Chamber of Commerce of the United States v. Reich

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 workers during a strike. The government, however, countered that the Procurement Act, passed in 1949 several years after the original NLRA was passed, gives the president 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 were challenged 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 different from 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 of conflicting interpretations of labor policy, the Supreme Court worked out two types of NLRA preemption. The first prohibits state and local regulation of activities that are protected under section 7 of the NLRA or that are defined as unfair labor practices under the section 8. The other forbids regulation of labor relations that Congress has intended to be unregulated and left to free market forces. The appeals court noted that "When the government acts as a 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 in nature and therefore preempted by the NLRA.