Requests for Arbitration Panels

Issuing agencies

Abstract

The Federal Mediation and Conciliation Service (FMCS) published an interim final rule on August 4, 2026, and republished on August 28, 2026, that amended its arbitration services regulations to clarify when the Office of Arbitration may decline to issue an arbitration panel, make a direct appointment, or provide related services. This document responds to the comments, clarifies the scope of the rule's threshold inquiry, adds procedural provisions governing notice, written disposition, request dates, and fees, and adopts the interim final rule as a final rule.

Full Text

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<title>Federal Register, Volume 91 Issue 208 (Thursday, October 29, 2026)</title>
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[Federal Register Volume 91, Number 208 (Thursday, October 29, 2026)]
[Rules and Regulations]
[Pages 68030-68043]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2026-22083]


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FEDERAL MEDIATION AND CONCILIATION SERVICE

29 CFR Part 1404

RIN 3076-AA31


Requests for Arbitration Panels

AGENCY: Federal Mediation and Conciliation Service.

ACTION: Final rule.

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SUMMARY: The Federal Mediation and Conciliation Service (FMCS) 
published an interim final rule on August 4, 2026, and republished on 
August 28, 2026, that amended its arbitration services regulations to 
clarify when the Office of Arbitration may decline to issue an 
arbitration panel, make a direct appointment, or provide related 
services. This document responds to the comments, clarifies the scope 
of the rule's threshold inquiry, adds procedural provisions governing 
notice, written disposition, request dates, and fees, and adopts the 
interim final rule as a final rule.

DATES: This final rule is effective October 29, 2026. The amendments to 
29 CFR 1404.9, 1404.10, 1404.11, and 1404.12 made by the interim final 
rule have been in effect since August 4, 2026.

ADDRESSES: The interim final rule, the comments received, and this 
final rule are available on FMCS's public website at <a href="http://www.fmcs.gov">www.fmcs.gov</a>. The 
comments received are also available for public inspection, by 
appointment, at the Office of General Counsel, Federal Mediation and 
Conciliation Service, One Independence Square, 250 E St. SW, 
Washington, DC 20427.

FOR FURTHER INFORMATION CONTACT: Anna Davis, General Counsel, Federal 
Mediation and Conciliation Service, (202) 606-3737, <a href="/cdn-cgi/l/email-protection#18797c796e716b587e757b6b367f776e"><span class="__cf_email__" data-cfemail="c6a7a2a7b0afb586a0aba5b5e8a1a9b0">[email&#160;protected]</span></a>.

SUPPLEMENTARY INFORMATION:

I. Background

A. FMCS's Arbitration Services and the Interim Final Rule

    FMCS maintains a Roster of Arbitrators and, through its Office of 
Arbitration (OA), furnishes panels of names of Roster arbitrators, 
makes direct appointments, and provides related services to parties to 
collective bargaining agreements under 29 CFR part 1404, which FMCS 
issues under Title II of the Labor Management Relations Act of 1947, 29 
U.S.C. 171-183. See 29 CFR 1404.1. Arbitrators listed on the Roster are 
not FMCS employees; once an arbitrator is selected or appointed, the 
arbitrator's relationship is solely with the parties. 29 CFR 1404.4(c).
    FMCS has no power to compel parties to appear before an arbitrator, 
to enforce an agreement to arbitrate, to compel parties to arbitrate 
any issue, to influence or set aside an arbitrator's decision, or to 
compel, deny, or modify the payment of an arbitrator's compensation. 29 
CFR 1404.9(c). OA may decline to furnish a panel or make an appointment 
where a request is overly burdensome or impracticable, and may decline 
to service a request from a party based on the party's prior non-
payment of arbitrator fees or other behavior that constrains the spirit 
or operation of the arbitration process. 29 CFR 1404.9(d). FMCS 
``retains its authority and responsibility to assure that the needs of 
the parties using its services are served'' and may establish 
procedures for the preparation of panels and the appointment of 
arbitrators to that end. 29 CFR 1404.4(d).
    Before the interim final rule, Sec.  1404.9(b) provided that a 
request for a panel of seven arbitrators, ``whether joint or 
unilateral, will be honored,'' while providing that requests for a 
panel of other than seven names, for a direct appointment, or for 
special qualifications or other special service would be honored only 
if jointly submitted or authorized by both parties, and that OA takes 
no position on the status of the agreement to arbitrate, the 
arbitrability of the dispute, or the terms of the parties' contract by 
issuing a panel or appointing an arbitrator. Section 1404.10 provided 
that OA will not decide the merits of a claim by either party that a 
dispute is not subject to arbitration.
    On August 4, 2026, FMCS published an interim final rule with 
request for comments at 91 FR 49273. The interim final rule 
restructured Sec.  1404.9(b) into four paragraphs. Paragraph (b)(1) 
retained the rule that, upon request, OA will refer a randomly selected 
panel of seven arbitrators to parties to an agreement to arbitrate or 
to engage in fact-finding, or where labor arbitration or fact-finding 
may be provided by statute.
    Paragraph (b)(2) provides that a request for a panel may be joint 
or unilateral unless part 1404, applicable law, or the parties' 
agreement requires joint authorization for the requested service, and 
retained the requirement of joint authorization for panels of other 
than seven names, direct appointments, special qualifications, and 
other special services.
    Paragraph (b)(3) provides that OA may conduct a limited threshold 
inquiry to determine whether issuing a panel, making a direct 
appointment, or providing related arbitration services would be 
inconsistent with applicable law, a court order, or FMCS's statutory or 
regulatory authority; that OA may request from the parties the 
agreement, statutory provision, regulation, court order, written 
authorization, or other information necessary to make that 
determination; and that, following the inquiry, FMCS may issue the 
panel or appointment, decline to provide the requested service, hold 
the request in abeyance, or take other administratively appropriate 
action.
    Paragraph (b)(4) provides that OA's issuance of a panel or 
appointment, refusal to issue one, or decision to hold a request in 
abeyance does not constitute a decision on the validity of any 
collective bargaining agreement, the merits of any grievance, the 
arbitrability of any dispute, or the rights or obligations of the 
parties under any agreement or law. The interim final rule made 
conforming amendments to Sec.  1404.10 (arbitrability), Sec.  
1404.11(b) and (c) (nominations of arbitrators and additional panels), 
and Sec.  1404.12(b) and (c) (selection and appointment), and updated 
the nondiscrimination sentence in Sec.  1404.11(b). 91 FR at 49274-75, 
49277-78.
    The interim final rule took effect on August 4, 2026, with comments 
due September 3, 2026. On August 27, 2026, the docket for the rule on 
<a href="http://www.regulations.gov">www.regulations.gov</a> displayed as

[[Page 68031]]

closed to comments before the comment period had ended. To ensure that 
no interested person was denied the opportunity to comment, FMCS 
republished the interim final rule in full on August 28, 2026, at 91 FR 
55473, directed that comments be submitted to FMCS's Office of General 
Counsel by email or mail, and extended the comment period to September 
28, 2026. The regulatory text and preamble of the republished rule were 
identical to those published on August 4. FMCS accepted every comment 
received on or before September 28, 2026.
    FMCS found good cause under 5 U.S.C. 553(b)(B) to issue the rule 
without prior notice and comment and under 5 U.S.C. 553(d)(3) to make 
it effective upon publication, because the sentence in former Sec.  
1404.9(b) stating that every joint or unilateral request ``will be 
honored'' could be read to require OA to furnish panels and make 
appointments regardless of whether doing so was consistent with 
applicable law, a court order, or FMCS's authority, and because delay 
would perpetuate uncertainty about FMCS's obligations when presented 
with requests raising threshold legal objections. 91 FR at 49276. FMCS 
invited comment on all aspects of the rule and stated that, after 
considering timely comments, it would revise, withdraw, or confirm the 
rule in a subsequent document.

B. The Circumstances That Gave Rise to the Rule

    Section 7103(b)(1) of Title 5 authorizes the President to exclude 
an agency or subdivision from coverage under chapter 71 of Title 5, the 
Federal Service Labor-Management Relations Statute, upon determining 
that the agency or subdivision has as a primary function intelligence, 
counterintelligence, investigative, or national security work and that 
chapter 71 cannot be applied to it in a manner consistent with national 
security requirements and considerations. Executive Order 14251, 
Exclusions From Federal Labor-Management Relations Programs, 90 FR 
14553 (Apr. 3, 2025), and Executive Order 14343, Further Exclusions 
From the Federal Labor-Management Relations Program, 90 FR 42683 (Sept. 
3, 2025), exercised that authority with respect to numerous agencies 
and subdivisions. Executive Order 14251 further directed excluded 
agencies, upon termination of their collective bargaining agreements, 
to terminate their participation in pending grievance proceedings under 
5 U.S.C. 7121. Determinations under section 7103(b)(1) are committed to 
the President's judgment, and the courts have declined to review them 
under the Administrative Procedure Act. See A.F.G.E. v. Reagan, 870 
F.2d 723, 727-28 (D.C. Cir. 1989); Dep't of Defense v. F.L.R.A., 685 
F.2d 641, 650 (D.C. Cir. 1982) (holding that section 7103(b)(1) ``is 
for the President alone to invoke''). Legal interpretations and 
directions issued by the President are controlling on the officers and 
employees of the Executive Branch. Exec. Order 14215, Sec.  7, 90 FR 
10447, 10449 (Feb. 24, 2025).
    When an agency is excluded under section 7103(b)(1), chapter 71 
does not apply to it. The agency has no statutory duty to bargain, its 
employees have no statutory right to a negotiated grievance procedure, 
and the statutory authorization for binding grievance arbitration in 
section 7121(b)(1)(C)(iii), which the commenters correctly identify as 
the source of a union's right to invoke arbitration unilaterally, does 
not reach it. During 2025 and 2026, many excluded agencies terminated 
their collective bargaining agreements. The validity of the Executive 
Orders and of particular terminations has been and remains the subject 
of litigation in several courts. As of the date of this rule, the 
Executive Orders remain in effect, and FMCS ensures compliance with 
applicable court orders related to the Executive Orders through seeking 
federal agencies' consent as the source of authority for the proceeding 
itself.
    Beginning in the spring of 2026, OA received a growing number of 
unilateral requests for panels, additional panels, and appointments in 
matters in which the responding Federal agency asserted that it had 
been excluded from chapter 71, that the applicable agreement had been 
terminated, and that it could not lawfully participate in the requested 
arbitration. Requesting parties, in turn, cited the ``will be honored'' 
sentence of former Sec.  1404.9(b) as obligating FMCS to furnish the 
panel and appoint the arbitrator regardless of the agency's exclusion. 
On April 22, 2026, FMCS's General Counsel issued a guidance memorandum 
to the Office of Arbitration, Aligning FMCS's Arbitration Services with 
Executive Orders 14251 and 14343, which FMCS posted on its public 
website. The memorandum directed that, for agencies identified in the 
Executive Orders, OA confirm the agency's consent before issuing a 
panel, hold the request in abeyance if consent was not given, preserve 
the request's submission date, and charge no fee until the request 
could be processed. The memorandum stated that FMCS's practice as to 
agencies not affected by the Executive Orders was unchanged. The 
regulatory language of former Sec.  1404.9(b) was at the center of a 
subsequent legal challenge to that memorandum. The interim final rule 
followed.

II. Comments Received and FMCS's Responses

A. Overview

    FMCS received five comments during the comment period, each from 
one or more labor organizations representing Federal employees. The 
comments are posted on FMCS's public website, and FMCS refers to them 
below by number in the order received: Comment 1 (September 10, 2026), 
submitted jointly by three national labor organizations; Comment 2 
(September 20, 2026), submitted by a local of a national labor 
organization; Comment 3 (September 23, 2026), submitted by an officer 
of a local union representing employees of a Federal medical facility; 
Comment 4 (September 28, 2026), submitted jointly by two national labor 
organizations; and Comment 5 (September 28, 2026), submitted by a 
coalition of Federal-sector labor organizations joined by twenty-three 
affiliated organizations.
    All five comments oppose the rule. Comments 1, 4, and 5 ask FMCS to 
withdraw it. Comment 2 asks FMCS to withdraw it or, at minimum, to 
limit the threshold inquiry to situations involving a clear and 
controlling legal prohibition or court order. Comment 3 asks FMCS to 
revise the rule and proposes eight specific changes directed 
principally at the scope, timing, transparency, and reviewability of 
the threshold inquiry.
    FMCS has considered each comment in full. For the reasons set out 
below, FMCS concludes that the comments do not identify a basis for 
withdrawing the rule. They do, however, identify respects in which the 
scope of the threshold inquiry and the process that accompanies it 
should be stated more precisely in the regulatory text, and FMCS has 
made the changes described in section III of this preamble in response. 
Before addressing the comments individually, FMCS addresses four issues 
that run through all of them.

B. Issues Common to the Comments

    1. The rule does not authorize FMCS to decide arbitrability. Every 
commenter contends that the threshold inquiry is, in substance, an 
arbitrability determination that Congress assigned to arbitrators. 
Comments 1, 4, and 5 rely on 5 U.S.C. 7121(a)(1), which requires every 
negotiated grievance procedure to provide for the settlement of 
grievances ``including questions of arbitrability,'' and on the 
deference that the Federal Labor Relations Authority (the

[[Page 68032]]

Authority) and the courts accord an arbitrator's construction of the 
agreement. See Nat'l Weather Serv. Emps. Org. v. F.L.R.A., 966 F.3d 
875, 881-82 (D.C. Cir. 2020).
    FMCS does not dispute any of that law. It does not apply to the 
question the rule addresses. ``Arbitrability,'' in the sense in which 
chapter 71, the Authority, and the courts use the term, is whether a 
particular grievance may be heard by the arbitrator: whether it falls 
within the scope of the negotiated procedure, whether it was timely 
filed and processed, whether it is excluded by a statutory exception in 
section 7121(c), whether the grievant elected another forum, and 
similar questions of contract and statute that govern the dispute 
between the parties. The rule leaves every one of those questions to 
the arbitrator. Section 1404.10 continues to provide that OA will not 
decide the merits of a claim that a dispute is not subject to 
arbitration; Sec.  1404.9(b)(4) provides that no action OA takes on a 
request constitutes a decision on the arbitrability of any dispute; and 
this final rule adds to Sec.  1404.9(b)(3) an express statement that a 
party's contention that a grievance lacks merit, is untimely, or is not 
arbitrable does not, by itself, establish that FMCS may not provide the 
requested service.
    The threshold inquiry concerns a different question: whether FMCS, 
an agency of the Executive Branch, may lawfully take the administrative 
action requested of it. That question arises where a court has stayed 
or enjoined the arbitration or the obligation to arbitrate; where the 
President has excluded the responding agency from chapter 71 under 5 
U.S.C. 7103(b)(1), the agreement has been terminated, and the agency 
has, as the President directed, terminated its participation in the 
proceeding; or where part 1404 itself requires joint authorization for 
the service requested. None of those is a question of whether the 
grievance is arbitrable under the parties' agreement. An arbitrator 
cannot answer any of them with respect to FMCS, because, as Comment 5 
emphasizes at length, FMCS is not a party to the agreement, not a party 
to the proceeding, and not subject to the arbitrator's jurisdiction. An 
arbitrator's award that a grievance is arbitrable binds the parties; it 
does not and cannot determine whether a Federal agency that is not 
before the arbitrator may lawfully furnish a service.
    The commenters' position, taken to its conclusion, is that FMCS 
must issue a panel and appoint an arbitrator in every case, including 
where a court has enjoined the arbitration, because the effect of the 
injunction is a question for the arbitrator. No commenter accepts that 
conclusion. Comment 2 states that if ``an actual court order or clear 
law prohibits FMCS from providing a panel, FMCS obviously must follow 
the law.'' Comment 3 agrees that ``a binding order applicable to a 
request cannot be ignored,'' that FMCS ``cannot ignore an applicable 
legal bar or a court order,'' and that ``a genuinely applicable 
prohibition should be honored.'' Comments 1, 4, and 5, for their part, 
nowhere contend that FMCS must furnish a panel in the face of a court 
order forbidding the arbitration. Once that is conceded, the 
disagreement is not about whether FMCS may inquire into its own 
authority before acting but about how narrowly that inquiry is defined 
and what process accompanies it. Those are the matters FMCS has 
addressed in this final rule.
    2. No commenter identifies any law that requires FMCS to furnish a 
panel on unilateral request, and the commenters' own statutory analysis 
confirms that the language characterized as an obligation existed only 
in FMCS's regulation. Comment 5 argues, in detail, that neither Title 
II of the Labor Management Relations Act nor the Administrative Dispute 
Resolution Act (ADRA) reaches Federal-sector grievance arbitration, and 
that chapter 71 assigns FMCS a role only in the resolution of 
bargaining impasses under 5 U.S.C. 7119. Comment 4 likewise observes 
that neither chapter 71 nor FMCS's enabling act mentions FMCS in 
connection with grievance arbitration. Comment 5 states that FMCS 
``appears in none of'' the provisions of chapter 71 governing 
grievances, arbitrability, review of awards, or unfair labor practices.
    FMCS agrees that chapter 71 imposes no obligation on FMCS with 
respect to grievance arbitration. Section 7121 requires agencies and 
exclusive representatives to negotiate a grievance procedure ending in 
binding arbitration; it does not direct them to obtain the arbitrator 
from FMCS, and many agreements do not. Parties are free to select any 
arbitrator or arbitration procedure acceptable to them. 29 CFR 1404.8. 
FMCS furnishes names from its Roster as a service, for a fee, to 
parties who choose to use it. The commenters' demonstration that no 
statute requires FMCS to provide that service is a demonstration that 
the language characterized as an obligation to honor every unilateral 
request existed in one place only: the sentence of former Sec.  
1404.9(b) that the interim final rule removed. What has been 
characterized as a regulatory commitment that FMCS made, FMCS may 
amend, subject to the requirements of the Administrative Procedure Act 
(APA). The commenters do not identify a statute that forbids the 
amendment, because there is none.
    Comment 5's observation that FMCS has, in different documents over 
the years, cited different provisions of the Labor Management Relations 
Act as the basis for its Roster does not alter this conclusion. Whether 
FMCS's furnishing of Roster services to Federal-sector parties rests on 
the declaration of policy in 29 U.S.C. 171(b), which makes governmental 
facilities available for ``voluntary arbitration,'' or on 29 U.S.C. 
173(f), which authorizes FMCS to make its services available to Federal 
agencies and directs it to consult with the interagency body designated 
under 5 U.S.C. 573 in maintaining rosters of neutrals and arbitrators, 
each provision authorizes the service and neither obligates it. The 
phrase ``voluntary arbitration'' in section 171(b), and the title of 
subpart A of part 1404 (``Arbitration Policy''), reflect the premise on 
which FMCS has always operated: that it facilitates arbitration to 
which the parties have lawfully agreed. Neither provision contemplates 
that FMCS will constitute a tribunal for a proceeding that the law does 
not authorize.
    3. Where chapter 71 applies and an agreement is in effect, section 
7121 supplies the authorization for binding arbitration; the rule's 
discussion of consent and sovereign immunity concerns the circumstance 
in which chapter 71 does not apply. Comments 4 and 5 devote 
considerable attention to the interim final rule's citation of 5 U.S.C. 
572(a) and (c) and to its discussion of sovereign immunity. Comment 5 
argues that ADRA governs an agency's discretionary election of 
alternative procedures in its own administrative programs and has 
nothing to do with a grievance procedure that Congress required the 
parties to negotiate; that consent under chapter 71 is given when the 
agreement is executed; and that section 7121, which the interim final 
rule itself cited, is the statutory authorization that the sovereign 
immunity principle requires. Comment 4 argues that FMCS has not 
explained how providing a panel would violate the Constitution.
    FMCS agrees with the commenters that, where chapter 71 applies and 
a collective bargaining agreement with a negotiated grievance procedure 
is in effect, section 7121(b)(1)(C)(iii) is the statutory authorization 
for binding arbitration, that authorization permits either party to 
invoke arbitration alone, and the agency's consent is supplied by the 
agreement it negotiated. 91 FR at

[[Page 68033]]

49274. In that circumstance, FMCS does not require, and under this rule 
will not seek, any renewed or case-specific consent from the responding 
agency before issuing a seven-name panel on a unilateral request. 
Comment 5 reads the interim final rule as applying an ADRA consent 
requirement to every Federal-sector grievance. It does not. To remove 
any doubt, FMCS states here that it does not read 5 U.S.C. 572 to 
require a Federal agency covered by chapter 71 to consent, case by 
case, to grievance arbitration under an agreement in effect.
    The interim final rule's discussion of consent and sovereign 
immunity addresses the circumstance in which chapter 71 does not apply. 
Chapter 71's arbitration provisions are, by their terms, components of 
the chapter. Section 7121 requires grievance procedures ending in 
binding arbitration in agreements negotiated under the chapter; section 
7122 provides for exceptions to, and the finality of, awards rendered 
in arbitration ``under this chapter''; and the chapter defines a 
``collective bargaining agreement'' as one ``entered into as a result 
of collective bargaining pursuant to the provisions of this chapter.'' 
5 U.S.C. 7103(a)(8), 7121, 7122.
    Those provisions are not freestanding delegations of arbitral 
power; they are elements of an integrated statutory scheme whose rights 
and remedies exist only as Congress created them. United States v. 
Fausto, 484 U.S. 439, 445 (1988); Karahalios v. Nat'l Fed'n of Fed. 
Emps., Local 1263, 489 U.S. 527, 531-33 (1989). An arbitrator acting 
under a negotiated grievance procedure exercises a statutory delegation 
whose content Congress defined, Cornelius v. Nutt, 472 U.S. 648, 660-63 
(1985), not an authority arising from the parties' private agreement. 
Section 7103(b)(1) authorizes the President to exclude an agency ``from 
coverage under this chapter.'' When the President does so, sections 
7121 and 7122 no longer apply to the agency, and an agreement that 
survives as a document no longer carries the statutory character the 
chapter gave it.
    With chapter 71 removed, the governing principles are those of 
sovereign immunity and the limited authority of Federal officers. The 
United States may be subjected to a binding adjudication only where 
Congress has consented, and that consent must be ``unequivocally 
expressed in statutory text.'' Lane v. Pe[ntilde]a, 518 U.S. 187, 192 
(1996); accord United States v. Sherwood, 312 U.S. 584, 586 (1941). No 
officer can supply that consent by contract, conduct, or acquiescence. 
United States v. Shaw, 309 U.S. 495, 500-01 (1940); Minnesota v. United 
States, 305 U.S. 382, 388-89 (1939); United States v. Mitchell, 463 
U.S. 206, 215-16 (1983). And an award payable from the Treasury 
requires an appropriation made by law, for which neither an agency's 
agreement nor its conduct can substitute. U.S. Const. art. I, Sec.  9, 
cl. 7; Off. of Pers. Mgmt. v. Richmond, 496 U.S. 414, 424-32 (1990).
    Congress's enactment of 5 U.S.C. 575, which authorizes agencies to 
use binding arbitration only where all parties consent in a written 
agreement that specifies a maximum award, entered by an official with 
authority to settle the matter, and subject to guidance issued by the 
agency head in consultation with the Attorney General, and which 
supplies its own enforcement and review provisions, 5 U.S.C. 575, 580, 
581, reflects the settled understanding that an agency may submit to 
binding arbitration only where a statute authorizes it, and that 
Congress legislates expressly when it intends arbitral awards to be 
enforceable against the sovereign. See Constitutional Limitations on 
Federal Government Participation in Binding Arbitration, 19 Op. O.L.C. 
208 (1995).
    Section 7121 is such a statute for agencies covered by chapter 71. 
When the President excludes an agency under section 7103(b)(1), that 
authorization no longer reaches the agency, and the agreement through 
which the agency gave its consent has, in the cases that gave rise to 
this rule, been terminated. In that circumstance, a request that FMCS 
furnish a panel and appoint an arbitrator to hear a grievance against 
the excluded agency is a request that FMCS constitute a tribunal over a 
Federal agency that no statute subjects to it. Comment 5's argument 
that ADRA does not reach such a dispute, if correct, does not help the 
commenters; it means that there is even less authority for the 
proceeding than the interim final rule contemplated.
    Nor can the arbitration article of a terminated chapter 71 
agreement simply be relabeled as an ADRA submission: such articles 
ordinarily specify no maximum award, were not adopted under agency-head 
guidance issued in consultation with the Attorney General, and purport 
to make arbitration a standing condition invocable unilaterally rather 
than a consensual submission of defined issues. An excluded agency that 
elects to arbitrate must therefore do so under ADRA or another 
statutory authority on that authority's own terms, and OA may ask the 
parties to identify that authority. Nothing in the rule, finally, 
prevents an excluded agency and a labor organization from jointly 
requesting FMCS's mediation or other nonbinding services, see 5 U.S.C. 
571(3), which FMCS remains available to provide.
    Comment 4 asks how providing a panel in that circumstance would 
implicate the Constitution. The interim final rule's reference to 
constitutional limits was to Article II. An Executive Branch agency has 
no authority to facilitate a proceeding that would subject another 
Executive Branch agency to binding adjudication without statutory 
authorization, and no authority to act contrary to a determination the 
President has made under a statute that commits that determination to 
him.
    The Office of Legal Counsel has explained that, under the Take Care 
Clause, ``where a statute or other law operates to require the 
government to submit to binding arbitration, the government must 
submit.'' 19 Op. O.L.C. at 224. The corollary follows: where no statute 
requires or authorizes submission, Executive Branch officials may not 
submit the United States to binding arbitration on the strength of a 
contract alone, and FMCS may not lend its process to that end. An 
exclusion under section 7103(b)(1), moreover, asserts no constitutional 
authority to override the statute; it is the exercise of an authority 
Congress itself conferred, which places the President where his 
authority is at its maximum. Youngstown Sheet & Tube Co. v. Sawyer, 343 
U.S. 579, 635 (1952) (Jackson, J., concurring).
    Where the President has determined under section 7103(b)(1) that 
chapter 71 does not apply to an agency and has directed that agency to 
cease participating in grievance arbitration, FMCS, which is bound by 
that determination to the same extent as the excluded agency, may not 
treat its own regulation as requiring it to furnish the means by which 
the proceeding goes forward. The commenters' disagreement with the 
Executive Orders is a disagreement with the President, which the courts 
will resolve in the litigation now pending. It is not a reason for FMCS 
to administer its Roster as though the Orders did not exist.
    4. The commenters' objections to the scope and process of the 
inquiry have been addressed in this final rule. The most substantial 
criticism in the comments is not that FMCS may never decline a service 
that it cannot lawfully provide but that the regulatory text, as 
written, could permit OA to decline or hold a request on the basis of 
an ordinary objection to the grievance, could leave a request in 
abeyance indefinitely without explanation, and

[[Page 68034]]

could leave the requesting party without its fee, without its place in 
line, and without a stated path to reconsideration. Comment 3 develops 
these concerns most fully; Comment 5 describes matters in which, before 
the rule issued, OA raised questions that the commenter characterizes 
as contractual or jurisdictional rather than as questions of FMCS's 
authority.
    FMCS has considered these criticisms and agrees that the regulatory 
text should state the limits of the inquiry and the process that 
accompanies it. This final rule therefore revises Sec.  1404.9(b)(3) to 
provide that the inquiry is limited to whether FMCS may lawfully 
provide the requested service; that a party's contention that a 
grievance lacks merit, is untimely, or is not arbitrable under the 
agreement, or a party's disagreement with a grievance or unwillingness 
to participate in the arbitration, does not by itself establish that 
providing the service would be inconsistent with law, a court order, or 
FMCS's authority; and that OA will afford each party a reasonable 
opportunity to respond to information submitted by the other. It adds 
Sec.  1404.9(b)(5), providing that OA will notify the parties in 
writing of any decision to decline or hold a request and of the basis 
for such a decision; that a request held in abeyance retains its 
original date of receipt; that OA will reconsider a held request upon a 
party's submission of information bearing on the basis for the hold and 
will periodically review all held requests; and that a party may obtain 
a refund or credit of the fee paid for a request that is declined or 
held. It revises Sec.  1404.12(b) to provide that a party's failure to 
submit ranked preferences does not by itself establish that an 
appointment would be inconsistent with law. These changes are discussed 
in section III.

C. Comment 1

    Comment: The comment contends that the rule is procedurally 
improper because none of the statutory bases for omitting notice and 
comment applies; that ``impracticable'' requires an emergency, 
``unnecessary'' applies only to minor or technical rules, and 
``contrary to the public interest'' applies only where advance notice 
would itself cause harm, citing Am. Pub. Gas Ass'n v. D.O.E., 72 F.4th 
1324, 1339-40 (D.C. Cir. 2023), U.S. Steel Corp. v. E.P.A, 595 F.2d 
207, 214 (5th Cir. 1979), and Utils. Solid Waste Activities Grp. v. 
E.P.A., 236 F.3d 749, 754-55 (D.C. Cir. 2001); that FMCS cites no 
examples of confusion and assigns thousands of arbitrators each year 
under a rule in place since 1979; that the rule is inadequately 
reasoned under D.H.S. v. Regents of the Univ. of Cal., 591 U.S. 1 
(2020), Motor Vehicle Mfrs. Ass'n v. State Farm Mut. Auto. Ins. Co., 
463 U.S. 29 (1983), and Encino Motorcars, LLC v. Navarro, 579 U.S. 211 
(2016), because it offers no data, does not explain the alleged 
confusion, and does not account for the reliance of unions that 
incorporated FMCS's procedures into their agreements; that the rule is 
a post hoc rationalization of the April 22, 2026 memorandum; and that 
the rule is internally inconsistent because deciding that sovereign 
immunity or an Executive Order forecloses a panel is deciding the 
parties' rights and will render CBA provisions null.
    Response: The procedural objections are addressed in section II.H. 
As to the asserted absence of confusion, the comment conflates the 
volume of FMCS's ordinary business with the question the rule 
addresses. The great majority of the panels OA issues each year involve 
private-sector parties or Federal-sector parties as to whom no question 
of FMCS's authority arises, and the rule does not change how those 
requests are processed. The confusion the interim final rule identified 
arose in a specific and, by mid-2026, recurring circumstance: 
unilateral requests for panels and appointments in matters involving 
agencies that the President had excluded from chapter 71 and that had 
terminated the applicable agreement, in which the requesting party 
invoked the ``will be honored'' sentence as obligating FMCS to proceed. 
That the sentence was so invoked is not speculation; the regulatory 
language was central to litigation challenging the April memorandum, 
and the comments in this rulemaking invoke it in the same way. A 
regulation that is being asserted as a mandate to take an action the 
agency believes it lacks authority to take is a regulation whose 
meaning is in dispute, and FMCS was entitled to resolve that dispute by 
amending it.
    The comment's reliance argument is addressed in response to Comment 
5 and in section II.H. FMCS notes here that the interim final rule did 
consider reliance interests, 91 FR at 49276, and that this final rule 
adds provisions--preservation of the request date, written notice, 
reconsideration, and refund or credit--that respond directly to the 
reliance the comment describes.
    The asserted internal inconsistency rests on the premise addressed 
in section II.B.1. A determination that FMCS may not lawfully furnish a 
service is a determination about FMCS. It does not purport to decide, 
and under Sec.  1404.9(b)(4) does not decide, whether the parties' 
agreement is valid or what their rights under it are; those questions 
remain for the Authority and the courts, and a party that believes the 
other has breached the agreement by refusing to arbitrate may say so in 
the forum with jurisdiction to decide it. The comment's assertion that 
the rule ``will render CBA provisions null'' is incorrect for 
agreements in effect between parties covered by chapter 71: for those 
parties, as section II.B.3 explains, FMCS will issue a seven-name panel 
on unilateral request as before. For agreements that an excluded agency 
has terminated, the question whether the provisions remain enforceable 
is being decided in litigation to which FMCS is not a party, and FMCS 
will act in accordance with the result.
    As to the characterization of the rule as a post hoc 
rationalization of the April 22, 2026, memorandum, FMCS addresses that 
contention in response to Comment 5. FMCS adds that an agency that 
confronts a new and recurring question, issues guidance to its staff on 
how to process the matters before it, and then codifies the governing 
standard through rulemaking that invites and responds to public comment 
has followed the ordinary course, not evaded it.

D. Comment 2

    Comment: The comment opposes giving FMCS authority to refuse or 
delay panels on the basis of a threshold inquiry. It contends that, for 
years, FMCS provided the panel and left arbitrability to the 
arbitrator; that FMCS cannot both disclaim deciding arbitrability and 
reserve authority to refuse a panel; that the rule adds a gatekeeper 
between workers and the process they negotiated, generates additional 
disputes and expense that taxpayers bear, and is part of a pattern of 
narrowing Federal employees' workplace protections, including those of 
the more than half a million veterans in the Federal civilian 
workforce; and that, if a court order or clear law prohibits FMCS from 
providing a panel, FMCS must follow it, but merely raising a legal or 
arbitrability objection should never become a tool for delay. The 
comment asks FMCS to withdraw the rule or, at minimum, to limit the 
threshold inquiry to situations involving a clear and controlling legal 
prohibition or court order.
    Response: FMCS appreciates the comment's recognition that FMCS must 
follow a court order or law that prohibits it from providing a panel, 
and agrees with the comment's central practical point: an objection to 
the merits or arbitrability of a grievance

[[Page 68035]]

should not become a tool for delay. The revisions to Sec.  1404.9(b)(3) 
in this final rule adopt that principle in the regulatory text. The 
inquiry is limited to whether FMCS may lawfully provide the service, 
and a party's objection to the grievance, its disagreement with the 
grievance, or its unwillingness to participate does not by itself 
establish that FMCS may not. FMCS has not adopted the comment's 
alternative formulation (``clear and controlling'') as the regulatory 
standard, because whether a legal prohibition is ``clear'' is itself a 
judgment, and the standard in the rule, whether providing the service 
would be inconsistent with applicable law, a court order, or FMCS's 
statutory or regulatory authority, is the standard that governs every 
action an Executive agency takes. FMCS expects that, in practice, the 
two formulations will rarely diverge: a request that does not involve a 
court order, an agency excluded from chapter 71, or a service that part 
1404 requires to be jointly authorized will be processed as it always 
has been.
    The comment's concern about additional cost and bureaucracy is 
addressed in section II.G.6 and in section IV. FMCS notes that, where 
FMCS lacks authority to provide a service, the cost of the resulting 
dispute is not created by FMCS's declining to provide it; it is created 
by the underlying legal dispute between the parties, which would exist, 
and would have to be resolved somewhere, whether or not a panel issued. 
Nothing in the rule affects the representational rights of Federal 
employees, including veterans, under chapter 71 where it applies.

E. Comment 3

    Comment: The comment, submitted by an officer of a local union 
representing employees of a Federal medical facility, asks FMCS to 
revise the rule so that an ordinary, properly authorized unilateral 
request for a seven-name panel is processed promptly and a party's 
disagreement with a grievance or unwillingness to participate does not, 
by itself, prevent the other party from obtaining a neutral. The 
comment acknowledges that revised Sec.  1404.9(b)(2) preserves 
unilateral requests for standard panels and that FMCS cannot ignore a 
court order but contends that the breadth of Sec.  1404.9(b)(3), the 
absence of deadlines, and the absence of any requirement of a written 
explanation could allow a general objection by the responding agency to 
trigger an indefinite hold.
    The comment describes two pending grievances at the commenter's 
facility, concerning environmental differential pay and weather and 
safety leave during a March 2026 winter storm, to illustrate the costs 
of delay to employees, the agency, and the veterans the facility 
serves, while expressly disclaiming any contention that FMCS declined a 
panel in either matter or that the rule caused delays that preceded it. 
The comment discusses the First Circuit's May 16, 2026, order in 
A.F.G.E. Local 2305 v. Dep't of Veterans Affs., No. 26-1321, which the 
commenter describes as distinguishing reinstatement of the VA agreement 
from specific enforcement of its grievance and arbitration procedures, 
and asks FMCS to identify the actual scope of any order on which it 
relies. The comment asks FMCS to explain whether the April 22, 2026, 
memorandum remains operative, observes that a preserved filing date 
does not appoint an arbitrator, and questions whether the alternatives 
the interim final rule identifies (the Authority, the courts, or 
another provider) are available in practice. The comment then proposes 
eight specific changes.
    Response: FMCS appreciates the care with which the comment 
distinguishes between what the rule's text permits and what the 
commenter fears it could permit in practice and has adopted the 
substance of several of its proposals. FMCS responds to the eight 
proposals in order.
    First, the comment asks FMCS to state expressly that an ordinary 
seven-name panel request authorized by statute or agreement will be 
processed when made by either party unless FMCS identifies a specific, 
presently applicable legal prohibition on providing the service, and to 
clarify that the responding party's lack of contemporaneous consent is 
not, standing alone, such a prohibition where a grievance has been 
invoked under an applicable negotiated procedure. FMCS has adopted this 
proposal in substance. Section 1404.9(b)(2) already provides that a 
request for a seven-name panel may be unilateral unless part 1404, 
applicable law, or the agreement requires joint authorization. Revised 
Sec.  1404.9(b)(3) now provides that a party's disagreement with a 
grievance or unwillingness to participate in the arbitration does not 
by itself establish that FMCS may not provide the service, and section 
II.B.3 of this preamble states that FMCS will not seek case-specific 
consent from an agency covered by chapter 71 under an agreement in 
effect. Where the responding agency has been excluded from chapter 71 
and the agreement has been terminated, the basis for declining or 
holding the request is the exclusion and termination, not the agency's 
unwillingness to participate, and OA's written notice under new Sec.  
1404.9(b)(5) will say so.
    Second, the comment asks FMCS to confine the inquiry to FMCS's 
authority to provide the requested service, to require an objecting 
party to identify the authority on which it relies, and to provide that 
ordinary factual, contractual, timeliness, and merits defenses are not 
decided through the screen and that an objection does not automatically 
suspend a request merely because it uses words such as ``jurisdiction'' 
or ``arbitrability.'' FMCS has adopted this proposal in substance in 
revised Sec.  1404.9(b)(3). FMCS has not added a regulatory requirement 
that an objecting party submit a formal statement of authority, because 
OA may already request the agreement, statute, regulation, order, 
authorization, or other information it needs, and because, in the cases 
that gave rise to the rule, the relevant authority (the Executive Order 
excluding the agency and the agency's notice of termination) is a 
matter of public record. FMCS agrees, however, that the burden of 
identifying the asserted bar lies in the first instance with the party 
asserting it, and that OA will not treat an objection as warranting 
abeyance merely because of the terms in which it is cast.
    Third, the comment asks FMCS to establish short default time limits 
for objections, responses, and decisions, suggesting five, five, and 
ten business days, and to prohibit abeyance ``until further notice'' 
without a date for reconsideration. FMCS agrees that a request should 
not remain in abeyance without explanation or any stated path forward, 
and new Sec.  1404.9(b)(5) requires written notice of the basis for a 
hold, reconsideration upon the submission of information bearing on 
that basis, and periodic review of every held request. FMCS has not 
adopted fixed deadlines in the regulatory text. The threshold questions 
that have arisen under the rule typically turn on the status of an 
Executive Order exclusion, a termination, or a court order that is the 
subject of ongoing litigation, and a fixed deadline for decision would, 
in many such cases, force OA to decline a request that it would 
otherwise hold pending a judicial ruling, to the detriment of the 
requesting party. OA will act on threshold questions as promptly as the 
circumstances permit and will state in its written notice what 
development would permit it to proceed.
    Fourth, the comment asks that OA provide a short written 
disposition to both parties whenever it declines,

[[Page 68036]]

suspends, or conditions service, identifying the service requested, the 
controlling authority, how it applies, the status of the original 
request date, and what would permit reconsideration. FMCS has adopted 
this proposal in new Sec.  1404.9(b)(5), which requires written notice 
to the parties of the action taken and the basis for it, and which 
provides for preservation of the request date and for reconsideration. 
OA's written notices will identify the responsible FMCS official.
    Fifth, the comment asks for a defined reconsideration route, 
periodic review of holds, notice when a cited impediment changes, and 
preservation of the original receipt date and position without a new 
fee. New Sec.  1404.9(b)(5) adopts each of these elements.
    Sixth, the comment asks FMCS to clarify that the one-party ranking 
process in Sec.  1404.12(b) continues to operate when the other party 
simply declines to rank, and that joint authorization is not imported 
into standard unilateral panels through the screening provisions. FMCS 
has adopted this proposal. Revised Sec.  1404.12(b) provides that a 
party's failure to submit its ranked preferences does not by itself 
establish that an appointment would be inconsistent with applicable 
law, a court order, or FMCS's authority. The limitation in Sec.  
1404.12(b) operates only where OA has determined under Sec.  
1404.9(b)(3) that the appointment itself may not lawfully be made, and 
the written notice required by Sec.  1404.9(b)(5) will identify that 
distinct basis.
    Seventh, the comment asks FMCS to publish deidentified 
implementation data concerning joint and unilateral Federal-sector 
requests, threshold inquiries, the categories of impediment asserted, 
time in inquiry or abeyance, and dispositions. FMCS has not adopted a 
regulatory reporting requirement, which would entail recordkeeping and 
systems changes whose cost the interim final rule did not contemplate. 
FMCS agrees, however, that information about how the rule is being 
applied would assist the public and FMCS alike, and FMCS will endeavor 
to make aggregate information about threshold inquiries under Sec.  
1404.9(b)(3) available on its website.
    Eighth, the comment asks FMCS to consider the alternative of 
issuing a standard panel with an express reservation that the service 
expresses no view on consent, contract validity, arbitrability, or the 
merits, whenever no specific legal bar to the administrative act is 
established. For requests that do not present a question of FMCS's 
authority, that is what the rule as revised provides: the panel issues, 
and Sec.  1404.9(b)(4) supplies the reservation. For requests that do 
present such a question, because the responding agency has been 
excluded from chapter 71 and has terminated the agreement, or because a 
court has stayed or enjoined the arbitration, the alternative does not 
answer the concern. The disclaimer in Sec.  1404.9(b)(4) describes what 
FMCS's action does not decide; it cannot supply authority that the law 
withholds, and a panel issued ``with reservation'' to constitute a 
tribunal over an agency that no statute subjects to it is still that.
    As to the comment's remaining points: FMCS agrees that the scope of 
any court order on which OA relies must be identified with care, and 
new Sec.  1404.9(b)(5) requires OA to state the basis for its action in 
writing. FMCS does not express a view on the First Circuit's May 16, 
2026, order, which concerns litigation to which FMCS is not a party; 
FMCS's obligation is to act consistently with applicable court orders 
as they apply to any request before OA. As to the April 22, 2026, 
memorandum, issued before the rule and will be conformed to this final 
rule; to the extent it is inconsistent with the regulatory text as 
revised, the regulation controls. FMCS agrees that a preserved filing 
date does not appoint an arbitrator and has not suggested otherwise; 
the preservation of the date, now codified, protects the requesting 
party's position for the day on which the impediment is removed. The 
availability and adequacy of alternative forums is addressed in 
response to Comment 5.

F. Comment 4

    Comment: The comment contends that the rule is inconsistent with 
chapter 71 because section 7121(a)(1) assigns questions of 
arbitrability to the negotiated procedure and to arbitrators, Congress 
deliberately moved away from the agency-controlled advisory arbitration 
of Executive Order 10988, and Congress provided a post-award review 
process before the Authority and the courts of appeals that leaves no 
risk an agency's objection will go unheard; that neither chapter 71 nor 
FMCS's enabling act gives FMCS a role in arbitrability, and FMCS has 
conceded that its role is administrative and facilitative; that the 
threshold inquiry is an arbitrability determination because it requires 
FMCS to assess one party's legal objection and, on that basis, to 
foreclose the other party's access to arbitration; that the interim 
final rule discloses no standard for the inquiry; that FMCS lacked good 
cause because eliminating uncertainty is not good cause, citing Mack 
Trucks, Inc. v. E.P.A., 682 F.3d 87, 93-95 (D.C. Cir. 2012), and 
California v. Azar, 911 F.3d 558, 576 (9th Cir. 2018), and FMCS's prior 
rulemakings used notice and comment; that the rule is substantive 
rather than clarifying; that there is no evidence of confusion, and 
FMCS has not addressed its decades-long practice, including its 2010 
rejection of a proposal to have OA determine whether an agreement 
requires a joint request; that the rule is internally contradictory; 
that FMCS failed to consider that no prior exclusion under section 
7103(b), including President Carter's in 1979, prompted any change in 
FMCS's regulations, and that the rule reaches disputes in which the 
Executive Orders play no part; and that the sovereign immunity 
rationale fails because FMCS has not explained the constitutional 
violation, is not the body to decide sovereign immunity, and did not 
consider whether other statutory authorities permit arbitration to 
proceed. The comment also contends that the interim final rule's 
suggestion that a refusal to arbitrate may be pursued as an unfair 
labor practice is a ``nonstarter'' because a party cannot pursue a 
charge over a failure to strike names from a panel that does not exist.
    Response: The comment's principal contention, that the threshold 
inquiry is an arbitrability determination assigned by section 
7121(a)(1) to arbitrators, is addressed in section II.B.1. FMCS adds 
the following: The comment's history is accurate: Congress replaced the 
advisory arbitration of Executive Order 10988, under which the agency 
had the last word, with binding arbitration that either party may 
invoke, and it provided for review of awards by the Authority and the 
courts of appeals. Each of those provisions governs the relationship 
between the agency and the exclusive representative. Each operates 
within chapter 71, and each depends on chapter 71 applying to the 
agency: section 7122, by its terms, governs awards rendered in 
arbitration ``under this chapter,'' and the agreements to which section 
7121 applies are, by statutory definition, those negotiated ``pursuant 
to the provisions of this chapter.'' 5 U.S.C. 7103(a)(8), 7122(a).
    The comment does not address what happens when, by the President's 
determination under section 7103(b)(1), the agreement is not covered by 
chapter 71. In that circumstance, there is no section 7121 procedure, 
no section 7122 review, and no section 7123 petition; the carefully 
constructed scheme the comment describes has, as to that agency, been 
withdrawn by the statute itself. The comment's argument that FMCS is 
``placing its policy preference

[[Page 68037]]

over that of Congress'' has it backwards. Congress chose to give the 
President the authority to exclude agencies from chapter 71 for 
national security reasons and to make that determination unreviewable. 
FMCS's rule gives effect to that choice; the comment asks FMCS to 
disregard it.
    The comment's assertion that the inquiry ``discloses no standard'' 
is addressed by the regulatory text, which states the standard: whether 
providing the service would be inconsistent with applicable law, a 
court order, or FMCS's statutory or regulatory authority. This final 
rule narrows that standard further by providing what does not satisfy 
it.
    As to FMCS's prior practice, the comment is correct that FMCS has 
furnished panels on unilateral request since 1979, and that, in 2010, 
FMCS declined to adopt a proposal under which OA would have examined 
whether the parties' agreement required joint requests and declined to 
proceed if the request had such a requirement and a party objected. 75 
FR 30704, 30705 (June 2, 2010). FMCS declined that proposal because it 
would have placed OA in the position of interpreting collective 
bargaining agreements. The present rule declines that role for the same 
reason: a party's contention that a grievance is not arbitrable under 
the agreement does not by itself warrant declining or holding a 
request. What the present rule addresses, and what the 2008 proposal 
did not, is the circumstance in which a question arises about FMCS's 
own authority to act. Nothing in FMCS's history suggests that it ever 
understood its regulation to require it to furnish panels where the law 
forbade it; the sentence the interim final rule removed was simply not 
tested against that circumstance until 2026.
    The comment's observation that no prior exclusion under section 
7103(b), including those in 1979, prompted a change to FMCS's 
regulations identifies no flaw in the rule. Prior exclusions, as the 
comment's own citation reflects, were adopted at the inception of the 
statute or involved agencies and subdivisions in which collective 
bargaining agreements with negotiated grievance procedures were not in 
effect or were few. The 2025 Executive Orders excluded agencies and 
subdivisions employing a substantial share of the Federal workforce, 
many of them parties to longstanding agreements, and directed those 
agencies to terminate the agreements and their participation in pending 
grievance proceedings. The question whether FMCS must furnish panels 
and appointments for proceedings against those agencies did not arise 
in 1979 and arose repeatedly in 2026. An agency is not required to 
amend its regulations in anticipation of a circumstance that has not 
arisen, and it is not precluded from amending them when the 
circumstance arises.
    The comment's objection that the rule reaches disputes in which the 
Executive Orders play no part is addressed in response to Comment 5. 
FMCS adds that the comment does not identify any dispute outside the 
Executive Orders in which, under the rule as revised, OA would have a 
basis to decline or hold a request, other than one involving a court 
order staying or enjoining the arbitration or a service that part 1404 
requires to be jointly authorized, and FMCS does not understand the 
comment to contend that OA must disregard either.
    The sovereign immunity arguments are addressed in section II.B.3. 
As to the contention that FMCS is not the body to decide questions of 
sovereign immunity, FMCS does not decide them. It decides whether, 
given the determinations that the President has made and the orders 
that courts have entered, it may lawfully furnish a service. Every 
agency makes that judgment about its own conduct every day; it is not 
an adjudication. As to the contention that FMCS failed to consider 
whether other statutory authorities would permit arbitration to 
proceed, the regulatory text expressly contemplates that a requesting 
party may identify a statutory provision, regulation, court order, or 
written authorization that permits the service, and OA will consider 
any such authority a party submits. The comment itself identifies none.
    Finally, the comment's contention that a refusal to arbitrate 
cannot be raised as an unfair labor practice because there is no panel 
from which to strike names misreads the interim final rule. The unfair 
labor practice to which the interim final rule referred is an agency's 
refusal to comply with the arbitration provisions of an agreement in 
effect, 5 U.S.C. 7116(a)(1), (5), and (8), which is complete when the 
agency refuses to participate, whether or not a panel has issued. 
Whether that charge lies against an agency that contends it has been 
excluded from Chapter 71 is, as Comment 3 correctly notes, one of the 
disputed questions in the pending litigation, and FMCS expresses no 
view on it. FMCS's point was and is a narrower one: FMCS declining to 
furnish a service it cannot lawfully provide does not extinguish 
whatever rights the requesting party has against the other party, and 
those rights are enforced in the forums Congress provided for that 
purpose, not by FMCS.

G. Comment 5

    Comment: The comment, submitted by a coalition of Federal-sector 
labor organizations and twenty-three affiliated organizations that 
together represent more than 550,000 Federal and postal employees, is 
the most extensive FMCS received. It contends that the rule takes 
arbitrability from the arbitrator and that the disclaimer in Sec.  
1404.9(b)(4) cannot be reconciled with the authority in Sec.  
1404.9(b)(3) to demand the parties' agreement; that FMCS's statutory 
authorities do not reach the rule, because Taft-Hartley excludes the 
United States as an employer, ADRA governs an agency's discretionary 
use of alternative procedures in its own administrative programs, 29 
U.S.C. 173(f) concerns FMCS's own employees acting as neutrals, consent 
under chapter 71 is given at execution of the agreement, and section 
7121 is itself the statutory authorization that sovereign immunity 
requires; that FMCS cites no decision of the Authority, no court of 
appeals decision construing section 7121, and no arbitral authority, 
and has given inconsistent accounts of the basis for its Roster; that 
the rule compromises FMCS's neutrality; that the rule's cost analysis 
ignores that most Federal-sector agreements name FMCS as the sole 
source of arbitrators, that parties pay the fee in advance, that, for 
some grievances (including reduction-in-force grievances), the 
negotiated procedure is the exclusive administrative forum, that 
contractual deadlines run during abeyance and FMCS cannot bind 
arbitrators on timeliness, and that interest under the Back Pay Act 
compounds daily during delay; that the rule overrides the aggrieved 
party's election under 5 U.S.C. 7116(d) and directs parties to an 
unfair labor practice channel that lacked a Senate-confirmed General 
Counsel from 2017 until July 2026; that the rule is pretext, because 
FMCS changed its practice in April 2026, before any published policy 
existed, in matters that no Executive Order reaches, and the rule's 
text contains no Executive Order trigger; and that the August 28 
republication, by moving comments from <a href="http://www.regulations.gov">www.regulations.gov</a> to FMCS, 
removed public comment from a government-wide docket without 
explanation.
    The comment describes four matters (Matters A through D) in which, 
it states, OA raised compliance questions on its own initiative, 
conditioned appointment on a union's submission of legal authority, 
questioned a bargaining-unit composition issue in a matter involving an 
agency not covered by any Executive Order, declined to certify a

[[Page 68038]]

panel because the agreement was silent on what should occur when one 
party refuses to participate, and, after asking an agency whether it 
consented, held a request in abeyance for lack of consent. The comment 
asks FMCS to withdraw the rule.
    Response: FMCS has considered the comment in full and responds to 
its principal contentions in turn. Several are addressed in section 
II.B and are not repeated here.
    1. Arbitrability and the parties' agreement. The contention that 
the rule takes arbitrability from the arbitrator is addressed in 
section II.B.1. The comment's narrower point, that Sec.  1404.9(b)(3) 
cannot authorize OA to request the parties' agreement while Sec.  
1404.9(b)(4) disclaims any decision about it, overlooks that OA has 
always consulted the parties' agreement for purposes that have nothing 
to do with its validity. Section 1404.12(b) directs OA to apply the 
ranked-preference process where the agreement ``permits each party to 
separately notify OA of its ranked order of preference, or is silent on 
the manner of selecting arbitrators''; Sec.  1404.11(c) directs OA to 
furnish additional panels on unilateral request ``if authorized by the 
applicable collective bargaining agreement''; and Sec.  1404.9(b)(2), 
both before and after the interim final rule, conditions special 
services on the agreement's terms. OA reads the agreement to learn what 
service the parties have asked it to perform. It may also need the 
agreement to determine whether a court order that refers to a specific 
agreement applies to the request before it. None of that is a decision 
that the agreement is or is not valid, and Sec.  1404.9(b)(4) says so.
    2. Statutory authority. The comment's analysis of Taft-Hartley, 
ADRA, and chapter 71 is addressed in sections II.B.2 and II.B.3. FMCS 
adds two points: First, the comment's observation that Taft-Hartley's 
definition of ``employer'' excludes the United States establishes that 
FMCS's duty under 29 U.S.C. 173(a) to mediate disputes in industries 
affecting commerce does not extend to Federal agencies as employers. It 
does not establish that FMCS lacks authority to make its Roster 
available to Federal-sector parties, a service FMCS has provided for 
more than four decades without objection from any commenter and of 
which the present commenters have availed themselves, and it does not 
establish that any statute requires FMCS to provide it.
    Second, the comment's observation that FMCS cited no decision of 
the Authority or of a court of appeals construing section 7121 reflects 
the nature of the question. The rule does not construe section 7121; it 
addresses what FMCS may do when section 7121 does not apply. The 
comment likewise cites no decision of the Authority, any court, or any 
arbitrator holding that FMCS must furnish a panel for a proceeding 
against an agency that the President has excluded from chapter 71. The 
comment's own observation that consent under chapter 71 is given at the 
execution of the agreement confirms the point: a collective bargaining 
agreement is, by statutory definition, one entered into ``pursuant to 
the provisions of this chapter,'' 5 U.S.C. 7103(a)(8), and the consent 
it embodies is consent to a statutory procedure. When the chapter 
ceases to apply to the agency, so does the procedure to which the 
agency consented.
    3. Neutrality. The comment contends that the rule seats FMCS as the 
party that decides whether one side gets a hearing, that, in every 
matter the comment describes, FMCS decided against the party seeking 
arbitration, and that FMCS's standing as a neutral will suffer. FMCS 
takes its neutrality seriously; it is the foundation of the agency's 
work.
    Neutrality, however, is impartiality between labor and management 
as to the merits of their disputes. It is not indifference to whether 
the law permits FMCS to act. An agency that furnishes the means for a 
proceeding the law does not authorize is not neutral; it has taken a 
side on a contested legal question by acting as though the question 
were settled. FMCS recognizes that, in the matters that have arisen 
under the Executive Orders, the party seeking arbitration has been the 
union and the party asserting a legal bar has been the agency, and that 
FMCS declining to proceed has therefore affected unions. That reflects 
the structure of the Executive Orders, not a preference of FMCS. The 
procedural provisions added by this final rule, written notice of the 
basis for any hold, an opportunity for each party to respond, periodic 
review, and refund or credit of the fee, are designed to ensure that 
OA's handling of threshold questions is transparent to both parties and 
that the party affected by a hold understands precisely why, and what 
would change the result.
    4. The parties who name FMCS as sole source; fees paid in advance. 
FMCS recognizes that many Federal-sector agreements designate FMCS as 
the source of arbitrators. That designation reflects the parties' 
choice to use a service that FMCS provides as a matter of regulation, 
and it does not confer on the parties a right to have FMCS perform an 
act that the law does not permit. FMCS cannot make itself able to 
provide a service by having been named in an agreement, any more than a 
court can acquire jurisdiction by being named in a forum-selection 
clause. The comment's point about fees is well taken, and this final 
rule adopts, in Sec.  1404.9(b)(5), the fee relief that the April 
memorandum contemplated, and that OA has offered in practice, but that 
the interim final rule's text did not include.
    The comment is also correct that there is no appendix A to part 
1404. The appendix that formerly contained the fee schedule was removed 
in 2022, Rescission of the Arbitration Policy; Schedule of Fees, 87 FR 
69165 (Nov. 18, 2022), and FMCS's current fees, which took effect 
October 1, 2023, are published on its website. The interim final rule's 
statement that the rule does not alter ``the fee schedule in appendix A 
to part 1404'' should have referred to FMCS's published schedule of 
fees, and this final rule makes conforming technical amendments to 
Sec. Sec.  1404.7 and 1404.9(g).
    5. Exclusive forums; reductions in force. The comment observes that 
for a bargaining unit employee covered by an agreement that includes 
reduction-in-force procedures, the negotiated procedure is the 
exclusive administrative forum for a grievance over those procedures. 
That is correct where chapter 71 applies and the agreement is in 
effect, and, in that circumstance, FMCS will issue a panel on 
unilateral request. The comment's concern arises only where the agency 
has been excluded from chapter 71. But the exclusivity on which the 
comment relies is itself a function of section 7121(a)(1) and of the 
employee's coverage by an agreement under it; when neither applies, the 
employee's reduction-in-force appeal rights under 5 CFR part 351 are 
unaffected by any agreement. The comment thus describes a circumstance 
in which either the negotiated procedure is available and FMCS will 
furnish the panel, or the negotiated procedure is not the exclusive 
forum. The rule does not leave any employee without a forum.
    6. Deadlines, delay, and the Back Pay Act. The comment contends 
that contractual deadlines run during abeyance, that FMCS cannot bind 
an arbitrator on timeliness, and that delay increases the interest 
payable under the Back Pay Act, 5 U.S.C. 5596(b)(2), at the agency's 
expense. FMCS agrees that it cannot bind arbitrators or the Authority 
on questions of timeliness. New Sec.  1404.9(b)(5) codifies the 
preservation of the original date of receipt, which was previously a 
matter of guidance only, so that a party that has timely

[[Page 68039]]

submitted its request to FMCS has a record of having done so. Whether 
an agreement's deadline for ``requesting a panel'' is satisfied by a 
timely request that FMCS has not yet acted on is a question of contract 
that the comment's own argument assigns to the arbitrator; FMCS notes 
only that the comment identifies no case in which an arbitrator has 
penalized a party for FMCS's processing time, and FMCS would expect any 
such contention to be received with skepticism.
    As to Back Pay Act interest, interest accrues on an award of back 
pay from the date of the personnel action regardless of the forum or 
the time the proceeding takes, and it is paid only where the employee 
prevails. Interest against the United States, moreover, is recoverable 
only where Congress has expressly provided for it, Libr. of Cong. v. 
Shaw, 478 U.S. 310, 314-18 (1986), and the Back Pay Act waives immunity 
only where an ``appropriate authority'' finds an unjustified or 
unwarranted personnel action, 5 U.S.C. 5596(b)(1). OPM's regulation 
recognizes an arbitrator as an appropriate authority when acting ``in a 
grievance or arbitration proceeding,'' 5 CFR 550.803, which presupposes 
a forum that is itself lawfully constituted. An arbitrator whose 
authority rests on nothing but a terminated agreement with an agency 
excluded from chapter 71 does not occupy that office, and an award by 
such an arbitrator would not be payable from appropriated funds in any 
event. Richmond, 496 U.S. at 424-28.
    The comment's argument that delay increases the Government's 
liability assumes a proceeding that will go forward and an award that 
will issue. Where FMCS has authority to furnish the panel, the rule as 
revised produces no delay; where it does not, no award will issue 
through FMCS's process whether FMCS acts promptly or not, and the 
employee's remedy, if any, lies elsewhere. FMCS has nonetheless 
considered the comment's point that delay has costs for the parties and 
for the Government, and the periodic review and reconsideration 
provisions in Sec.  1404.9(b)(5) are intended to ensure that a request 
does not remain in abeyance longer than the impediment that caused the 
hold.
    7. Section 7116(d) and the unfair labor practice channel. The 
comment contends that, by directing parties to the Authority, the rule 
overrides the aggrieved party's election of forum under 5 U.S.C. 
7116(d), and that the unfair labor practice channel has not functioned 
reliably for most of the past decade. FMCS does not direct any party 
anywhere. The interim final rule observed that FMCS declining to 
furnish a service does not affect the parties' ability to pursue 
remedies before the Authority, a court, or another tribunal with 
jurisdiction, and gave the unfair labor practice process as one 
example. 91 FR at 49276. Whether a particular charge lies, whether the 
election in section 7116(d) has been made, and whether the Authority's 
General Counsel will issue a complaint are matters for the Authority, 
and the comment's account of the Authority's General Counsel vacancy, 
which the comment states ended in July 2026, concerns an agency that 
FMCS does not supervise. FMCS's point is the limited one stated in 
response to Comment 4: FMCS's action on a request does not extinguish 
any right the requesting party has against the other party.
    8. Pretext and the April 22, 2026, memorandum; Matters A through D. 
The comment contends that the rule is a pretext for a screening 
authority FMCS began exercising in April 2026 for undisclosed reasons, 
and describes four matters in support. FMCS does not comment on the 
particulars of individual matters, which the comment has anonymized and 
which may be the subject of litigation, except to note the following. 
In Matter A, as the comment itself states, FMCS processed the panel 
request and left to the parties how to proceed. In Matter B, OA asked a 
single question, received an answer the same afternoon, and proceeded 
the same day; the comment's own description of the question indicates 
that it concerned whether the subdivision involved fell within the 
exclusion in Executive Order 14251 for subdivisions whose primary duty 
is information resources management, and OA asked it because an 
Executive Order exclusion would bear on OA's authority to proceed, not 
because OA proposed to decide a unit-composition question reserved to 
the Authority.
    FMCS acknowledges that the communications the comment describes in 
Matters B and C should have identified their author and stated their 
basis, and new Sec.  1404.9(b)(5) requires written notice of the basis 
for any decision to decline or hold a request. As to Matter C, FMCS 
agrees with the comment that an agency's contention that it had no duty 
to bargain, and therefore that the grievance was not arbitrable, is a 
question for the arbitrator and not a basis for OA to withhold a panel, 
and this final rule revises Sec.  1404.9(b)(3) to say so. As to Matter 
D, OA's inquiry whether an agency covered by the Executive Orders 
consented to the arbitration was not a solicitation of an objection; 
where the agency has been excluded from chapter 71 and the agreement 
terminated, the agency's consent is the only potential remaining source 
of authority for the proceeding, and whether it has been given is the 
threshold question itself. OA's communication in that matter stated its 
basis, preserved the request date, and offered a refund or credit, each 
of which this final rule now codifies.
    The rule is not a pretext. The sequence the comment describes, in 
which requests involving excluded agencies began to arrive in the 
spring of 2026, OA sought guidance, the General Counsel issued it in 
April, and FMCS codified the governing standard by rule in August, is 
the sequence by which an agency ordinarily responds to a new and 
recurring question. The rule's text does not contain an ``Executive 
Order trigger'' because the principle it codifies--that FMCS may not 
furnish a service that would be inconsistent with law, a court order, 
or its own authority--is not limited to the Executive Orders, and FMCS 
cannot anticipate every circumstance in which a court order or a change 
in law would preclude a service. The Executive Orders are the occasion 
for the rule, not the measure of it. This final rule nonetheless 
responds to the comment's concern about breadth by stating, in the 
regulatory text, what does not warrant declining or holding a request.
    9. The republication. The comment contends that the August 28 
republication moved public comment from a government-wide docket to the 
office that wrote the rule, without explanation. The explanation is the 
one the republication gave: a technical error. Rather than risk that an 
interested person would be turned away, FMCS republished the rule in 
full, directed comments to its Office of General Counsel by email and 
mail, extended the period to September 28, and committed to post all 
comments on its public website. FMCS accepted every comment received 
through either channel, including those submitted to 
<a href="http://www.regulations.gov">www.regulations.gov</a> before the docket closed. All five comments FMCS 
received, including Comment 5, have been posted on FMCS's website, and 
FMCS confirms its receipt of each. The comment identifies no person who 
was unable to comment and no comment that was not received.

H. Procedural Objections

    Comments: Comments 1, 4, and 5 contend that FMCS lacked good cause 
under 5 U.S.C. 553(b)(B) to issue the rule without prior notice and 
comment and under 5 U.S.C. 553(d)(3) to make it effective upon 
publication. They argue

[[Page 68040]]

that the good cause exception is narrowly construed and reserved for 
emergencies, citing Mack Trucks, Inc. v. E.P.A., 682 F.3d 87 (D.C. Cir. 
2012), Am. Pub. Gas Ass'n v. D.O.E., 72 F.4th 1324 (D.C. Cir. 2023), 
U.S. Steel Corp. v. E.P.A., 595 F.2d 207 (5th Cir. 1979), N.J. Dep't of 
Envtl. Prot. v. E.P.A., 626 F.2d 1038 (D.C. Cir. 1980), and Util. Solid 
Waste Activities Grp. v. E.P.A., 236 F.3d 749 (D.C. Cir. 2001); that an 
agency's desire to eliminate uncertainty is not good cause, citing 
California v. Azar, 911 F.3d 558, 576 (9th Cir. 2018); that FMCS cited 
no instance of confusion; that FMCS's prior amendments to part 1404 
used notice and comment; that the rule is substantive rather than 
clarifying; and that four months of unchanged operation under the April 
memorandum is not an emergency. Comment 5 adds that the original rule 
was dated the same day FMCS answered a complaint challenging the April 
memorandum. Comment 4 also notes that FMCS's statement of good cause 
recites all three statutory grounds.
    Response: FMCS has considered these objections and concludes that 
the interim final rule was procedurally proper. In any event, the 
procedure FMCS followed--publication of the rule with a request for 
comments, republication with an extended period when a technical 
problem arose, and this final rule responding to every comment received 
and revising the rule in response--has afforded the commenters the 
opportunity to participate that they seek, and none identifies an 
argument it was prevented from making or any respect in which FMCS's 
consideration of its comment was impaired.
    1. Rules of agency procedure and practice. The interim final rule 
invoked the good cause exception in section 553(b)(B). FMCS notes that 
the rule is also, independently, a rule of ``agency organization, 
procedure, or practice'' within the meaning of 5 U.S.C. 553(b)(A), to 
which the notice-and-comment requirement does not apply. Part 1404, 
subpart C, is entitled ``Procedures for Arbitration Services.'' Section 
1404.9 governs the procedures by which parties request, and OA 
processes, lists and panels. The rule does not alter any party's rights 
under chapter 71 or under any agreement; it addresses how FMCS 
processes requests for a service it provides.
    The commenters contend that the rule is substantive because 
declining a service has consequences for the requesting party. A rule 
of agency procedure does not become substantive because its application 
affects the persons subject to it; the question is whether the rule 
``encodes a substantive value judgment'' on the matters the agency 
regulates or instead governs the manner in which the agency conducts 
its own proceedings. JEM Broad. Co. v. F.C.C., 22 F.3d 320, 326-28 
(D.C. Cir. 1994); Am. Hosp. Ass'n v. Bowen, 834 F.2d 1037, 1047 (D.C. 
Cir. 1987). FMCS has itself treated amendments to part 1404 as rules of 
agency procedure and practice exempt from notice and comment on that 
basis. 87 FR 69165, 69166 (Nov. 18, 2022). The rule makes no judgment 
about the merits of any grievance, the validity of any agreement, or 
the rights of any party; it addresses the circumstances in which FMCS 
will perform an administrative act, which is a matter of FMCS's own 
procedure and practice. FMCS does not rest this final rule on section 
553(b)(A) alone, because it has, in any event, provided notice and an 
opportunity for comment and has responded to the comments received, but 
the commenters' characterization of the rule as substantive is not one 
FMCS accepts.
    2. Good cause. The commenters characterize FMCS's basis for good 
cause as a desire to eliminate ``legal uncertainty'' or ``confusion'' 
in the abstract. It was neither. By the summer of 2026, OA was 
receiving unilateral requests for panels and appointments in 
proceedings against agencies that the President had excluded from 
chapter 71 and that had terminated the applicable agreements; the 
requesting parties cited former Sec.  1404.9(b) as obligating FMCS to 
proceed; and that regulatory language had become the basis of 
litigation against FMCS. FMCS was thus confronted, request by request, 
with a choice between furnishing panels and appointing arbitrators for 
proceedings it had concluded it lacked authority to facilitate, and 
declining to do so under a regulation that, read literally, said every 
request ``will be honored.''
    Neither course was acceptable for the months a notice-and-comment 
proceeding would require. Furnishing the panels would have required 
FMCS to act contrary to the President's determinations and, in FMCS's 
judgment, without lawful authority; declining them under the unamended 
regulation would have invited exactly the charge the commenters now 
level-that FMCS was acting contrary to its own rule. Prior notice and 
comment were impracticable because the requests could not be held in 
suspense without decision for that period, and contrary to the public 
interest because every panel issued in the interim would have 
constituted a tribunal that FMCS had concluded no statute authorized. 
The commenters' authorities involved agencies that sought to avoid 
comment on policy choices committed to their discretion or that created 
their own urgency through delay. FMCS did neither. The circumstance 
that required the amendment--the exclusion of agencies employing a 
substantial share of the Federal workforce and the termination of their 
agreements--was created by Executive Orders that FMCS did not issue, 
and the amendment was made as soon as the recurring nature of the 
problem became apparent. Comment 5's observation that the rule was 
signed on the day FMCS answered a complaint challenging the April 
memorandum confirms, rather than undermines, that the dispute over the 
regulatory language was concrete and immediate.
    Comment 4 correctly notes that FMCS's statement recited all three 
grounds in section 553(b)(B). FMCS's finding rested principally on 
impracticability and the public interest, for the reasons just stated. 
FMCS also notes that where, as here, the rule is one of agency 
procedure and practice, notice and comment are ``unnecessary'' in the 
statutory sense.
    3. Prior rulemakings. That FMCS amended part 1404 through notice 
and comment in 1978, 1997, 2008, and 2019 shows that FMCS uses notice 
and comment when circumstances require. None of those rulemakings was 
conducted while FMCS was receiving requests that it had concluded it 
could not lawfully honor. The existence of prior notice-and-comment 
rulemakings on other occasions is not evidence that good cause was 
lacking on this one.
    4. Immediate effectiveness. The same considerations supported 
FMCS's finding of good cause under section 553(d)(3) to make the rule 
effective on publication. FMCS adds that the amendments made by this 
final rule, which add procedural protections for requesting parties and 
provide for refunds and credits, relieve restrictions within the 
meaning of 5 U.S.C. 553(d)(1) and may be made effective on publication 
on that basis as well.
    5. Cure and the absence of prejudice. Even if the commenters were 
correct that FMCS lacked good cause, the APA directs that ``due account 
shall be taken of the rule of prejudicial error.'' 5 U.S.C. 706. An 
interim final rule accompanied by a request for comments satisfies the 
APA's notice requirement where the agency subsequently issues a final 
rule after considering the comments received; the APA does not require 
a separate notice of proposed rulemaking. Little Sisters of the Poor 
Saints Peter & Paul Home v. Pennsylvania, 591 U.S. 657, 685-86 (2020). 
The commenters filed comprehensive comments within

[[Page 68041]]

an extended comment period, FMCS has considered them in full, this 
document responds to each, and FMCS has revised the rule in response to 
several of the points they raise. No commenter identifies anything it 
would have said in response to a notice of proposed rulemaking that it 
did not say in response to the interim final rule.
    6. Request for withdrawal and a new proposal. FMCS declines to 
withdraw the rule and issue a notice of proposed rulemaking. The 
commenters have had and used a comment period of more than seven weeks 
on every aspect of the rule. A second comment period on the same 
amendments would serve no purpose the first did not, and the commenters 
identify none beyond a generalized interest in public participation 
that the interim final rule's request for comments satisfied. FMCS 
will, of course, consider any petition for rulemaking directed to the 
rule as revised.

III. Changes Made in This Final Rule and Adoption of the Interim Final 
Rule as Final

    Having considered the comments, FMCS adopts the interim final rule 
published at 91 FR 49273 on August 4, 2026, and republished at 91 FR 
55473 on August 28, 2026, as a final rule with the following changes.
    Section 1404.9(b)(3). FMCS revises paragraph (b)(3) to add three 
sentences. The first provides that the inquiry under the paragraph is 
limited to whether FMCS may lawfully provide the requested service. The 
second provides that a party's contention that a grievance lacks merit, 
is untimely, or is not arbitrable under the parties' agreement, or a 
party's disagreement with a grievance or unwillingness to participate 
in the arbitration, does not by itself establish that providing the 
requested service would be inconsistent with applicable law, a court 
order, or FMCS's statutory or regulatory authority. The third provides 
that OA will afford each party a reasonable opportunity to respond to 
information submitted by the other party. These additions codify the 
limits that the interim final rule's preamble described and that the 
commenters asked FMCS to state in the regulatory text. They do not 
narrow FMCS's authority to decline a service that it may not lawfully 
provide; they confirm that an objection to the grievance itself is not 
a basis for doing so.
    Section 1404.9(b)(5). FMCS adds a new paragraph (b)(5) governing 
the process that follows a decision to decline a requested service or 
to hold a request in abeyance. OA will notify the parties in writing of 
the action taken and the basis for it. A request held in abeyance 
retains its original date of receipt. OA will reconsider a held request 
upon a party's submission of a court order, agreement, authorization, 
or other information bearing on the basis for the hold, and will 
periodically review requests held in abeyance. A party that paid a fee 
for a request that OA declines or holds in abeyance may, on request, 
receive a refund or a credit toward future FMCS arbitration services. 
These provisions codify, and extend to all requests, commitments that 
FMCS's April 22, 2026, memorandum made as a matter of guidance for 
requests involving agencies identified in the Executive Orders and that 
the commenters correctly observed did not appear in the interim final 
rule's text, together with the written-notice, reconsideration, and 
review provisions proposed in Comment 3.
    Section 1404.12(b). FMCS adds a sentence providing that a party's 
failure to submit its ranked preferences does not by itself establish 
that an appointment would be inconsistent with applicable law, a court 
order, or FMCS's statutory or regulatory authority. The limitation 
added to Sec.  1404.12(b) by the interim final rule applies only where 
OA has determined under Sec.  1404.9(b)(3) that the appointment may not 
lawfully be made.
    Sections 1404.7 and 1404.9(g). FMCS makes technical amendments to 
replace references to a schedule of fees ``in the appendix to this 
part,'' which no longer exists, with references to the schedule of fees 
published by FMCS. These amendments make no change to any fee.
    The amendments to Sec. Sec.  1404.9, 1404.10, 1404.11, and 1404.12 
made by the interim final rule have been in effect since August 4, 
2026, and remain in effect as revised by this document. The April 22, 
2026, memorandum will be conformed to the rule as revised; to the 
extent of any inconsistency, the regulation controls.

IV. Regulatory Analyses

A. Administrative Procedure Act

    The amendments made by this final rule are effective on 
publication. The amendments add procedural protections for parties 
requesting FMCS arbitration services and provide for the refund or 
credit of fees, and therefore relieve restrictions within the meaning 
of 5 U.S.C. 553(d)(1). FMCS also finds good cause under 5 U.S.C. 
553(d)(3) to make the amendments effective on publication, because they 
clarify and narrow a rule that is already in effect and delaying their 
effectiveness would postpone, without any countervailing benefit, 
protections that respond to the comments received. The amendments are a 
logical outgrowth of the interim final rule and the comments on it.

B. Severability

    FMCS intends the provisions of this final rule to be severable. If 
any provision of this rule, or the application of any provision to any 
person or circumstance, is held invalid, FMCS intends that the 
remainder of the rule and its application to other persons or 
circumstances remain in effect to the fullest extent permitted by law. 
In particular, FMCS intends that the threshold-inquiry provisions of 
Sec.  1404.9(b)(3) and (4) and the conforming provisions of Sec. Sec.  
1404.10 through 1404.12 remain in effect independently of the 
procedural provisions of Sec.  1404.9(b)(5), and that each ground on 
which OA may decline or hold a request (inconsistency with applicable 
law, with a court order, or with FMCS's statutory or regulatory 
authority) operate independently of the others.

C. Regulatory Review

    FMCS has examined this final rule under Executive Orders 12866 and 
13563. The rule adopts, with limited changes that add procedural 
protections and relieve restrictions, an interim final rule that 
clarified FMCS's procedures for processing requests for arbitration 
services and imposed no new compliance obligations on any person. The 
Office of Information and Regulatory Affairs has determined that this 
rule is not a significant regulatory action under Executive Order 
12866. This rule is not an Executive Order 14192 regulatory action 
because it imposes no more than de minimis costs; to the extent the 
refund and credit provisions have any cost effect, they reduce costs to 
the public.
    FMCS has considered the costs and benefits of the rule, including 
the costs identified by the commenters. The commenters contend that the 
interim final rule understated the costs of delay to parties whose 
requests are held in abeyance, including the cost of preparing 
responses to threshold inquiries, the running of contractual deadlines, 
the accrual of interest on back pay, and the expense of pursuing 
alternative remedies. FMCS has considered each of these. As explained 
in section II, the rule as revised produces no delay in the processing 
of requests that does not present a question of FMCS's authority, which 
are the overwhelming majority of requests OA receives; and, where a 
request does

[[Page 68042]]

present such a question, the cost of the resulting delay is 
attributable to the underlying legal dispute between the parties, which 
FMCS did not create and cannot resolve, rather than to FMCS's declining 
to proceed. The procedural provisions added by this final rule reduce 
the costs the commenters identify by requiring written notice of the 
basis for any hold, preserving the request date, providing for 
reconsideration and periodic review, and refunding or crediting fees. 
FMCS expects the cost to FMCS of implementing those provisions to be 
minimal and to be absorbed within existing OA resources. The benefits 
of the rule are those identified in the interim final rule: clarity 
regarding FMCS's obligations when presented with requests raising 
threshold legal questions, assurance that FMCS administers its services 
consistent with law, and, as revised, a transparent and reviewable 
process for the small number of requests that present such questions.

D. Regulatory Flexibility Act

    Because FMCS issued the interim final rule without prior notice and 
comment under the good cause exception in 5 U.S.C. 553(b)(B), and 
because the rule is one of agency procedure and practice under 5 U.S.C. 
553(b)(A), the requirements of the Regulatory Flexibility Act, 5 U.S.C. 
601 et seq., for an initial or final regulatory flexibility analysis do 
not apply. In any event, the General Counsel of FMCS certifies that 
this final rule will not have a significant economic impact on a 
substantial number of small entities. The rule governs FMCS's own 
procedures for processing requests for arbitration services, imposes no 
new compliance, reporting, or recordkeeping obligations on any entity, 
and does not alter any fee. To the extent a small entity, such as a 
local labor organization, requests FMCS arbitration services, the rule 
may affect whether FMCS provides the requested service only in the 
limited circumstance in which FMCS determines that doing so would be 
inconsistent with applicable law, a court order, or FMCS's authority, 
and, in that circumstance, the entity may obtain a refund or credit of 
its fee.

E. Federalism

    FMCS has analyzed this final rule under Executive Order 13132 and 
has determined that it will not have substantial direct effects on the 
States, on the relationship between the National Government and the 
States, or on the distribution of power and responsibilities among the 
various levels of government. The rule governs FMCS's own procedures 
and does not preempt State law or impose any obligation on State or 
local governments.

F. Civil Justice Reform

    This final rule has been reviewed under section 3(a) and (b)(2) of 
Executive Order 12988 and meets the applicable standards. The rule 
states the circumstances in which FMCS may decline or hold a request 
for arbitration services, states what does not warrant that action, and 
provides for written notice and reconsideration, thereby minimizing 
ambiguity and the potential for litigation.

G. Unfunded Mandates Reform Act of 1995

    This final rule will not result in the expenditure by State, local, 
or Tribal governments, in the aggregate, or by the private sector, of 
$100 million or more, adjusted annually for inflation, in any one year. 
Accordingly, no written statement under the Unfunded Mandates Reform 
Act, 2 U.S.C. 1532, is required.

H. Paperwork Reduction Act

    This final rule does not impose a new collection of information 
within the meaning of the Paperwork Reduction Act of 1995, 44 U.S.C. 
3501 et seq., because it does not require standardized reporting or 
recordkeeping by the public. Information that a party may submit in 
response to a threshold inquiry under Sec.  1404.9(b)(3) is submitted 
in the course of an individual request for services and does not 
constitute a collection of information. If FMCS later revises Form R-43 
or establishes a standardized submission requirement to implement 
threshold inquiries, FMCS will evaluate whether approval from the 
Office of Management and Budget is required.

I. Congressional Review Act

    FMCS will submit this final rule to Congress and the Comptroller 
General in accordance with 5 U.S.C. 801. The Office of Information and 
Regulatory Affairs has determined that this rule is not a ``major 
rule'' within the meaning of 5 U.S.C. 804(2).

List of Subjects in 29 CFR Part 1404

    Administrative practice and procedure, Arbitration, Labor 
management relations.

    For the reasons stated in the preamble, the Federal Mediation and 
Conciliation Service adopts as final the interim final rule published 
August 4, 2026, at 91 FR 49273 and republished August 28, 2026, at 91 
FR 55473, that amended 29 CFR part 1404, with the following changes:

PART 1404--ARBITRATION SERVICES

0
1. The authority citation for part 1404 continues to read as follows:

    Authority:  29 U.S.C. 172 and 29 U.S.C. 173 et seq.

Subpart B--Roster of Arbitrators; Admission and Retention

0
2. Revise Sec.  1404.7 to read as follows:


Sec.  1404.7  Listing fee.

    All arbitrators will be required to pay an annual fee for listing 
on the Roster. The amount of the fee is set forth in the schedule of 
fees published by FMCS.

Subpart C--Procedures for Arbitration Services

0
3. Amend Sec.  1404.9 by:
0
a. Revising paragraph (b)(3);
0
b. Adding paragraph (b)(5); and
0
c. Revising paragraph (g).
    The revisions and addition read as follows:


Sec.  1404.9  Procedures for requesting arbitration lists and panels.

* * * * *
    (b) * * *
    (3) OA may conduct a limited threshold inquiry to determine whether 
issuing a panel, making a direct appointment, or providing related 
arbitration services would be inconsistent with applicable law, a court 
order, or FMCS's statutory or regulatory authority. The inquiry under 
this paragraph (b)(3) is limited to whether FMCS may lawfully provide 
the requested service. A party's contention that a grievance lacks 
merit, is untimely, or is not arbitrable under the parties' agreement, 
or a party's disagreement with a grievance or unwillingness to 
participate in the arbitration, does not by itself establish that 
providing the requested service would be inconsistent with applicable 
law, a court order, or FMCS's statutory or regulatory authority. OA may 
request from the parties the agreement, statutory provision, 
regulation, court order, written authorization, or other information 
necessary to determine whether OA may provide the requested service, 
and will afford each party a reasonable opportunity to respond to 
information submitted by the other party. Following such inquiry, FMCS 
may issue the panel or appointment, decline to provide the requested 
service, hold the request in abeyance, or take

[[Page 68043]]

other administratively appropriate action.
* * * * *
    (5) If OA declines to provide a requested service or holds a 
request in abeyance under paragraph (b)(3) of this section, OA will 
notify the parties in writing of the action taken and the basis for it. 
A request held in abeyance retains its original date of receipt by OA. 
OA will reconsider a request held in abeyance upon a party's submission 
of a court order, agreement, written authorization, or other 
information bearing on the basis for the abeyance, and will 
periodically review requests held in abeyance. A party that has paid a 
fee for a request that OA declines or holds in abeyance may, upon 
request, receive a refund of the fee or a credit toward future FMCS 
arbitration services.
* * * * *
    (g) OA will charge a fee for all requests for lists, panels, and 
other major services. Payments for these services must be received with 
the request for services before the service is delivered and may be 
paid by either labor or management or both. A schedule of fees is 
published by FMCS.

0
4. Amend Sec.  1404.12 by revising paragraph (b) to read as follows:


Sec.  1404.12  Selection by parties and appointment of arbitrators.

* * * * *
    (b) Where the parties' collective bargaining agreement permits each 
party to separately notify OA of its ranked order of preference, or is 
silent on the manner of selecting arbitrators, FMCS will ask each party 
to advise OA of its order of preference by numbering each name on the 
panel and submitting the numbered list in writing to OA. Upon receiving 
the rank order from one party, OA will notify the other party that it 
has fourteen (14) days in which to submit its selections. Where both 
parties respond, the name that has the lowest combined number will be 
appointed. If the other party fails to respond, the first party's 
choice will be honored. This paragraph is subject to Sec.  1404.9(b) 
and does not require OA to make an appointment where OA determines that 
the appointment would be inconsistent with applicable law, a court 
order, or FMCS's statutory or regulatory authority. A party's failure 
to submit its ranked preferences does not by itself establish that an 
appointment would be inconsistent with applicable law, a court order, 
or FMCS's statutory or regulatory authority.
* * * * *

    Dated: October 27, 2026.
Anna Davis,
General Counsel, Federal Mediation and Conciliation Service.
[FR Doc. 2026-22083 Filed 10-28-26; 8:45 am]
BILLING CODE 6732-01-P


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