Labor & Employment Law Daily Wrap Up, LABOR—BARGAINING—E.D. Ky.: Treasury Department lacked standing to enforce EO 14,251 against local union, (May 22, 2025)

By Ronald Miller, J.D.

While Treasury implies that it enforced the order in the 24 hours prior to the filing of this suit by ceasing union payroll deductions and ousting union stewards from agency office space, it does not contend that the union somehow invaded its sovereign right to enforce it.

National Treasury Employees Union, Chapter 73 was granted summary judgment to the extent that it alleged that the U.S. Department of Treasury lacked standing to enforce Executive Order, 14,251 against it, but denied the motion as moot to the extent that it alleged an improper use of the Declaratory Judgment Act. The Treasury asked the court to hold that it may rescind or repudiate a collective bargaining agreement with the union pursuant to the EO. Though the court concluded that the agency made a good argument on the merits, the agency did not have standing to bring the action in this forum under the facts presented (United States Department of Treasury v. National Treasury Employees Union, Chapter 73, No. 2:25-049-DCR (E.D. Ky. May 20, 2025)).

FSLMRS. In 1978, Congress passed the Federal Service Labor-Management Relations Statute (FSLMRS), 5 U.S.C. § 7101 et seq., as part of the Civil Service Reform Act, providing that “the statutory protection of the right of [federal] employees to organize, bargain collectively, and participate through labor organizations of their own choosing in decisions which affect them . . . safeguards the public interest.”

When Congress enacted the FSLMRS, it exempted certain agencies and provided that:

The President may issue an order excluding any agency or subdivision thereof from coverage under [the statute] if the President determines that—(A) the agency or subdivision has as a primary function intelligence, counterintelligence, investigative, or national security work, and (B) the provisions of [the statute] cannot be applied to that agency or subdivision in a manner consistent with national security requirements and considerations.

Executive Order 14,251. No president has exempted entire cabinet-level agencies before now. On March 27, 2025, President Trump issued Executive Order 14,251, Exclusions from Federal Labor Management Relations Program, removing roughly a dozen agencies and departments from the FSLMRS, including the United States Department of the Treasury (Treasury), except for the Bureau of Engraving and Printing.

OPM guidance. Earlier that same day, the Office of Personnel Management (OPM) issued guidance for implementing EO 14,251 including that those covered “are no longer required to collectively bargain with Federal unions.” The OPM guidance also directed agencies to submit a report to the President of outlining other agencies and subdivisions that should otherwise be excluded under § 7103(b)(1) within 30 days.

Request for declaratory relief. The following day, the Treasury Department filed this complaint for declaratory relief seeking a declaration that it has the power to terminate its national collective bargaining agreement and other supplemental agreements with the NTEU, Chapter 73 pursuant to EO 14,251. The CBAs at issue include the Internal Revenue Service and NTEU’s 2022 National Agreement and the 2025 Addendum to the National Agreement, both of which apply to IRA employees nationwide. Additionally, there are local agreements and memorandums of understanding executed between Chapter 73 and the IRS.

Chapter 73 is headquartered in Covington, Kentucky, and it represents more than 2,000 IRS employees in this district. Other lawsuits have been filed by other agencies removed from the FSLMRS by EO 14,251 seeking declaratory relief that they may also terminate their respective CBAs.

FAQ document. The OPM director circulated a FAQ document addressing agency inquiries concerning implementation of EO 14,251 that made clear that agencies should wait until litigation is concluded before terminating CBAs or filing decertification petitions. But by April 8, 2025, all automatic withdrawals of union dues from the paychecks of federal employees had ceased and all agency office space and official duty hours for union activities was terminated.

Before a hearing of the Treasury’s complaint for declaratory relief, the agency filed a motion for summary judgment on the merits. Chapter 73 moved to dismiss for improper venue or alternatively, to transfer to the District Court for the District of Columbia, and failure to join an indispensable party, Chapter 73’s parent union NTEU. Chapter also tendered a motion for summary judgment for lack of subject matter jurisdiction or alternatively, dismissal for inappropriate request for declaratory relief.

Subject matter jurisdiction. The parties disagreed regarding the court’s subject matter jurisdiction to grant declaratory relief. The Treasury contended that there has been an actual controversy between Chapter 73’s enforcement of the CBAs and Treasury’s implementation of EO 14,251. Conversely, Chapter 73 insists that no controversy existed at the time the action was initiated because EO 14,251 had not yet been enforced and any conflict between the parties in abiding by the existing contracts cannot amount to an Article III case or controversy (or injury).

The parties also disagreed regarding whether Treasury experienced any cognizable actual or threatened injury. Treasury further contended that it faces a threatened injury if it repudiates the CBAs and terminates Chapter 73 employees, who may then file grievances, which could result in the FLRA or Circuit Court ordering reinstatement, backpay, and attorney fees.

Both sides disputed the causal connection and redressability requirements for standing. Treasury provided that, because Chapter 73 is tasked with enforcing the CBAs in this district, if Treasury receives the requested relief, then its actual and threatened injury would be no more, and it would be free to implement the President’s initiatives. Chapter 73 insisted that NTEU is the true defendant here, so that any relief provided to Treasury as it pertains to Chapter 73 would fail to redress its alleged injury because it would not bind NTEU.

Cases and controversies. Federal courts are authorized “to deliver judgments on real disputes, not hypothetical ones, to resolve concrete disputes, not to pronounce judgments on theoretical disputes that may or may not materialize.” The case and controversy requirement insists that there be a “‘real, earnest, and vital controversy’” between the parties. “‘One element of the case-or-controversy requirement’ is that plaintiffs ‘must establish that they have standing to sue.’”

Standing. A party seeking declaratory relief, “must satisfy the prerequisites of the Declaratory Judgment Act and Article III’s standing baseline.”

Three threshold requirements must be shown for a plaintiff to have standing: (1) “injury in fact,” (2) “a causal connection between the injury and the conduct complained of,” and (3) a likelihood that “the injury will be ‘redressed by a favorable decision.’” “‘If a plaintiff lacks standing at the time the action commences,’” then that plaintiff is not entitled “‘to a federal judicial forum.’”

Ripeness. The requirement that a claim must be ripe and not moot also bears on the temporal element of standing. Therefore, if a “case is ‘dependent on “contingent future events that may not occur as anticipated, or indeed may not occur at all,”’ it is not constitutionally ripe.”

Factual attack. Treasury had to do more than plausibly allege standing at this juncture. Chapter 73 raised a factual attack regarding Treasury’s standing to bring this action. More specifically, it alleged that no case or controversy existed at the filing of the complaint because no enforcement actions were taken against Chapter 73. Chapter 73 explained that less than 24 hours elapsed between the release of EO 14,251 and the complaint’s filing. Moreover, the complaint is devoid of any allegation that Treasury attempted to enforce EO 14,251. Therefore, Chapter 73 insisted that Treasury seeks an impermissible advisory opinion requesting that the Court bless its future enforcement action.

Enforcement. The court found that Chapter 73 correctly notes that Treasury’s complaint fails to allege that it enforced EO 14,251 against Chapter 73 or NTEU. Instead, the Complaint provides the actions Treasury wishes to take pursuant to EO 14,251. Further, the complaint references the OPM guidance “encouraging the agencies and subdivisions covered by the Executive Order to take appropriate steps toward terminating their previously negotiated CBAs” but does not state that any steps had been taken or that such terminations had occurred prior to the filing of the complaint.

During oral argument, the Treasury indicated in the affirmative that union payroll deductions and agency space for union activities had ceased; however, counsel never claimed that these events occurred prior to the filing of the complaint, despite Chapter 73 raising the issue. In response to Chapter 73’s motion for summary judgment, Treasury again alluded that enforcement had already occurred but has not provided a declaration or affidavit nor pointed to any specific fact indicating that it had enforced EO 14,251 against Chapter 73 at the time the complaint was filed.

Consequently, construing the facts and all reasonable inferences in its favor, the court determined that Treasury has not provided “persuasive evidence” that EO 14,251 was enforced against Chapter 73 when the complaint was filed.

Injury in fact. The first threshold requirement for standing requires that the “plaintiff must have suffered an injury in fact—an invasion of a legally protected interest which is (a) concrete and particularized and (b) actual or imminent, not conjectural or hypothetical.” In the absence of actual injury, “threatened injury” can satisfy the imminence requirement if it is “‘certainly impending,’ or there is a ‘substantial risk’” that the harm will occur.” A “plaintiff must point to some harm the defendant has inflicted or is about to inflict on him, and that is susceptible to judicial remedy through an award of damages or equitable relief.”

Treasury suggested that its concrete injuries are those that stem from the CBA’s constraints. The agency argued that it experienced actual harm by Chapter 73 enforcing the CBAs in the past, present, and possible future enforcement despite the President’s lawful exercise in EO 14,251. It further contended that it may be subject to significant backpay if it terminates employees but is later ordered to reinstate them. But Chapter 73 contended that Treasury seeks an advisory opinion because it asks the Court to declare that the actions it wishes to take are lawful, and the injuries that Treasury claims are not sufficiently coercive.

Analogous cases. After comparing arguments raised by parties in analogous cases, the court resolved the standing issue. In the present case, the issue of justiciability was raised by Chapter 73 in its motion for summary judgment. Therefore, to survive summary judgment, Treasury “can no longer rest on . . . mere allegations, but must set forth by affidavit or other evidence specific facts” to show a justiciable controversy.

Treasury believed it has a valid law (EO 14,251) that authorizes it to terminate its contracts (the CBAs) with Chapter 73. While it implied that it partially implemented the Executive Order in the less than 24 hours between the EO and the filing of this action, it sought to do more. Treasury sought declaratory relief that the termination would not violate the law.

The arguable “penalties” Treasury alleged that it faces are not coercive, self-inflicted, and too speculative, the court found. Although Treasury may face grievances, lawsuits, delay, or “labor strife” if it fully enforces EO 14,251, none of those rise to the level of coercion. While extant CBAs inherently create impediments to swift reductions in force, Treasury may not generate standing by inflicting harm upon itself by terminating employees and risking losing the value of those employees’ work if it is made to reinstate them with backpay.

Additionally, these “penalties” cannot amount to threatened injuries because they are more akin to generalized grievances which lack the requisite particularity Article III demands. Generalized grievances, such as those incurred by taxpayers, are “inconsistent with ‘the framework of Article III’” because “‘the impact on [a plaintiff] is plainly undifferentiated” and “common to all members of the public.” Thus, Treasury may not raise a generalized grievance on behalf of taxpayers any more than a taxpayer could.

Speculative injuries. Further, Treasury’s claimed threatened injuries are too speculative. If Treasury enforces EO 14,251 to terminate employees, Chapter 73 could file a grievance and the FLRA may order (and the Circuit Court may affirm) reinstatement and backpay, which would result in the loss of value for the work during the period that the employees were terminated. But this theory rests on a series of hypothetical occurrences that lack the concreteness necessary to define the scope of the dispute to be fit for judicial review, which fails to establish Treasury’s potential injury “is certainly impending or is fairly traceable” to Chapter 73.

The same is true for any injuries Treasury alleges that it faces by not repudiating the CBAs. Treasury provides that it must continue using the grievance and bargaining process under the CBAs, which, it insists, interferes with its ability to implement the Trump administration’s national security initiatives in a swift manner. Here, Treasury’s alleged injuries stem from its compliance with the CBAs.

Threatened injuries. While Treasury implies that it enforced EO 14,251 in the 24 hours prior to the filing of this suit by ceasing union payroll deductions and ousting union stewards from agency office space, it does not contend that Chapter 73 somehow invaded (or threatened to invade) its sovereign right to enforce the EO. Indeed, it provides “no persuasive evidence” nor points to any specific facts that it had enforced the EO against Chapter 73 when it filed its complaint, said the court.

There are three issues with Treasury’s omission. First, if no enforcement was in effect (i.e., no case or controversy) at the time the complaint was filed, then Treasury sought an impermissible advisory opinion. Second, if enforcement had commenced, Treasury made no showing that Chapter 73 invaded or threatened to invade its sovereign right to enforce the law. And third, it is Treasury’s burden to show standing commensurate with the present stage of litigation. Here, summary judgment required more than plausibly alleging standing.

Assuming Treasury has a right to terminate its CBAs pursuant to EO 14,251 and OPM Guidance, it still must show that Chapter 73 actually invaded (or threatened to invade) that right at the time the complaint was filed. That Treasury failed to do, concluded the court.

Treasury did not point to any specific right that it once had but now has lost or is at risk of losing. Nor did it identify any new burden placed upon it by Chapter 73. Instead, it argued that the terms of the existing CBAs are the source of its injuries (e.g., needing to participate in the grievance process and provide space and official time for union stewards under the CBAs). But it failed to provide support for how the status quo under those CBAs can confer Article III standing.

Causal connection and redressability. Standing requires “a causal connection between the injury and the conduct complained of,” which means that the injury must be “‘fairly . . . traceable to the challenged action of the defendant, and not . . . the result of the independent action of some third party not before the court.’” Therefore, “if a plaintiff’s injury does not derive from the purportedly unlawful conduct or provision, but instead from some other source, a plaintiff will lack standing.”

Similarly, redressability requires that it “be ‘likely,’ as opposed to merely ‘speculative,’ that the injury will be ‘redressed by a favorable decision.’” Redressability requires that a declaratory judgment affect the “behavior of the defendant towards the plaintiff.”

Despite the apparent breadth of its complaint, Treasury sought a declaration that, pursuant to EO 14,251 and OPM Guidance, it may rescind or repudiate the CBAs (2022 National Agreement, 2025 Addendum, and various local agreements) as applied only to Chapter 73—not NTEU or any other chapter. And if the court were to grant the narrow declaratory relief as requested, Treasury’s alleged injuries would not be redressed because Chapter 73’s parent, NTEU, is the exclusive representative for Treasury employees and holds exclusive bargaining rights. Thus, the impediments the CBAs allegedly created would persist nationwide with only a small portion of IRS employees outside of the CBAs.

Thus, the court concluded that the Treasury lacked standing to bring this action against Chapter 73.

The case is No. 2:25-049-DCR.

Judge: Reeves, D.

Attorneys: Bridget K. O’Hickey, U.S. Department of Justice, for the U.S. Department of Treasury. Benjamin A. Gastel (Herzfeld, Suetholz, Gastel, Leniski and Wall) for National Treasury Employees Union, Chapter 73.

Companies: United States Department of Treasury; National Treasury Employees Union, Chapter 73

Cases: Labor Bargaining PublicEmployees AgencyNews WhiteHouseNews KentuckyNews GCNNews