US Supreme Court ruling curbing agency powers could hobble labor board

FILE PHOTO: U.S. Supreme Court building in Washington

By Daniel Wiessner

(Reuters) - A U.S. Supreme Court ruling eliminating the deference that courts owe to federal agencies in interpreting the laws they administer could sharply limit the National Labor Relations Board's ability to enforce federal labor law, experts said.

Most federal agencies craft policies through traditional rulemaking, and Friday's decision is expected to have a widespread impact on every corner of the federal government. The case is part of a broader effort by conservative groups to rein in the powers of administrative agencies.

The NLRB rarely adopts broad rules, and instead interprets laws protecting workers' rights to organize and join unions through decisions issued in individual cases. The agency has for decades relied on courts to uphold its decisions by largely deferring to the board's unique expertise in the complexities of labor law.

But the Supreme Court in Friday's 6-3 ruling nixed a doctrine it adopted 40 years ago known as "Chevron deference", in a case involving oil company Chevron, which had required courts to defer to agencies' interpretations of ambiguous laws as long as they are reasonable.

"Agencies have no special competence in resolving statutory ambiguities. Courts do," Chief Justice John Roberts wrote for the court.

Much of the focus about Chevron's demise has been centered on how it will hamper the ability of federal agencies to adopt new rules such as environmental and securities regulations.

But legal experts said the ruling is also likely to result in federal courts increasingly overturning decisions by the labor board and will invite challenges by businesses to labor policies that were upheld by courts decades ago.

"Removing the thumb from the scale would leave reviewing courts with more traditional tools of statutory interpretation, which is precisely why labor law might experience massive change," David Broderdorf of the law firm Morgan Lewis & Bockius, who represents employers, said before the decision was released.

Some unions and worker advocates are concerned that giving courts more discretion in reviewing NLRB decisions will prevent the board from tweaking its interpretation of labor law to keep up with changes in the workplace, such as new technology or an increase in the use of temporary contract labor.

"Future NLRB decisions would likely be subject to heightened scrutiny ... making it more difficult for (the board) to effectively protect American workers’ rights," Jeevna Sheth, a policy analyst at the Center for American Progress, a left-leaning think tank, said before the decision was issued.

Several recent board rulings widely seen as favoring unions may now be more vulnerable to legal challenges. Those include decisions that allow unionizing outside of the longstanding formal election process and extend legal protections to workers who advocate for non-employees, such as interns or ex-coworkers who quit or were fired.


But other experts, including many management-side lawyers, say the change could temper the board's oft-criticized tendency to revisit many of its key policies each time control of the agency changes hands.

Just in the last decade, the board has shifted its positions numerous times on various issues, such as when businesses must bargain with contract and franchise workers or when labor law protects vulgar or profane statements by workers in the course of a labor dispute.

“The rulemaking and adjudications in which the NLRB engages are not based on any sort of technical expertise, but rather are based on the agency's political makeup," leading to extreme swings in policy, the National Right to Work Legal Defense Foundation said in an amicus brief it filed in the Supreme Court case. The group represents workers in disputes with unions.

The five-member board is typically made up of three members from the president's party and two from the opposing party. Members' terms are staggered, so control of the board may not change hands for a year or more into a presidential administration.

NLRB cases are heard by administrative judges and then the board, whose decisions can be reviewed by federal appeals courts.

Businesses often appeal NLRB rulings and the agency also frequently turns to appeals courts to enforce its decisions, such as orders requiring companies to bargain with unions or reinstate workers who were illegally fired. The board's website says it wins about 80% of the roughly 65 appeals the agency is involved in each year.

The high victory rate is rooted in a 1944 U.S. Supreme Court decision involving Hearst Publications that is seen as a predecessor to Chevron, lawyers said. The court held that board decisions should not be overruled if they have a "reasonable legal basis."

But Roberts in Friday's decision said the Hearst decision involved "fact-bound determinations" by the board and not the interpretation of legal questions. That may embolden federal judges to overturn board decisions they disagree with, something that courts have long avoided because of Hearst and Chevron.

In February, for example, a Washington, D.C.-based appeals court upheld a longstanding board policy requiring employers that acquire other companies to bargain with their workers' unions. But one judge in a concurring opinion suggested that he disagreed with the board and that the policy could be wiped out if the Supreme Court eliminated Chevron deference.

(Reporting by Daniel Wiessner in Albany, New York, Editing by Alexia Garamfalvi and Alistair Bell)