Denver court approves Biden's outdoor recreation $15 minimum wage rule, dissenting judge questions legality

The federal appeals court based in Denver cleared the way on Tuesday for a Biden administration rule requiring outdoor recreation companies to pay their workers, including river guides, a $15-per-hour minimum wage, plus overtime while operating on federal land.

However, the three-judge panel of the U.S. Court of Appeals for the 10th Circuit was divided about the constitutionality of the key federal law underlying the wage rule. The all-Republican panel's disagreement sets the stage for possible intervention by the U.S. Supreme Court, where conservative justices have indicated their skepticism about Congress's broad grants of authority to the executive branch.

The Colorado plaintiffs who brought the challenge — Arkansas Valley Adventures and its owner, Duke Bradford — warned the U.S. Department of Labor's minimum wage rule, enacted in response to an executive order from President Joe Biden, would increase their costs and force them to reduce services to the public. But the appellate panel's majority concluded not only that Biden and the department had authority to act, but the stated reasons for paying employees more were valid.

"Thus, even if the rule could plausibly increase costs for the government and the public, enhanced worker productivity and higher quality work — standing alone — are sufficient justifications," wrote Chief Judge Jerome A. Holmes, a George W. Bush appointee, in the April 30 opinion.

Judge Allison H. Eid, a Donald Trump appointee, dissented. In her view, the law Biden relied upon, known for short as the Procurement Act, was unconstitutional. Specifically, the act authorizes presidents to carry out directives for an "economical and efficient system" of procuring and supplying services in the federal government.

"That is it. That is all the (Procurement Act) gives us — no floor of what specific situations must arise, no ceiling on what the President may find economical or efficient to do," she wrote. Congress, in effect, gave the president authority to do "whatever he finds necessary to regulate entire industries in the name of what he believes to be economical and efficient. Such a broad delegation without limits cannot stand."

Attorneys for the plaintiffs did not immediately indicate whether they would seek Supreme Court review on an issue that could affect the entire $700 billion sector for federal contracts.

3 administrations, 3 executive orders

In 2014, then-President Barack Obama used an executive order to establish a minimum hourly wage of $10.10 for workers on federal contracts, relying on his authority under the Procurement Act. Trump, in 2018, issued an executive order carving hunting, river running and related operations on federal lands out of the contractor minimum wage.

Then, in 2021, Biden reversed course with an executive order directing federal agencies to ensure "contracts and contract-like instruments" required companies to pay a $15 minimum wage to workers, including seasonal recreation operations. The Department of Labor published a rule later that year implementing Biden's directive, prompting Bradford and his company to sue.

U.S. District Court Chief Judge Philip A. Brimmer declined to issue an injunction, finding the plaintiffs were unlikely to prevail on their challenge to the Biden administration's authority — in particular, because both Trump and Obama had relied on the same law to issue their own wage directives.

The 10th Circuit agreed to temporarily block the department's rule, only for outdoor recreation companies on public lands, while the appeal proceeded. The court received supportive briefs from multiple outside organizations arguing in favor of a higher minimum wage for seasonal workers or else warning that contractors would curtail their hunting or river guide services as a result of the rule.

The Procurement Act "was never intended to give the President a license to regulate the economy to achieve his desired social equity aims by fiat," wrote a collection of Republican-controlled states, led by Arizona.

The 10th Circuit's majority opinion concluded the executive branch had authority to impose wage conditions on outfitters, as they received permits to provide their services on federal land. Holmes noted the Procurement Act allows presidents to issue orders they consider necessary for an "economical and efficient system" of supplying goods and services — and courts have repeatedly upheld those orders.

"More specifically, the President has determined that he will issue permits — granting access to federal lands for the supply of guided tours — to outfitters that comply with the minimum wage rule, which he deems necessary to carry out the objectives of economy and efficiency. This exercise of proprietary authority is entirely within the bounds of the President’s authority," wrote Holmes for himself and Senior Judge David M. Ebel, a Ronald Reagan appointee.

The nondelegation doctrine

In her dissent, Eid doubted the legality of the Procurement Act in the first place. Under the "nondelegation doctrine," she explained, Congress must delegate authority to the executive branch that has some guardrails restricting the exercise of power. Although the Supreme Court has only struck down laws twice in the country's history for violating that principle, Eid believed the Procurement Act qualified as the rare, unconstitutional exception.

"Nothing stops the President; he may impose any conditions at any time as long as he considers the conditions necessary," she argued.

Recently, the Supreme Court's Republican-appointed majority has taken steps to limit executive branch authority to issue rules and regulations on subjects from climate change to student loan relief. As one tool, the court has endorsed the "major questions doctrine," which requires Congress to "speak clearly" on issues of economic and political significance in order to authorize executive action.

The 10th Circuit's majority rejected the idea that minimum wages for seasonal workers on public lands was a "major question" significantly affecting the economy, and Eid did not argue otherwise in her dissent.

However, in a 2019 Supreme Court dissenting opinion, Eid's predecessor on the 10th Circuit, Justice Neil M. Gorsuch, raised the major questions and nondelegation doctrines in tandem to argue for a more robust approach to striking down laws broadly empowering executive action.

"While it’s been some time since the Court last held that a statute improperly delegated the legislative power to another branch," Gorsuch wrote for himself and two other justices, "the Court has hardly abandoned the business of policing improper legislative delegations."

Eid quoted Gorsuch's opinion in questioning the authority presidents have to issue orders about government contracting, guided only by what they believe is necessary to maintain efficiency and economy.

"That is not a standard," she concluded.

Representatives from the Department of Labor did not respond to an email seeking comment on the 10th Circuit's decision. An attorney for the plaintiffs called the majority's opinion "dangerous and mistaken."

"As Judge Eid’s dissent points out, the majority’s reading of the Procurement Act contradicts the Constitution, because it gives the president unlimited unilateral power to 'impose any conditions at any time' on any person or company who holds a federal permit, allowing him to personally commandeer vast portions of the American economy," said lawyer Michael Poon. "We are considering our response."

The case is Bradford et al. v. U.S. Department of Labor et al.