US Federal Contractor Vaccine Mandate Dealt Blows by 5th and 6th Circuits

The US Courts of Appeals for the Fifth and Sixth Circuits recently affirmed federal district court decisions enjoining President Biden’s September 9, 2021, executive order, EO 14042, which mandates COVID-19 vaccines for federal contractors.¹ The Fifth Circuit affirmed the preliminary injunction issued by the US District Court for the Western District of Louisiana, and a Sixth Circuit panel affirmed the preliminary injunction issued by the US District Court for the Eastern District of Kentucky, but limited the scope of the trial court’s injunction.² These government losses are in addition to the Eleventh Circuit’s ruling last summer that affirmed a district court’s injunction but reduced its scope from nationwide to the plaintiff states and contractor organization.³

While the challenges against the Biden administration’s efforts to impose requirements on its contractual counterparties proceed, the federal government continues to refrain from enforcing the vaccine mandate for federal contractors. These recent decisions are explained below, as well as their meaning for federal contractors and future efforts by the government to implement vaccine policy via a contractor mandate.

Fifth Circuit Decision

On December 19, 2022, a divided panel of the Fifth Circuit affirmed the lower court decision enjoining the government from enforcing the contractor-vaccine mandate against state employers located in Louisiana, Mississippi, and Indiana that have contracts with the federal government.

The Fifth Circuit held that the government’s vaccine mandate is unlawful because it exceeds the president’s authority under the Federal Property and Administrative Services Act, known as the “Procurement Act” (and also known as the “FPASA” or the “Property Act”). The court stated: “No such provision exists in the Procurement Act to justify this intrusive command. The pandemic, challenging as it has been for the President, the legislature, the courts, and especially the populace, does not justify such an enormous and transformative expansion of presidential authority [under the Procurement Act].” (Louisiana v. Biden, at *25.)

The court anchored its decision under the “major questions doctrine,” which courts have deployed to limit presidential authority when Congress did not “speak clearly [when] it wishes to assign to an agency decisions of vast ‘economic and political significance.’” (Id. at *23, *27.) The court held that “Congress has not spoken clearly to authorize such a dramatic shift in the exercise of the President’s power [under the Procurement Act],” and “[t]he President’s use of procurement regulations to reach through an employing contractor to force obligations on individual employees is truly unprecedented.” (Id. at *27.)

Because the court’s majority applied the major questions doctrine, it did not apply the “close nexus” test, which is a less demanding standard under which “the President must demonstrate a ‘sufficiently close nexus’ between the requirements of the executive order and ‘the values of economy and efficiency.’” (Id. at *15.) Instead, Judge Kurt Engelhardt (the author of the majority opinion) criticized that test, asserting that “[t]he ‘close nexus’ test combined with appropriate deference to presidential determinations leaves the President with nearly unlimited authority to introduce requirements into federal contracts.” The majority opinion then discussed potentially problematic requirements such as mandating that “all federal contractors certify that their employees take daily vitamins, live in smoke-free homes, exercise three times a week, or even, at the extremity, take birth control in order to reduce absenteeism relating to childbirth and care.” (Id. at *17, *24.) Judge Engelhardt also noted that “[t]he Eleventh Circuit has made a compelling case that the text and structure of the Procurement Act are inconsistent with this [‘close nexus’] test, see Georgia v. President of the United States, No. 21-14269, 2022 WL 3703822 at *8-11 (11th Cir. 2022).” (Id. at *15 n. 25.)

The court also ruled that the requirement for irreparable harm was satisfied by the facts of the vaccine mandate, noting the “nonrecoverable compliance costs” such as “diversion of resources necessary to identify covered employees and manage their vaccination status” and “the choice the states would have to make if an employee refused to get vaccinated against COVID-19: a choice between ‘releasing the employee and all accompanying efficiency, institutional memory, and operational know-how or foregoing federal contracts.’” (Id. at *27-28.)

Judge James Graves’ dissent is notable because he explained why the “executive order here is consistent with what is allowed under the Procurement Act.” For example, he cited historical uses of executive orders, citing the Procurement Act as their authority, to require federal contractors to implement non-discrimination measures, verification of immigration status under the E-Verify system, and paid sick leave for employees. Judge Graves also took issue with the majority opinion’s assertion that the vaccine mandate is “unrelated to any scheme” because a “plain reading of the Procurement Act makes it clear that the action does not have to be tied to any outside statutory scheme. If that were so, Congress would have mandated that requirement.” (Id. at *34, n.2.) Furthermore, Judge Graves criticized the majority’s reliance on the major questions doctrine and found that “this is not an ‘enormous and transformative expansion in’ regulatory authority, but rather is a standard exercise of the federal government’s proprietary authority” (emphasis in original). As such, the dissenting opinion explained “the injunction cannot be grounded in reasoning under the major questions doctrine.” (Id. at *37.)

Sixth Circuit Decision

On January 12, 2022, a Sixth Circuit panel affirmed the Kentucky federal district court decision enjoining the government’s application of the contractor vaccine mandate in Kentucky, Ohio, and Tennessee. Although the Kentucky federal district court had restrained the government’s ability to enforce the vaccine mandate against all federal contractors within the three states, the Sixth Circuit modified the injunction and applied it only to the parties in litigation (i.e., the federal government is enjoined from enforcing the contractor vaccine mandate against state employers in Kentucky, Ohio, and Tennessee that have contracts and are in litigation with the federal government). (See Kentucky v. Biden, No. 21-6147, Doc. 23a0006p.06 at *17 (6th Cir. Jan. 12, 2023).)

Like the Fifth Circuit, the Sixth Circuit characterized the scope of the mandate as broad. For instance, the Sixth Circuit stated that the contractor vaccine-mandate had a “stunning” scope that exceeds the president’s authority under the Procurement Act. (Id. at *3.) The court criticized the president’s use of the 70-year Procurement Act to issue what the court characterized as a “sweeping directive” instead of relying on “any landmark legislation or broad emergency authority.” (Id.)

The court found “the government’s statutory arithmetic” was flawed because “[i]t searches for power in a powerless provision” and noted that the Procurement Act’s “statutory statement of purpose provides no legal authority.” (Id. *8.) The government argued that the Procurement Act’s purpose provision under 40 U.S.C. § 101, combined with the act’s operational provision under 40 U.S.C. § 121(a), provided the president the “power to ‘issue orders that improve the economy and efficiency of contractor’s operations.’” (Id. at *8.) The court held that only the “operative language in § 121(a) empowers the President to issue directives necessary to effectuate the Property Act’s substantive provisions, not its statement of purpose.” (Id. at *8.)

The court criticized the government’s reliance on legislative “prologues, prefatory clauses, and purpose statements,” which the court explained “do not confer legal powers, rights, or duties.” Accordingly, the court “decline[d] the government’s invitation to construe § 121(a) as authorizing the President to ignore the limits inherent in the Property Act’s operative provisions in favor of an “anything-goes” pursuit of a broad statutory purpose.” (Id. at * 10.)

The court also explained that the Procurement Act’s purpose is “internally focused, speaking to government efficiency, not contractor efficiency” and held that “the government’s justifications for the mandate center not on how it would make contracting more efficient, but how it would make contractors more efficient.” (Id. at * 11.) The court ultimately ruled that “[t]he Property Act does not authorize the President to issue directives that simply ‘improve the efficiency of contractors and subcontractors.’” (Id. at *14.)

The court agreed that the plaintiff states had satisfied the requirements to demonstrate irreparable harm, agreeing with the lower court that “the plaintiffs are likely to lose valuable government contracts and incur unrecoverable compliance costs if the mandate is not preliminarily enjoined.” (Id. at *14.) However, the Sixth Circuit found that “the district court abused its discretion in extending the preliminary injunction’s protection to non-party contractors in the plaintiff States.” Therefore, the court limited application of the injunction to party contractors in the plaintiff states because the limitation would “adequately protect the plaintiffs’ interests while the case is pending disposition on the merits.” (Id. at *17.)

TAKEAWAYS

Three appellate courts have now held that President Biden’s contractor vaccine mandate exceeds the executive branch’s authority under the Procurement Act. Therefore, it is likely that the government will continue its non-enforcement of EO 14042’s vaccine-mandate. However, contractors should monitor the Safer Federal Workforce’s website for any updates to the government’s enforcement of EO 14042.

¹ Mayer Brown has issued multiple past updates regarding President Biden’s contractor-vaccine mandate available: Executive Orders Place US Federal Contractors and Employers at Forefront of New COVID Mandates; US Issues Federal Agency COVID Contract Clause and Policy Direction Along with Immediate DoD and GSA Implementation; Updates to the US Federal Contractor Vaccine Mandate—But Will They Matter?; US Federal Court Preliminarily Enjoins Vaccine Mandate for Federal Contractors in KY, OH and TN; US Federal Court Preliminarily Enjoins Vaccine Mandate for Federal Contractors Nationwide and the Government Responds; Another US Federal Court Preliminarily Enjoins Contractor COVID Vaccine Rule; US Sixth Circuit Denies Government’s Request to Stay Injunction Blocking Federal Contractor Vaccine Mandate, Fifth Circuit Decision to Follow; Arizona’s Federal District Court Preliminarily Enjoins Federal Contractor Vaccine Mandate; US Eleventh Circuit Affirms Injunction Against Federal Contractor Vaccine Mandates But Limits Previously Nationwide Scope; and OMB Guidance Potentially Resurrects US COVID-19 Vaccine Mandate for Government Contractors.

² See Louisiana v. Biden, No. 22-30019, Doc. 00516582132 (5th Cir. Dec. 19, 2022); Kentucky v. Biden, No. 21-6147, Doc. 23a0006p.06 (6th Cir. Jan. 12, 2023).

³ See our previous update on the Eleventh Circuit’s decision, US Eleventh Circuit Affirms Injunction Against Federal Contractor Vaccine Mandates But Limits Previously Nationwide Scope.