Last week, Idaho Gov. Butch Otter (R) signed S.B. 1337, which is the legislature’s second attempt to ban wasteful and discriminatory project labor agreement (PLA) mandates on taxpayer-funded construction.
The prior piece of legislation (S.B. 1006 of 2011) Gov. Otter signed on March 3, 2011 to ban these taxpayer-funded handouts was invalidated in December 2011 in a legal ruling favoring the Idaho Building and Construction Trades Council, AFL-CIO. A federal judge in Michigan issued a similar decision on its law to ban government-mandated PLAs in February 2012.
The Idaho and Michigan courts’ decisions directly conflict with settled case law on this issue.
In September 2011, a federal judge in Iowa dismissed a union lawsuit against Gov. Terry Branstad’s Executive Order 69, which prohibits government-mandated PLAs on state and state-funded construction. It is the first court to address whether a state executive order or statute guaranteeing government neutrality with regard to PLAs is preempted by federal law.
More importantly, the Idaho and Michigan decisions conflict with the U.S. Circuit Court of Appeals for the D.C. Circuit’s opinion in Building and Construction Trades Dep’t, AFL-CIO v. Allbaugh, 295 F.3d 28 (D.C. Cir. 2002), in which the court upheld President George W. Bush’s Executive Order 13202, which banned government-mandated PLAs on federal and federally assisted construction. To date, this is the highest court to consider whether the National Labor Relations Act (NLRA) preempts executive orders and statutes guaranteeing government neutrality with regard to PLAs. The judge in the Michigan lawsuit went so far as to say the Allbaugh decision was ruled incorrectly.
Associated Builders and Contractors (ABC) agrees with the Allbaugh decision, in which the court states government entities have the right to make their own procurement decisions with regard to PLAs through their proprietary interest in the construction services marketplace. While the NLRA expressly allows for pre-hire agreements (i.e. PLAs) in the construction industry, it does not authorize government entities to require pre-hire agreements as a condition of performing work on public construction projects.
The executive orders and statutes adopted by 12 states to ban government-mandated PLAs (Montana, Utah, Arizona, Iowa, Missouri, Louisiana, Arkansas, Tennessee, Maine, Michigan, Idaho and now Virginia) simply require government neutrality with regard to PLAs. The orders and statutes say that government entities can neither prohibit nor require a contractor to enter into a PLA as a condition of performing public work. This allows contractors to configure their bids in a way that guarantees taxpayers the best construction at the best price, while still allowing government entities to accept bids that provide the most value for taxpayers regardless of whether they include a PLA.
ABC is pleased the Idaho Legislature re-affirmed its commitment to quality and accountability on public construction projects. ABC believes a positive solution for taxpayers is in the cards for Michigan as well.
Update: On September 18, 2015, the U.S. Court of Appeals for the 9th Circuit upheld Idaho’s law, setting aside the lower court’s decision. In 2013, the U.S. Circuit Court of Appeals for the 6th Circuit overturned a lower court ruling and upheld Michigan’s right to ban government-mandated PLAs on taxpayer-funded construction projects. All challenges to state laws ensuring fair and open competition have failed.