CARPENTERS 46 CTY. CONF. BD. v. CONSTRUCTION IND. SC

• Decision Date: 22 April 1975
• Docket Number: No. C-73-1912 AJZ.,C-73-1912 AJZ.
• Citation: 393 F. Supp. 480
• Court: U.S. District Court — Northern District of California
• Parties: CARPENTERS 46 COUNTY CONFERENCE BOARD et al., Plaintiffs, v. The CONSTRUCTION INDUSTRY STABILIZATION COMMITTEE et al., Defendants.

393 F. Supp. 480

CARPENTERS 46 COUNTY CONFERENCE BOARD et al., Plaintiffs, v. The CONSTRUCTION INDUSTRY STABILIZATION COMMITTEE et al., Defendants.

No. C-73-1912 AJZ.

United States District Court, N. D. California.

April 22, 1975.

COPYRIGHT MATERIAL OMITTED

Levy & Van Bourg, Victor J. Van Bourg, David A. Rosenfeld, San Francisco, Cal., for plaintiffs.

James L. Browning, Jr., U.S. Atty., William T. McGivern, Jr., Asst. U.S. Atty., San Francisco, Cal., Chester W. Kitchings, Jr., Atty., Economic Stabilization Section, Civ. Div., U.S. Dept. of Justice, Washington, D.C., for defendants.

ORDER STAYING DECISION OF CROSS-MOTIONS FOR SUMMARY JUDGMENT AND CERTIFYING CONSTITUTIONAL ISSUE TO TEMPORARY EMERGENCY COURT OF APPEALS

ZIRPOLI, District Judge.

This case involves a broad-based attack on the Nixon Administration's Economic Stabilization Program of 1971-74. Plaintiffs are the Carpenters 46 County Conference Board, Local 34 of the United Brotherhood of Carpenters,¹ and three officials of these labor organizations, which represent workers in the construction industry in Northern California. Defendants are the Construction Industry Stabilization Committee (CISC) and its chairman, John T. Dunlop. The issue is whether CISC properly disapproved all but 15 cents of the 65 cent wage increase plaintiffs were scheduled, under a collective bargaining agreement, to receive beginning in June, 1973. Both plaintiffs and defendants have moved for summary judgment. In order to resolve plaintiffs' multiplicity of attacks on CISC's action, the court must first outline the development of the Economic Stabilization Program and review the history of the dispute between plaintiffs and defendants over the June, 1973, wage increases.

I. The Regulatory Background

The regulatory framework of the Program was complicated and fluid. Its source was the Economic Stabilization Act of 1970, 84 Stat. 799. Section 202 of the Act empowered the President to issue "such orders and regulations as he may deem appropriate to stabilize prices, rents, wages and salaries." Section 203 permitted the President to delegate performance of any function under the Act to such officers as he deemed appropriate. From this simple and broad beginning, the Act has grown by amendment as Congress has attempted to delimit the power delegated to the President. Thus, on May 18, 1971, it added section 202(b) which stated that the President's power to issue orders as to any given industry should not be exercised

unless the President determines . . that prices or wages in that industry or segment of the economy have increased at a rate which is grossly disproportionate to the rate at which prices or wages have increased in the economy generally.

85 Stat. 38.

On March 31, 1971, the President made his first use of power conferred upon him by the Act in Executive Order 11588, which recited that "wages and prices in the construction industry have tended in recent years to increase at a rate greater than that for the economy as a whole." In response to this problem the Order created CISC and, under it, various Craft Boards, to review proposed increases in wages in the construction industry. CISC was to consist of ten members, four from labor, four from management and two "public" members. Section 6 of the Order established various criteria that were to be applied to such proposed increases, looking to matters like increases in productivity and the traditional hierarchy of wages among different crafts. The Order required that all proposed increases be approved by CISC before being put into effect. CISC soon went into operation and began to review wage increases proposed in collective bargaining agreements submitted for its approval.

On August 15, 1971, the President inaugurated his economy-wide Economic Stabilization Program with Executive Order 11615. Section 1 of this Order stabilized (froze) prices, rents, wages and salaries for 90 days, thereby beginning what was popularly known as Phase I of the Program. The Order established the Cost of Living Council (CLC), section 2, delegated to the CLC all powers conferred upon the President by the Act, section 3, and permitted the CLC to redelegate these powers. Section 4(b).

Two months later the President announced Executive Order 11627, beginning what came to be known as Phase II of the Program. Section 1 of the Order stated that it was to be substituted for Executive Order 11615. Sections 2 and 3 continued the CLC in existence and continued the earlier delegation of power to CLC. Section 7 established the Pay Board, which was to perform functions delegated to it by the CLC with respect to stabilizing wages. Section 14(a) continued CISC in existence but section 14(c) revoked section 6 of Executive Order 11588, which had set out the criteria that CISC should apply to proposed wage increases. The same day the CLC issued its Order No. 3, 36 Fed. Reg. 20202, which delegated the Pay Board authority to establish criteria, standards and procedures for stabilization of wages. On November 13, 1971, the Pay Board issued its Order No. 2, 36 Fed.Reg. 21875, which authorized CISC to administer the Board's policies in the building and construction industry, but provided that the Board would prescribe the form of procedures to be utilized by CISC.

On December 22, the President signed the Economic Stabilization Act Amendments of 1971, 85 Stat. 743, which greatly expanded the Act's provisions. Section 203 was amended to require that Presidential Orders include a statement of reasons and that the President issue standards that would make administration of the program "generally fair and equitable" by taking into account changes in productivity and to provide for reductions in prices and rents to correspond to wage declines. Section 203(c) was added to limit the President's power to limit wage increases scheduled to take place in the future in several ways. Section 207 was added to the Act establishing certain procedural requirements for agency action under the Act, but exempting the agencies from most of the requirements of the Administrative Procedure Act. Section 211 was added to the Act to provide for judicial review of agency action under it. It reposed exclusive jurisdiction of cases arising under the Act in United States district courts and created a Temporary Emergency Court of Appeals (TECA) to hear appeals from decisions of district courts. Section 211(d)(1) limited the authority of a reviewing court to determine whether a challenged order issued under the Act "is in excess of the agency's authority, or is based upon findings which are not supported by substantial evidence." Additionally, under sections 211(c) and 211(g), the district courts were prohibited from enjoining an order issued by an agency on constitutional grounds and required to certify all substantial constitutional challenges to an order to the TECA. On January 26, 1972, the President issued Executive Order 11640, which was designed to reflect the changes made by the Amendments and substituted for Order 11627. Section 1 continued in existence the Pay Board and the CLC. Section 3 continued the delegation of authority to CLC; section 4(b) permitted the CLC to continue to redelegate authority. Section 15 continued CISC in existence and continued the revocation of section 6 of Order 11588 in effect.

On January 28, the Pay Board and CISC jointly announced the issuance of an amended Pay Board Order No. 2, which was published in the Federal Register on April 25. 37 Fed.Reg. 8110. Pursuant to the authority of Executive Order 11640, it again authorized the CISC to administer its regulations with respect to collective bargaining agreements in the construction industry. Additionally, it set forth certain "Substantive Policies" that CISC should apply to such agreements. Paragraph 2 of these policies stated that no agreed wage increase should be entitled to automatic approval. Paragraph 3 provided that fringe benefits should be considered along with other benefits (such as wages) in determining the propriety of the proposed economic adjustments. Paragraph 4 set guidelines for application of exceptions in individual cases. Paragraph 5 provided in part that

Deferred increases which would cause unstabilizing effects in a locality or among localities (i. e., which would prove unreasonably inconsistent with the application of such standards to a locality or a branch of the industry), should be promptly reviewed and agreement sought on adjustments at a local level or the adjustment spread over a sufficiently long period to reduce unstabilizing effects and to achieve settlements at reasonable amounts.

On January 11, 1973, the President issued Executive Order 11695 which continued his Economic Stabilization Program into Phase III. Section 1 continued the CLC in existence and section 2 delegated all the President's powers to the Chairman of the CLC. Section 3(a) continued in effect all regulations issued under any of the previous Orders and in effect at that time. Section 5 continued CISC as an agency of the United States. Section 10 abolished the Pay Board. The following day the CLC issued its Order No. 16, delegating to the CISC authority to administer its policies in the construction industry and arguably expanding the CISC's role in the Program. See Associated Gen. Contractors of America v. Laborers' Int'l Union, 476 F.2d 1388, 1401 (Em.App.1973). On February 26, 1973, the CISC issued as a press release its 1973 Policies, which were quite similar to those set out in the amended Pay Board Order No. 2 published in the Federal Register the previous April.² In particular, paragraph 2(a) provided that the CISC could approve economic adjustments on a case-by-case basis

where the parties have made a careful review of the economic provisions of their collective bargaining agreement and have provided for an economic trade-off between increases in wage rates or benefits and other

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