FOLLOW US

In a seismic decision shaking the foundation of U.S. labor law, the Fifth Circuit Court of Appeals ruled Tuesday that the structure of the National Labor Relations Board (NLRB) is likely unconstitutional. The three-judge panel upheld injunctions shielding SpaceX and two other companies from ongoing unfair labor practice prosecutions, striking a blow at the agency’s authority.

The ruling arose from three consolidated cases—SpaceX, social services platform Aunt Bertha, and pipeline giant Energy Transfer LP—all of which argued that the NLRB operates under unlawful constraints on executive oversight. At the heart of the challenge: federal labor law grants board members and administrative law judges protections that severely limit the president’s ability to remove them.

SpaceX, Energy Transfer and Aunt Bertha Lead the Charge

The companies alleged that these removal protections clash with constitutional checks on executive power, giving the board sweeping influence without proper accountability. By insulating its members from dismissal, they argued, the NLRB was functioning like a “fourth branch of government” unchecked by the Constitution.

In siding with the companies, the Fifth Circuit noted that although the U.S. Supreme Court has previously upheld similar removal protections for leaders of other agencies, the NLRB’s unique enforcement authority placed it beyond that scope.

A Judicial Rebuke with National Consequences

“The Constitution does not countenance unlawful power,” the panel wrote. “And when the Constitution draws boundaries, neither agency expedience nor institutional inertia can erase them.”

The decision threatens to undercut the agency’s ability to prosecute unfair labor practice cases nationwide, setting the stage for a potential showdown at the U.S. Supreme Court.

For now, SpaceX, Aunt Bertha, and Energy Transfer LP are shielded from the NLRB’s legal firepower—a reprieve that could ripple across industries and embolden other companies to challenge the agency’s reach.