Chamber of Commerce of the United States v. Reich

Appellants
Chamber of Commerce of the United States, et al.
Appellee
Robert B. Reich, U.S. Secretary of Labor
Appellants' Claim
That Executive Order No. 12,954, which prevents the U.S. government from contracting with employers who hire permanent replacement workers during a lawfulstrike, violates the National Labor Relations Act (NRLA) and the ProcurementAct, and is unconstitutional.
Chief Lawyer for Appellants
Timothy B. Dyk
Chief Lawyer for the Appellee
John A. Rogovin
Justices for the Court
A. Raymond Randolph, David Bryan Sentelle, Laurence H. Silberman (writing forthe Court)
Justices Dissenting
None
Place
Washington, D.C.
Date of Decision
2 February 1996
Decision
That the Executive Order is regulatory in nature and is preempted by the NLRA.
Significance
The decision confirmed the circumstances under which the judiciary can properly review Executive Orders and rule on their validity. The decision determined that the Procurement Act does not give the president broad discretionary power to set labor policy. The decision also clarified the preemption doctrine,which establishes that federal law preempts any state or local law, and thata narrowly specific law preempts a more general one.
One of the president's concerns as the country's chief executive is the economical and efficient management of government. This includes setting the budget for purchasing goods and services from private contractors-an amount that totaled $437 billion in 1994. The Federal Property and Administrative ServicesAct (the Procurement Act) gives the president broad authority to set the conditions for federal contracts with private sector providers. The law's statedintent is "to provide for the Government an economical and efficient systemfor . . . procurement and supply . . . " On 8 March 1995, President Clinton issued Executive Order No. 12,954, 60 Fed. Reg 13,023, which stated that "to ensure the economical and efficient administration and completion of Federal Government contracts, contracting agencies shall not contract with employers that permanently replace lawfully striking employees." The president's rationale was that replacement workers would be less efficient than permanent workers, and thus would raise the cost of the products and goods being produced. Secretary of Labor Robert Reich was charged with developing the specific regulations to implement this order, and on 25 March, Secretary Reich issued the final implementing regulations.
On 15 March, the Chamber of Commerce, American Trucking Associations, Inc., Labor Policy Association, National Association of Manufacturers, Bridgestone/Firestone, Inc., and Mosler Inc. filed suit for declaratory and injunctive relief against the enforcement of the order. They argued that the order conflicted with the National Labor Relations Act (NLRA), the Procurement Act, and theConstitution. The district court found that the appellants' claims were notyet appropriate because Secretary Reich had not finalized the regulations asked for in the Executive Order. That decision was reversed on appeal, and on remand, the district court again found in favor of the government. The district court ruled that the appellants' claim was not reviewable by the courts because of the broad discretionary authority given the president under the Procurement Act. This decision was then appealed to the U.S. Court of Appeals forthe District of Columbia.
Authority to Review Executive Orders
The Court first grappled with the issue of judicial authority to review executive orders. The judiciary has always been extremely cautious in reviewing the actions of the other branches of the government because the Constitution created separation of powers for the executive, legislative, and judicial branches. In addition, the United States inherited from English law the principleof sovereign immunity, which protects the chief executive from lawsuits. Thelandmark Marbury v. Madison (1803) case, however--which Jethro K. Keiberman called "the most celebrated case in American history"--established thatsovereign immunity is not absolute, and that the Supreme Court may review the executive branch to determine whether its actions are constitutional.
The Administrative Procedures Act was formulated to help define the circumstances under which executive actions could be subject to judicial review. The appellee in Chamber of Commerce, (in this case, the government) arguedthat the appellants did not have the statutory cause of action necessary under the Administrative Procedures Act (APA) to waive sovereign immunity. Sovereign immunity had been upheld in Dalton v. Specter (1994), when the Supreme Court refused to review a claim challenging an Executive Order by President Bush, and the government claimed that this precedent should be applied toits case here. But the court of appeals rejected the government's sovereignimmunity claim, ruling that the action was being brought against the secretary of labor, not the president. Since the secretary's powers were limited by the terms of the NLRA, his regulations for the enforcement of the Executive Order--which conflicted with the statute--were considered individual rather than sovereign actions. Furthermore, the court of appeals noted that while the Dalton case upheld sovereign immunity, it did raise some doubt on non-statutory judicial review of presidential action, because that decision stated"we may assume for the sake of argument that some claims that the Presidenthas violated a statutory mandate are judicially reviewable outside the framework of the APA."
Finding no apparent available statutory cause of action on which to base judicial review in this case, the appeals court considered whether appellants were entitled to bring a non-statutory cause of action challenging the legalityof the Executive Order. The Court noted that until the beginning of the 1900s, it was unclear whether the courts could consider non-statutory review of executive action, but in a 1902 case, American School of Magnetic Healing v.McAnnulty, the Supreme Court ruled that "acts of all [a government department's] officers must be justified by some law, and in case an official violates the law to the injury of an individual the courts generally have jurisdiction to grant relief . . . " This reasoning was affirmed in several subsequent cases, establishing that courts have the authority to review executive orders when their legality is in question.
Preemption Doctrine
The courts have relied on the doctrine of preemption to determine which law should prevail when statutes are in conflict. The preemption doctrine specifies that a federal law preempts any state or local law, and that unless Congress clearly states otherwise, a specific law will preempt a more general one. The appellants' chief argument was that the Executive Order conflicted with the NLRA, which gives employers the right to hire permanent replacement workersduring a strike. The government, however, countered that the Procurement Act, passed in 1949 several years after the original NLRA was passed, gives thepresident broad discretion to set federal procurement policy and should therefore preempt the NLRA. The government argued that previous executive orders employing broad discretion--to ensure equal employment opportunities and to limit the size of wage increases--were upheld by appeals courts when they werechallenged on the grounds that they were beyond the president's authority. But the court of appeals rejected this reasoning. The court noted that because"[t]he Procurement Act was designed to address broad concerns quite differentfrom the more focused question of the appropriate balance of power between management and labor in collective bargaining," there was a conflict between the Executive Order and the NLRA.
In a series of cases through which it determined that Congress intended the NLRA to balance the rights of employer and worker, and to avoid a multitude ofconflicting interpretations of labor policy, the Supreme Court worked out two types of NLRA preemption. The first prohibits state and local regulation ofactivities that are protected under section 7 of the NLRA or that are defined as unfair labor practices under the section 8. The other forbids regulationof labor relations that Congress has intended to be unregulated and left tofree market forces. The appeals court noted that "When the government acts asa purchases of goods and services NLRA preemption is still relevant." Finding that the Executive Order "surely goes to the heart of United States labor relations policy," the Court ruled that the Executive Order was regulatory innature and therefore preempted by the NLRA.
Impact
Chamber of Commerce of the United States v. Reich upheld the ruling inMarbury v. Madison that actions of the executive branch can be subject to judicial review. It further clarified the principles by which the courtscould determine which law should prevail when different statutes are in conflict. The decision stated that the Procurement Act cannot be interpreted to give the president authority to set procurement policy in such a way that it,in effect, regulates national labor policy.
The issues in Chamber of Commerce show how the constitutional system of checks and balances works. The decision clarifies that the broad powers invested in the president by acts of Congress must be used in ways that are constitutional and that also conform to the express intent of the legislature.
Related Cases

• Marbury v. Madison, 5 U.S. 137 (1803).
  
• American School of Magnetic Healing v. McAnnulty, 187 U.S. 94 (1902).
  
• Dalton v. Specter, 511 U.S. 462 (1994).