court to address this issue, something it has not been asked to do due to the Biden administration’s decision not to seek review of any of the previous adverse court of appeals decisions.  Provided the issue does not become moot through, for example, revocation of the Contractor Mandate, Arizona and the other plaintiff-appellees will likely file a petition for a writ of certiorari. Given the unequivocal circuit split, the odds of Supreme Court review are high.

At least until the Supreme Court weighs in, the Ninth Circuit’s decision cautions federal contractors to continue to be mindful of the federal government’s ability to impose requirements beyond the four corners of a contract, at least in certain parts of the country.

*Law Clerk Thomas Lee contributed to this blog post