NFIB Legal Center Proclaims Victory in SW General v. NLRB

Date: March 22, 2017

It’s been relatively quiet in the Supreme Court over the past year. But this week, we’ve seen a sudden flurry of activity. On Monday, as the Senate began its hearings on Judge Neil Gorsuch, the current eight-member Supreme Court heard arguments in Murr v. Wisconsin, which is probably the most important property rights case that the Supreme Court has heard in over a decade. And on Tuesday the Supreme Court issued its opinion in SW General v. NLRB—concerning limitations on Presidential powers. In a 6-2 decision, the high court ruled that President Obama violated the law when he appointed Lafe Solomon to serve as the acting General Counsel for the National Labor Relations Board, which necessarily calls into question cases that NLRB prosecuted against small business owners during Solomon’s tenure in that post.

NLRB’s General Counsel is one of those positions that requires Senate confirmation as a constitutional matter. But knowing that it can take time for the Senate to consider a nominee for a position like this, Congress has enacted law authorizing the President to temporarily fill vacancies for these sorts of positions. Yet this wasn’t a blank check for the President to have anyone he might like serving in this role. Congress knew that sometimes positions can remain vacant for a long-time, which could mean that an interim appointment might very well have an indefinite tenure at the helm. As such, Congress thought it only proper to impose limitations.

So while the Federal Vacancies Reform Act (FVRA) spells out criteria for whom the President might appoint to fill a temporary vacancy, it also expressly prohibited the President from installing a temporary or interim officer if that man or woman is the very person whom the President has nominated for the permanent position. This only makes sense because, otherwise, the President could have his pick in the seat long before the Senate may have a chance to review his or her credentials. And in any event, as a matter of separation of powers, the President is bound to make temporary appointments consistent with the FVRA—even if he may think it in inconvenient.

Not surprisingly, the Obama Administration took an exceedingly liberal view of its powers under the FVRA—invoking the Chevron doctrine in arguing that the President should be entitled to deference in his interpretation of the statute. That is the very line of argument that the Obama Administration used time and again in defending controversial regulations—for example in expanding EPA powers under the guise of the Clean Air Act or the Clean Water Act. But of course, this case really illustrates a fundamental problem with Chevron. It simply doesn’t make sense to defer to the President’s interpretation of a provision intended to limit his statutorily conferred powers.

And of course, as we’ve made clear in the past, Chevron is a huge thorn in the side of small business because it’s largely responsible for the rising tide of regulation that’s crippling small business in America. So while our ultimate goal is to see the Supreme Court eventually reject Chevron all together, we’re doing what we can to chip-at Chevron one case at a time. And in this case we filed an amicus brief urging the Supreme Court to hold that the President was not entitled to any form of deference because the President’s interpretation was not the product of reasoned deliberation—much less the product of notice-and-comment rulemaking, which we think is mandatory if the Executive Branch wants to invoke Chevron. But in any event—even setting aside Chevron—we argued that it would be improper to automatically defer to the President’s view in this case because the White House Office of Legal Counsel failed to follow its own protocol when pronouncing its interpretation.

While the Court’s decision in SW General may have direct impact only on those businesses that were subject to NLRB proceedings under Solomon’s tenure as acting General Counsel, the decision may be viewed more broadly as a win for small business. Both the decision and NFIB Legal Center’s amicus brief can be found here. And we would direct readers to Cato’s summation of the case for further explanation as to what was at stake here.

For more on what NFIB Legal Center is doing to cabin agency discretion, check out our original post on SW General—which explained our work in this area in greater depth.

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