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104th Congress Report
HOUSE OF REPRESENTATIVES
1st Session 104-163
NULLIFYING AN EXECUTIVE ORDER THAT PROHIBITS FEDERAL CONTRACTS WITH
COMPANIES THAT HIRE PERMANENT REPLACEMENTS FOR STRIKING EMPLOYEES
June 27, 1995.--Committed to the Committee of the Whole House on the
State of the Union and ordered to be printed
Mr. Goodling, from the Committee on Economic and Educational
Opportunities, submitted the following
R E P O R T
MINORITY AND ADDITIONAL VIEWS
[To accompany H.R. 1176]
[Including cost estimate of the Congressional Budget Office]
The Committee on Economic and Educational Opportunities, to
whom was referred the bill (H.R. 1176) to nullify an executive
order that prohibits Federal contracts with companies that hire
permanent replacements for striking employees, having
considered the same, report favorably thereon without amendment
and recommend that the bill do pass.
The purpose of H.R. 1176 is to nullify any executive order
that prohibits Federal contracts with companies that hire
permanent replacements for striking employees.
H.R. 1176 was introduced by Representative William F.
Goodling on March 8, 1995, the day that Executive Order 12954
was issued. The original cosponsors of the legislation included
a bipartisan group of 29 Members, and the bill is now
cosponsored by almost 70 Members.
The Committee on Economic and Educational Opportunities
held a hearing on H.R. 1176 and Executive Order 12954 on April
5, 1995. The hearing focused on both the policy implications of
a ban on striker replacement workers and on the legality, from
a constitutional perspective, of the Executive Order. Testimony
was received from Stephen Bokat, General Counsel, U.S. Chamber
of Commerce; Paul Huard, Senior Vice President for Policy and
Communications, National Association of Manufacturers; Clifford
J. Erhlich, Senior Vice President of Human Resources, Marriott
International, and Vice Chairman, Labor Policy Association;
Richard K. Willard, Partner, Steptoe & Johnson; Reed Larson,
President, National Right to Work Committee; and Roger Gates,
President, Local 713, United Rubber Workers.
Although the April 5th hearing was the only one this
Congress specifically devoted to the issues raised by H.R. 1176
and the Executive Order, the Committee, in the past, has held
numerous hearings on the implications of a ban on striker
replacements for our system of labor-management relations.
During the last several Congresses, hearings were held on
legislation to broadly prohibit all employers covered by the
National Labor Relations Act (NLRA) and the Railway Labor Act
(RLA) from hiring permanent replacement workers in a wide range
of labor disputes--H.R. 3936 in the 101st Congress and H.R. 5
in the 102nd and 103rd Congresses. Although these hearings
obviously did not touch upon the legal authority of the
President to act in this area, they were a forum for discussion
of the effect of a ban on hiring striker replacement workers on
the collective bargaining system created by the NLRA.
On June 14, 1995, the Committee on Economic and Educational
Opportunities approved H.R. 1176 by a vote of 22-16, and, by a
voice vote, ordered the bill favorably reported.
H.R. 1176 would nullify Executive Order 12954, which was
issued March 8, 1995, to prohibit Federal contracts with
companies that hire permanent replacement workers for striking
employees. This Order's ban on permanent replacement workers,
even if limited to government contractors 1, has serious
negative implications for the integrity of our system of
collective bargaining. The foundation of that system is a
balancing of the interests and risks of labor and management
that allows the bargaining process to prod both parties toward
a collective agreement on the terms and conditions of
\1\ Although limited to contractors with the Federal government,
the sweep of the Executive Order is still quite broad. Clifford Erlich,
Senior Vice President for Human Resources of Marriott International and
Vice-Chairman of the Board of Directors of the Labor Policy
Association, testified before the Committee on Economic and Educational
Opportunities on April 5, 1995, that the federal government is now
purchasing approximately 22 percent of the nation's Gross Domestic
The peaceful use of economic weapons, including the right
to strike and the right to continue business operations during
a strike by hiring permanent replacement workers, are part and
parcel of our collective bargaining system. The system becomes
completely unbalanced when the economic weapon available to one
party is taken away, while the other party retains the ability
to fully use its economic weapon to force concessions.2
The Committee is convinced that a ban on the use of replacement
workers will lead to more strikes in the Federal contractor
arena, and the ripple effects of those strikes will result in
lost jobs and lost business opportunities throughout industry.
\2\ As to the policy arguments generally in favor of retaining
current law allowing employers to hire permanent replacement workers
during an economic strike, see the Minority Views to Committee Report
103-116, H.R. 5, the Cesar Chavez Workplace Fairness Act.
The Committee also has serious concerns regarding the
legality of an Executive Order prohibiting Federal contractors
from using permanent replacement workers when that right is
guaranteed to employers in every other industry.3 The
Congress has expressed its will with respect to the legality of
permanent replacement workers during an economic strike and the
proposed order runs completely counter to that will. The
National Labor Relations Act (NLRA) is a comprehensive
statutory and remedial scheme governing collective bargaining
relations and the unilateral executive action taken by the
President completely undermines that scheme. The responsibility
for setting employment policy rests in the Congress, not in the
White House, and the Committee objects to the President's
attempt to circumvent the legislative process with an Executive
action of questionable legality.
\3\ The Minority Members of the Committee made much of the fact
that President Bush had issued executive orders dealing with the
ability of government contractors to execute pre-hire agreements and
the obligation of contractors to notify employees of their rights under
the Beck decision to object to the payment of union dues for activities
unrelated to collective bargaining. The legal authority of the
President to issue these orders was never seriously examined and thus
they provide no basis for justifying Executive Order 12954.
In sum, Executive Order 12954 constitutes both bad policy
and bad law, and the Committee strongly supports H.R. 1176
nullifying the order.
Executive Order 12954
Executive Order 12954 prohibits contracting agencies from
contracting with employers that permanently replace lawfully
striking employees. This prohibition would apply to all
contracts over $100,000. The Executive Order authorizes the
Secretary of Labor to investigate an organizational unit of a
Federal contractor and to hold public or private hearings to
determine if the unit has permanently replaced lawfully
striking employees. The Order, which was effective immediately
upon being issued on March 8, 1995, applies only to striker
replacements hired after the effective date with respect to
contract termination, but applies to striker replacements hired
before the effective date with respect to contract debarment.
The period of debarment of a contractor may not extend beyond
the date of the resolution of the labor dispute precipitating
the hiring of permanent replacement workers.
The President attempts to justify Executive Order 12954,
pursuant to his authority under the Federal Property and
Administrative Services Act (FPASA), on the grounds that
``efficient economic performance and productivity are directly
related to the existence of cooperative working relationships
between employers and employees.'' The President presumes that
stable employee relations in a company will lead to more
efficient performance and that the threat of permanent
replacement is a threat to the stability of the collective
bargaining relationship. The Committee seriously questions the
conclusions on which the President rests his authority to take
this unilateral executive action.
Executive Order 12954 is of Questionable Legality
The starting point for any analysis of the authority of the
President to issue an executive order is the Supreme Court's
decision in Youngstown Sheet & Tube Co. v. Sawyer.4 In
that decision, the Court instructed that ``[t]he President's
power, if any, to issue [an] order must stem either from an act
of Congress or from the Constitution itself.'' 5 Justice
Jackson's oft-cited concurrence in the so-called ``steel
seizure'' decision delineated three situations where
Presidential authority to issue an executive order might be
exercised, each with different implications with respect to the
legality of the resulting order: 6
\4\ 343 U.S. 579 (1952).
\5\ Id. at 585.
\6\ Id. at 635-38.
(1) Executive order is issued pursuant to express or
implied authorization from Congress--Presidential
authority is at its maximum.
(2) Executive order is issued in the absence of
either a granting or a denial of authorization from
Congress--Presidential authority is less clear and must
derive from the independent power of the President.
There is also likely concurrent authority in the
Congress to act.
(3) Executive order is incompatible with the
expressed or implied will of Congress--Presidential
authority is most restricted and to be sustained,
courts must disable Congress from acting on the
The President cites the FPASA as authorizing the Executive
Order on striker replacements and relies on a Justice
Department Memorandum analyzing this authority.7 The
Administration argues that the Act promotes an economic and
efficient procurement system and a ban on strike replacement
workers would lead to cooperative working relationships, thus
reducing labor strife and holding down labor costs on Federal
contracts. The courts have held that the FPASA gives the
President ``broad ranging authority'' to issue orders designed
to promote ``economy'' and ``efficiency'' in government
procurement.8 The critical element in assessing the
legality of the President's action, in this context, is whether
there is a ``sufficiently close nexus'' between the order
banning striker replacements by federal contractors and the
goals of economy and efficiency.9
\7\ Memorandum to Janet Reno, Attorney General, from Walter
Dellinger, Assistant Attorney General, Re: Executive Order 12954, March
9, 1995, reprinted at 141 Cong. Rec. S 3781-01, 3782 (March 10, 1995).
\8\ See American Federation of Labor and Congress of Industrial
Organizations v. Kahn, 618 F.2d 784 (D.C. Cir.) (en banc), cert.
denied, 443 U.S. 915 (1979).
\9\ Id. at 792.
There is no nexus between the executive order banning federal
contractors from hiring permanent replacement workers and the
goals of economy and efficiency in federal procurement.
The Committee does not believe that a nexus exists between
the order banning striker replacements by federal contractors
and the goals of economy and efficiency, and the findings cited
by the President do little to establish the requisite
connection. Far from contributing to the goals of economy and
efficiency, Executive Order 12954 will increase the costs of
federal procurement.10 A ban on the hiring of permanent
replacement workers by federal contractors is likely to cause
excessive delays in the performance of federal contracts in the
many situations where the use of temporary replacement workers
is not feasible, thus increasing costs. And, as a recent
Congressional Research Service analysis of the Executive Order
attests, it could be argued that the order ``ignores the
possibility that a ban on striker replacements could lead to
higher wage settlements, ultimately increasing the cost to the
government.'' 11 The CRS report goes on to conclude that
``a reviewing court might find it difficult to discern any
reasonable nexus between the goals of economy and efficiency of
the federal acquisition process, and the goals of the Executive
\10\ It is interesting to note a point about the impact of the
Executive Order's ban on the hiring of permanent replacement workers on
the goals of efficiency and economy that was raised by John A. Penello,
a former Member of the National Labor Relations Board, in a letter to
Representative William Clay dated April 6, 1995. Mr. Penello states
that when the AFL-CIO submitted a draft labor law reform bill to the
White House for review in 1977, it included a provision outlawing
permanent replacement workers during strikes for first or second
collective bargaining agreements. Citing Townley, Labor Law Reform in
U.S. Industrial Relations, 93 (1986), he asserts that President
Carter's White House rejected the proposal both as politically
infeasible, and, agreeing with objections raised by the Commerce
Department, as leading to ``increased industrial conflict'' and
``inflationary wage increases.''
\11\ CRS American Law Division Memorandum, ``Executive Order 12954:
Prohibiting the Use of Striker Replacements Under Federal Contracts,''
by Vince Treacy, April 3, 1995.
The Justice Department's reliance on the Kahn case as the
justification for Executive Order 12954 is misplaced. Indeed,
although the Kahn doctrine certainly establishes the operative
principles for analyzing the scope of the President's authority
under the FPASA, the court there indicated that they would look
unfavorably on an executive order dealing with labor-management
relations similar to that issued on March 8, 1995. The court
Amicus argues that a decision upholding Executive
Order 12092 [dealing with wage and price standards]
would give the President power, for example, to
establish by Executive Order the sort of program
proposed in the National Labor Law Reform Act of 1977,
which was not enacted, that ``willful'' violators of
the National Labor Relations Act should be suspended
from seeking Government contracts for three years.
[Citation omitted.] The approach we take today might
raise serious questions about the validity of such an
Order, but we need not reach that issue here.12
\12\ Kahn at 793 n.50 (emphasis added).
The President asserts that an important aspect of stable
collective bargaining relationships, that lead to efficient
economic performance, is the balance between allowing
businesses to operate during a strike and preserving worker
rights.13 The President goes on to contend that this
balance is disrupted when permanent replacement employees are
hired. This contention by the President demonstrates his
misunderstanding both of the practical realities faced by many
businesses during a strike and the statutory scheme governing
collective bargaining created in the NLRA.
\13\ See, Preamble to Executive Order 12954.
The hiring of permanent replacement workers to maintain
business operations in the face of an economic strike is part
and parcel of the give and take of collective bargaining and is
a ``legitimate and substantial'' practice entirely consistent
with the NLRA.14 Furthermore, as a practical matter, in
order to continue operating during a strike, which the
President admits is part of the balance, hiring permanent
replacement workers may be a necessity. It is impossible for
many employers to keep an operation running for any sustained
period of time utilizing supervisory personnel or temporary
replacements. Geographic isolation, specialized skill
requirements, or the threat of union violence all may drive
employers to the necessity of offering permanent employment to
those who cross the picket lines. Economy and efficiency in
federal procurement will certainly not be served if factories
are forced to stand idle by a ban on permanent replacement
workers which makes it impossible for companies performing
federal contracts to maintain operations.
\14\ See Trans World Airlines, Inc. v. Independent Federation of
Flight Attendants, 489 U.S. 426, 433 (1989).
Executive Order 12954 is inconsistent with the National Labor Relations
Act's comprehensive statutory and remedial scheme governing
The President's reliance on the FPASA also ignores the fact
that executive authority in this area may be circumscribed by
the National Labor Relations Act (NLRA). The NLRA has been
interpreted to have broad preemptive effect, and the Executive
Order--which vests in the Department of Labor the authority to
investigate Federal contractors to determine if strike
replacements have been used--unreasonably interferes with the
National Labor Relations Board's (NLRB) broad remedial
authority over labor-management relations. The Labor-Management
Relations Act (LMRA) 15 gives the NLRB exclusive
jurisdiction over the NLRA and thus suggests that no other
government actor has the authority to regulate private sector
collective bargaining relationships. The CRS analysis, on this
point, indicates that ``there seems to be no statutory
authority for the reallocation of jurisdiction from the NLRB to
the Department of Labor.'' 16
\15\ 29 U.S.C. section 153 et seq.
\16\ CRS Memorandum at p. 9.
Further, by denying federal contractors the right to hire
permanent replacement workers during an economic strike,
Executive Order 12954 disrupts the foundation of the National
Labor Relations Act's system of collective bargaining. Indeed,
the order runs counter to the very purpose of our collective
bargaining system, which is to facilitate the resolution of
disputes between employees and employers within the general
confines of a competitive market place. Fundamental to that
system, and its overall effectiveness, is a delicate balance
that both protects the interests of labor and management and,
at the same time, exposes both to certain risks.
The law safeguards both workers' right to strike and the
right of employers to continue business operations during a
strike. If an employer is found to have committed unfair labor
practices in the course of a strike undertaken to secure
economic concessions, all economic strikers are entitled to
full reinstatement and back pay. If, however, the strike is
fully based on economic disagreements between labor and
management, management may continue to operate with workers to
whom it may offer permanent employment. Put simply, both sides
have something to lose if they fail to reach agreement. Labor
is threatened with the prospect of permanent replacement if it
goes on strike; and, business is faced with the decline in
productivity and profits which invariably accompany a strike,
whether or not permanent replacements are employed.
This balance of protections and risks is designed to
encourage settlement of labor disputes. For almost 60 years
this balance has served labor and management very well, and has
never been seriously questioned by the Congress--or by the
Supreme Court, which first articulated the permanent
replacement doctrine in its Mackay decision in 1938.17 The
Committee fails to see how Executive Order 12954 can be
justified in the face of the clear effect it would have
upsetting the delicate balance which is and, always has been,
one of the underpinnings of our collective bargaining system.
\17\ In National Labor Relations Board v. Mackay Radio & Telegraph
Co., the Supreme Court concluded that, although section 13 of the NLRA
prohibits employer interference with the right to strike:
``. . . [It] does not follow that an employer, guilty of
no act denounced by the statute, has lost the right to
protect and continue his business by supplying places left
vacant by strikers. And he is not bound to discharge those
hired to fill the places of the strikers, upon the election
of the latter to resume their employment, in order to
create places for them. The assurance by [the employer] to
those who accepted employment during the strike that if
they so desired their places might be permanent was not an
unfair labor practice nor was it such to reinstate only so
many of the strikers as there were vacant places to be
filled.'' 304 U.S. 333, 345-46 (1938).
The Court thus concluded that hiring ``permanent'' replacements
during ``economic'' strikes was not an unfair labor practice prohibited
by the NLRA. As the NLRA was amended subsequent to the Mackay decision,
the permanent replacement doctrine was essentially incorporated into
other provisions of the Act dealing with the rights of economic
strikers. Section 9(c)(3) of the NLRA which was added by 1947 Taft-
Hartley changes to the Act and amended by 1959 Landrum-Griffin changes
implicitly recognizes the right of employers to hire permanent
replacement workers in an economic strike. That provision deals with
the voting rights of ``employees on strike who are not entitled to
reinstatement'' and has always been interpreted to refer to replaced
economic strikers. See Hardin The Developing Labor Law (3d Ed. 1992),
Executive Order 12954's ban on permanent replacement workers is an
exercise of regulatory authority, preempted by the NLRA, which
cannot be justified as a legitimate condition of doing business
with the Federal Government
While the federal government certainly has a right, as a
purchaser of goods and services, to place terms and conditions
on those with whom it chooses to deal 18, Executive Order
12954 is clearly regulatory in nature. Thus, the order loses
its protection as a government action in the sphere of
participation in the market and the preemptive effect of the
NLRA applies in full force. As the Supreme Court concluded in
the Machinists case, this preemption doctrine applies to
conduct the ``Congress intended to be `unrestricted by any
governmental power to regulate' because it was among the
`permissible economic weapons in reserve' '' under the
NLRA.19 The right of employers to hire permanent
replacement workers is clearly a permissible economic weapon
under the NLRA upon which government regulation of any kind,
including Executive Order 12954, is foreclosed.
\18\ See Building & Construction Trades Council v. Associated
Builders & Contractors, Inc., 113 S.Ct. 1190 (1993). [the so-called
Boston Harbor case]
\19\ Lodge 76, International Association of Machinists & Aerospace
Workers v. Wisconsin Employment Relations Commission, 427 U.S. 132, 141
The Supreme Court's rationale in Wisconsin Department of
Industry v. Gould 20, overturning a state law which
debarred contractors found guilty of three unfair labor
practices under the NLRA, has application to Executive Order
12954 as well. The Court rejected the state's arguments,
similar to those raised by the Department of Justice in the
context of the Executive Order, that the law was not regulatory
in nature, but was the state functioning as a private purchaser
of services. The Supreme Court refused to elevate form over
substance and stated that ``[t]o uphold the Wisconsin penalty
simply because it operates through state purchasing decisions .
. . would make little sense. It is the conduct being regulated,
not the formal description of governing legal standards, that
is the proper focus of concern.'' 21 Thus, the Court found
that the purpose of the law was to deter NLRA violations, and
was tantamount to regulation, thereby invoking the preemption
\20\ 475 U.S. 282 (1986).
\21\ Gould at 289 (internal quotation marks omitted.)
\22\ In Gould, the preemption doctrine at issue was actually that
established in San Diego Building Trades Council v. Garmon, 359 U.S.
236 (1959), which protects the primary jurisdiction of the NLRB to
determine what conduct is prohibited or protected by the NLRA.
The Executive Order is more closely comparable to the
Wisconsin law rejected in Gould than to the union-only prehire
agreement, required by Massachusetts in the bid specification
for the Boston Harbor Cleanup project, that was upheld by the
Supreme Court. In the latter case, the Court found that the
state was free as a participant in the marketplace to condition
its ``purchasing upon the very sort of labor agreement that
Congress explicitly authorized'' under the NLRA.23 The
Executive Order, like the provision at issue in Gould, is a
blanket requirement demanding all government contractors, not
just those on a single project, to waive their right under the
NLRA to hire replacement workers. The broad sweep of the order,
potentially impacting almost one fifth of the gross domestic
product (GDP) of the United States, makes it more akin to
regulatory, than proprietary, action by the President.
\23\ Boston Harbor, 113 S.Ct. at 1199.
Furthermore, in rationalizing the need for Executive Order
12954, the President asserts that the balance, so important to
stable collective bargaining relationships, between allowing
businesses to operate during a strike and preserving worker
rights is disrupted when permanent replacements are hired. The
broad attempt by the President to prohibit striker replacements
in the guise of stabilizing collective bargaining relationships
exposes the order as the President ``perform[ing] a role that
is characteristically a governmental rather than a private
role,'' 24 and thus as an action that is regulatory in
\24\ See Boston Harbor, 113 S.Ct. at 1197.
Clearly, the collective bargaining relationship is of
utmost concern to the statutory framework of the NLRA, and,
implicit in that framework, is a judgment that the use of the
economic weapon of permanent replacement workers is part of
collective bargaining process. The Executive Order interferes
with the statutory judgment implicit in the NLRA and cannot be
Executive Order 12954's ban on permanent replacement workers is bad
Although the Committee believes strongly that the President
overstepped his authority in issuing Executive Order 12954, the
Committee believes equally strongly, regardless of the legality
of the Order, that it constitutes bad policy in the area of
labor-management relations that will undermine our system of
Executive Order 12954 ignores economic realities
Far from improving the efficiency of Federal contracting, a
ban on striker replacements would inevitably lead to more
strikes. If management were prevented from hiring permanent
replacement workers, much of the risk would be removed from the
decision to strike, thereby labor's impulse to strike would be
less restrained. In situations where operations cannot be
maintained without hiring permanent replacements, an employer
would face the lose-lose proposition of agreeing to what are
perhaps unreasonable demands of the union or suffering serious
business losses. Related businesses and their employees would
also suffer, as the domino effect of stalled industries and
services leads to lost productivity and lay-offs.
Executive Order 12954 upsets the balance of interests and risks
The current system of collective bargaining works because
both labor and management come to the table with considerable
leverage. The right to strike and the right to hire permanent
replacement workers are counterbalancing weapons that drive
both sides to settle their disputes at the bargaining table. By
tying one arm behind management's back, the Order places so
heavy a thumb on the scale in favor of labor that the balance
of interests and risks that serves as the foundation for this
nation's collective bargaining system will be seriously
Executive Order 12954 reverses 55 years of labor-management law which
recognizes the right of employers to maintain operations during
an economic strike by hiring permanent replacement workers
The right of employers to hire permanent replacement
workers was first recognized in 1938 when the Supreme Court
concluded in the Mackay decision that, although section 13 of
the NLRA prohibits employer interference with the right to
strike, it ``does not follow that an employer, guilty of no act
denounced by the statute, has lost the right to protect and
continue his business by supplying places left vacant by
strikers. And he is not bound to discharge those hired to fill
the places of the strikers, upon the election of the latter to
resume their employment, in order to create places for them.''
25 The Court thus concluded that hiring ``permanent''
replacements during economic strikes was not an unfair labor
practice prohibited by the NLRA. This distinction between
economic strikers and unfair labor practice strikers, in terms
of their reemployment rights, has survived 55 years of
lawmaking by the Congress, the Supreme Court, and the NLRB.
Unfair labor practice strikers are entitled to immediate
reinstatement at the conclusion of a strike, with backpay,
while economic strikers are entitled to reinstatement only as
\25\ 304 U.S. at 345.
The origins and development of the Mackay Radio Doctrine demonstrate
that the right of employers to hire permanent replacement
workers is a well-accepted facet of labor law
Proponents of a ban on permanent replacement workers have
argued that the Supreme Court announced the right of employers
to hire permanent replacement workers during an economic strike
in a discussion that was peripheral to the holding of the
Mackay decision. They contend that this right became enshrined
in precedent without a thorough examination of the issue of
permanent replacement either in the decision or when the NLRA
was passed. However, this contention ignores legislative
developments prior to passage of the NLRA, amendments to the
NLRA subsequent to the Mackay decision, and the evolution of
the Mackay doctrine through 50 years of Supreme Court
decisionmaking. Employers were understood to retain the right
to hire permanent replacement workers prior to the passage of
the NLRA, and in numerous cases since the 1938 decision, the
Supreme Court has reaffirmed the Mackay doctrine.26
Further, subsequent case law and legislative developments
related to the rights of both replacement workers and economic
strikers have started from the premise of the per se legality
of permanent replacement.27
\26\ See, e.g., Trans World Airlines, Inc. v. Independent
Federation of Flight Attendants, 489 U.S. 426 (1989).
\27\ See, generally, Hardin, The Developing Labor Law (3d Ed.
1992), pp. 1104-10.
The many legal protections in the NLRA that are extended to strikers
ensures that permanent replacement is not the same as firing a
Allowing permanent replacement workers is not the same as
allowing an employer to fire an employee for engaging in a
lawful strike. There are numerous protections in the current
law that are extended to economic strikers that protect the
lawful exercise of the right to strike. Among these statutory
protections are the fact that economic strikers remain
statutory employees eligible for recall until they obtain
regular and substantially equivalent employment 28 and
they remain eligible to vote in union elections for 12
months.29 Employers are prohibited from engaging in
``surface bargaining'' to instigate a strike so that nonunion
replacement workers can be hired.30 Likewise, employers
may not grant additional benefits to either temporary or
permanent replacement workers,31 and they may not presume
that replacement workers do not support the union for purposes
of their duty to bargain.32
\28\ See Laidlaw Corp., 171 NLRB 1366 (1968), enfd. 414 F.2d 99
(7th Cir. 1969), cert. denied, 397 U.S. 920 (1970).
\29\ See section 9(c)(3) of the NLRA.
\30\ Employers have an obligation under section 8(a)(5) of the NLRA
to bargain in good faith.
\31\ See NLRB v. Erie Resistor Corp., 373 U.S. 221 (1962).
\32\ See NLRB v. Curtin Matheson Scientific, Inc., 110 S.Ct. 1542
There is no evidence of an increase in the incidence of striker
replacement activity during the 1980's and 1990's
Proponents of a ban on permanent replacement workers have
argued that, after 55 years of coexisting with the possibility
of permanent replacement, the practice has increased so
dramatically in the last 15 years that it has become
management's first and most common response to any labor
dispute. The notion that employers cavalierly decide to replace
entire units of employees contradicts the nearly universal
efforts of employers to ensure workforce stability. Indeed, an
experienced, well-trained workforce is one of an employer's
most valuable assets. Moreover, not only is the hiring of
permanent replacements costly, in terms of recruitment,
training, and productivity loss, but it also is often
associated with strike violence, public relations problems, and
costly litigation. As a result, most employers involved in
labor disputes will hire permanent replacements when faced with
the most dire of circumstances and, then, only as a last
resort. There is simply no empirical evidence demonstrating a
marked increase in striker replacement activity.
Comparisons to the labor-management laws of other nations are
irrelevant to the issue of whether a ban on striker
replacements makes policy sense for the United States
Much has been made by proponents of the striker replacement
ban of the contention that the United States is the only
industrialized nation in the world to allow the permanent
replacement of striking workers. Even assuming arguendo that
this contention is accurate, such a comparison ignores not only
the comprehensive body of statutory and regulatory labor
relations law in each country, but also the economic, social,
and cultural context of which any legal system is a part.
Employers could also pick and choose among the labor relations
laws of other nations to find provisions that might be more
amenable to the interests of American businesses than the
system of balanced interests they must work within in this
country. A decision by any other country to include a ban on
the hiring of permanent replacement workers within the fabric
of their labor laws says very little about whether that policy
makes sense for the United States. The fact remains that within
the context of the U.S. system of labor relations law, the
collective bargaining process simply will not work with the
inequality of power that will result from a ban on permanent
H.R. 1176 is necessary to nullify executive order 12954 because it is
of questionable legality and because it interferes with the
balance between labor and management underpinning the
collective bargaining process protected by the NLRA
Executive Order 12954 attempts to make illegal the use of
economic weapons by federal contractors that are specifically
authorized by the NLRA, and thus, cannot be allowed to stand.
There is no nexus between the Executive Order banning federal
contractors from hiring permanent replacement workers and the
goals of economy and efficiency in federal procurement. The
order is inconsistent with the National Labor Relations Act's
comprehensive statutory and remedial scheme governing labor-
management relations. Finally, Executive Order 12954's ban on
permanent replacement workers is an exercise of regulatory
authority, preempted by the NLRA, which cannot be justified as
a legitimate condition of doing business with the federal
The President's action runs counter to Congress' clearly
expressed legislative intent to permit employers to maintain
business operations during a strike by hiring permanent
replacement workers. The will of Congress is consistent with
almost 60 years of interpretation of the National Labor
Relations Act (NLRA) that recognizes the necessary
counterbalancing effect of the right to strike and the right to
hire permanent replacement workers. Indeed, this balance of
powers is at the heart of our system of collective bargaining.
If Executive Order 12954 is allowed to stand, the Committee is
convinced that the system would break down, resulting in more
strikes, with the consequent loss of business opportunities
and, ultimately, jobs.
The conclusion of the CRS analysis of Executive Order 12954
is that it ``may not survive even the most restrained judicial
scrutiny.'' 33 The analysis noted the irony of the
situation created by the Order, in that a company could lose
its Federal contracts because it had legally hired permanent
replacement workers, while a company guilty of illegal unfair
labor practices could not be disabled from participating in the
Federal procurement process by the NLRB. The Committee feels
strongly that the order is completely inappropriate and
unwarranted and wholeheartedly supports the purpose of H.R.
1176 to make it null and void.
\33\ See CRS Memorandum at p. 7.
H.R. 1176 would nullify any executive order that prohibits
Federal contracts with companies that hire permanent
replacements for striking employees.
Section one provides that any executive order, or other
rule or order, that prohibits Federal contracts with, or
requires the debarment of, or imposes other sanction on, a
contractor on the basis that such contractor or organizational
unit thereof has permanently replaced lawfully striking workers
shall have no force or effect.
Oversight Findings of the Committee
In compliance with clause 2(l)(3)(A) of rule XI of the
Rules of the House of Representatives and clause 2(b)(1) of
rule X of the Rules of the House of Representatives, the
Committee's oversight findings and recommendations are
reflected in the body of this report.
Inflationary Impact Statement
In compliance with clause 2(l)(4) of rule XI of the Rules
of the House of Representatives, the Committee estimates that
the enactment into law of H.R. 1176 will have no significant
inflationary impact on prices and costs in the operation of the
national economy. It is the judgment of the Committee that the
inflationary impact of this legislation as a component of the
federal budget is negligible.
Government Reform and Oversight
With respect to the requirement of clause 2(l)(3)(D) of
rule XI of the Rules of the House of Representatives, the
Committee has received no report of oversight findings and
recommendations from the Committee on Government Reform and
Oversight on the subject of H.R. 1176.
Clause 7 of rule XIII of the Rules of the House of
Representatives requires an estimate and a comparison by the
Committee of the costs which would be incurred in carrying out
H.R. 1176. However, clause 7(d) of that rule provides that this
requirement does not apply when the Committee has included in
its report a timely submitted cost estimate of the bill
prepared by the Director of the Congressional Budget Office
under section 403 of the Congressional Budget Act of 1974.
Application of Law to Legislative Branch
Section 102(b)(3) of Public Law 104-1 requires a
description of the application of this bill to the legislative
branch. This bill would nullify any executive order that
prohibits Federal contracts with contractors on the basis that
such contractor has permanently replaced lawfully striking
workers and as such has no application to the legislative
Unfunded Mandate Statement
Section 423 of the Congressional Budget & Impoundment
Control Act requires a statement of whether the provisions of
the reported bill include unfunded mandates. This bill would
nullify any executive order that prohibits Federal contracts
with contractors on the basis that such contractor has
permanently replaced lawfully striking workers and as such does
not contain any unfunded mandates.
Budget Authority and Congressional Budget Office Cost Estimate
With respect to the requirement of clause 2(l)(3)(B) of
rule XI of the House of Representatives and section 308(a) of
the Congressional Budget Act of 1974 and with respect to
requirements of clause 2(l)(3)(C) of rule XI of the House of
Representatives and section 403 of the Congressional Budget Act
of 1974, the Committee has received the following cost estimate
for H.R. 1176 from the Director of the Congressional Budget
Congressional Budget Office,
Washington, DC, June 19, 1995.
Hon. William F. Goodling,
Chairman, Committee on Economic and Educational Opportunities, House of
Representatives, Washington, DC.
Dear Mr. Chairman: The Congressional Budget Office has
reviewed H.R. 1176, as ordered reported by the Committee on
Economic and Educational Opportunities on June 14, 1995, and
has estimated that the bill would have no significant effects
on the federal budget, and no impact on the budgets of state
and local governments.
The bill would nullify an executive order that prohibits
federal contracts with, requires debarment of, or imposes other
sanctions on a contractor on the basis that the contractor has
hired permanent replacements for striking employees. On March
8, 1995, President Clinton signed an executive order that
prohibited the executive branch from contracting with employers
that permanently replace lawfully striking employees. No action
has been taken under this executive order, but the regulations
implementing the order will become effective June 26, 1995. CBO
has no basis for predicting the extent to which the executive
order or its absence would affect labor disputes, and whether
there would be any resulting effect on costs to the federal
government. We anticipate that such effects, if any, would not
Enactment of H.R. 1176 would not affect direct spending;
therefore, pay-as-you-go procedures would not apply to this
If you wish further details on this estimate, we will be
pleased to provide them.
James T. Blum
(For June E. O'Neill, Director).
motion to adopt the bill h.r. 1176
The bill H.R. 1176 was adopted without amendments on June
14, 1995 by a vote of 22 ayes to 16 noes.
The rollcall vote is as follows:
Chairman Goodling Mr. Clay
Mr. Petri Mr. Martinez
Mr. Gunderson Mr. Owens
Mr. Fawell Mr. Sawyer
Mr. Ballenger Mr. Payne
Mr. Barrett Mrs. Mink
Mr. Cunningham Mr. Andrews
Mr. Hoekstra Mr. Reed
Mr. McKeon Mr. Roemer
Mr. Castle Mr. Engel
Mr. Johnson Mr. Becerra
Mr. Talent Mr. Scott
Mr. Greenwood Mr. Green
Mr. Hutchinson Ms. Woolsey
Mr. Knollenberg Mr. Romero-Barcelo
Mr. Riggs Mr. Reynolds
Changes in Existing Law
There are no changes to existing law made by this bill.
Congress of the United States,
House of Representatives,
Washington, DC, June 20, 1995.
Hon. Bill Goodling,
Chairman, Committee on Economic and Educational Opportunities, Rayburn
House Office Building, Washington, DC.
Dear Chairman Goodling: I regret that I was unable to be
present on June 14th when our full committee voted to favorably
report H.R. 1176, legislation which nullified President
Clinton's Executive Order 11954. Unfortunately, as Chairwoman
of the Banking Subcommittee on Financial Institutions and
Consumer Credit, I was presiding over a second mark-up.
Had I been present, I would have voted ``yes'' to favorably
report H.R. 1176.
Thank you for including this explanation in the committee
Member of Congress.
Congress of the United States,
House of Representatives,
Washington, DC, June 20, 1995.
Hon. William Goodling,
Chairman, Committee on Economic and Educational Opportunities, Rayburn
House Office Building, Washington, DC.
Dear Congressman Goodling: I unfortunately was not present
during final consideration of H.R. 1176 before the Committee on
Economic and Educational Opportunities. I was engaged in a
markup of a measure before the Resources Committee. Had I been
present during the vote to bring up H.R. 1176 and to report it
out of Committee, I would have voted ``no.''
Thank you for your consideration.
Member of Congress, 7th District.
Congress of the United States,
House of Representatives,
Washington, DC, June 15, 1995.
Hon. William L. Goodling,
Chairman, Committee on Economic and Educational Opportunities, House of
Representatives, Washington, DC.
Dear Mr. Chairman: I regret that I was unable to be present
yesterday when the Full Committee voted to favorably report
H.R. 1176, legislation to Nullify the President's Striker
Replacement Executive Order.
I would like the official transcript to reflect that had I
been present, I would have voted ``Yea.'' However, it was
necessary for me to be present on the House floor to speak in
support of an amendment at the time the vote was taken.
Thank you for including this explanation in the record.
Member of Congress.
Committee on Economic
and Educational Opportunities,
U.S. House of Representatives,
Washington, DC, June 21, 1995.
Hon. William L. Goodling,
Chairman, Committee on Economic and Educational Opportunities, House of
Representatives, Washington, DC.
Dear Mr. Chairman: I regret that I was unable to be present
Wednesday, June 14, when the Full Committee voted to favorably
report H.R. 1176, legislation to Nullify the President's
Striker Replacement Executive Order.
I would like the official transcript to reflect that had I
been present, I would have voted ``No.'' However, it was
necessary for me
to be present at another Committee proceeding at the time the
vote was taken.
Thank you for including this explanation in the record.
Member of Congress.
In its zeal to enact legislation to embarrass the
President, the majority has failed to present either a
convincing case that the legislation represents good policy or
that the legislation would serve any constructive purpose. H.R.
1176 raises two fundamental issues: (1) Is a policy that
prohibits government contractors from permanently replacing
striking workers in the Nation's interest? And, (2) does
Executive Order No. 12954 exceed the scope of the President's
With regard to whether it is in the national interest to
prohibit government contractors from permanently replacing
striking workers, the answer is ``absolutely yes.'' Restricting
the use of permanent replacements by government contractors is
clearly in the interest of taxpayers.
Not even the major league baseball owners were willing to
pretend that the replacement players they hired were capable of
playing baseball with the same skill and professionalism of
major leaguers. The same is true in any other endeavor.
Unilaterally turning one's back on skilled experienced
employees in order to permanently replace them with unskilled,
inexperienced replacements cannot help but have detrimental
consequences for the products or services of government
contractors and for the taxpayers who purchase those goods or
services. Government contractors often provide essential
services for our Nation's welfare. We should not, for instance,
be willing to jeopardize the safety of our troops by sending
them into battle using aircraft, weapons, and other equipment
built by permanent replacement workers.
On the issue of whether the President has acted within his
authority, the majority has failed to make its case that he has
not so acted. Moreover, it is impossible not to notice a
glaring inconsistency in the majority's position. In October
1992, President Bush issued Executive Order No. 12818
prohibiting federal contractors from entering into pre-hire
agreements.\1\ In effect, Mr. Bush denied construction workers
on federal construction projects the only practical means they
have of protecting their ability to engage in collective
\1\ In fact, their is a substantial body of precedents for
Executive Orders relating to federal procurement policy. They are
discussed in more detail later in these minority views. Significantly,
H.R. 1176 would not prohibit any of the other Executive Orders. H.R.
1176 only applies where the President has taken action to protect
workers and taxpayers from permanent replacement workers.
That Executive Order and President Clinton's Executive
Order (No. 12954) were based on a similar claim of executive
authority. However, the majority does not contend that
President Bush exceeded his authority, and H.R. 1176 would not
prevent a future President from reissuing the Bush Executive
Order. We are left to conclude then that the majority's theory
of Presidential authority would seem to be that as long as the
President takes an action against the interest of workers, he
is acting within his authority; however, if the President acts
to help workers, he has exceeded his authority. While such a
posture may be consistent with the majority's political
philosophy, it has no basis in law and is simply unfair.
In addition, it is ironic that some in the majority contend
that the President somehow violated the principle of separation
of powers by issuing Executive Order No. 12954. If the majority
is so concerned with the separation of powers, why is it not
content to let the courts determine the lawfulness of the
President's action? The judicial branch is best equipped to
determine the limits of executive power.
The use of permanent replacement workers is bad policy
The use of permanent replacement workers undermines
cooperative and stable labor-management relations. Once
management makes the decision to replace striking workers
permanently, the union's paramount focus is to return its
members to work. All other issues, including issues vital to
productivity, become relatively insignificant.
Strikes involving the use of permanent replacement workers
are more prolonged and contentious than other strikes. The
trust essential to a cooperative collective bargaining
relationship is shattered even when the mere threat of
permanent replacements hovers overhead.
The decades of the 1980's and 1990's are littered with the
destruction caused by the use of permanent replacement workers.
Greyhound, International Paper, Continental Airlines, and
Eastern Airlines offer prime examples of subsequent financial
calamity. The best workplaces are those that foster constant
experimentation, development, flexibility, and better products.
Because workers are integral to the central process of
collective innovation, they need flexible skills and
responsibilities that will enable them to contribute more
fully. This model cannot survive in an atmosphere polluted by
permanent replacement workers. H.R. 1176 not only fails to
recognize this reality, but promotes a policy of awarding
federal contracts to companies that engage in this destructive
The majority's report, like so much of the majority's
actions this Congress, utterly ignores the effects of H.R. 1176
on workers. The painful reality is that the pro-permanent-
replacement policy embodied in the report promotes practices
that destroy the lives of workers and their families. At a
hearing on April 5, 1995, the Committee heard testimony from
Roger Gates, President of Local 713 of the United Rubber
Workers of America and an employee of Bridgestone/Firestone.
That company permanently replaced its striking workers without
notice in January 1994. Gates reminded us that:
Aside from the legal questions of what goods the
federal government should buy, there are some human
questions. In the last year, I have learned nearly as
much about those as about making tires. Every day I
confront and try to deal with what is happening to the
families of several thousand Bridgestone/Firestone
workers in Decatur, in Oklahoma City, in Noblesville,
Indiana, and in Des Moines, Iowa. I am here to make
sure that when you in Washington debate government
policy in this area, you clearly have in mind the real
people whose lives you are affecting.\2\
\2\ ``Hearing on E.O. 12954 and H.R. 1176 before the House Economic
and Educational Opportunities Committee'', 104th Cong., 1st Sess. at 33
(Apr. 5, 1995).
In keeping with Mr. Gates salient observation, the minority
notes the following comments from other ``real people.''
By far, the most tragic case was that of flight
attendant Frank Fotjik. Frank had flown for TWA for 21
years when the strike took place; he was married with
two children, 8 and 9 years old. Frank's inability to
regain his rightful employment and the fact that he
could no longer provide for his wife and children
weighed heavily on him, causing deep depression. Frank
would have regained his job back at the end of the
strike had the crossovers been removed. Three weeks
after the strike ended, when Frank realized that he had
no post-strike job, he committed suicide. His widow
told IFFA that Frank had no prior history of
depression. Frank's death is a tremendous loss to his
family, friends, and TWA.\3\
\3\ ``Prohibiting Permanent Replacement of Striking Workers,
Hearing before the Subcommittee on Aviation of the Committee on Public
Works and Transportation'', 102d Cong., 1st Sess. at 113 (Apr. 10,
1991) (Testimony of Vicki Frankovich, President, Independent Federation
of Flight Attendants).
There were divorces, there were problems, physical,
mental. It's devastating. You're pitting brother
against brother in many cases . . . I saw one brother
on one side of the coin and the other as a striker and
they literally would fight each other because one was
working for the company and one was not . . . The
company pitted one against another and some of this is
never going to go away. All of the top management that
makes these decisions, they don't live here in this
\4\ ``Hearings on H.R. 5, The Striker Replacement Bill, Hearings
before the Subcommittee on Labor-Management Relations of the Committee
on Education and Labor,'' 102d Cong., 1st Sess. at 162 (Mar. 6, 1991).
I was with Ravens 18 years. I worked my way up
through the ranks, my family had a good quality of
life. I was earning $13.16 an hour when Ravens locked
us out and hired scabs. It takes two to negotiate--we
were ready to do some honest talking, but Ravens wasn't
interested. We knew what they were doing wasn't right,
but it seemed that everywhere we turned for help, all
we got was a slap in the face. To make matters even
worse, the few other companies in this area apparently
have ``blacklisted'' us; as far as I know, none of the
workers who were forced to strike by Ravens has found
work in this area. Now, I work when I can . . . usually
part-time, temporary jobs, whatever comes along. My
wife works full-time as a bank teller. She earns $9,000
a year. Our daughter Susan is a senior in high school,
and she is filling out applications for college, but we
don't know how we are going to pay the tuition. My
family went from being comfortable, typical middle-
class working Americans, to worrying about keeping the
wolves away from the door.\5\
\5\ Prohibiting Discrimination Against Economic Strikers, Hearing
before the Subcommittee on Labor of the Committee on Labor and Human
Resources,'' 102d Cong., 1st Sess. at 224 (Mar. 12, 1991). (Richard
Executive Order 12954 promotes productive Federal procurement
The Clinton Administration argues that the Federal Property
and Administrative Services Act of 1949 (FPASA), 40 U.S.C.
Sec. 471 et seq., was enacted to ``provide for the Government
an economical and efficient system for . . . procurement and
supply.'' \6\ The goals of economy and efficiency ``appear in
the statute and dominate the sparse record of the congressional
deliberations'' concerning the FPASA.\7\ Section 486(a) of the
FPASA provides that the President ``may prescribe such policies
and directives, not inconsistent with the provisions of this
Act, as he shall deem necessary to effectuate the provisions of
said Act.'' The Administration argues that Congress intended
the FPASA to ``emphasiz[e] the leadership role of the President
in setting Government-wide procurement policy on matters common
to all agencies,'' by giving the President ``particularly
direct and broad-ranging authority over those larger
administrative and management issues that involve the
Government as a whole.'' \8\
\6\ 40 U.S.C. Sec. 471.
\7\ AFL-CIO v. Kahn, 618 F.2d 784, 788 (D.C.Cir.) (en banc), cert.
denied, 443 U.S. 915 (1979).
\8\ Id. at 788, 789.
The Administration concedes, however, that the authority
delegated to the President is not unlimited. Because the
purpose of the FPASA is to promote economy and efficiency in
federal procurement of goods and services, the U.S. Court of
Appeals for the District of Columbia has held that presidential
orders under section 486(a) ``must accord with values of
`economy' and `efficiency.' '' \9\ The Administration asserts
that ``[e]conomy and efficiency are not narrow terms; they
encompass those factors like price, quality, suitability, and
availability of goods or services that are involved in all
acquisition decisions.'' \10\ Nonetheless, the Administration
recognizes that some nexus between the executive order and the
statutory goals of economy and efficiency is required. Although
courts have not yet specified what is a ``sufficiently close
nexus,'' \11\ it is the Administration's view that the
President need only have a rational basis for finding that the
executive order serves economy and efficiency in government
\9\ Id. at 792.
\10\ Id. at 789.
\11\ Id. at 792.
The Administration accumulated evidence from recent
congressional debates, hearings, and reports, as well as from
scholarly studies on the use of permanent replacements for
lawful strikers to support the President's findings that
strikes involving permanent replacements tend to be longer \12\
and more disruptive \13\ than other strikes. These strikes
result in lower productivity \14\ and less cooperative labor-
\12\ S. Rep. No. 110, 103d Cong., 1st Sess. 12 (1993); H.R. Rep.
No. 116 at 20; ``Hearings on H.R. 5, The Striker Replacement Bill:
Hearings before the Subcomm. on Labor-Management Relations of the House
Comm. on Educ. & Labor,'' 102d Cong., 1st Sess. 490-91, 495-96 (1991);
John F. Schnell and Cynthia L. Gramm, ``The Empirical Relations Between
Employers' Striker Replacement Strategies and Strike Duration,'' 47
Indus. & Lab. Rel. Rev. 189, 190, 199, 201, 203 (1994); Craig A. Olson,
``The Use of Strike Replacements in Labor Disputes: Evidence From the
1880's to the 1980's,'' at 13-21 (Univ. of Wisconsin-Madison, March
1991) (unpublished paper); Cynthia Gramm, ``Empirical Evidence on
Political Arguments Relating to Replacement Worker Legislation,'' 42
Lab. L.J. 491, 493-94 (1991); see also Cynthia L. Gramm and John F.
Schnell, ``An Analysis of The Economic Costs of Executive Order 12954:
Barring Federal Contractors From Hiring Permanent Striker
Replacements'' Kenneth L. Deavers, Employment Policy Foundation, 1995
at 6-14 (June 1995).
\13\ S. Rep. No. 110 at 7, 21-24; H.R. Rep. No. 116 at 16, 28-29.
\14\ S. Rep. No. 110 at 7; H.R. Rep. No. 116 at 16.
\15\ S. Rep. No. 110 at 4, 24-25; H.R. Rep. No. 116 at 27, 30-31.
The evidence and common sense also support the executive
order's finding that an employer who hires permanent
replacement workers ``loses the accumulated knowledge,
experience, skill, and expertise of its incumbent employees.''
\16\ The evidence also indicates not only that employers using
permanent replacement workers are not able to operate their
facilities at a greater capacity than employers using other
means to operate during a strike (e.g., temporary
replacements), but also that the use of temporary replacements,
rather than permanent replacements, may allow a firm to operate
at a greater capacity.\17\ Consistent with the findings in the
executive order, studies show that cooperative workplaces are
likely to be more productive than those that experience a great
\16\ See, e.g., Julius Getman & Ray Marshall, ``Industrial
Relations in Transition; The Paper Industry Example,'' 102 Yale L.J.
1803, 1840-43, 1881 (June 1993).
\17\ Cynthia Gramm, ``Employers' Decision to Operate During
Strikes: Consequences and Policy Implications'' (1990), reprinted in
Hearings on H.R. 5, The Striker Replacement Bill: Hearings Before the
Subcomm. on Labor-Management Relations of the House Comm. on Educ. &
Labor,'' 102d Cong., 1st Sess. 491-92, 497-98 (1991); Cynthia L. Gramm
and John F. Schnell, ``Some Empirical Effects of Using Permanent
Striker Replacements,'' 12 Contemp. Econ. Pol'y 122, 124-29, 132
\18\ See Julius Getman & Ray Marshall, ``Industrial Relations in
Transition: The Paper Industry Example,'' 102 Yale L.J. 1803, 1836-44,
1880-81 (June 1993); Belman, ``Unions, the Quality of Labor Relations,
and Firm Performance,'' reprinted in ``Unions and Economic
Competitiveness'' 41, 70-71 (Mishel and Voos, eds., 1992); see
generally Richard B. Freeman and James L. Medoff, ``What Do Unions
Do?'' (1984) (presence of unions increases efficiency and
Executive Order No. 12954 advances cooperative and stable
labor-management relations, which is a central feature of
efficient, economical and productive procurement. The use (or
threatened use) of permanent replacement workers destroys
opportunities for cooperative and stable labor-management
relations. Since the economical and efficient administration
and completion of federal government contracts requires a
stable and productive labor-management environment, the federal
government has a strong interest in prohibiting the use of
Executive Order 12954 is carefully tailored to promote efficient and
Executive Order No. 12954 only applies to those who seek to
profit from the taxpayers. The vast majority of employers who
are not government contractors are wholly unaffected by the
President's order. The order is only applicable to the small
number of irresponsible government contractors who seek to
permanently replace lawfully striking workers. The order does
not restrict the right of contractors to replace striking
workers. Moreover, if the strike is unlawful, if the conduct of
the strikers is unlawful, or if the workers lose the strike and
do not agree to return to work under the employer's terms and
conditions, contractors may still, in effect, permanently
replace strikers. Executive Order No. 12954 merely provides
that, if a contractor chooses to discriminate against lawfully
striking workers in favor of replacement workers, the federal
government will not reward that behavior by doing business with
Executive Order No. 12954 closely ties termination or
debarment of contractors who permanently replace striking
workers to the pursuit of economy and efficiency.
Significantly, the order provides that the Secretary of Labor
will do a case-by-case analysis before issuing any debarment or
termination order. In addition, any decision by the Secretary
to issue a debarment or termination order is subject to review
by the contracting agency. Finally, any final agency action
remains subject to judicial review. As stated by the U.S.
District Court for the District of Columbia:
As both the proposed regulations and the Executive
Order itself make clear, the Order does not create an
automatic bar to the hiring of permanent replacement
workers, but rather, provides for an administratively
layered system of case-by-case review in order to
determine whether termination and/or debarment would be
appropriate in the case of individual contracts and
\19\ Chamber of Commerce et al v. Reich, Civ. No. 95-0503,
Memorandum-Opinion at 16 (D.D.C. May 9, 1995) (Kessler, J.).
Clearly, Executive Order No. 12954 does not establish a
universal or general rule. Rather, it provides a careful review
process to ensure the particular facts and circumstances of
each case and the interests of efficient and economical
procurement are assessed before any action is taken.
A substantial body of precedents exists for executive orders on
Federal contractors are often required to follow a more
progressive course than other employers. Since enactment of the
FPASA, Presidents have exercised the authority delegated to
them by Congress, among other things, to ban discrimination and
require affirmative action by federal contractors, to exclude
certain state prisoners from federal contract work, to require
federal contractors to adhere to wage and price controls, and
to require federal workers to pay parking fees.\20\
\20\ See Kahn at 790-93; American Fed'n of Gov't Employees v.
Carmen, 669 F.2d 815 (D.C. Cir. 1981); Contractors Ass'n v. Secretary
of Labor, 442 F.2d 159 (3d Cir.), cert. denied, 404 U.S. 854 (1971);
Farkas v. Texas Instrument Inc., 375 F.2d 629, 632 n.1 (5th Cir.),
cert. denied, 389 U.S. 977 (1967).
The Buy American Act,\21\ passed by Congress in 1933,
requires that the federal government buy primarily goods and
services that are produced or manufactured in the United
States. The rationale for that Act is that American taxpayers'
dollars should be used to put Americans to work. Several
executive orders have been issued by a variety of Presidents to
enforce that requirement.
\21\ 41 U.S.C. Sec. 10a et seq.
Before 1964, racial discrimination in employment did not
violate federal law. Nonetheless, in 1941, President Roosevelt
issued an executive order requiring defense contractors to
refrain from racial discrimination. In 1951, President Truman
extended that requirement to all federal contractors, even
through Congress had declined to enact an anti-discrimination
statute proposed by the President. In 1964, President Johnson
issued Executive Order No. 11246 to require federal contractors
to guarantee equal opportunity based on race, gender, and
national origin. President Johnson issued that executive order
a full year before Congress enacted the Civil Rights Act of
1965, and the executive order still requires a higher standard
for federal contractors than the Civil Rights Act requires for
other employers. President Johnson also issued an executive
order in 1964 prohibiting federal contractors from
discriminating on the basis of age, even though Congress would
not act to prohibit age discrimination for at least another
Most recently, President George Bush issued two executive
orders pursuant to his authority under the FPASA that related
directly to labor-management relations policy: \22\
\22\ The majority correctly notes that neither of President Bush's
executive orders underwent serious legal challenge. Both orders were
eventually repealed by President Clinton. Nonetheless, these precedents
undermine the majority's claim to the principle of defending the
integrity of the National Labor Relations Act and the collective
bargaining process. No member of the majority either introduced
legislation to overturn either of President Bush's executive orders or
publicly advocated for hearings to consider the consequences of these
executive orders for collective bargaining and the NLRA. In fact, as
noted later in this text, leaders of the Republican party praised
President Bush's actions.
(1) ``Pre-Hire Agreements'': Executive Order No. 12818
issued in late October 1992 prohibited federal contractors from
entering into ``pre-hire agreements,'' also known as ``project
agreements'' with a union for work on federal construction
contracts.\23\ Project agreements are collective bargaining
agreements common to the construction industry that establish
labor standards for construction work prior to the hiring of
workers. Section 8(f) of the National Labor Relations Act
(``NLRA''),\24\ specifically and expressly permits construction
employers and construction unions to enter into project
agreements. In Building and Construction Trade Council of
Boston and the Massachusetts Water Resources Authority v.
Associated Builders & Contractors of Massachusetts/Rhode
Island, 113 S. Ct. 1190 (1993) (``Boston Harbor'') the United
States Supreme Court held unanimously that a State could enter
into project agreements without violating federal labor laws.
\23\ 57 Fed. Reg. 48713 (Oct. 28, 1992).
\24\ 29 U.S.C. Sec. 158(f).
In sum, Executive Order No. 12818 sought to prohibit a
practice which Congress had expressly permitted. In contract,
the National Labor Relations Act is silent on the question of
whether federal contractors may use permanent replacement
workers. Congress has never spoken on the issue. The House of
Representatives twice passed the Workplace Fairness Act which
would have prohibited all employers, not just federal
contractors, from using permanent replacements.\25\ A majority
of United States Senators was ready to pass the Workplace
Fairness Act, but their intent was frustrated by filibusters on
two separate occasions.
\25\ See H.R. 5, 102d Cong., 1st Sess. (1991); S. 55, 102d Cong.,
2d Sess. (1992); H.R. 5, 103d Cong., 1st Sess. (1993).
(2) Beck Decision: Executive Order No. 12800, issued in
April 1992, required federal contractors to post notices
declaring that their employees could not be required to join or
maintain membership in a union.\26\ This executive order
purported to implement the Supreme Court's decision in
Communications Workers of America v. Beck, 487 U.S. 735 (1988).
\26\ 57 Fed. Reg. 12985 (Apr. 14, 1992).
President Bush proceeded with this executive order, even
though a very closely related legislative proposal was pending
before Congress. In 1991, a coalition of House Republicans,
including the current Speaker Newt Gingrich, the current
Republican leader Richard Armey, the current Republican whip
Tom Delay, and Representatives Archer, Ballenger, and
Livingston co-sponsored the Workers Political Rights Act of
1991.\27\ The proposed legislation would have required that
employees be notified in writing that they could not be
required to join a union. The bill was never passed by the
Congress. But on April 13, 1992, President Bush issued
Executive Order No. 12800 anyway.
\27\ H.R. 2915, 102d Cong., 1st Sess. (1991).
On the very day President Bush issued that Executive Order,
presidential Press Secretary Marlin Fitzwater explained that
the Bush Administration had hoped that Congress would pass
legislation that addressed Bush's policy or that the NLRB would
issue a decision preventing unions from using fees collected
from dissenting employees for political purposes. ``That has
not occurred,'' said Fitzwater. ``[W]e thought it most
important to go forward with this piece of it, which is all we
could do.'' \28\ The current Republican whip, Rep. Tom DeLay,
expressed an even more blunt view: ``This is an effort by the
President to do something through executive order that he
cannot get Congress to do.'' \29\
\28\ 72 Daily Labor Report A-10, April 14, 1992.
\29\ 72 Daily Labor Report A-10, April 14, 1992.
The majority's arguments regarding strike duration, strike incidence,
and the costs of the executive order are entirely without merit
The evidence contradicts several unsupported assertions in
the majority report. First, while the majority claims (without
citation to any scholarly or empirical support or testimony
before the Committee) that ``there is no evidence of an
increase in the incidence of striker replacement activity
during the 1980's and the 1990's,'' scholars have found that
the incidence of strikes in which employers permanently replace
striking workers has generally increased during the period
since the Supreme Court's decision in National Labor Relations
Board v. Mackay Radio & Telegraph Company, 304 U.S. 333 (1938).
That increase has been sustained at a historically high level
during the past two decades.\30\
\30\ See, e.g., Michael Leroy, ``Regulating Employer Use of
Permanent Replacement Strikes: Empirical Analysis of NLRA and RLA
Strikes, 1935-1991,'' (forthcoming in Berkeley Journal of Employment &
Labor Law, 1995); Cynthia Gramm, ``Employers' Decision to Operate
During Strikes: Consequences and Policy Implications'' (1990),
reprinted in Hearings on H.R. 5, The Striker Replacement Bill: Hearings
Before the Subcomm. on Labor-Management Relations of the House Comm. on
Educ. & Labor, 102d Cong., 1st Sess. (1991); see also Cynthia L. Gramm
and John F. Schnell, ``An Analysis of The Economic Costs of Executive
Order 12954: Barring Federal Contractors From Hiring Permanent Striker
Replacement'' Kenneth L. Deavers, Employment Policy Foundation, 1995 at
16-21 (June 1995).
Second, while the majority asserts that the executive order
will increase the incidence of strikes, data drawn from
experience with Canadian provincial law that would affect all
employers (not simply federal contractors with contracts
exceeding $100,000) indicate that prohibiting employers from
using permanent replacement workers does not significantly
increase the incidence or duration of strikes.\31\
\31\ John W. Budd, ``Canadian Strike Replacement Legislation and
Collective Bargaining: Lessons for the United States,'' at 9-12 (Univ.
of Minnesota, Dec. 1994) (unpublished paper forthcoming in Industrial
Relations; see also Cynthia L. Gramm and John F. Schnell, ``An Analysis
of The Economic Costs of Executive Order 12954: Barring Federal
Contractors From Hiring Permanent Striker Replacements'' Kenneth L.
Deavers, Employment Policy Foundation, 1995 at 14-16 (June 1995).
A third unsupported assertion relates to the cost of the
executive order to the economy, as a whole, and to the
government, in particular. The majority offers no empirical
evidence to support its view that the executive order will
increase the government's costs. A letter from Congressional
Budget Office Director June E. O'Neill (included in this
Committee Report) directly rebuts the majority's view:
CBO has no basis for predicting the extent to which
the executive order or its absence would affect labor
disputes, and whether there would be any resulting
effect on costs to the federal government. We
anticipate that such effects, if any, would not be
\32\ Letter from Director June E. O'Neill, Congressional Budget
Office, to Chairman William F. Goodling, June 9, 1995.
A study by the Employment Policy Foundation purported to
show that Executive Order No. 12954 would cost the economy as a
whole between $520 million and $2 billion. A careful analysis
of that study concluded the following with respect to the EPF
[F]inal estimates of the aggregate annual economic
cost of the Executive Order are not credible because
they are derived from contaminated data and because
they are based on several assumptions that are
demonstrably false when considered in light of both
economic theory and empirical evidence.\33\
\33\ Cynthia L. Gramm and John F. Schnell, ``An Analysis of The
Economic Costs of Executive Order 12954: Barring Federal Contractors
From Hiring Permanent Striker Replacements'' Kenneth L. Deavers,
Employment Policy Foundation, 1995 at ii (June 1995) (Executive
Not surprisingly, the majority does not cite the EPF study
in the Committee Report. In fact, the majority cites no
authority for their naked assertion regarding the Executive
Order's costs. If anything, the Executive Order is likely to
save money by protecting the government from low-quality goods
and services provided by unskilled, less productive permanent
The administration has advanced substantial arguments in support of the
legality of Executive Order No. 12954
The Justice Department's Office of Legal Counsel reviewed
Executive Order No. 12954 before it was issued and released a
thorough memorandum finding that the President plainly acted
within his executive authority when he issued the Executive
Order. This memorandum (attached as Appendix A to these
minority views) concisely sets forth the Administration's legal
arguments in support of the executive order.
The United States Supreme Court has construed the NLRA to
preempt government regulation of certain conduct that the
Congress intended to remain free from any regulation or to
commit to the exclusive jurisdiction of the National Labor
Relations Board (``NLRB''). The Administration argues, however,
that the NLRA does not preempt action by the government when it
is acting, as here, as a purchaser of goods or services, rather
than as a regulator or policymaker.\34\
\34\ Boston Harbor, 113 S. Ct. 1190 (1993). The Administration has
pointed out that the Supreme Court has not applied the NLRA preemption
doctrine to action by a federal agency, other than the NLRB. See Kahn,
618 F.2d at 796. Even assuming that Congress meant to preempt any
federal, as well as state or local, regulation of conduct that it
intended to be left to the free play of economic forces, proprietary
action such as that embodied in Executive Order No. 12954 is not
Section 7 of the NLRA guarantees certain rights to
employees, including the right to organize, to bargain
collectively, and to engage in other concerted activities,
including strikes.\35\ Section 8 prohibits employer conduct
that interferes with the exercise of section 7 rights.\36\ The
Supreme Court has recognized that employers who hire permanent
replacements during an economic strike do not violate section 8
of the NLRA.\37\ However, the Supreme Court has never created a
statutory right for employers to hire permanent
\35\ 29 U.S.C. Sec. 157; NLRA v. Fleetwood Trailer Co., 389 U.S.
\36\ 29 U.S.C. Sec. 158.
\37\ NLRB v. Mackay, 304 U.S. 333, 345-46 (1938).
\38\ In fact, there is good reason to doubt whether the NLRA
creates any rights for employers, as opposed to mere permitted conduct.
The Supreme Court has developed two preemption doctrines
under the NLRA. Under the first doctrine, known as ``Garmon
preemption'', the NLRA preempt State or local regulation of
conduct that is arguably subject to section 7 or 8 of the
NLRA.\39\ Garmon preemption ``protects the primary jurisdiction
of the NLRA to determine in the first instance what kind of
conduct is either prohibited or protected by the NLRA.'' \40\
\39\ San Diego Bldg. Trades Council v. Garmon, 359 U.S. 236, 245
\40\ Metropolitan Life Ins. Co. v. Massachusetts, 471 U.S. 724, 748
The second preemption doctrine, ``Machinists preemption,''
applies to conduct that ``Congress intended to be `unrestricted
by any governmental power to regulate' because it was among the
permissible `economic weapons in reserve' '' under the Act.\41\
The Machinists rule ``creates a free zone from which all
regulation, `whether federal or State,' is excluded.'' \42\
\41\ Lodge 76, Int'l Ass'n of Machinists & Aerospace Workers v.
Wisconsin Employment Relations Comm'n, 427 U.S. 132, 141 (1976)
(``Machinists'') (citation omitted).
\42\ Golden State Transit Corp. v. City of Los Angeles, 493 U.S.
103, 111 (1989) (quoting Machinists, 427 U.S. at 153) (citations and
The Administration argues that these NLRA preemption
doctrines ``apply only to . . . regulation'' by the government
within a ``zone protected and reserved for market freedom'' or
for NLRB jurisdiction.\43\ Where the government acts as a
proprietor in the market, and does not engage in regulation or
policymaking, the Administration asserts that its conduct
simply is not subject to either Garmon or Machinists
\43\ Boston Harbor, 113 S. Ct. at 1196 (emphasis in original).
\44\ Id. at 1196-97; see Babler Bros., Inc. v. Roberts, 995 F.2d
911, 916 (9th Cir. 1993); Associated Builders & Contractors, Inc., v.
City of Seward, 966 F.2d 492, 495-96, 498 (9th Cir. 1992), cert.
denied, 113 S. Ct. 1577 (1993).
The Administration relies on the Supreme Court's reasoning
in Boston Harbor that a public entity ``purchasing contracting
services'' generally may make the same decisions as private
purchaser in the market.\45\ Thus, the Court held that a State
could insist that all successful bidders on a particular State
project abide by a project agreement negotiated between the
manager of the project and a council of trade unions. The Court
emphasized that the State was not engaged in policymaking, but
was simply trying to ensure that the project would be completed
with economy and efficiency.\46\ The State's proprietary
conduct as a purchaser of construction services exemplified the
workings of the market and was subject to neither Garmon nor
\45\ Boston Harbor, 113 S. Ct. at 1198.
\46\ Id. at 1193.
\47\ Id. at 1199.
The Administration also relies on the Supreme Court's
recent statement that ``the status of the Government as . . .
market participant must be sharply distinguished from the
status of the Government as regulator.'' \48\ Contrary to the
majority's assertions, the Administration argues that the
Executive Order does not regulate an area of conduct that
Congress intended to be left to the free play of economic
forces. In the Administration's view, the order simply is an
exercise of federal government's authority as a purchaser of
goods and services and, therefore, does not conflict with the
\48\ Director, OWCP v. Newport News Shipbuilding & Dry Dock Co., 63
U.S.L.W. 4213, 4215 (U.S. March 21, 1995).
As in Boston Harbor, Executive Order No. 12954 applies
only to contracts in which the federal government acts as a
purchaser of goods and services.\49\ The Administration argues
that the order implements the government's right as a purchaser
to refrain from doing business with employers whose use of
permanent replacements likely will impede their ability to
fulfill their contractual obligations.\50\ The Administration
asserts that, like private purchasers, ``the Government enjoys
the unrestricted power to . . . determine those with whom it
will deal, and to fix the terms and conditions upon which will
make needed purchases.'' \51\
\49\ Boston Harbor, 113 S. Ct. at 1198.
\50\ See id. at 1198-99.
\51\ Perkins v. Lukens Steel Co., 310 U.S. 113, 127 (1940)
Moreover, the Administration argues that Executive Order
No. 12954 is intended to serve economic, rather than regulatory
or policy goals.\52\ Thus, in the Administration's view, the
order is easily distinguishable from the Wisconsin statute in
Wisconsin Dep't of Indus., Labor & Human Relations v. Gould
Inc., 475 U.S. 282 (1986), which automatically debarred
businesses that had committed three unfair labor practices
under the NLRA in five years. In that case, the Administration
concludes that the Court could not credibly ascribe any purpose
other than regulation to the statute, ``given the rigid and
undiscriminating manner'' in which debarment occurred.\53\
Indeed, the State conceded that the statute's purpose was ``to
deter labor law violations'' regardless of their nature and, as
the Court emphasized in Boston Harbor, it served only to deter
conduct that bore no relation to an employer's performance on
government contracts.\54\ Thus, Wisconsin was not functioning
as a private purchaser of services, but had enacted a law that
was ``tantamount to regulation.'' \55\
\52\ Boston Harbor, 113 S. Ct. at 1198; Phoenix Eng'g Inc. v. MK-
Ferguson of Oak Ridge Co., 966 F.2d 1513, 1524 (6th Cir. 1992); Seward,
966 F.2d at 496.
\53\ Gould, 475 U.S. at 287.
\54\ Boston Harbor, 113 S. Ct. at 1197.
\55\ Gould, 475 U.S. at 289; see Boston Harbor, 113 S. Ct. at 1197.
The Administration argues that, unlike the statute in
Gould, the proprietary purpose of Executive Order No. 12954 is
evident on its face. The order is intended ``to ensure that
economical and efficient administration and completion of
Federal Government contracts.'' \56\ Doing business with
contractors engaged in prolonged labor disputes impedes those
\56\ 60 Fed. Reg. 13023.
The extensive research and congressional history cited
above provides the Administration's support for its conclusions
that hiring permanent replacement workers results in longer
strikes, antagonizes labor-management relations, and deprives
employers of the knowledge, experience, skill, and expertise of
the incumbent employees, adversely affecting productivity.
Thus, sound business judgment counsels against entering into
contracts with employers that permanently replaced lawfully
Finally, the Administration argues that the flexible scheme
embodied in Executive Order No. 12954 underscores its lawful
proprietary purpose. The Executive Order does not provide for
automatic contract termination or debarment of those
contractors that hire permanent replacements. Rather, according
to the Administration, the Secretary of Labor or the
contracting agency heads have discretion in determining when to
take such action. By permitting individual agencies to continue
to contract with entities that hire permanent replacements, the
Executive Order demonstrates a flexibility wholly incompatible
with a regulatory rationale.
Department of Justice,
Office of Legal Counsel,
Washington, DC, March 9, 1995.
Memorandum for Janet Reno, Attorney General
From: Walter Dellinger, Assistant Attorney General
Re: Executive Order No. 12954, entitled ``Ensuring the Economical and
Efficient Administration and Completion of Federal Government
On March 6, 1995, we issued a memorandum approving as to
form and legality a proposed executive order entitled,
``Ensuring the Economical and Efficient Administration of
Federal Government Contracts.'' On March 8, 1995 the President
signed the proposed directive, making it Executive Order No.
12954. This memorandum records the basis for our prior
conclusion that the Federal Property and Administrative
Services Act vests the President with authority to issue
Executive Order No. 12954 in light of his finding that it will
promote economy and efficiency in government procurement.
Executive Order No. 12954 establishes a mechanism designed
to ensure economy and efficiency in government procurement
involving contractors that permanently replace lawfully
striking workers. After a preamble that makes and discusses
various findings and ultimately concludes that Executive Order
No. 12954 will promote economy and efficiency in government
procurement, the order declares that ``[i]t is the policy of
the Executive branch in procuring goods and services that, to
ensure the economical and efficient administration and
completion of Federal Government contracts, contracting
agencies shall not contract with employers that permanently
replace lawfully striking employees.'' Exec. Order No. 12954,
Sec. 1. The order makes the Secretary of Labor (``Secretary'')
responsible for its enforcement. Id. Sec. 6. Specifically, the
Secretary is authorized to investigate and holding hearings to
determine whether ``an organizational unit of a federal
contractor'' has permanently replaced lawfully striking
employees either on the Secretary's own initiative or upon
receiving ``complaints by employees'' that allege such
permanent replacement. Id. Sec. 2.
If the Secretary determines that a contractor has
permanently replaced lawfully striking employees, the Secretary
is directed to exercise either or both of two options. First,
the Secretary may make a finding that all contracts between the
government and that contractor should be terminated for
convenience. Id. Sec. 3. The Secretary's decision whether to
issue such a finding is to be exercised to advance the
government's economy and efficiency interests as set forth in
section 1. Id Sec. 1 (``all discretion under this Executive
order shall be exercised consistent with this policy.''). The
Secretary is then to transmit the finding to the heads of all
departments and agencies that have contracts with the
contractor.\1\ Each such agency head is to terminate any
contracts that the Secretary has designated for termination,
unless the agency head formally and in writing objects to the
Secretary's finding. Id. Sec. 3. An agency head's discretion to
object is also limited to promoting the purpose of economy and
efficiency as set forth in the policy articulated in section 1.
\1\ We will refer to this class of officials generally as agency
The Secretary's second option is debarment. If the
Secretary determines that a contractor has permanently replaced
lawfully striking employees, the Secretary is to place the
contractor on the debarment list until the labor dispute has
been resolved, unless the Secretary determines that debarment
would impede economy and efficiency in procurement. The effect
of this action is that no agency head may enter into a contract
with a contractor on the debarment list unless the agency head
finds compelling reasons for doing so. Id. Sec. 4.
Exective Order No. 12954, taken as a whole, sets forth a
mechanism that closely ties its operative procedures--
termination and debarment--to the pursuit of economy and
efficiency. The President has made a finding that, as a general
matter, economy and efficiency in procurement are advanced by
contracting with employers that do not permanently replace
lawfully striking employees. Additionally, the President has
provided for a case-by-case determination that his finding is
justified on the peculiar facts and circumstances of each
specific case before any action to effectuate the President's
finding is undertaken.
The Supreme Court has instructed that ``[t]he President's
power, if any, to issue [an] order must stem either from an act
of Congress or from the Constitution itself.'' Youngstown Sheet
& Tube Co. v. Sawyer, 343 U.S. 579, 585 (1952). The President's
authority to issue Executive Order No. 12954 is statutory;
specifically, the Federal Property and Administrative Services
Act of 1949 (``FPASA''). That statute was enacted ``to provide
for the Government an economical and efficient system for ...
procurement and supply.'' 40 U.S.C. Sec. 471. The FPASA
expressly grants the President authority to effectuate this
The President may prescribe such policies and
directives, not inconsistent with the provisions of
this Act, as he shall deem necessary to effectuate the
provisions of said Act, which policies and directives
shall govern the Administrator [of General Services]
and executive agencies in carrying out their respective
Id Sec. 486(a). An executive order issued pursuant to this
authorization is valid if (a) ``the President acted `to
effectuate the provisions' of the FPASA,'' and (b) the
President's ``action was `not inconsistent with' any specific
provision of the Act.'' American Fed'n of Gov't Employees v.
Carmen, 669 F.2d 815, 820 (D.C. Cir 1981) (quoting 40 U.S.C.
Sec. 486(a)). We are not aware of any specific provision of the
FPASA that is inconsistent with Executive Order No. 12954.
Therefore, we turn to the question whether the President acted
to effectuate the purposes of the FPASA.
Every court to consider the question has concluded that
Sec. 486(a) grants the President a broad scope of authority. In
the leading case on the subject, the United States Court of
Appeals for the District of Columbia Circuit, sitting en banc,
addressed the question of the scope of the President's
authority under the FPASA, and Sec. 486(a) in particular. See
AFL-CIO v. Kahn, 618 F.2d 784 (D.C. Cir.) (en banc), cert.
denied, 443 U.S. 915 (1979). A plausible argument that the
FPASA granted the President only narrowly limited authority was
advanced and rejected. See id. at 799-800 (MacKinnon, J.,
dissenting). After an extensive review of the legislative
history of that provision, the court held that the FPASA,
through Sec. 486(a), was intended to give the President
``broad-ranging authority'' to issue orders designed to promote
``economy'' and ``efficiency'' in government procurement. Id.
at 787-89. The court emphasized that ``(e)conomy' and
`efficiency' are not narrow terms; they encompass those factors
like price, quality, suitability, and availability of goods or
services that are involved in all acquisition decisions.'' Id.
at 789 see also Peter E. Quint, The Separation of Powers under
Carter, 62 Tex. L. Rev. 785, 792-93 (1984) (although
Sec. 486(a) ``easily could be read as authorizing the President
to do little more than issue relatively modest housekeeping
regulations relating to procurement practice. . . . The Kahn
court found congressional authorization of sweeping
presidential power. . . .''); Peter Raven-Hansen, ``Making
Agencies Follow Orders: Judicial Review of Agency Violations of
Executive Order 12,291, 1983 Duke L.J. 285, 333 n.266; Jody S.
Fink, ``Notes on Presidential Foreign Policy Powers (Part
II),'' 11 Hofstra L. Rev. 773, 790-91 n.132 (1983)
(characterizing Kahn as reading Sec. 486(a) to grant President
``virtually unlimited'' authority).
The court then concluded that a presidential directive
issued pursuant to Sec. 486(a) is authorized as long as there
is a ``sufficiently close nexus'' between the order and the
criteria of economy and efficiency. Kahn, 618 F.2d at 792.
Although the opinion does not include a definitive statement of
what constitutes such a nexus, the best reading is that a
sufficiently close nexus exists when the President's order is
``reasonably related'' to the ends of economy and efficiency.
See id. at 793 n.49; Harold H. Bruff ``Judicial Review and the
President's Statutory Powers,'' 68 Va. L. Rev. 1, 51 (1982)
(``in AFL-CIO v. Kahn, the court stated an appropriate standard
for reviewing the basis of a presidential action--that it be
`reasonably related' to statutory policies'') (footnote
As one commentator has asserted, under Kahn, the President
need not demonstrate that an order ``would infallibly promote
efficiency, merely that it [is] plausible to suppose this.''
Alan Hyde, ``Beyond Collective Bargaining: The Politicization
of Labor Relations under Government Contract,'' 1982 Wis. L.
Rev. 1, 26. In our view a more exacting standard would invade
the ``broad-ranging'' authority that the court held the statute
was intended to confer upon the President See Kahn, 618 F.2d at
787-89. In addition, a stricter standard would undermine the
great deference that is due presidential factual and policy
determinations that Congress has vested in the President. See
e.g., Henry P. Monaghan, Stare Decisis and Constitutional
Adjudication,'' 88 Colum. L. Rev. 723, 738 (1988).\2\
\2\ We do not mean to indicate a belief that Executive Order No.
12954 could not withstand a stricter level of scrutiny. We simply
regard the employment of such a standard to be contrary to the holding
of Kahn, as well as the view of the purposes of the FPASA and its
legislative history upon which that decision expressly rests.
We have no doubt, for example, that Sec. 486(a) grants the
President authority to issue a directive that prohibits
executive agencies from entering into contracts with
contractors who use a particular machine that the President has
deemed less reliable than others that are available.
Contractors that use the less reliable machines are less likely
to deliver quality good or to produce their goods in a timely
manner. We see no distinction between this hypothetical order
in which the President prohibits procurement from contractors
that use machines that he deems unreliable and the one the
President has actually issued, which would bar procurement with
contractors that use labor relations techniques that the
President deems to be generally unreliable, especially when the
Secretary of Labor and the contracting agency head each confirm
the validity of that generalization in each specific case.
The preamble of Executive Order No. 12954 sets forth the
President's findings that the state of labor-management
relations affects the cost, quality, and timely availability of
goods and services. The order also announces his finding that
the government's procurement interests in cost, quality, and
timely availability are best secured by contracting with those
entities that have ``stable relationships with their
employees'' and that ``[a]n important aspect of a stable
collective bargaining relationship is the balance between
allowing businesses to operate during a strike and preserving
worker rights.'' The President has concluded that ``[t]his
balance is disrupted when permanent replacement employees are
hired.'' In establishing the policy ordinarily \3\ to contract
with contractors that do not hire permanent replacement
workers, the President has found that he will advance the
government's procurement interests in cost, quality, and timely
availability of goods and services by contracting with those
contractors that satisfy what he has found to be an important
condition for stable labor-management relations.
\3\ Again, the order does not categorically bar procurement from
contractors that have permanently replaced lawfully striking workers.
The sanctions that the order would authorize would not go into effect
if either the Secretary, with respect to either the termination or the
debarment option, or the contracting agency head, with respect to the
termination option, finds that the option would impede economy and
efficiency in procurement.
The order's preamble then proceeds to set forth a
reasonable relation between the government's procurement
interests in economy and efficiency and the order itself.
Specifically, the order asserts the President's finding that
strikes involving permanent replacement workers are
longer in duration than other strikes. In addition, the
use of permanent replacements can change a limited
dispute into a broader, more contentious struggle,
thereby exacerbating the problems that initially led to
the strike. By permanently replacing its workers, an
employer loses the accumulated knowledge, experience,
skill, and expertise of its incumbent employees. These
circumstances then adversely affect the businesses and
entities, such as the Federal Government, which rely on
that employer to provide high quality and reliable
goods or services.
We believe that these findings state the necessary reasonable
relation between the procedures instituted by the order and
achievement of the goal of economy and efficiency.
It may well be that the order will advance other
permissible goals in addition to economy and efficiency. Even
if the order were intended to achieve goals other than economy
and efficiency, however, the order would still be authorized
under the FPASA as long as one of the President's goals is the
promotion of economy and efficiency in government procurement.
``We cannot agree that an exercise of section 486(a) authority
becomes illegitimate if, in design and operation, the
President's prescription, in addition to promoting economy and
efficiency, serves other, not impermissible, ends as well.
``Carmen,'' 669 F.2d at 821; see Rainbow Navy, Inc. v. Dep't of
the Navy, 783 F.2d 1072 (D.C. Cir. 1986); Kimberley A. Egerton,
Note, ``Presidential Power over Federal Contracts under the
Federal Property and Administrative Services Act; The Close
Nexus Test of'' AFL-CIO v. Kahn, 1980 Duke L.J. 205, 218-20.
Since the adoption of the FPASA, Presidents have
consistently regarded orders such as the one currently under
review as being within their authority under that Act. As the
court explained in Kahn, Presidents have relied on the FPASA as
authority to issue a wide range of orders. 618 F.2d at 789-92
(noting the history of such orders since 1941, especially to
institute ``buy American'' requirements and to prohibit
discrimination in employment by government contractors). Not
surprisingly this executive practice has continued since Kahn.
For instance, President Bush issued Executive Order No. 12800,
which required all government contractors to post notices
declaring that their employees could not ``be required to join
a union or maintain membership in a union in order to retain
their jobs.'' 57 Fed. Reg. 12985 (April 13, 1992). The order
was supported solely by the statement that it was issued ``in
order to . . . promote harmonious relations in the workplace
for purposes of ensuring the economical and efficient
administration and completion of Government contracts.'' Id.\4\
This long history of executive practice provides additional
support for the President's exercise of authority in this case.
See Kahn, 618 F.2d at 790.\5\ This is especially so where, as
here, the President sets forth the close nexus between the
order and the statutory goals of economy and efficiency.
\4\ This order is also significant insofar as it demonstrates that
Executive Order No. 12954 is not the first in which a president has
found that more stable workplace relations promote economy and
efficiency in government procurement.
\5\ Of course, the President's view of his own authority under a
statute is not controlling, but when that view has been acted upon over
a substantial period of time without eliciting congressional reversal,
it is `entitled to great respect.' . . . [t]he `construction of a
statute by those charged with its execution should be followed unless
there are compelling indications that it is wrong.' '' Kahn, 618 F.2d
at 790 (quoting Board of Governors of the Federal Reserve Sys. v. First
Lincolnwood Corp., 439 U.S. 234 (1978), and Miller v. Youakim, 440 U.S.
125, 144 n. 25 (1979)).
It may be that in individual cases, a contractor that
maintains a policy of refusing to permanently replaced lawfully
striking workers may nevertheless have an unstable labor-
management relationship while a particular contractor that has
permanently replaced lawfully striking workers may have a more
stable relationship. As to such situation, however, the
Secretary and the contracting agency heads retain the
discretion to continue to procure goods and services from
contractors that have permanently replaced lawfully striking
workers if that procurement will advance the federal
government's economy and efficiency interests as articulated in
section 1 of Executive Order No. 12954.\6\ We recognize that,
even with these safeguards, it could happen that a specific
decision to terminate a contract for convenience or to debar a
contractor pursuant to the order might not promote economy or
efficiency. The courts have held that it remains well within
the President's authority to determine that such occurrences
are more than offset by the economy and efficiency gains
associated with compliance with an order generally. See Kahn,
F. 2d at 793.\7\
\6\ The authority of an agency head is diminished somewhat, though
not eliminated entirely, with respect to procuring from a contractor
that the Secretary has debarred. An agency head may procure from a
debarred contractor only for compelling reasons. See Exec. Order No.
12954, Sec. 4. Nevertheless, the Secretary has authority to refuse to
place a contractor on the debarment list in the first instance if the
Secretary believes that debarment would not advance economy and
\7\ ``[W]e find no basis for rejecting the President's conclusion
that any higher costs incurred in those transactions will be more than
offset by the advantages gained in negotiated contracts and in those
cases where the lowest bidder is in compliance with the voluntary
standards and his bid is lower than it would have been in the absence
of standards.'' Kahn, 618 F.2d at 793.
Similarly, it would be unavailing to contend that Executive
Order No. 12954 will secure no immediate or near-term
advancement of the federal government's economy and efficiency
procurement interests. Section 486(a) authorizes the President
to employ ``a strategy of seeking the greatest advantage to the
Government, both short- and long-term,'' and this is ``entirely
consistent with the congressional policies behind the FPASA.''
Id. (emphasis added); cf, Contractors Ass'n v. Secretary of
Labor, 442 F.2d 159, 170 (3d Cir.) (deciding on basis of
President's constitutional rather than statutory authority),
cert. denied, 404 U.S. 854 (1971).
The FPASA grants the President a direct and active
supervisory role in the administration of that Act and endows
him with broad discretion over how best ``to achieve a flexible
management system capable of making sophisticated judgments in
pursuit of economy and efficiency.'' Kahn, 618 F.2d at 788-89.
As explained above, the President has set forth a sufficiently
close nexus between the program to be established by the
proposed order and the goals of economy and efficiency in
\8\ Moreover, we note that under the Supreme Court's decision in
Dalton v. Specter, 114 S. Ct. 1719 (1994). It is unlikely that the
President's judgment may be subjected to judicial review. It is clear
that Sec. 486(a) gives the President the power to issue orders designed
to promote economy and efficiency in government procurement. See 40
U.S.C. Sec. 486(a); Carmen, 669 F.2d at 821: Kahn, 618 F.2d at 788-89,
792-93. The Supreme Court has recently ``distinguished between claims
of constitutional violations and claims that an official has acted in
excess of his statutory authority. ``Dalton 114 S. Ct. at 1726. The
Court held that
where a claim ``concerns not a want of [presidential] power, but
a more excess or abuse of discretion in exerting a power given, it is
clear that it involves considerations which are beyond the reach of
judicial power. This must be since, as this court has often pointed
out, the judicial may not invade the legislative or executive
departments so as to correct alleged mistakes or wrongs arising from
asserted abuse of discretion.''
Id. at 1727 (quoting Dakota Central Telephone Co. v. South Dakota
ex rel. Payne. 250 U.S. 163. 184 (1919)); see also Smith v. Reagan, 844
F.2d 195, 198 (4th Cir.), cert. denied. 488 U.S. 954 (1988); Colon v.
Carter, 633 F 2d 964, 966 (1st Cir. 1980); cf. Heckler v. Chaney, 470
U.S. 821 (1985); Chicago Southern Air Lines Inc. v. Waterman S.S. Corp.
333 U.S. 103 (1948).
Judicial review is unavailable for claims that the President had
erred in his judgment that the program established in the order is
unlikely to promote economy and efficiency. The FPASA entrusts this
determination to the President's discretion and, under Dalton, courts
may not second-guess his conclusion. The Court made it clear that the
President does not violate the Constitution simply by acting ultra
vires. see Dalton, 114 S. Ct. at 1726-27. Judicial review is available
only for contentions that the President's decision not only is outside
the scope of the discretion Congress granted the President, but also
the President's action violates some freestanding provision of the
Finally, we do not understand the action of Congress in
relation to legislation on the subject of replacement of
lawfully striking workers to bear on the President's authority
to issue Executive Order 12954. The question is whether the
FPASA authorizes the President to issue the order. As set forth
above, we believe that it does. Recent Congresses have
considered but failed to act on the issue of whether to adopt a
national, economy-wide proscription of the practice applying to
all employers under the National Labor Relations Act
(``NLRA'').\9\ This action may not be given the effect of
amending or repealing the President's statutory authority, for
the enactment of such legislation requires passage by both
houses of Congress and presentment to the President. See
Metropolitian Washington Airports Authority v. Citizens for the
Abatement of Aircraft Noise, Inc., 501 U.S. 252 (1991), INS v.
Chadha, 462 U.S. 919 (1983). To contend that Congress's
inaction on legislation to prohibit all employers from hiring
replacement workers deprived the President of authority he had
possessed is to contend for the validity of the legislative
\9\ In the 102d Congress, The House of Representatives passed a
bill to amend the National Labor Relations Act to make it an unfair
labor practice for an employer to hire a permanent replacement for a
lawfully striking employee. See H.R. 5. 102d Cong., 1st Sess. (1991).
The House passed this legislation on a vote of 247-182. Cong. Rec.
H5589 (daily ed. July 17, 1991). The Senate considered legislation to
the same effect. S. 55, 102d Cong., 2d Sess. (1992). The legislation
was not brought to the floor for a vote because supporters of the
measure were only able to muster 57 votes to invoke cloture. See Cong.
Rec. S8237-38 (daily ed. June 16, 1992).
Likewise, legislation to categorize the hiring of permanent
replacement workers as an unfair labor practice was considered in the
103d Congress. The House of Representatives approved the legislation on
a vote of 239-190. See Cong. Rec. H3568 (daily ed. June 15, 1993).
Again, the Senate did not bring the bill to a vote, because its
supporters were unable to attract the supermajority required to invoke
cloture. See Cong. Rec. S8524 (daily ed. July 12, 1994) (fifty-three
senators voting to invoke cloture).
In Youngstown Sheet & Tube, it was considered relevant that
Congress had considered and rejected granting the President the
specific authority he had exercised. 343 U.S. at 586. There,
however, the President did not claim to be acting pursuant to
any statutory power, but rather to inherent constitutional
power. In such a case, the scope of the President's power
depends upon congressional action in the field, including an
express decision to deny the President any statutory authority.
Id. Youngstown Sheet & Tube is inapposite here because the
President does not rely upon inherent constitutional authority,
but rather upon express statutory authority--Sec. 486(a) of the
FPASA. See Kahn, 618 F. 2d at 787 & n.13.
Moreover, we note that Congress's action was far from a
repudiation of the specific authority exercised in Executive
Order No. 12954. Even if a majority of either house of Congress
had voted to reject the blanket proscriptions on hiring
permanent replacements for lawfully striking workers, contained
in H.R. 5 and S. 55, this would denote no more than a
determination that such a broad, inflexible rule applied in
every labor dispute subject to the NLRA would not advance the
many interests that Congress may consider when assessing
legislation. The order, by contrast, does not apply across the
economy, but only in the area of government procurement. Nor
does the order establish an inflexible application, rather it
provides the Secretary of Labor an opportunity to review each
case to determine whether debarring or terminating a contract
with a particular contractor will promote economy and
efficiency in government procurement and further permits any
contracting agency head to override a decision to debar if he
or she believes that there are compelling circumstances or to
reject a recommendation to terminate a contract if, in his or
her independent judgment, it will not promote economy and
efficiency. In sum, the congressional action alluded to above
simply does not implicate the narrow context of government
procurement or speak to the efficacy of a flexible case-by-case
regime such as the one set forth in the order.\10\
\10\ We have found no indication in the legislative history that
those opposing the proposed amendments to the NLRA even considered the
specialized context of government procurement. See e.g., S. Rep. No.
110. 103d Cong., 1st Sess. at 35-49 (1993) (stating minority views);
H.R. Rep. No. 116, 103d Cong. 2d Sess., pt. 1. at 42-62 (1993)
(minority views); H.R. Rep. No. 116, 103d Cong., 2d Sess., pt. 2, at
16-17 (1993) (minority views); H.R. Rep. No. 116, 103d Cong., 2d Sess.,
pt. 3, at 11-15 (1993) (minority views). Moreover, we note that at
least some of the opposition to the legislation was based in part on
concerns regarding the breadth of the legislation, see H.R. Rep. No.
116, pt. 1, at 45 (minority views) (emphasizing absence of ``a truly
pressing societal need'' (emphasis added)), as well as its
inflexibility see id. at 62 (views of Rep. Roukema).
The Kahn option fully supports this view. There the
President promulgated voluntary wage and price guidelines that
were applicable to the entire economy. Contractors that failed
to certify compliance with the guidelines were debarred from
most government contracts. See Exec. Order No. 12092, 43 Fed.
Reg. 51,375 (1978). The order was issued in 1978 against the
following legislative backdrop: In 1971 Congress passed the
Economic Stabilization Act, which authorized the President to
enforce economy-wide wage and price controls. In 1974, a few
months after the Economic Stabilization Act expired, the
Council on Wage and Price Stability Act (``COWPSA'') was
enacted. COWPSA expressly provided that ``[n]othing in this Act
. . . authorizes the continuation, imposition, or reimposition
of any mandatory economic controls with respect to prices
rents, wages, salaries, corporate dividends, or any similar
transfers.'' Pub. L. No. 93-387, Sec. 3(b), 88 Stat. 750
The court concluded that ``the standards in Executive Order
12092, which cover only wages and prices, are not as extensive
as the list in Section 3(b). Consequently, we do not think the
procurement compliance program falls within the coverage of
Section 3(b), but rather is a halfway measure outside the
contemplation of Congress in that enactment.'' Kahn, 618 F.2d
at 795. Similarly, Executive Order No. 12954 is a measure that
operates in a manner (case-by-case determination) and a realm
(government procurement exclusively) that was outside the
contemplation of Congress in its consideration of a broad and
inflexible prohibition on the permanent replacement of lawfully
Congress, in the FPASA, established that the President is
to play the role of managing and directing government
procurement. Congress designed this role to include ``broad-
ranging authority'' to issue orders intended to achieve an
economical and efficient procurement system. Executive Order
No. 12954, ``Ensuring the Economical and Efficient
Administration and Completion of Federal Government
Contracts,'' represents a valid exercise of this authority.
William L. Clay.
Dale E. Kildee.
Matthew G. Martinez.
Patsy T. Mink.
Eliot L. Engel.
Robert C. Scott.
Major R. Owens.
Donald M. Payne.
Robert E. Andrews.
ADDITIONAL VIEWS OF CONGRESSMAN DALE E. KILDEE
Mr. Chairman, I want to include in the official record the
reason why I was not present during the vote to report H.R.
1176 out of the House Educational and Economic Opportunities
Committee on June 14, 1995.
I was present for the mark-up of H.R. 1176. However, during
the mark-up, I was informed that the House Committee on
Resources, of which I am also a member, was conducting a vote
on a bill being considered before that committee.
While I was absent to vote on the bill in the House
Resources Committee, I missed the roll call vote on reporting
H.R. 1176. If I were present, I would have voted NO on
reporting H.R. 1176 out of the Committee.
Dale E. Kildee.
ADDITIONAL VIEWS OF CONGRESSMAN DAVID FUNDERBURK
The Congress has been able to defeat much of President
Clinton's anti-business agenda, including two attempts to force
through legislation that would have prohibited employers from
hiring permanent replacement workers for striking employees.
However, the President recently decided to do an end-run around
the will of the Congress and the American people by issuing an
executive order that would effectively prohibit any company
with federal contracts in excess of $100,000 from hiring
permanent striker replacements.
The President's March 8 executive order, if allowed to
stand, will fracture the delicate balance between workers and
employers which has made the American workplace the job engine
of the world. Since 1938, U.S. labor law has carefully balanced
labor's right to withhold its services against management's
right to keep its doors open.
Contrary to the claims of union leaders, management's right
to replace striking workers has been seldom invoked. In fact, a
recent study by the General Accounting Office showed that
although management has often threatened to use its legal
rights, the threats were carried out in only 17 percent of all
strikes and affected less than four percent of all striking
This executive order is a threat to the future of our free
enterprise system. At stake is the right of every employer to
keep his business operating during labor unrest. At stake is
the future of millions of American workers who refuse to be
coerced into joining labor unions. At stake is whether we will
accelerate the flight of American companies to Mexico and the
Far East because of out-of-kilter, coercive labor laws.
Will any worker be willing to risk life and limb to cross a
picket line and go to work if the President is allowed to have
his way? The President's action leaves workers with no
practical alternative but to join a union at a time when
Americans of all stripes are repeatedly rejecting the tactics
of the union leaders.
The leaders of the AFL-CIO will fight H.R. 1176 because
they want to make their strike weapon as powerful as possible.
But Walter Williams, distinguished professor of economics at
George Mason University, observed that:
Unions' power comes from their ability, through laws
or violence, to prevent businesses from hiring other
workers. If they didn't have that ability, a strike
would be just a massive resignation.
The union struggle is not against employers, as
popularly thought. Its against workers who are not
union members. One way you see this is to ask: Who gets
beat up during a strike? It's not owners or management;
it's workers who've disagreed with the union and wish
to work. The union labels these men and women trying to
earn a livelihood ``scabs.'' The National Right to Work
Committee estimates that almost 6000 violent incidents
have occurred during strikes since 1975, including the
1990-1993 Greyhound bus strike, where buses were shot
at 52 times.
As Professor Williams clearly illustrates, organized
labor's objective is not to destroy employers outright. The
unions' top goal is to increase its membership rolls and to
fill up the labor union coffers with forced union dues. The
President wants to give the unions' the leverage to demand that
all of a company's workers be forced to pay the bills the union
leaders demand. What worker will be able to withstand threats,
picket-line violence, and blacklisting to work at a job if he
knows that the employer, with the blessing of President
Clinton, must punish him or fire him as soon as the union says
the strike is over? Why should big labor end strikes quickly
and quietly? If the President has his way, union strikers can't
lose their jobs and the union bosses can't lose the massive
dues paid to their unions.
The Clinton Administration is in the White House partly
because of the money and organization big labor is able to
provide in every election. Fair enough. Big labor means big
bucks. Union PACs gave $43.3 million to Democratic candidates
in 1991-92. But, as Reed Larson of the National Right to Work
Committee points out, ``. . . that $41 million was only the tip
of the iceberg.'' Unreported soft money contributions to the
Democratic Party--in the form of phone banks, get out the vote
drives, and door to door canvassing--amounted to ten times the
value of the $41 million up front money.
Mr. Clinton is working overtime to make the AFL-CIO forget
his support of NAFTA. During the campaign he said that he was
on the side of working Americans who ``work hard and play by
the rules.'' Unfortunately, the President's order demonstrates
once again that his rhetoric is far removed from the reality of
his actions. Even though the President is from a right-to-work
state he has surrounded himself with advisors who have nothing
but contempt for the right of the American worker to offer his
skills to any employer without fear of coercion or retribution.
The attitude of Labor Secretary Robert Reich is illustrative.
In 1985, while an instructor at Harvard, Mr. Reich had this to
say about the workplace:
In order to maintain themselves unions have got to
have some ability to strap their members to the mast.
The only way unions can exercise countervailing power
vis-a-vis management is to hold their members' feet to
the fire when times get tough. Otherwise the union is
only as good as it is convenient for any given member
at any given time.
Under these circumstances we should expect more strikes for
longer periods of time. That is what happened in Canada once
striker replacement legislation became law north of the border.
According to the Journal of Labor Economics, the province of
Quebec nearly went bankrupt because of the loss of revenue from
businesses that were shut down because of increased strike
activity. The Heritage Foundation reports that the striker
replacement law in Italy has cost that country 1,440 work days
per 1,000 workers each year compared with fewer than 100 days
lost in American due to strikes.
The President's actions will wreak havoc on my state and my
district. North Carolina has the longest right-to-work
tradition in the nation. Businesses--big and small--are rushing
to North Carolina because employers know that their workplace
will be free from intimidation and outside agitation. It is no
accident that North Carolina has the lowest unemployment rate
of the twenty largest states in America. I cannot stand by and
watch as North Carolina's right-to-work tradition is swept away
because the President wants to appease the labor leaders who
put him into office.
The committee minority has attached supporters of this bill
as being against the worker. Nothing could be farther from the
truth. In any free country, workers must be free to organize
themselves and strike. It is already illegal to fire strikers
and hire replacements if a company engages in unfair or
dangerous practices. But when workers do strike for higher pay
or benefits they take a risk that their employers will not be
able to find skilled people to replace them. That they are
sometimes, though rarely, replaced keeps sanity and stability
in the workplace.
There is nothing, repeat nothing, ``fair'' about the
President's actions. This executive order discriminates against
the small businessmen who struggle to provide ninety percent of
our jobs, it discriminates against employees who choose to
remain on the job and, it discriminates against workers who
won't join a union. More importantly, the President's action is
a direct challenge to the Constitutional prerogatives of the
Congress. If President Clinton is allowed to have his way,
striking union members will be given the exclusive rights to
jobs they refuse to perform and that is not fair for any
American, union member or otherwise.
The President's policy on striker replacement will lead to
higher labor costs, higher prices, lower productivity and fewer
jobs--and that is all this economy needs to send it reeling
into another recession. This order is a threat to every right-
to-work state in the country. I urge my colleagues to support
H.R. 1176 and not allow the President to unilaterally upset the
delicate balance between the rights of labor and management to
resolve their own disputes.