United States Department of Transportation, Federal Aviation Administration and National Air Traffic Controllers Association, 0-AR-3432, November 7, 2002, 58 FLRA No. 43.

FLRA set aside an award in which the arbitrator enforced an FAA order specifying the super-visory relationships or lines of authority on the midnight shift at certain locations. Since the award affected management's 7106(a)(1) right to determine its organization, and since § 7106(a)(1) rights aren't subject to the "applicable law" exception that applies to § 7106(a)(2) nights, the Authority held that "the FAA Order does not constitute an external limitation on the exercise of the Agency's right to determine the organizational structure of the midnight shift that is enforceable in arbitration."

An FAA regulation provides that watch supervision may be performed by managers, supervisors, or Controllers-in-Charge (CICs) at its Air Route Traffic Control Centers (ARTCCs) and requires that when a supervisor or CIC leaves the operational area, or is engaged in an activity that precludes the performance of watch supervision duties, another qualified individual is to be designated to supervise the watch. The FAA regulation also states that an air traffic control room "is divided into easily managed segments or areas of operation." An operational area, in turn, is defined as "a group of sectors requiring the service of" air traffic controllers.

The collective bargaining agreement provides, among other things, that CIC premium pay is to be paid at the rate of 10% of the applicable hourly rate for every hour or portion thereof that an employee serves as a CIC.

Supervisors were ordered to comply with the regulations when a management evaluation of the operations of the New York ARTCC disclosed that supervisors weren't designating CICs on the midnight shift whenever they left an operational area. The union grieved management's failure to comply with the regulations and the matter was referred to arbitration.

The arbitrator found that the agency violated its own regulation when it failed to have a supervisor or a CIC physically present in a operational area on the midnight shift at the ARTCCs. In the arbitrator's view, "an entire Control Room cannot be considered to be a single operational area." He ruled that the agency is liable for failing to pay the 10% premium, ordered the agency to use the New York model to bring all of its ARTCCs into compliance with the FAA order on the midnight shift, and retained jurisdiction to resolve any differences that might arise regarding the application of the award.

In its exceptions the agency claimed that the award affected its right to determine its organization by "defining the area of operation and restricting management from consolidating the control room into a single operational area." Nor did the award enforce a § 7106(b)(3) appropriate arrangement because denial of the opportunity to work CIC duties does not constitute an adverse effect flowing from the exercise of a management right. Even if it did, the arbitrator's remedy abrogated the agency's right to determine its organization.

FLRA noted that the arbitrator found that the agency violated the FAA order by "grouping operational areas on the midnight shift under one supervisor" and "ordered the Agency, on the midnight shift, to maintain each operational area that is established on the other two existing shifts[.]" Thus, "[t]he Arbitrator's order is determinative of the organization of the midnight shift because it specifies the nature and scope of the supervisory relationships, or lines of authority, on that shift." Because the award affected management's § 7106(a)(1) right to determine its organization, it was necessary to apply the BEP test. FLRA noted, in this connection, that under Prong I of the BEP test it examines whether an award affecting management's rights provides a remedy for a violation of either an "applicable law" within the meaning of § 7106(a)(2) or a § 7106(b) contract provision.

FLRA, citing the Supreme Court's decision in Dep't of Treasury, Internal Revenue Service v. FLRA, 494 U.S. 922 (1990), reminded us that § 7106(a)(1) rights aren't subject to the "applicable law" exception, which applies only to § 7106(a)(2) rights. "Consequently," said FLRA, "the FAA Order does not constitute an external limitation on the exercise of the Agency's right to determine the organizational structure of the midnight shift that is enforceable in arbitration."

FLRA also found that the arbitrator did not find that the agreement provisions on which he relied were negotiated pursuant to § 7106(b). Thus the award didn't satisfy Prong I of BEP -- i.e., it didn't enforce either an "applicable law" (within the meaning of § 7106(b)(2)) or a contract provision that constituted one of the three § 7106(b) exceptions to management's § 7106(a) rights--and had to be set aside.

Awards affecting management rights are sanctioned only if they enforce "applicable laws" or CBA provisions that are bona fide limitations on the exercise of those rights. This case reminds us that the "applicable law" limitation applies only where the award affects a § 7106(a)(2) right.

It should be noted, in passing, that although the agency argued that the arbitrator's award wasn't enforcing a contractual "appropriate arrangement" (a limitation that applies to both § 7106(a)(1) and (a)(2) rights) because it "abrogated" management's rights, the Authority, in a recent split decision, replaced the "abrogation" test with an "excessive interference" test in 58 FLRA No. 21 (reported in Significant Cases No. 145). The Authority didn't have to address the agency's contention because it found that the arbitrator didn't hold that the agreement provisions he cited were negotiated pursuant to § 7106(b).