National Labor Relations Board v. Wyman-Gordon Company/Dissent Harlan

by John Marshall Harlan II

United States Supreme Court

394 U.S. 759

National Labor Relations Board  v.  Wyman-Gordon Company

 Argued: March 3, 1969. --- Decided: April 23, 1969

Mr. Justice HARLAN, dissenting.

The language of the Administrative Procedure Act does not support the Government's claim that an agency is 'adjudicating' when it announces a rule which it refuses to apply in the dispute before it. The Act makes it clear that an agency 'adjudicates' only when its procedures result in the 'formulation of an order.' 5 U.S.C. § 551(7). (Emphasis supplied.) An 'order' is defined to include 'the whole or a part of a final disposition * * * of an agency in a matter other than rule making * * *.' 5 U.S.C. § 551(6). (Emphasis supplied.) This definition makes it apparent that an agency is not adjudicating when it is making a rule, which the Act defines as 'an agency statement of general or particular applicability and future effect * * *.' 5 U.S.C. § 551(4). (Emphasis supplied.) Since the Labor Board's Excelsior rule was to be effective only 30 days after its promulgation, it clearly falls within the rule-making requirements of the Act. ^[1]

Nor can I agree that the natural interpretation of the statute should be rejected because it requires the agency to choose between giving its rules immediate effect or initiating a separate rule-making proceeding. An agency chooses to apply a rule prospectively only because it represents such a departure from preexisting understandings that it would be unfair to impose the rule upon the parties in pending matters. But it is precisely in these situations, in which established patterns of conduct are revolutionized, that rule-making procedures perform the vital functions that my Brother DOUGLAS describes so well in a dissenting opinion with which I basically agree.

Given the fact that the Labor Board has promulgated a rule in violation of the governing statute, I believe that there is no alternative but to affirm the judgment of the Court of Appeals in this case. If, as the plurality opinion suggests, the NLRB may properly enforce an invalid rule in subsequent adjudications, the rule-making provisions of the Administrative Procedure Act are completely trivialized. Under today's prevailing approach, the agency may evade the commands of the Act whenever it desires and yet coerce the regulated industry into compliance. It is no answer to say that ' respondent was under no compulsion to furnish the list because no statute and no validly adopted rule required it to do so,' ante, at 766, when the Labor Board was threatening to issue a subpoena which the courts would enforce. In what other way would the administrative agency compel obedience to its invalid rule?

One cannot always have the best of both worlds. Either the rule-making provisions are to be enforced or they are not. Before the Board may be permitted to adopt a rule that so significantly alters pre-existing labor-management understandings, it must be required to conduct a satisfactory rule-making proceeding, so that it will have the benefit of wide-ranging argument before it enacts its proposed solution to an important problem.

In refusing to adopt this position, the prevailing opinion not only undermines the Administrative Procedure Act, but also compromises the most basic principles governing judicial review of agency action established in our past decisions. This Court's landmark opinion in SEC v. Chenery Corp., 318 U.S. 80, 94, 63 S.Ct. 454, 462, 87 L.Ed. 626 (1943), makes it clear that we are obliged to remand a case if the agency has relied upon an improper reason to justify its action:

'If the action rests upon an administrative determination-an exercise of judgment in an area which Congress has entrusted to the agency-of course it must not be set aside because the reviewing court might have made a different determination were it empowered to do so. But if the action is based upon a determination of law as to which the reviewing authority of the courts does come into play, an order may not stand if the agency has misconceived the law. In either even the orderly functioning of the process of review requires that the grounds upon which the administrative agency acted be clearly disclosed and adequately sustained.'

Chenery's teachings are applicable here. The Regional ffice that issued the order under review refused to consider the merits of the arguments against the Excelsior rule which were raised by Wyman-Gordon on the ground that they had been rejected by the Board in the Excelsior case itself:

'(It) is well known that Excelsior issued only after oral argument and briefs, including amicus curiae briefs by interested parties. The Board has considered arguments such as those made here and nevertheless established the requirement embodied in Excelsior and the undersigned (Acting Regional Director) is bound by it.' Appendix 33.

The Board denied review of this decision on the ground that 'it raises no substantial issues warranting review.' Appendix 35.

Since the major reason the Board has given in support of its order is invalid, Chenery requires remand. See also Bell v. United States, 366 U.S. 393, 412-413, 81 S.Ct. 1230, 1240-1241, 6 L.E.2d 365 (1961); Burlington Truck Lines v. United States, 371 U.S. 156, 167-168, 83 S.Ct. 239, 245-246, 9 L.Ed.2d 207 (1962); cf. Phelps Dodge Corp. v. NLRB, 313 U.S. 177, 196-197, 61 S.Ct. 845, 853-854, 85 L.Ed. 1271 (1941). The prevailing opinion explains its departure from our leading decisions in this area on the ground that: 'There is not the slightest uncertainty as to the outcome of (this) proceeding' on remand. Ante, n. 6, at 767. I can perceive no justification whatever for this assertion. Since the Excelsior rule was invalidly promulgated, it is clear that, at a minimum, the Board is obliged on remand to recanvass all of the competing considerations before it may properly announce its decision in this case. ^[2] We cannot know what the outcome of such a reappraisal will be. Surely, it cannot be stated with any degree of certainty that the Board will adopt precisely the same solution as the one which was embraced in Excelsior. The plurality simply usurps the function of the National Labor Relations Board when it says otherwise.

I would affirm the judgment of the Court of Appeals.

Notes

1. For the reasons advanced by Chief Judge Aldrich in his opinion below, 397 F.2d 394, I think it clear that the Excelsior rule invoves matters of substance and not procedure, and so does not fall within the exception created by 5 U.S.C. § 553(b)(A) of the Act.
2. As I have indicated, supra, at 781, I would go further and require the Board to initiate a new rule-making proceeding where, as here, it has previously recognized that the proposed new rule so departs from prior practices that it cannot fairly be applied retroactively. In the absence of such a proceeding, the administrative agency must be obliged to follow its earlier decisions which did not require employers to furnish Excelsior lists to unions during organizing campaigns.