A Summary of PLA Reform in the States

0 August 22, 2012  State & Local Construction

Like the U.S. Congress, most state legislatures conduct two-year legislative sessions. Now that most of these sessions are complete and lawmakers are focusing on election season, we are taking a look back at the successes and setbacks American taxpayers have experienced in the fight against wasteful and discriminatory government-mandated project labor agreements (PLAs).

Although the fight against PLA mandates goes back decades, President Barack Obama made it a national issue in 2009 when he issued Executive Order 13502 after less than 60 days in office. E.O. 13502 encourages federal agencies to require PLAs on federal projects costing more than $25 million. It also repealed a Bush-era executive order that guaranteed fair and open competition on federal and federally assisted projects during his two terms in office.

Although President Obama was the first U.S. president to issue a pro-PLA executive order, he was not the only elected official to take a pro-PLA stance in advance of the competitive 2010 elections. Many local elected officials issued similar orders  to curry favor with organized labor. In February 2010, Iowa Gov. Chet Culver (D) issued an executive order that mirrored President Obama’s Executive Order 13502. Illinois Gov. Pat Quinn (D) did the same a little more than a month later. Although PLA policy was not a priority issue for either administration for the first three years of their terms, election-year politics seemed to bring the PLA issue into greater focus for both governors. There is little doubt that the threat of electoral defeat in November 2010 prompted them both into action.

Despite the initial setback of the Illinois and Iowa pro-PLA executive orders, the results of the November 2010 elections changed the political dynamics of the PLA issue. New Republican governors in Pennsylvania and Ohio stopped imminent PLA requirements on several large-scale projects, including stopping potential PLA mandates on more than $800 million worth of prison construction projects in Pennsylvania. In addition, Gov. John Kasich (R) used executive action to effectively eliminate PLA requirements on nearly all K-12 school construction projects in Ohio.

While these developments were significant, newly elected Iowa Gov. Terry Branstad (R) elevated the fight in January 2011 when he issued an executive order banning government-mandated PLAs on any construction project using state funds, reversing former Gov. Culver’s 2011 order. This was the first executive order or bill enacted by a state government entity to curtail the use of PLA mandates since Missouri enacted legislation banning PLA mandates on state projects in 2007.

The PLA battle picked up even more momentum in 2011 when six other states followed Iowa’s lead. By July, Idaho, Tennessee, Louisiana, Arizona, Maine and even Michigan had all enacted legislation to ban PLA mandates on state and local projects, as responsible leaders recognized the threat of potential PLA expansion to projects in their states.

In Michigan, a state organized labor considers a stronghold, the ban on PLA mandates had an immediate impact for taxpayers. The law opened up millions of dollars’ worth of construction to the vast majority of the construction workforce that chooses not to join a labor organization, as government entities complied with the law by removing PLA mandates from requests for proposal. This was an important step for getting Michigan’s construction workforce back to work.

But Big Labor would not go down without a fight. Attorneys representing construction unions in Iowa, Idaho and Michigan all filed lawsuits in federal court, claiming that the government neutrality executive order issued in Iowa and the bills enacted in Idaho and Michigan are preempted by the National Labor Relations Act (NLRA).

Merit shop supporters were surprised by these actions because the Iowa executive order was carefully drafted to avoid preemption issues and the Idaho and Michigan laws were modeled after President Bush’s Executive Order 13202, which was upheld by the U.S. Circuit Court of Appeals for the D.C. Circuit.

In a strong statement of support for states that choose to guarantee government neutrality with regard to PLAs, a federal district court judge in Iowa dismissed the union’s suit in September 2011.  Unfortunately, in December 2011 and February 2012, federal judges in Idaho and Michigan, respectively, found those state laws to be preempted by the NLRA. Both judges were appointed by President Clinton. The judge in the Michigan case went so far as to say the appeals court erred when it found the Bush executive order to be allowable. Both rulings contradict the controlling case law on this issue and are on appeal.

Big Labor responded to the merit shop construction industry’s successes at the state legislative level as well. In the summer of 2011, the Illinois General Assembly codified the 2011 executive order issued by Gov. Quinn. In addition, the California Legislature took a shot at local governments by enacting legislation that nullifies bans on PLA mandates in general law municipalities and deprives charter cities of state funding for construction if they ban PLA mandates. The Legislature then strengthened the charter city provisions in 2012.

Undeterred by Big Labor’s efforts, state leaders throughout the country continued to take on the PLA issue. In both Michigan and Idaho, lawmakers enacted new bills that addressed the issues raised by the two federal court opinions, while preserving the intent of the original government neutrality bills.

In addition, Oklahoma, Virginia and Kansas all enacted legislation to ban PLA mandates in their states. The Virginia win was especially important, as it helped to stop a potential PLA preference that would have amounted to a PLA requirement on Phase 2 of the Metro expansion to Dulles International Airport. The law ensures that the 97 percent of Virginia’s construction workforce that chooses not to join a union can still have the opportunity to compete for one of the most important projects in the DC-region in decades.

The only two major setbacks for the merit shop came from Hawaii and Connecticut. In May 2012, Big Labor was able to convince their long-time ally Gov. Neil Abercrombie (D) to issue a directive encouraging the use of PLAs.  In addition, Connecticut Gov. Dan Malloy (D) signed legislation in June that authorizes PLA mandates by local government entities.

Still, it remains clear that the momentum in the PLA fight is with the merit shop as we head into 2013 – and many more states are poised to take action against PLA mandates within their borders. As they do, these states will join the other states who have banned government-mandated PLAs in sending a clear signal that they are open for business. Guaranteeing open competition shows these governments understand that the best way to create value for taxpayers on public construction is to get the best construction at the best price, and that happens by allowing the entire construction workforce – not just those in a politically connected union – to compete for projects funded by their own tax dollars.

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