How FCC v. Consumers’ Research Could Sink Proposals to Reform Labor Law

On its face, FCC v. Consumers’ Research seems to have nothing to do with labor law. Set to be argued later this month, the case centers on a little-known rule called the “private-nondelegation doctrine.” The respondent, Consumers’ Research, argues that the FCC violated that rule when it allowed a private company to decide how much telecom companies have to pay to subsidize service for certain users. If the Supreme Court accepts that view, it will obviously upset a major part of telecom law. But less obviously, it could also frustrate plans to reform labor law. Multiple recent bills have proposed to change labor law by allowing labor contracts to be written by private arbitrators. That method, called “interest arbitration,” is supposed to make collective bargaining move faster. But if Consumers’ Research strikes down the FCC’s program, it might also stop interest arbitration in its tracks.

Delegation and Subordination

Again, Consumers’ Research centers on the private-nondelegation doctrine. But that name is a bit of a misnomer. The doctrine doesn’t actually bar delegations to private people as such. Instead, it bars delegations of government power outside the proper hands.

The rule stems from the Vesting Clauses in Articles I and II of the Constitution. Those clauses assign all legislative power to Congress and all executive power to the president. Because the clauses are absolute, they prevent the president or Congress from giving their power away. Congress cannot, for example, give private business the right to regulate their own industries. Nor can the president give law-enforcement authority to private bounty hunters. The Constitution assigns government power to government officials, and those officials can’t delegate their power away.

But that doesn’t mean that the government can’t enlist private help. Public officials can and do hire private parties to handle certain jobs. For example, the government can hire private contractors to clean government buildings. It can also pay private consultants to build its IT systems. It can even hire private companies to run its prisons. None of these activities violates the private-nondelegation doctrine because none of them actually delegate anything. Public officials continue to supervise the activities and make the major policy decisions. They’ve merely brought in private parties to handle ministerial tasks.

Of course, the difference between ministerial tasks and policy decisions isn’t always clear. To draw the line, courts usually look to two U.S. Supreme Court decisions: Carter v. Carter Coal Co. and Sunshine Anthracite Coal Co. v. Adkins. Both were decided in the early 20th century, and both involved a version of the same law. First, Carter Coal considered the original Bituminous Coal Conservation Act of 1935. The Act allowed large coal producers and their unions to set rules of “fair practice,” including minimum wages and maximum hours. Those rules applied not only to the producers themselves, but also to other companies in the same industry.

The Supreme Court held that the Act was unconstitutional. In effect, the Act allowed private companies and unions to regulate their competitors. They could effectively write laws for themselves with no external supervision. In the Court’s view, that wasn’t just an improper delegation; it was “legislative delegation in its most obnoxious form.” 

But four years later, the Court reached a different result in Adkins. In the intervening years, Congress had amended the Act to add a layer of government supervision. Large producers and unions could still write standards for their own industry. But those standards had no effect until approved by a public official, the coal commissioner. The Court held that the scheme was “unquestionably valid” because the commissioner had “authority and surveillance” over the industry. It was the commissioner, not the industry, that had ultimate regulatory power.   

Reading those cases together, courts have found a principle of subordination. Under Adkins, the government can enlist private expertise and even accept private regulatory proposals. But under Carter Coal, it cannot give private actors final say. Whatever authority private actors have, they can exercise it only under government supervision and subject to government control.

Collective Bargaining as Private Regulation

That principle doesn’t often come up in federal labor law, even though the law gives private actors significant control. The law requires unions and employers to bargain for a collective-bargaining agreement. Once signed, the agreement applies to everyone in the covered workplace, including employees who decide not to join the union. In that sense, the agreement acts like a regulation: it applies even to people who didn’t agree to it.

But even so, collective bargaining is still basically grounded in consent. Federal law doesn’t require anyone to agree to any specific term. In fact, it doesn’t require anyone to agree at all. The parties only have to bargain in good faith. As long as they do that, they’ve satisfied their legal obligations, even if they never sign a contract. And so if they do sign a contract, it’s one that they’ve mutually agreed to.

That’s why it’s hard to describe collective bargaining as an exercise of government power. No one imposes any term on anyone else. The terms remain basically private, and the parties remain basically free to manage their workplaces.

Nondelegation Comes to Labor Law

But that could change under two proposed bills: the Protect the Right to Organize (PRO) Act and the Faster Labor Contracts Act. Though the bills differ in their details, each would add so-called interest arbitration to the federal bargaining process. Interest arbitration is essentially an alternative to private negotiation. An employer and a union would first get a chance to negotiate their own agreement. But if they couldn’t make a deal, they’d be sent to a private arbitrator. That arbitrator would listen to their proposals and then write an agreement for them. That agreement would bind them to the same extent as any contract, with or without their consent.

That change to labor law could drag in the private-nondelegation doctrine. Again, under that doctrine, the government can sometimes enlist private help. It can consider private feedback when writing regulations. It can even translate that feedback directly into law. But it cannot let private parties make the law themselves. Doing that would transplant government power outside the government—a result barred by the Vesting Clauses.

The bills’ drafters might look for support in earlier challenges to interest arbitration, which have mostly failed. For example, in 2017, a group of farmers challenged an interest arbitration scheme under California law. That challenge succeeded before a court of appeal, but ultimately failed at the California Supreme Court. The Supreme Court held that interest arbitration didn’t improperly delegate governmental power because the government had given arbitrators clear guidelines to follow. And since the government had set the broad policy outlines, it could let private arbitrators fill in the details.

But that decision doesn’t quite map on to the federal bills. For one, it involved the California constitution. So the rules announced in Carter Coal and Adkins didn’t apply, and the rule to be announced in Consumers’ Research won’t apply. For another, the California law subjected arbitration decisions to review by a state agency. And that option isn’t available under federal law. Federal labor law is managed by the National Labor Relations Board, and the Board cannot review any agreement. The Board can make sure the parties bargain in good faith, but it cannot review any resulting terms. Neither the PRO Act nor the Faster Labor Contracts Act would change that. So as written, the bills would effectively delegate unreviewable term-setting power to a private arbitrator.

That approach would be hard to square with the private-nondelegation doctrine. Again, the Supreme Court has said that private parties cannot exercise legislative power without government supervision. It has also described the power to write labor contracts as a quasi-legislative power. So if the Court reaffirms, or even expands, nondelegation principles in Consumers’ Research, it could stop interest arbitration cold.

Few people think about Consumers’ Research as a labor case. Even so, it could ultimately decide the direction of labor law. Labor lawyers take note.