National Labor Relations Board v. Natural Gas Utility District of Hawkins County, Tennessee

• Decision Date: 01 June 1971
• Docket Number: No. 785,785
• Parties: NATIONAL LABOR RELATIONS BOARD, Petitioner, v. The NATURAL GAS UTILITY DISTRICT OF HAWKINS COUNTY, TENNESSEE
• Court: U.S. Supreme Court

402 U.S. 600

91 S.Ct. 1746

29 L.Ed.2d 206

NATIONAL LABOR RELATIONS BOARD, Petitioner,

v The NATURAL GAS UTILITY DISTRICT OF HAWKINS COUNTY, TENNESSEE.

No. 785.

Argued April 20, 1971.

Decided June 1, 1971.

Syllabus

In this unfair labor practice proceeding under the Labor Management Relations Act respondent contended that it was not an 'employer' but came within the 'political subdivision' exemption in § 2(2) of the Act. The National Labor Relations Board (NLRB) had found that respondent met neither of the tests to which it held that exemption was limited, viz., entities that are either (1) created directly by the State, so as to constitute governmental departments or administrative arms, or (2) administered by individuals who are responsible to public officials or the general electorate. The Court of Appeals upheld respondent's contention, viewing as controlling a Tennessee Supreme Court decision construing the State's Utility District Law under which respondent had been organized. A District organized under that statute is a "municipality' or public corporation,' has eminent domain powers, is exempt from state, county, or municipal taxation, and whose income from its bonds is exempt from federal income tax. The officers who conduct the District's business receive nominal compensation, are appointed by a public official, and are subject to removal by statutory procedures applicable to public officials. Held:

1. Federal, rather than state, law governs the determination whether an entity is a 'political subdivision' of a State within the meaning of § 2(2) of the Labor Management Relations Act. NLRB v. Randolph Electric Membership Corp., 343 F.2d 60. Pp. 602—604.

2. While the NLRB's construction of the statutory term is entitled to great respect, there is no 'warrant in the record' and 'no reasonable basis in law' for the NLRB's conclusion that respondent was not a political subdivision. In the light of all the factors present here, including the fact that the District is administered by individuals who are responsible to public officials (thus meeting even one of the tests used by the NLRB), respond- ent comes within the coverage of that statutory exemption. Pp. 604 609.

427 F.2d 312, affirmed.

Dominick L. Manoli, Washington, D.C., for petitioner.

Eugene Greener, Jr., Memphis, Tenn., for respondent.

Mr. Justice BRENNAN delivered the opinion of the Court.

Upon the petition of Plumbers and Steamfitters Local 102, the National Labor Relations Board ordered that a representation election be held among the pipefitters employed by respondent, Natural Gas Utility District of Hawkins County, Tennessee, 167 N.L.R.B. 691 (1967). In the representation proceeding, respondent objected to the Board's jurisdiction on the sole ground that as a 'political subdivision' of Tennessee, it was not an 'employer' subject to Board jurisdiction under § 2(2) of the National Labor Relations Act, as amended by the Labor Management Relations Act, 1947, 61 Stat. 137, 29 U.S.C. § 152(2). ¹ When the Union won the election and was certified by the Board as bargaining representative of the pipefitters, respondent refused to comply with the Board's certification ad recognize and bargain with the Union. An unfair labor practice proceeding resulted and the Board entered a cease-and-desist order against respondent on findings that respondent was in violation of §§ 8(a)(1) and 8(a)(5) of the Act, 29 U.S.C. §§ 158(a)(1) and 158(a)(5). 170 N.L.R.B. 1409 (1968). Respondent continued its noncompliance and the Board sought enforcement of the order in the Court of Appeals for the Sixth Circuit. Enforcement was refused, the court holding that respondent was a 'political subdivision,' as contended. 427 F.2d 312 (1970). We granted certiorari, 400 U.S. 990, 91 S.Ct. 457, 27 L.Ed. 435 (1971). We affirm.

The respondent was organized under Tennessee's Utility District Law of 1937, Tenn.Code Ann. §§ 6—2601 to 6—2627 (1955). In First Suburban Water Utility District v. McCanless, 177 Tenn. 128, 146 S.W.id 948 (1941), the Tennessee Supreme Court held that a utility district organized under this Act was an operation for a state governmental or public purpose. The Court of Appeals held that this decision 'was of controlling importance on the question whether the District was a political subdivision of the state' within § 2(2) and 'was binding on the Board.' 427 F.2d, at 315. The Board, on the other hand, had held that 'while such State law declarations and interpretations are given careful consideration * * *, they are not necessarily controlling.' 167 N.L.R.B., at 691. We disagree with the Court of Appeals and agree with the Board. Federal rather than state, law governs the determination, under § 2(2), whether an entity created under state law is a 'political subdivision' of the State and therefore not an 'employer' subject to the Act.²

The Court of Appeals for the Fourth Circuit dealt with this question in NLRB v. Randolph Electric Membership Corp., 343 F.2d 60 (1965), where the Board had determined that Randolph Electric was not a 'political subdivision' within § 2(2). We adopt as correct law what was said at 62—63 of the opinion in that case:

'There are, of course, instances in which the application of certain federal statutes may depend on state law. * * *

'But this is controlled by the will of Congress. In the absence of a plain indication to the contrary, however, it is to be assumed when Congress enacts a statute that it does not intend to make its application dependent on state law. Jerome v. United States, 318 U.S. 101, 104, 63 S.Ct. 483, 87 L.Ed. 640 (1943).

'The argument of the electric corporations fails to persuade us that Congress intended the result for which they contend. Furthermore, it ignores the teachings of the Supreme Court as to the congressional purpose in enacting the national labor laws. In National Labor Relations Board v. Hearst Publications, 322 U.S. 111, 123, 64 S.Ct. 851, 857, 88 L.Ed. 1170 (1944), the Court dealt with the meaning of the term 'employee' as used in the Wagner Act, saying:

"Both the terms and the purposes of the statute, as well as the legislative history, show that Congress had in mind no * * * patchwork plan for securing freedom of employees' organization and of collective bargaining. The Wagner Act is federal legislation administered by a national agency, intended to solve a national problem on a national scale. * * * Nothing in the statute's background, history, terms or purposes indicates its scope is to be limited by * * * varying local conceptions, either statutory or judicial, or that it is to be administered in accordance with whatever different standards the respective states may see fit to adopt for ths disposition of unrelated, local problems.'

'Thus, it is clear that state law is not controlling and that it is to the actual operations and characteristics of (respondents) that we must look in deciding whether there is sufficient support for the Board's conclusion that they are not 'political subdivisions' within the meaning of the National Labor Relations Act.'

We turn then to identification of the governing federal law. The term 'political subdivision' is not defined in the Act and the Act's legislative history does not disclose that Congress explicitly considered its meaning. The legislative history does reveal, however, that Congress enacted the § 2(2) exemption to except from Board cognizance the labor relations of federal, state, and municipal governments, since govermental employees did not usually enjoy the right to strike.³ In the light of that purpose, the Board, according to its Brief, p. 11, 'has limited the exemption for political subdivisions to entities that are either (1) created directly by the state, so as to constitute departments or administrative arms of the government, or (2) administered by individuals who are responsible to public officials or to the general electorate.'

The Board's construction of the broad statutory term is, of course, entitled to great respect. Randolph Electric, supra, at 62. This case does not however require that we decide whether 'the actual operations and characteristics' of an entity must necessarily feature one or the other of the Board's limitations to qualify an entity for the exemption, for we think that it is plain on the face of the Tennessee statute that the Board erred in its reading of it in light of the Board's own test. The Board found that 'the Employer in this case is neither created directly by the State, nor administered by State-appointed or elected officials.' 167 N.L.R.B., at 691—692 (footnotes omitted). But the Board test is not whether the entity is administered by 'State-appointed or elected officials.' Rather, alternative (2) of the test is whether the entity is 'administered by individuals who are responsible to public officials or to the general electorate' (emphasis added), and the Tennessee statute makes crystal clear that respondent is administered by a Board of Commissioners appointed by an elected county judge, and subject to removal proceedings at the instance of the Governor, the county prosecutor, or private citizens. Therefore, in the light of other 'actual operations and characteristics' under that administration, the Board's holding that respondent 'exists as an essentially private venture, with insufficient identity with or relationship to the State of Tennessee,' 167 N.L.R.B., at 691, has no 'warrant in the record' and no 'reasonable basis in law.' NLRB v. Hearst Publications, 322 U.S. 111, 131, 64 S.Ct. 851, 861, 88 L.Ed. 1170 (1944).

Respondent is one of nearly 270 utility districts established under the Utility District Law of 1937. Under that statute, Tennessee residents may create districts to provide a wide range of public services such as the furnishing of water, sewers, sewage disposal, police protection, fire protection, garbage collection, street lighting, parks, and recreational...