Yesterday morning, the U.S. Supreme Court heard oral argument in an important case at the intersection of labor law, statutory interpretation, and administrative law. In New Process Steel, L.P. v. NLRB, on appeal from the Seventh Circuit Court of Appeals, the Court will decide whether a two-member National Labor Relations Board (NLRB or Board) has the authority to engage in adjudication on behalf of the Board. The Board has operated with only two members for over two years, since the appointments of two Board members expired on December 31, 2007. Just before that time, effective midnight, December 28, 2007, the Board delegated all of its powers to a group of three members to continue to issue decisions and orders as long as a quorum of two members remained. Since that time, the two Board members remaining, acting as a quorum of the group, have issued over 500 decisions.
First, some labor law background: the NLRB is an independent federal agency, established to prevent and remedy violations of the National Labor Relations Act, 29 U.S.C. §§ 151-169, called “unfair labor practices,” by both employers and unions, and also to hold union representation elections. The Board is supposed to be a five-member panel that primarily acts as a quasi-judicial body in deciding cases on the basis of formal records in administrative proceedings. Board Members are appointed by the President to five-year terms, with Senate consent. The terms of the Board members are staggered such that the term of one Member expires each year. Because of the political nature of Board appointments (with the President’s party controlling three positions), the last couple decades have seen many vacancies on the Board. In the last few years, political partisanship has reached an all-time high and President Obama’s recent nomination of Craig Becker to serve as a Member on the Board was filibustered by Senate Republicans this past February.
As a result, the Board currently has only two members and three vacancies. The current Members are Chairman Wilma B. Liebman (Democrat) and Member Peter C. Schaumber (Republican). The authority of a two-member Board to make decisions and carry on the business of the agency has caused a split in the circuits. Although there were four petitions for certiorari filed with the U.S. Supreme Court, the Court decided to take up the issue in New Process Steel. The D.C. Circuit (an important appellate court in administrative law matters) has held that the Board with only two members does not form a quorum and therefore has no authority to render decisions. See Laurel Baye Healthcare of Lake Lanier, Inc. v. NLRB, 564 F.3d 469 (D.C. Cir. 2009). On the other hand, the First, Second, and Seventh Circuits have found that a such a Board was contemplated under the statute and can validly express the authority of the agency. See New Process Steel, L.P. v. NLRB, 564 F.3d 840 (7th Cir. 2009); Snell Island SNF LLC v. NLRB, 568 F.3d 410 (2nd Cir. 2009); Northeastern Land Servs., Ltd. v. NLRB, 560 F.3d 36 (1st Cir.2009).
The dispute requires interpretation of Section 3(b) of the NLRA. It provides:
[t]he Board is authorized to delegate to any group of three or more members any or all of the powers which it may itself exercise. . . . A vacancy in the Board shall not impair the right of the remaining members to exercise all of the powers of the Board, and three members of the Board shall, at all times, constitute a quorum of the Board, except that two members shall constitute a quorum of any group designated pursuant to the first sentence hereof.
So, Section 3(b) of the Act provides that the Board can delegate its powers to a group of three Board Members and normally, Board vacancies do not impair the authority of remaining Board members to exercise the powers of the Board. That Section also provides that two members shall constitute a quorum of any three-member Board group established pursuant to the Board’s delegation authority. When read in combination, the Board has maintained that the plain meaning of those delegation, vacancy, and quorum provisions authorize the Board’s action in these two-member cases.
It goes without saying that it would be an administrative catastrophe of epic proportions if over 500 Board decisions were vacated by the Supreme Court’s decision in New Process Steel. But besides the obvious prudential considerations for affirming the Board’s authority in these cases, I believe strongly that the proper functioning of the National Labor Relations Board inures to the benefit of American workers. As such, I hope that the Court will find that the Board’s decision to exercise its authority in this manner over the last two plus years was an eminently reasonable construction of its powers under Section 3(b) of the Act (especially based on the fact that the appellate courts have come to different interpretations on the disputed provisions). That action will once again enable the Board to continue to promote the Act’s purpose of helping to avoid industrial strife.
One more point: the current situation of the Board results from an on-going political dispute between the President and Congress. What needs to happen, and happen now, is for President Obama to appoint, at the very least, a third Board Member by recess appointment. The President and his allies have attempted to move a package of three nominees through the Senate only to be filibustered. At this point, only the recess appointment would take the Board out of this untenable, albeit lawful, position. Labor law and the protections it affords are just too important to employees and their families to continue to receive this type of treatment at the hands of the political process.