The National Labor Relations Board (NLRB) ordered a
representation election among respondent's employees, and directed
respondent to furnish a list of names and addresses of employees
eligible to vote. Respondent refused to furnish the list, the
election was held without it, and the unions were defeated. The
NLRB ordered a new election and respondent again refused to obey an
NLRB order to supply the list. The NLRB issued a subpoena ordering
respondent to provide the list or records showing the employees'
names and addresses. The NLRB filed an action in the District Court
seeking to have its subpoena enforced or to have an injunction
issued to compel compliance with its order. The District Court held
the NLRB's order valid and directed respondent to comply. The Court
of Appeals reversed, holding the order invalid because it was based
on a rule laid down in an earlier NLRB decision,
Excelsior
Underwear Inc., 156 N.L.R.B. 1236, which rule had not been
promulgated in accordance with the rulemaking requirements of the
Administrative Procedure Act.
Held: The judgment of the Court of Appeals is reversed,
and the case is remanded to the District Court with directions to
reinstate its judgment. Pp.
394 U. S.
761-775.
397 F.2d 394, reversed and remanded.
MR. JUSTICE FORTAS, joined by THE CHIEF JUSTICE, MR. JUSTICE
STEWART, and MR. JUSTICE WHITE, concluded that:
1. In the
Excelsior case the NLRB purported to exercise
its
quasi-legislative power and make a rule without
following the rulemaking requirements of the Administrative
Procedure Act. The Excelsior "rule" is therefore invalid. Pp.
394 U. S.
763-765.
2. Here respondent was directed in an adjudicatory proceeding to
submit a list of employees for use in connection with an
election,
Page 394 U. S. 760
and it was not the
Excelsior "rule," but this valid
order, that respondent was required to obey. P.
394 U. S.
766.
3. The requirement of disclosure of employees' names is
substantively valid, as the NLRB has wide discretion to ensure the
fair and free choice of bargaining representatives, and such
disclosure furthers this objective. P.
394 U. S.
767.
4. The list of names comes within the scope of the term
"evidence" in § 11 of the National Labor Relations Act, and so may
properly be subpoenaed by the NLRB. Pp.
394 U. S.
768-769.
MR. JUSTICE BLACK, joined by MR. JUSTICE BRENNAN and MR. JUSTICE
MARSHALL, concluded that:
1. The requirement that an employer supply a list of employees
prior to an election is valid, and can be enforced by subpoena. P.
394 U. S.
769.
2. The
Excelsior practice was adopted by the NLRB as a
legitimate incident to the adjudication of a specific case, and the
NLRB properly followed the procedures applicable to "adjudication",
rather than "rulemaking." Pp.
394 U. S.
770-775.
(a) NLRB's adjudicatory and rulemaking powers are almost
inseparably related, and the exercise of one power does not exclude
the use of the other. Pp.
394 U. S.
770-771.
(b) The choice between proceeding by general rule or by
adjudication lies primarily in the informed discretion of the NLRB.
Pp.
394 U. S.
771-772.
(c) All procedural safeguards required for adjudication were
satisfied in the
Excelsior case, and that decision did
constitute adjudication within the meaning of the Administrative
Procedure Act. Pp.
394 U. S.
772-773.
(d) Even though the
Excelsior list-furnishing
requirement was to apply prospectively, the
Excelsior
order should not be regarded as any less a part of the adjudicatory
process merely because the NLRB did not feel that it should upset
Excelsior Company's reliance on past refusals to compel
disclosure by setting aside that particular election. Pp.
394 U. S.
773-774.
(e) It would be impractical to require the NLRB, in effect, to
proceed by adjudication only when it could decide, prior to
adjudicating a specific case, that any new practice to be adopted
would be applied retroactively. Pp.
394 U. S.
774-775.
Page 394 U. S. 761
MR. JUSTICE FORTAS announced the judgment of the Court and
delivered an opinion in which THE CHIEF JUSTICE, MR. JUSTICE
STEWART, and MR. JUSTICE WHITE Join.
On the petition of the International Brotherhood of Boilermakers
and pursuant to its powers under § 9 of the National Labor
Relations Act, 49 Stat. 453, 29 U.S.C. § 159, the National Labor
Relations Board ordered an election among the production and
maintenance employees of the respondent company. At the election,
the employees were to select one of two labor unions as their
exclusive bargaining representative, or to choose not to be
represented by a union at all. In connection with the election, the
Board ordered the respondent to furnish a list of the names and
addresses of its employees who could vote in the election, so that
the unions could use the list for election purposes. The respondent
refused to comply with the order, and the election was held without
the list. Both unions were defeated in the election.
The Board upheld the unions' objections to the election because
the respondent had not furnished the list, and the Board ordered a
new election. The respondent again refused to obey a Board order to
supply a list of employees, and the Board issued a subpoena
ordering the respondent to provide the list or else produce its
personnel and payroll records showing the employees' names and
addresses. The Board filed an action in the United
Page 394 U. S. 762
States District Court for the District of Massachusetts seeking
to have its subpoena enforced or to have a mandatory injunction
issued to compel the respondent to comply with its order.
The District Court held the Board's order valid and directed the
respondent to comply.
270 F.
Supp. 280 (1967). The United States Court of Appeals for the
First Circuit reversed. 397 F.2d 394 (1968). The Court of Appeals
thought that the order in this case was invalid because it was
based on a rule laid down in an earlier decision by the Board,
Excelsior Underwear Inc., 156 N.L.R.B. 1236 (1966), and
the
Excelsior rule had not been promulgated in accordance
with the requirements that the Administrative Procedure Act
prescribes for rulemaking, 5 U.S.C. § 553.
* We granted
certiorari to resolve a conflict among the circuits concerning the
validity and effect of the
Excelsior rule. 393 U.S. 932
(1968). [
Footnote 1]
I
The
Excelsior case involved union objections to the
certification of the results of elections that the unions
Page 394 U. S. 763
had lost at two companies. The companies had denied the unions a
list of the names and addresses of employees eligible to vote. In
the course of the proceedings, the Board "invited certain
interested parties" to file briefs and to participate in oral
argument of the issue whether the Board should require the employer
to furnish lists of employees. 156 N.L.R.B. at 1238. Various
employer groups and trade unions did so, as
amici curiae.
After these proceedings, the Board issued its decision in
Excelsior. It purported to establish the general rule that
such a list must be provided, but it declined to apply its new rule
to the companies involved in the
Excelsior case. Instead,
it held that the rule would apply "only in those elections that are
directed, or consented to, subsequent to 30 days from the date of
[the] Decision."
Id. at 1240, n. 5.
Specifically, the Board purported to establish
"a requirement that will be applied in all election cases. That
is, within 7 days after the Regional Director has approved a
consent-election agreement entered into by the parties . . . , or
after the Regional Director or the Board has directed an election .
. . , the employer must file with the Regional Director an election
eligibility list, containing the names and addresses of all the
eligible voters. The Regional Director, in turn, shall make this
information available to all parties in the case. Failure to comply
with this requirement shall be grounds for setting aside the
election whenever proper objections are filed."
Id. at 1239-1240.
Section 6 of the National Labor Relations Act empowers the
Board
"to make . . . , in the manner prescribed by the Administrative
Procedure Act, such rules and regulations as may be necessary to
carry out the provisions of this Act."
29 U.S.C. 156. The Administrative Procedure Act contains
specific provisions governing agency rulemaking, which it defines
as "an agency statement of general or particular applicability and
future
Page 394 U. S. 764
effect," 5 U.S.C. § 551(4). [
Footnote 2] The Act requires, among other things,
publication in the Federal Register of notice of proposed
rulemaking and of hearing; opportunity to be heard; a statement in
the rule of its basis and purposes, and publication in the Federal
Register of the rule as adopted.
See 5 U.S.C. § 553. The
Board asks us to hold that it has discretion to promulgate new
rules in adjudicatory proceedings, without complying with the
requirements of the Administrative Procedure Act.
The rulemaking provisions of that Act, which the Board would
avoid, were designed to assure fairness and mature consideration of
rules of general application.
See H.R.Rep. No.1980, 79th
Cong., 2d Sess., 21-26 (1946); S.Rep. No. 752, 79th Cong., 1st
Sess., 13-16 (1945). They may not be avoided by the process of
making rules in the course of adjudicatory proceedings. There is no
warrant in law for the Board to replace the statutory scheme with a
rulemaking procedure of its own invention. Apart from the fact that
the device fashioned by the Board does not comply with statutory
command, it obviously falls short of the substance of the
requirements of the Administrative Procedure Act. The "rule"
created in
Excelsior was not published in the Federal
Register, which is the statutory and accepted means of giving
notice of a rule as adopted; only selected organizations were given
notice of the "hearing," whereas notice in the Federal Register
would have been general in character; under the Administrative
Procedure Act, the terms or substance of the rule would have to be
stated in the notice of hearing, and all interested parties
Page 394 U. S. 765
would have an opportunity to participate in the rulemaking.
The Solicitor General does not deny that the Board ignored the
rulemaking provisions of the Administrative Procedure Act.
[
Footnote 3] But he appears to
argue that
Excelsior's command is a valid substantive
regulation, binding upon this respondent as such, because the Board
promulgated it in the
Excelsior proceeding, in which the
requirements for valid adjudication had been met. This argument
misses the point. There is no question that, in an adjudicatory
hearing, the Board could validly decide the issue whether the
employer must furnish a list of employees to the union. But that is
not what the Board did in
Excelsior. The Board did not
even apply the rule it made to the parties in the adjudicatory
proceeding, the only entities that could properly be subject to the
order in that case. Instead, the Board purported to make a rule:
i.e., to exercise its
quasi-legislative
power.
Adjudicated cases may and do, of course, serve as vehicles for
the formulation of agency policies, which are applied and announced
therein.
See H. Friendly, The Federal Administrative
Agencies 36-52 (1962). [
Footnote
4] They
Page 394 U. S. 766
generally provide a guide to action that the agency may be
expected to take in future cases. Subject to the qualified role of
stare decisis in the administrative process, they may
serve as precedents. But this is far from saying, as the Solicitor
General suggests, that commands, decisions, or policies announced
in adjudication are "rules" in the sense that they must, without
more, be obeyed by the affected public.
In the present case, however, the respondent itself was
specifically directed by the Board to submit a list of the names
and addresses of its employees for use by the unions in connection
with the election. [
Footnote 5]
This direction, which was part of the order directing that an
election be held, is unquestionably valid.
See, e.g., NLRB v.
Waterman S.S. Co., 309 U. S. 206,
309 U. S. 226
(1940). Even though the direction to furnish the list was followed
by citation to "
Excelsior Underwear Inc., 156 NLRB No.
111," it is an order in the present case that the respondent was
required to obey. Absent this direction by the Board, the
respondent was under no compulsion to furnish the list because no
statute and no validly adopted rule required it to do so.
Because the Board in an adjudicatory proceeding directed the
respondent itself to furnish the list, the decision of the Court of
Appeals for the First Circuit must be reversed. [
Footnote 6]
Page 394 U. S. 767
II
.
The respondent also argues that it need not obey the Board's
order because the requirement of disclosure of employees' names and
addresses is substantively invalid. This argument lacks merit. The
objections that the respondent raises to the requirement of
disclosure were clearly and correctly answered by the Board in its
Excelsior decision. All of the United States Courts of
Appeals that have passed on the question have upheld the
substantive validity of the disclosure requirement, [
Footnote 7] and the court below strongly
intimated a view that the requirement was substantively a proper
one, 397 F.2d at 396.
We have held in a number of cases that Congress granted the
Board a wide discretion to ensure the fair and free choice of
bargaining representatives.
See, e.g., NLRB v. Waterman S.S.
Co., supra, at
309 U. S. 226;
NLRB v. A. J. Tower Co., 329 U. S. 324,
329 U. S. 330
(1946). The disclosure requirement furthers this objective by
encouraging an informed employee electorate and by allowing unions
the right of access to employees that management already possesses.
It is for the Board, and not for this Court, to weigh against this
interest the asserted interest of employees in avoiding the
problems that union solicitation may present.
Page 394 U. S. 768
III
The respondent contends that, even if the disclosure requirement
is valid, the Board lacks power to enforce it by subpoena. Section
11(1) of the National Labor Relations Act provides that the Board
shall have access to "any evidence of any person being investigated
or proceeded against that relates to any matter under investigation
or in question," and empowers the Board to issue subpoenas
"requiring the attendance and testimony of witnesses or the
production of any evidence in such proceeding or investigation."
Section 11(2) gives the district courts jurisdiction, upon
application by the Board, to issue an order requiring a person who
has refused to obey the Board's subpoena
"to appear before the Board . . . there to produce evidence if
so ordered, or there to give testimony touching the matter under
investigation or in question. . . ."
29 U.S.C. §§ 161(1), (2).
The respondent takes the position that these statutory
provisions do not give the Board authority to subpoena the lists
here in question because they are not "evidence" within the meaning
of the statutory language. The District Court held, however,
that,
"in the context of § 11 of the Act, 'evidence' means not only
proof at a hearing, but also books and records and other papers
which will be of assistance to the Board in conducting a particular
investigation. [
Footnote
8]"
The courts of appeals that have passed on the question have
construed the term "evidence" in a similar manner.
NLRB v.
Hanes Hosiery Division, 384 F.2d 188, 191-192 (C.A.4th
Cir.1967).
See NLRB v. Rohlen, 385 F.2d 52, 55-58 (C.A.
7th Cir.1967);
NLRB v. Beech-Nut Life Savers, Inc., 406
F.2d 253, 259 (C.A.2d Cir.1968);
British Auto Parts, Inc.
v.
Page 394 U. S. 769
NLRB, 405 F.2d 1182, 1184 (C.A. 9th Cir.1968);
NLRB
v. Q-T Shoe Mfg. Co., 409 F.2d 1247 (C.A.3d Cir.1969). We
agree that the list here in issue is within the scope of § 11 so
that the Board's subpoena power may be validly exercised.
The judgment of the Court of Appeals is reversed, and the case
is remanded to the District Court with directions to reinstate its
judgment.
It is so ordered.
* [REPORTER'S NOTE: The citations to the Administrative
Procedure Act in the opinions in this case are to Supplement IV of
the 1964 edition of the U.S.Code.]
[
Footnote 1]
When we granted certiorari, the Fifth Circuit had expressly
approved the procedure the Board followed in adopting the
Excelsior rule.
Howell Refining Co. v. NLRB, 400
F.2d 213 (1968). Two other circuits had approved enforcement of the
Excelsior rule without explicitly passing on the
correctness of the method by which it was adopted.
NLRB v.
Hanes Hosiery Division, 384 F.2d 188 (C.A. 4th Cir.1967); NLRB
v. Rohlen, 385 F.2d 52 (C.A. 7th Cir.1967). After our grant of
certiorari in the present case, three more courts of appeals
explicitly upheld the
Excelsior rule and the procedure by
which it was adopted,
NLRB v. Beech-Nut Life Savers, Inc.,
406 F.2d 253 (C.A.2d Cir.1968);
British Auto Parts, Inc. v.
NLRB, 405 F.2d 1182 (C.A. 9th Cir.1968);
NLRB v. Q-T Shoe
Mfg. Co., 409 F.2d 1247 (C.A.3d Cir.1969), and the Fifth
Circuit reaffirmed its earlier holding in
Howell Refining Co.,
Groendyke Transport, Inc. v. Davis, 406 F.2d 1158 (1969).
[
Footnote 2]
We agree with the opinion of Chief Judge Aldrich below that the
Excelsior rule involves matters of substance and that it
therefore does not fall within any of the Act's exceptions.
See 5 U.S.C. § 553(b)(A).
[
Footnote 3]
The Board has never utilized the Act's rulemaking procedures. It
has been criticized for contravening the Act in this manner.
See, e.g., 1 K. Davis, Administrative Law Treatise § 6.13
(Supp. 1965); Peck, The Atrophied Rule-Making Powers of the
National Labor Relations Board, 70 Yale L.J. 729 (1961).
[
Footnote 4]
The Solicitor General argues that this Court has previously
approved "rules" articulated by the Board in the adjudication of
particular cases without questioning the propriety of that
procedure. He cites
Republic Aviation Corp. v. NLRB,
324 U. S. 793
(1945);
NLRB v. A. J. Tower Co., 329 U.
S. 324 (1946);
NLRB v. Seven-Up Bottling Co.,
344 U. S. 344
(1953), and
Brooks v. NLRB, 348 U. S.
96 (1954). In none of these cases has this Court ruled
upon or sanctioned the exercise of
quasi-legislative power
--
i.e., rulemaking -- without compliance with § 6 of the
NLRA and the rulemaking provisions of the Administrative Procedure
Act.
[
Footnote 5]
In his Decision and Direction of Election, the Regional Director
ordered that
"[a]n election eligibility list, containing the names and
addresses of all the eligible voters, must be filed with the
Regional Director within seven (7) days of the date of this
Decision and Direction of Election. The Regional Director shall
make the list available to all parties to the election. . . ."
[
Footnote 6]
MR. JUSTICE HARLAN's dissent argues that, because the Board
improperly relied upon the
Excelsior "rule" in issuing its
order, we are obliged to remand. He relies on
SEC v. Chenery
Corp., 318 U. S. 80
(1943). To remand would be an idle and useless formality.
Chenery does not require that we convert judicial review
of agency action into a ping-pong game. In
Chenery, the
Commission had applied the wrong standards to the adjudication of a
complex factual situation, and the Court held that it would not
undertake to decide whether the Commission's result might have been
justified on some other basis. Here, by contrast, the substance of
the Board's command is not seriously contestable. There is not the
slightest uncertainty as to the outcome of a proceeding before the
Board, whether the Board acted through a rule or an order. It would
be meaningless to remand.
[
Footnote 7]
See NLRB v. J. P. Stevens & Co., 409 F.2d 1207
(C.A.4th Cir.1969), and the cases cited in
n 1,
supra.
[
Footnote 8]
270 F. Supp. at 285. The Court of Appeals did not reach the
issue whether the Board could subpoena the lists in question.
MR. JUSTICE BLACK, with whom MR. JUSTICE BRENNAN and MR. JUSTICE
MARSHALL join, concurring in the result.
I agree with Parts II and III of the prevailing opinion of MR.
JUSTICE FORTAS, holding that the
Excelsior requirement
[
Footnote 2/1] that an employer
supply the union with the names and addresses of its employees
prior to an election is valid on its merits and can be enforced by
a subpoena. But I cannot subscribe to the criticism in that opinion
of the procedure followed by the Board in adopting that requirement
in the
Excelsior case, 156 N.L.R.B. 1236 (1966). Nor can I
accept the novel theory by which the opinion manages to uphold
enforcement of the
Excelsior practice in spite of what it
considers to be statutory violations present in the procedure by
which the requirement was adopted. Although the opinion is
apparently
Page 394 U. S. 770
intended to rebuke the Board and encourage it to follow the
plurality's conception of proper administrative practice, the
result instead is to free the Board from all judicial control
whatsoever regarding compliance with procedures specifically
required by applicable federal statutes such as the National Labor
Relations Act, 29 U.S.C. § 151
et seq., and the
Administrative Procedure Act, 5 U.S.C. § 551
et seq.
Apparently, under the prevailing opinion, courts must enforce any
requirement announced in a purported "adjudication" even if it
clearly was not adopted as an incident to the decision of a case
before the agency, and must enforce "rules" adopted in a purported
"rulemaking" even if the agency materially violated the specific
requirements that Congress has directed for such proceedings in the
Administrative Procedure Act. I, for one, would not give judicial
sanction to any such illegal agency action.
In the present case, however, I am convinced that the
Excelsior practice was adopted by the Board as a
legitimate incident to the adjudication of a specific case before
it, and, for that reason, I would hold that the Board properly
followed the procedures applicable to "adjudication", rather than
"rulemaking." Since my reasons for joining in reversal of the Court
of Appeals differ so substantially from those set forth in the
prevailing opinion, I will spell them out at some length.
Most administrative agencies, like the Labor Board here, are
granted two functions by the legislation creating them: (1) the
power under certain conditions to make rules having the effect of
laws, that is, generally speaking,
quasi-legislative
power, and (2) the power to hear and adjudicate particular
controversies, that is
quasi-judicial power. The line
between these two functions is not always a clear one, and, in
fact, the two functions merge at many points. For example, in
exercising its
quasi-judicial function an agency must
frequently
Page 394 U. S. 771
decide controversies on the basis of new doctrines, not
theretofore applied to a specific problem, though drawn to be sure
from broader principles reflecting the purposes of the statutes
involved and from the rules invoked in dealing with related
problems. If the agency decision reached under the adjudicatory
power becomes a precedent, it guides future conduct in much the
same way as though it were a new rule promulgated under the
rulemaking power, and both an adjudicatory order and a formal
"rule" are alike subject to judicial review. Congress gave the
Labor Board both of these separate but almost inseparably related
powers. [
Footnote 2/2] No language
in the National Labor Relations Act requires that the grant or the
exercise of one power was intended to exclude the Board's use of
the other.
Nor does any language in the Administrative Procedure Act
require such a conclusion. The Act does specify the procedure by
which the rulemaking power is to be exercised, requiring
publication of notice for the benefit of interested parties and
provision of an opportunity for them to be heard, and, after
establishment of a rule as provided in the Act, it is then to be
published in the Federal Register. Congress had a laudable purpose
in prescribing these requirements, and it was evidently
contemplated that administrative agencies like the Labor Board
would follow them when setting out to announce a new rule of law to
govern parties in the future. In this same statute, however,
Congress also conferred on the affected administrative agencies the
power to proceed by adjudication, and Congress specified a distinct
procedure by which this adjudicatory power is to be exercised.
[
Footnote 2/3] The Act defines
"adjudication" as
Page 394 U. S. 772
"agency process for the formulation of an order," and "order" is
defined as "the whole or a part of a final disposition, whether
affirmative, negative, injunctive, or declaratory in form, of an
agency in a matter other than rulemaking but including licensing."
5 U.S.C. §§ 551(7), (6). Thus, although it is true that the
adjudicatory approach frees an administrative agency from the
procedural requirements specified for rulemaking, the Act permits
this to be done whenever the action involved can satisfy the
definition of "adjudication," and then imposes separate procedural
requirements that must be met in adjudication. Under these
circumstances, so long as the matter involved can be dealt with in
a way satisfying the definition of either "rulemaking" or
"adjudication" under the Administrative Procedure Act, that Act,
along with the Labor Relations Act, should be read as conferring
upon the Board the authority to decide, within its informed
discretion, whether to proceed by rulemaking or adjudication. Our
decision in
SEC v. Chenery Corp., 332 U.
S. 194 (1947), though it did not involve the Labor Board
or the Administrative Procedure Act, is nonetheless equally
applicable here. As we explained in that case,
"the choice made between proceeding by general rule or by
individual,
ad hoc litigation is one that lies primarily
in the informed discretion of the administrative agency."
Id. at
332 U. S.
203.
In the present case, there is no dispute that all the procedural
safeguards required for "adjudication" were fully satisfied in
connection with the Board's
Excelsior decision, and it
seems plain to me that that decision did
Page 394 U. S. 773
constitute "adjudication" within the meaning of the
Administrative Procedure Act, even though the requirement was to be
prospectively applied.
See Great Northern R. Co. v. Sunburst
Co., 287 U. S. 358
(1932). The Board did not abstractly decide out of the blue to
announce a brand new rule of law to govern labor activities in the
future, but rather established the procedure as a direct
consequence of the proper exercise of its adjudicatory powers.
Sections 9(c)(1) and (2) of the Labor Relations Act empower the
Board to conduct investigations, hold hearings, and supervise
elections to determine the exclusive bargaining representative that
the employees wish to represent them. This is a key provision of
the plan Congress adopted to settle labor quarrels that might
interrupt the free flow of commerce. A controversy arose between
the Excelsior Company and its employees as to the bargaining agent
the employees desired to act for them. The Board's power to provide
the procedures for the election was invoked, an election was held,
and the losing unions sought to have that election set aside.
Undoubtedly the Board proceeding for determination of whether to
confirm or set aside that election was "agency process for the
formulation of an order," and thus was "adjudication" within the
meaning of the Administrative Procedure Act.
The prevailing opinion seems to hold that the
Excelsior
requirement cannot be considered the result of adjudication because
the Board did not apply it to the parties in the
Excelsior
case itself, but rather announced that it would be applied only to
elections called 30 days after the date of the
Excelsior
decision. But the
Excelsior order was nonetheless an
inseparable part of the adjudicatory process. The principal issue
before the Board in the
Excelsior case was whether the
election should be set aside on the ground, urged by the unions,
that the employer had refused to make the employee lists
available
Page 394 U. S. 774
to them.
See 156 N.L.R.B. at 1236-1238. The Board
decided that the election involved there should not be set aside,
and thus rejected the contention of the unions. In doing so, the
Board chose to explain the reasons for its rejection of their
claim, and it is this explanation, the Board's written opinion,
which is the source of the
Excelsior requirement. The
Board's opinion should not be regarded as any less an appropriate
part of the adjudicatory process merely because the reason it gave
for rejecting the unions' position was not that the Board disagreed
with them as to the merits of the disclosure procedure, but rather,
see 156 N.L.R.B. at 1239, 1240, n. 5, that, while fully
agreeing that disclosure should be required, the Board did not feel
that it should upset the Excelsior Company's justified reliance on
previous refusals to compel disclosure by setting aside this
particular election.
Apart from the fact that the decisions whether to accept a "new"
requirement urged by one party and, if so, whether to apply it
retroactively to the other party are inherent parts of the
adjudicatory process, I think the opposing theory accepted by the
Court of Appeals and by the prevailing opinion today is a highly
impractical one. In effect, it would require an agency like the
Labor Board to proceed by adjudication only when it could decide,
prior to adjudicating a particular case, that any new practice to
be adopted would be applied retroactively. Obviously, this decision
cannot properly be made until all the issues relevant to adoption
of the practice are fully considered in connection with the final
decision of that case. If the Board were to decide, after careful
evaluation of all the arguments presented to it in the adjudicatory
proceeding, that it might be fairer to apply the practice only
prospectively, it would be faced with the unpleasant choice of
either starting all
Page 394 U. S. 775
over again to evaluate the merits of the question, this time in
a "rulemaking" proceeding, or overriding the considerations of
fairness and applying its order retoactively anyway, in order to
preserve the validity of the new practice and avoid duplication of
effort. I see no good reason to impose any such inflexible
requirement on the administrative agencies.
For all of the foregoing reasons, I would hold that the Board
acted well within its discretion in choosing to proceed as it did,
and I would reverse the judgment of the Court of Appeals on this
basis.
[
Footnote 2/1]
This requirement, first announced in the
Excelsior
case, 156 N.L.R.B. 1236 (166), has often been referred to by the
Board, the lower courts, and the commentators as "the
Excelsior rule." I understand the use of the word "rule"
in this context to imply simply that the requirement is a rule of
law such as would be announced in a court opinion, and not
necessarily that it is the kind of "rule" required to be
promulgated in accordance with the "rulemaking" procedures of the
Administrative Procedure Act. For the sake of clarity, however, I
have chosen in this opinion to avoid use of the word "rule" when
referring to the procedure required by the
Excelsior
decision.
[
Footnote 2/2]
See National Labor Relations Act §§ 6, 9(c)(1), 10; 29
U.S.C. §§ 156, 159(c)(1), 160.
[
Footnote 2/3]
The procedure to be followed in "adjudication," which includes
notice of the issues, an opportunity for responsive pleadings, a
hearing, and decision, is specified in 5 U.S.C. §§ 554, 556, and
557. The Administrative Procedure Act expressly exempts proceedings
for "the certification of worker representatives" from these
requirements, 5 U.S.C. § 554(a)(6), 556(a), 557(a), and these
proceedings are therefore governed only by the requirements
specified in the National Labor Relations Act, 29 U.S.C. § 151
et seq.
MR. JUSTICE DOUGLAS, dissenting.
The Administrative Procedure Act, 5 U.S.C. § 553(b) provides
that general notice "of proposed rulemaking" shall be published in
the Federal Register. Public participation -- in essence, a hearing
-- is provided, § 553(c). And "interested" persons are given the
right to petition for the issuance, amendment, or repeal of a rule,
§ 553(c).
In
Excelsior Underwear Inc., 156 N.L.R.B. 1236, the
Board in 1966 decided (1) that an employer would be required to
furnish the Regional Director, prior to the conducting of a
representation election, the names and addresses of the eligible
voters, which list would then be made available to all contestants
in the election, but (2) that this requirement would apply only
prospectively, to all elections directed or consented to subsequent
to 30 days after the date of its decision there.
The notice and hearing procedure prescribed by § 553(b) was not
followed, and in this case, an election was directed seven months
after the Excelsior decision, the Board applying the
Excelsior rule.
I am willing to assume that, if the Board decided to treat each
case on its special facts and perform its adjudicatory
Page 394 U. S. 776
function in the conventional way, we should have no difficulty
in affirming its action. The difficulty is that it chose a
different course in the
Excelsior case and, having done
so, it should be bound to follow the procedures prescribed in the
Act as my Brother HARLAN has outlined them. When we hold otherwise,
we let the Board "have its cake and eat it too."
The Committee reports make plain that the Act "provides quite
different procedures for the
legislative' and `judicial'
functions of administrative agencies." S.Rep. No. 752, 79th Cong.,
1st Sess., 7; H.R.Rep. No.1980, 79th Cong., 2d Sess., 17.
Section 553(b)(3) provides in part:
"Except when notice or hearing is required by statute, this
subsection does not apply --"
"(A) to interpretative rules, general statements of policy, or
rules of agency organization, procedure, or practice."
We need not stop to inquire what the word "procedure" in that
context embraces. For § 553(d) provides, with exceptions not
material [
Footnote 3/1] here
that:
"The required publication or service of a substantive rule shall
be made not less than 30 days before its effective date. . . .
"
Page 394 U. S. 777
The Board apparently decided the
Excelsior case with §
553(d) in mind, for it made the proposed new rule effective after
30 days. The House report states that § 553(d) (which was § 4(c) in
its draft) "does not provide procedures alternative to notice and
other public proceedings required by the prior sections."
Id. at 25. And that report added,
"It will afford persons affected a reasonable time to prepare
for the effective date of a rule or rules or to take any other
action which the issuance of rules may prompt."
Ibid. And see S.Rep.
supra at 15.
The "substantive" rules described by § 553(d) may possibly cover
"adjudications," even though they represent performance of the
"judicial" function. But it is no answer to say that the order
under review was "adjudicatory." For as my Brother HARLAN says, an
agency is not adjudicating when it is making a rule to fit future
cases. A rule like the one in
Excelsior is designed to fit
all cases at all times. It is not particularized to special facts.
It is a statement of far-reaching policy covering all future
representation elections.
It should therefore have been put down for the public hearing
prescribed by the Act.
The rulemaking procedure performs important functions. It gives
notice to an entire segment of society of those controls or
regimentation that is forthcoming. It gives an opportunity for
persons affected to be heard. Recently the proposed Rules of the
Federal Highway Administration governing the location and design of
freeways, 33 Fed.Reg. 15663, were put down for a hearing, and the
Governor of every State appeared or sent an emissary. The result
was a revision of the Rules before they were promulgated. 34
Fed.Reg. 727.
That is not an uncommon experience. Agencies discover that they
are not always repositories of ultimate
Page 394 U. S. 778
wisdom; they learn from the suggestions of outsiders and often
benefit from that advice.
See H. Friendly, The Federal
Administrative Agencies 45 (1962).
This is a healthy process that helps make a society viable. The
multiplication of agencies and their growing power make them more
and more remote from the people affected by what they do and make
more likely the arbitrary exercise of their powers. Public airing
of problems through rulemaking makes the bureaucracy more
responsive to public needs and is an important brake on the growth
of absolutism in the regime that now governs all of us.
Many federal agencies touch on numerous aspects of the lives of
the poor. Rulemaking for this group is discussed in Bonfield,
Representation for the Poor in Federal Rulemaking, 67 Mich.L.Rev.
511, 512 (1969):
"An agency promulgating rules affecting the poor cannot assume
that it automatically knows what is best for such people.
Government administrators are usually persons with middle-class
backgrounds, experiences, and associations; therefore, they tend to
have middle-class viewpoints, orientations, and understandings.
This means that the personnel of federal agencies may be expected
to reflect more accurately the interests of the affluent than those
of the economically underprivileged. Consequently, there is a
special reason for concern when, as is now the case, the interests
of poor people are inadequately represented in the rulemaking
process."
While that suggestion may not be relevant to the present
labor-management area and the sophisticated opponents with which
this case is concerned, it does illustrate that, when we are lax
and allow federal agencies to play fast and loose with rulemaking,
we set a precedent with dangerous repercussions.
Page 394 U. S. 779
It has been stated that "the survival of a questionable rule
seems somewhat more likely when it is submerged in the facts of a
given case" than when rulemaking is used.
See Shapiro, The
Choice of Rulemaking or Adjudication in the Development of
Administrative Policy, 78 Harv.L.Rev. 921, 946-947 (1965).
Moreover, "agencies appear to be freer to disregard their own prior
decisions than they are to depart from their regulations."
Id. at 947. Failure to make full use of rulemaking power
is attributable at least in part "to administrative inertia and
reluctance to take a clear stand."
Id. at 972.
Rulemaking is no cure-all; but it does force important issues
into full public display, and, in that sense, makes for more
responsible administrative action.
I would hold the agencies governed by the rulemaking procedure
strictly to its requirements, and not allow them to play fast and
loose, as the National Labor Relations Board apparently likes to
do. [
Footnote 3/2]
As stated by the Court of Appeals, the procedure used in the
Excelsior case plainly flouted the Act:
"Recognizing the problem to be one affecting more than just the
parties before it, the Board chose to solicit the assistance of
selected
amici curiae, and, ultimately, to establish a
rule which not only did not apply to the parties before it, but did
not take effect for thirty days. In so doing, we consider that
Page 394 U. S. 780
the Board, to put it bluntly, designed its own rulemaking
procedure, adopting such part of the Congressional mandate as it
chose, and rejecting the rest."
397 F.2d 394, 396-397.
I would affirm the judgment.
[
Footnote 3/1]
The rulemaking provision does not apply to
"(1) a military or foreign affairs function of the United
States; or"
"(2) a matter relating to agency management or personnel or to
public property, loans, grants, benefits, or contracts."
5 U.S.C. § 553(a)
These exceptions exclude,
inter alia, the National
Forest Service, the National Park System, the Bureau of Land
Management, and other agencies dealing with "public property" such
as the Interior Department and its leases of off-shore oil
properties.
For a compilation of federal agency rules on rulemaking,
see J. Pike & H. Fischer, Administrative Law (2d
series 1952).
[
Footnote 3/2]
"The NLRB has never used its rulemaking power; it misuses the
methods of adjudication for making rules, and it uses press
releases not published in the Federal Register for announcing
policies that ought to be embodied in formal rules. It seems to be
violating § 3 and § 4 of the Administrative Procedure Act, and the
result in some instances is serious injustice."
1 K. Davis, Administrative Law Treatise § 6.13 (Supp. 1965).
And see Peck, The Atrophied Rule-Making Powers of the
National Labor Relations Board, 70 Yale L.J. 729 (1961).
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
rulemaking. . . ." 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 rulemaking requirements of the Act. [
Footnote 4/1]
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
rulemaking proceeding. An agency chooses to apply a rule
prospectively only because it represents such a departure from
preexisting understandings
Page 394 U. S. 781
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 rulemaking
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
rulemaking 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
394 U. S. 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
rulemaking provisions are to be enforced or they are not. Before
the Board may be permitted to adopt a rule that so significantly
alters preexisting labor-management understandings, it must be
required to conduct a satisfactory rulemaking 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
Page 394 U. S. 782
in our past decisions. This Court's landmark opinion in
SEC
v. Chenery Corp., 318 U. S. 80,
318 U. S. 94
(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 event, 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
Office 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:
"[I]t 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.
Page 394 U. S. 783
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,
366 U. S.
412-413 (1961);
Burlington Truck Lines v. United
States, 371 U. S. 156,
371 U. S.
167-168 (1962);
cf. Phelps Dodge Corp. v. NLRB,
313 U. S. 177,
313 U. S.
196-197 (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
394 U. S. 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. [
Footnote
4/2] 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.
[
Footnote 4/1]
For the reasons advanced by Chief Judge Aldrich in his opinion
below, 397 F.2d 394, I think it clear that the
Excelsior
rule involves 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.
[
Footnote 4/2]
As I have indicated,
supra, at
394 U. S. 781,
I would go further and require the Board to initiate a new
rulemaking 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.