Toward Politically Stable Nlrb Lawmaking: Rulemaking vs. Adjudication

• Jurisdiction: United States,Federal
• Publication year: 2015
• Citation: Vol. 64 No. 0

Toward Politically Stable NLRB Lawmaking: Rulemaking vs. Adjudication

Charlotte Garden

TOWARD POLITICALLY STABLE NLRB LAWMAKING: RULEMAKING VS. ADJUDICATION

Charlotte Garden^*

ABSTRACT

For the last several decades, there have been two constants with respect to the National Labor Relations Board. First, the modern Board has been notoriously reluctant to use its rulemaking authority; until recently, it had made only one significant substantive rule via the notice-and-comment process. Second, commentators—academics, lawyers, judges, and politicians—have issued a steady stream of calls for the Board to make law via rulemaking rather than through adjudications, arguing for the rulemaking process on both pragmatic and normative grounds. In recent years, however, the first of these has changed: the Board has engaged in two significant rulemaking processes. Each of these processes was both time intensive and politically and judicially fraught, calling into question whether the Board can achieve the process benefits of rulemaking in the current contentious political environment. This Symposium Essay explores the extent to which the Obama Board has been able to achieve the purported benefits of rulemaking, and therefore whether the benefits of making labor law through the rulemaking process exceed the costs, especially where the Board could alternatively make law via adjudication.

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INTRODUCTION ............................................................................................ 1471

I. CALLS FOR NLRB RULEMAKING ...................................................... 1473
II. RULEMAKING UNDER THE OBAMA BOARD ...................................... 1477

A. The Short Life and Untimely Death of the NLRB's Notice-Posting Rule ................................................................. 1477
B. The NLRB's Election-Procedures Rule ................................... 1480

III. RULEMAKING'S RESULTS ................................................................. 1484

A. More and Better Information? ................................................. 1485
B. Forward-Looking Lawmaking? ............................................... 1489
C. Stability and Consistency? ....................................................... 1491

CONCLUSION ................................................................................................ 1493

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INTRODUCTION

For decades now, academics and courts have been calling on the National Labor Relations Board (NLRB) to use its rulemaking authority, rather than relying nearly exclusively on announcing legal principles through adjudication.¹ This suggestion mostly fell on deaf ears, with the notable exception of a 1987 Board rule governing bargaining unit determinations in the health care context.² But recently, the NLRB has promulgated two new substantive rules through the notice-and-comment rulemaking process. First, in 2011, the Board issued a rule requiring employers to post a notice of employee rights; this rule was intended to remedy employee ignorance of the rights and protections contained in the National Labor Relations Act (NLRA).³ However, the Fourth and District of Columbia circuits struck down the rule,⁴ and the Board eventually withdrew it.⁵ Then, in December 2014, the Board issued a rule intended to streamline union representation elections.⁶ The rule took effect in April 2015 amid tremendous controversy, with industry groups filing lawsuits aimed at invalidating it,⁷ and both houses of congress passing resolutions (since vetoed by the President) disapproving the rule.⁸

This Essay uses these two recently promulgated rules as case studies to discuss the relative merits and drawbacks of NLRB rulemaking as compared to

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adjudication in an environment in which labor law is heavily politicized. It explores the extent to which the Board—a flashpoint for controversy—has been able to realize the advantages of rulemaking over adjudication in its recent attempts.⁹ It concludes that whereas the Board's rulemakings have potential to yield benefits, such as improved certainty and consistency for unions and employers, those benefits can easily be overshadowed by the risk of judicial invalidation on constitutional or administrative law grounds. Moreover, judicial rejection of high-profile NLRB rules—particularly when based on ideas with public resonance, like free speech—in turn feeds a political narrative of an out-of-control Board that must be throttled by the legislative and judicial branches of government.¹⁰ As a case-in-point, the Board's notice-posting rule was struck down by the District of Columbia Circuit as an infringement of employers' speech rights, and the elections procedure rule has been challenged on the same grounds. In both instances, the free speech arguments seemed to come as something of a surprise to the rules' public proponents. This is not to say that the choice of rulemaking over

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adjudication is responsible for the injection of these and other arguments into the debate. However, incremental adjudications may run less risk of judicial invalidation than rulemaking, which might reasonably lead the Board to conclude that it should proceed via adjudication whenever it is free to do so, given that the benefits of rulemaking may prove illusory. Further, the Board has adopted adjudicatory procedures that mimic some benefits of rulemaking, especially in high-profile cases. Thus, where the Board is free to choose between adjudication and rulemaking, adjudication may be both the more pragmatic choice and one that carries relatively little downside.

The Essay proceeds in three parts. It begins with a brief discussion of the benefits and drawbacks of rulemaking versus adjudication and surveys the literature calling for the NLRB to engage in rulemaking. Then, it describes the Obama Board's recent rulemakings, including the early demise of the notice-posting rule and the looming challenges facing the election-procedures rule. Finally, it discusses what might be learned from the Board's recent forays into notice-and-comment rulemaking.

I. CALLS FOR NLRB RULEMAKING

For decades, scholars and courts have debated the relative merits of rulemaking and adjudication.¹¹ However, in the context of the NLRB, "debate" is perhaps a misnomer: commentators have almost universally called for the Board to exercise its rulemaking authority more often.¹² This Part explores the reasons for this rare near-unanimity, which in turn provide the backdrop for a more thorough exploration and evaluation of the Obama Board's recent experience with rulemaking.

It is black-letter law that agencies have discretion to choose between rulemaking and adjudication. In articulating this principle in SEC v. Chenery Corp.,¹³ the Supreme Court generated a list of reasons that an agency might choose to announce legal principles through adjudication rather than rulemaking; these largely pertained to the need to maintain agency flexibility

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when dealing with new or multi-faceted problems.¹⁴ Nonetheless, the Court also urged that "[t]he function of filling in the interstices of the Act should be performed, as much as possible, through this quasi-legislative promulgation of rules to be applied in the future."¹⁵ The Court affirmed this principle in NLRB v. Bell Aerospace Co.,¹⁶ though it added, without elaboration, that there "may be situations where the Board's reliance on adjudication would amount to an abuse of discretion or a violation of the Act."¹⁷

As the Chenery II Court suggested, advantages of agency adjudication over rulemaking include increased speed as well as the flexibility to adjust standards as novel situations arise or as the agency gains experience.¹⁸ In addition, adjudications may pose less chance of attracting political heat¹⁹ —though NLRB adjudications, and even charging decisions, are far from immune to political controversy.²⁰ Finally, gradual changes brought about through adjudications may be less likely to be overturned by courts, and, in any event, "there is far more at stake when a rule is rejected by a federal court than when an adjudicated decision is reversed."²¹

Yet, many have called for the NLRB to limit its reliance on adjudication, particularly where it is announcing broad, new standards. They describe the benefits of the rulemaking process as follows:

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• More & Better Information²² : The rulemaking process allows all interested constituencies to submit comments, and the resulting empirical record could lead to better decisionmaking by the Board.²³ In other words, the rulemaking process allows for greater public participation than the adjudicatory process—a feature that offers advantages in terms of democratic process, as well as the final result. In contrast, adjudication is limited to the parties before the Board, plus amici.²⁴ Even where amicus participation in adjudication is robust—and therefore yields much of the same information that a rulemaking process would—there is some loss from a public participation standpoint; amici will probably be insiders, as it is simply more difficult to figure out how to draft and file an amicus brief than a comment.²⁵ Further, the Board's response to submitted comments (both for and against) is likely to be quite thorough, which might prompt "increased deference from courts."²⁶

• Forward-Looking Lawmaking²⁷ : Whereas Board adjudications are necessarily confined to issues that happen to arise and to be pursued by the Board's General Counsel, rulemaking allows the Board to decide which issues to tackle, when to tackle them, and how broadly or narrowly to address them.²⁸ Further, while these advantages relate to the efficacy of rulemaking, one might also characterize this interest in terms of fairness to regulated parties. In fact, as the Supreme Court recently emphasized, this consideration takes on a constitutional valence; enforcement proceedings premised on abrupt changes in

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