[House Report 104-163]
[From the U.S. Government Publishing Office]



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

                             together with

                     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.

                                Purpose

    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.

                            Committee Action

    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.
                               Statement

                              Introduction

    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 
employment.
    \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 
Product (GDP).
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    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.
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    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.
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    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 
        subject.

    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.
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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 
Order.''
    \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 
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said:

          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.
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    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).
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Executive Order 12954 is inconsistent with the National Labor Relations 
        Act's comprehensive statutory and remedial scheme governing 
        labor-management relations

    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.
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    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:
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        ``. . . [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), 
p.1109.
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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 
(1976).
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    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 
doctrine.22
    \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.
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    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.
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    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 
nature.
    \24\ See Boston Harbor, 113 S.Ct. at 1197.
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    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 
justified.
Executive Order 12954's ban on permanent replacement workers is bad 
        policy

    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 
collective bargaining.

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 
compromised.

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 
vacancies occur.
    \25\ 304 U.S. at 345.
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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.
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The many legal protections in the NLRA that are extended to strikers 
        ensures that permanent replacement is not the same as firing a 
        striker

    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 
(1990).
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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 
replacement workers.

                               Conclusion

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 
government.
    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.
---------------------------------------------------------------------------

                                Summary

    H.R. 1176 would nullify any executive order that prohibits 
Federal contracts with companies that hire permanent 
replacements for striking employees.

                      Section-by-Section Analysis

                              Section One

    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.

                           Committee Estimate

    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 
branch.

                       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 
Office:

                                     U.S. Congress,
                               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 
be significant.
    Enactment of H.R. 1176 would not affect direct spending; 
therefore, pay-as-you-go procedures would not apply to this 
bill.
    If you wish further details on this estimate, we will be 
pleased to provide them.
            Sincerely,
                                              James T. Blum
                                   (For June E. O'Neill, Director).
                             Rollcall Votes

                   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:
        AYES                          NOES
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
Mr. Graham
Mr. Weldon
Mr. Funderburk
Mr. Souder
Mr. McIntosh
Mr. Norwood

                        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 
report.
            Sincerely,
                                             Marge Roukema,
                                                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.
            Sincerely,
                                             George Miller,
                                  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.
            Sincerely,
                                                Jan Meyers,
                                                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.
            Sincerely,
                                              Pat Williams,
                                                Member of Congress.
                             MINORITY VIEWS

                              introduction

    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 
procurement authority?
    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 
bargaining.
    \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 
behavior.
    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 
        town.\4\
    \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). 
(Tom Pratt.)
---------------------------------------------------------------------------
          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 
Board.)

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 
procurement.
    \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-
management relations.\15\
    \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 
conflict.\18\
    \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 
(1994).
    \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 
productivity).
---------------------------------------------------------------------------
    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 
permanent replacements.

Executive Order 12954 is carefully tailored to promote efficient and 
        economical procurement

    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 
that contractor.
    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 
        contractors.\19\
    \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 
        procurement policy

    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 
decade.
    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 
        significant.\32\
    \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 
---------------------------------------------------------------------------
study

          [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 
Summary).

    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 
replacement workers.

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 
preempted.
---------------------------------------------------------------------------
    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 
replacements.\38\
    \35\ 29 U.S.C. Sec. 157; NLRA v. Fleetwood Trailer Co., 389 U.S. 
375 (1967).
    \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 
(1959).
    \40\ Metropolitan Life Ins. Co. v. Massachusetts, 471 U.S. 724, 748 
(1985).
---------------------------------------------------------------------------
    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 
footnote omitted).
    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 
preemption.\44\
    \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 
Machinists preemption.\47\
    \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 
NLRA.
    \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) 
(footnote omitted).
---------------------------------------------------------------------------
    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 
goals.\57\
    \56\ 60 Fed. Reg. 13023.
    \57\ Id.
---------------------------------------------------------------------------
    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 
striking workers.
    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.
                               APPENDIX A

                              ----------                              

                             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 
        Contracts''
    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.

                                 Part I

    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 
head(s).
---------------------------------------------------------------------------
    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.

                                Part II

    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 
purpose,

          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 
        functions hereunder.

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 
omitted).
    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 
efficiency.
    \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 
government procurement.\8\
    \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 
Constitution.
    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 
veto.
    \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 
(1974).
    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 
striking workers.

                                Part III

    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.
                                   Tom Sawyer.
                                   Patsy T. Mink.
                                   Jack Reed.
                                   Eliot L. Engel.
                                   Robert C. Scott.
                                   Lynn Woolsey.
                                   Mel Reynolds.
                                   George Miller.
                                   Pat Williams.
                                   Major R. Owens.
                                   Donald M. Payne.
                                   Robert E. Andrews.
                                   Tim Roemer.
                                   Xavier Becerra.
                                   Gene Green.
                                   Carlos Romero-Barcelo.
             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 
workers.
    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.