Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-caDC-01-05436/USCOURTS-caDC-01-05436-0/pdf.json

Nature of Suit Code: 890
Nature of Suit: Other Statutory Actions
Cause of Action: 

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United States Court of Appeals

FOR THE DISTRICT OF COLUMBIA CIRCUIT

Argued May 10, 2002 Decided July 12, 2002

No. 01-5436

Building and Construction Trades Department,

AFL-CIO, et al.,

Appellees

v.

Joe Allbaugh, Director,

Federal Emergency Management Agency, et al.,

Appellants

Appeal from the United States District Court

for the District of Columbia

(No. 01cv00902)

Mark B. Stern, Attorney, U.S. Department of Justice,

argued the cause for appellants. With him on the briefs were

Roscoe C. Howard Jr., U.S. Attorney, Gregory G. Katsas,

Deputy Assistant Attorney General, U.S. Department of Justice, Alisa B. Klein and Ara B. Gershengorn, Attorneys.

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Jerry W. Kilgore, Attorney General, State of Virginia,

Roger L. Chaffe, Senior Assistant Attorney General and

Chief, and William E. Thro, Special Assistant Attorney General, were on the brief for amicus curiae Commonwealth of

Virginia in support of appellants

Stephen A. Bokat, Maurice Baskin and Glenn Taubman

were on the brief for amici curiae Chamber of Commerce of

the United States, et al. in support of appellants.

Victoria L. Bor argued the cause for appellees. With her

on the brief were Laurence J. Cohen, Terry R. Yellig, Michael B. Roger and Sandra Benson.

John Gaal and Arnon D. Siegel were on the brief for

amicus curiae New York Thruway Authority in support of

appellees.

Albert H. Meyerhoff, Stanley S. Mallison, Stephen J. Burton, David L. Hashmall, Gary L. Lieber, Katherine Brewer

and Jonathan Cuneo were on the brief for amici curiae

Sierra Club, et al. in support of appellees.

Eliot Spitzer, Attorney General, State of New York, Seth

Kupferberg, Assistant Attorney General, Bill Lockyer, Attorney General, State of California, Manuel M. Medeiros, State

Solicitor General, J. Joseph Curran Jr., Attorney General,

State of Maryland, Thomas F. Reilly, Attorney General,

Commonwealth of Massachusetts, were on the brief for amici

curiae State of New York, et al. in support of appellees.

Before: Ginsburg, Chief Judge, and Randolph and Tatel,

Circuit Judges.

Opinion for the Court filed by Chief Judge Ginsburg.

Ginsburg, Chief Judge: Executive Order No. 13,202 provides that, to the extent permitted by law, no federal agency,

and no entity that receives federal assistance for a construction project, may either require bidders or contractors to

enter, or prohibit them from entering, into a project labor

agreement (PLA). The plaintiffs -- the Building and Construction Trades Department of the AFL-CIO (BCTD), the

Contra Costa Building and Construction Trades Council

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(BCTC), and the City of Richmond, California -- brought this

suit to challenge the validity of the Executive Order. The

district court held the Executive Order invalid and enjoined

its enforcement.

We hold that the President had authority under Article II

of the Constitution of the United States to issue Executive

Order No. 13,202, and that the Executive Order is not

preempted by the National Labor Relations Act. Therefore,

we reverse the judgment of the district court and vacate the

injunction.

I. Background

A PLA is a multi-employer, multi-union pre-hire agreement

designed to systemize labor relations at a construction site.

It typically requires that all contractors and subcontractors

who will work on a project subscribe to the agreement; that

all contractors and subcontractors agree in advance to abide

by a master collective bargaining agreement for all work on

the project; and that wages, hours, and other terms of

employment be coordinated or standardized pursuant to the

PLA across the many different unions and companies working on the project. The implementation of a PLA on a

project underwritten by the Government almost always is

accomplished by making agreement to the PLA a bid specification, thereby allowing the contracting authority to ensure

that firms at every level -- from the general contractor to the

lowest level of subcontractor -- comply with the terms of the

PLA.

President George W. Bush issued Executive Order No.

13,202 on February 17, 2001, establishing the policy of the

Government with regard to the use of PLAs in federal and

federally funded construction contracts. See Preservation of

Open Competition and Government Neutrality Towards Government Contractors' Labor Relations on Federal and Federally Funded Construction Projects, 66 Fed. Reg. 11,225 (Feb.

22, 2001) (Executive Order). The Executive Order provides

that the Government will neither require nor prohibit the use

of a PLA on any federal or federally funded construction

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project. Section 1(a) provides that, "[t]o the extent permitted

by law," no federal agency or construction manager acting on

its behalf shall "in its bid specifications, project agreements,

or other controlling documents" for a construction project

"[r]equire or prohibit bidders, offerors, contractors, or subcontractors to enter into or adhere to agreements with one or

more labor organizations, on the same or other related project(s)." Section 3 applies the same prohibition to "any

executive agency issuing grants, providing financial assistance, or entering into cooperative agreements for construction projects." The Executive Order makes clear that it does

not prohibit a contractor or a subcontractor from entering

into a PLA, see id. s 1(c); it merely prevents the contracting

authority from either requiring or forbidding the use of a

PLA for a project. The result in practice is to leave to the

contractors working on a project the choice whether to enter

into, and to require their subcontractors to enter into, a PLA,

presumably depending upon whether it is likely to increase or

to decrease their costs. See, e.g., United States General

Accounting Office, Project Labor Agreements, The Extent of

Their Use and Related Information, GAO/GGD-98-82 (May

1998) 9 (describing instructions for bidders issued by Department of Labor allowing, but not requiring, "a responsive

bidder [to] have a Project Labor Agreement (PLA) with its

contractors" because a "PLA is one possible method of meeting th[e] goal" of ensuring good labor relations).

The plaintiffs brought suit in the district court to enjoin

enforcement of the Executive Order, naming as defendants

the Director of the Federal Emergency Management Agency,

the Secretary of Housing and Urban Development, the Secretary of Transportation, and the members of the Federal

Acquisition Regulatory Council. The BCTD, which consists

of 14 national labor organizations representing workers in the

construction industry, averred that it and its affiliates had

entered into and intended to negotiate many PLAs, the future

availability of which would be affected directly by the Executive Order. The City of Richmond alleged that the Executive

Order prevented it from requiring the use of PLAs on several

federally funded construction contracts lest it lose its access

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to federal funds. The BCTC, which consists of 27 local labor

unions representing construction workers in Contra Costa

County, California, claimed in turn that but for the Executive

Order it would negotiate PLAs with respect to work on

federally funded projects put out for bid by the City of

Richmond.

One of the projects for which the BCTD had negotiated a

PLA was the Woodrow Wilson Bridge Construction Project,

the purpose of which is to replace a drawbridge over the

Potomac River. The Congress, after transferring ownership

of the existing bridge to an interstate authority established by

the District of Columbia, the State of Maryland, and the

Commonwealth of Virginia, appropriated more than $1.5 billion for the project. See Woodrow Wilson Memorial Bridge

Authority Act of 1995, Pub. L. No. 104-59, tit. IV, ss 405,

410, 109 Stat. 568, 629, 633-34 (1995). Maryland took responsibility for building the structures crossing the Potomac River

and the highways and interchanges on the Maryland side, and

Virginia agreed to build the highways and interchanges on

the Virginia side of the River. Before the President issued

Executive Order No. 13,202 affiliates of the BCTD and the

construction manager for the Maryland State Highway Administration entered into an agreement to set terms for the

construction of Maryland's share of the project.

The agreement provided that Maryland would incorporate

a PLA into its bid specifications and that the successful

bidder for the project would be bound by the PLA regardless

whether the contractor's employees were members of a union.

As required by federal regulations, see 23 C.F.R.

ss 630.205(e), 635.104(a), 635.112(a), Maryland submitted the

bid specifications to the Federal Highway Administration

(FHWA) for approval, but the FHWA rejected them because

the newly issued Executive Order prohibited the State from

requiring adherence to a PLA. Maryland later awarded the

contract without requiring that the awardee enter into a PLA,

which left the BCTD no role in the project.

Upon application of the BCTD, the district court issued a

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forcing the Executive Order against the Wilson Bridge PLA."

Bldg. & Constr. Trades Dep't v. Allbaugh, 172 F. Supp. 2d 67,

79 (2001). The court held that the Executive Order conflicts

with the National Labor Relations Act, 29 U.S.C. s 151 et

seq., and that without an injunction the BCTD would suffer

irreparable harm because "before the Executive Order was

put in place ... [the] BCTD had negotiated an agreement,

binding on Maryland, and Maryland was using its best efforts

to implement it," 172 F. Supp. 2d at 79.

A few weeks later the district court issued a permanent

injunction against enforcement of the Executive Order. The

court held first that, pursuant to the reasoning of the Supreme Court in Youngstown Sheet & Tube Co. v. Sawyer, 343

U.S. 579 (1952), the President could not impose the conditions

in s 3 of the Executive Order upon the administration of

federal funds without the express authorization of the Congress, See Bldg. & Constr. Trades Dep't v. Allbaugh, 172

F. Supp. 2d 138, 160 (2001), and that neither the Federal

Property and Administrative Services Act, 40 U.S.C. s 471 et

seq. (Procurement Act), nor any other statute authorizes the

President to do so, see id. at 162. The district court next

concluded that the Executive Order was preempted in its

entirety by the NLRA because the Executive Order would

abridge rights granted in s 8 of the Act to employers in the

construction industry and would "alter the delicate balance of

bargaining and economic power that the NLRA establishes."

See id. at 167, 169 (quoting Chamber of Commerce v. Reich,

74 F.3d 1322, 1337 (D.C. Cir. 1996)).

II. Analysis

The Government appeals, contending that under Article II

of the Constitution the President has authority to impose the

conditions in s 3 of the Executive Order, and that the Executive Order is a proprietary rather than a regulatory act and

therefore not subject to preemption by the NLRA. We

address these questions of law de novo. See Time Warner

Entm't Co. v. United States, 211 F.3d 1313, 1316 (D.C. Cir.

2000).

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A. The Constitution and the Executive Order

The President's authority to act "must stem either from an

act of Congress or from the Constitution itself." Youngstown, 343 U.S. at 585. In this case the district court assumed

without deciding (because the plaintiffs had not argued to the

contrary) that s 1 of the Executive Order, which section

"involves contracting by federal agencies, ... is arguably

authorized by the Procurement Act," 172 F. Supp. 2d at 159

& n.9, but the court went on to "invalidate s 3 of EO 13202 as

an action beyond the scope of the President's authority," id.

at 162. The Government contends on appeal that in so ruling,

"the district court fundamentally misunderstood the President's authority as head of the executive branch." The first

question before us, therefore, is whether the President had

constitutional authority to issue s 3 of the Executive Order,

which section applies to "any agency issuing grants, providing

financial assistance, or entering into cooperative agreements

for construction projects."

Article II, s 1 of the Constitution provides that the "executive Power shall be vested in a President of the United States

of America." As the Government observes, the President's

power necessarily encompasses "general administrative control of those executing the laws," Myers v. United States, 272

U.S. 52, 164 (1926), throughout the Executive Branch of

government, of which he is the head. The authority of the

President is not without limits, of course: "the President's

power [under Article II, s 3] to see that the laws are faithfully executed refutes the idea that he is to be a lawmaker."

Youngstown, 343 U.S. at 587. His faithful execution of the

laws enacted by the Congress, however, ordinarily allows and

frequently requires the President to provide guidance and

supervision to his subordinates. As we previously have had

occasion to observe:

The ordinary duties of officers prescribed by statute

come under the general administrative control of the

President by virtue of the general grant to him of the

executive power, and he may properly supervise and

guide their construction of the statutes under which they

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act in order to secure that unitary and uniform execution

of the law which Article II of the Constitution evidently

contemplated in vesting general executive power in the

President alone.

Sierra Club v. Costle, 657 F.2d 298, 406 n.524 (D.C. Cir. 1981).

Those officers are duty-bound to give effect to the policies

embodied in the President's direction, to the extent allowed

by the law. See The Federalist No. 72, at 463 (Alexander

Hamilton) (Benjamin F. Wright ed., 1961) ("The persons,

therefore, to whose immediate management these different

matters are committed, ought to be considered as the assistants or deputies of the chief magistrate ... and ought to be

subject to his superintendence").

Section 3 of Executive Order No. 13,202 is such an exercise

of the President's supervisory authority over the Executive

Branch. In the Executive Order, the President directs his

subordinates how to proceed in administering federally funded projects, but only "[t]o the extent permitted by law."

Thus, if an executive agency, such as the FEMA, may lawfully implement the Executive Order, then it must do so; if the

agency is prohibited, by statute or other law, from implementing the Executive Order, then the Executive Order itself

instructs the agency to follow the law.

The district court's comparison of Executive Order No.

13,202 to the executive order by which President Truman

purported to seize privately owned steel mills, and which the

Supreme Court declared unlawful in Youngstown, is misplaced because the present Executive Order is not selfexecuting. As the Government says, the question in the

earlier case was whether the President had constitutional

authority to seize the mills and not, as here, whether he could

direct Executive Branch officials in their implementation of

statutory authority. Indeed, had President Truman merely

instructed the Secretary of Commerce to secure the Government's access to steel "[t]o the extent permitted by law,"

Youngstown would have been a rather mundane dispute over

whether the Secretary had statutory authority to act as he

did.

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The plaintiffs raise the prospect that, notwithstanding the

President's instruction that the Executive Order be applied

only "[t]o the extent permitted by law," a particular agency

may try to give effect to the Executive Order when to do so is

inconsistent with the relevant funding statute. We express

no opinion upon whether this may come to pass. The mere

possibility that some agency might make a legally suspect

decision to award a contract or to deny funding for a project

does not justify an injunction against enforcement of a policy

that, so far as the present record reveals, is above suspicion

in the ordinary course of administration. See Reno v. Flores,

507 U.S. 292, 301 (1993) (to prevail in facial attack, complainant must "establish that no set of circumstances exists under

which the [regulation] would be valid") (brackets in original).

In the event that an agency does contravene the law in a

particular instance, an aggrieved party may seek redress

through any of the procedures ordinarily available to it: a bid

protest, a motion for administrative reconsideration, or an

action in the district court challenging that specific decision.

Nonetheless, the plaintiffs complain that it is "untenable to

require each federal grantee or other potential party to a

PLA to challenge a threatened denial of funds based on the

Executive Order" because "projects are planned and conducted on tight and critical timeframes." That concern, however,

provides us with no warrant to relieve the plaintiffs of their

burden in this facial challenge to show that s 3 of the Order

is without any valid application. See Flores, 507 U.S. at 301.

Nor is there reason to be concerned for "each federal grantee"; a single judicial determination that an agency lacks

authority to implement the Executive Order in its administration of a particular statute is likely to settle any questions

about the application of the Executive Order to later grants

of federal funds pursuant to that statute. Insofar as the

plaintiffs are concerned that "there is rarely time to litigate

an agency's rejection of a bid specification, or to challenge a

threat that funding will be withheld," the Government correctly points out that the plaintiffs "offer no reason to think

that the usual mechanisms for seeking expedited review

would be inadequate" to provide redress where appropriate.

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See, e.g., 4 C.F.R. s 21.10 (2002) (Comptroller General may

resolve dispute "using an express option" or other "flexible

alternative procedures").

B. The Executive Order and the NLRA

The district court held that because "[p]rivate entities are

being prohibited ... from requiring PLAs that are expressly

allowed by the NLRA," the NLRA preempts s 3 of the

Executive Order insofar as it applies to "private recipients of

federal funding who act as employers in construction projects," 172 F. Supp. 2d at 167 (citing San Diego Bldg. Trades

Council v. Garmon, 359 U.S. 236 (1959)). In that case, the

Supreme Court held that when "the activities which a State

purports to regulate are protected by s 7 of the [NLRA], or

constitute an unfair labor practice under s 8, due regard for

the federal enactment requires that state jurisdiction must

yield." Id. at 244. The district court also held that because

the Executive Order "impermissibly attempts to create an

ideally balanced state of bargaining according to the President's conception of open competition among labor and management," BCTD, 172 F. Supp. 2d at 167, the NLRA

preempts the Executive Order under the teaching of International Association of Machinists & Aerospace Workers v.

Wisconsin Employment Relations Commission, 427 U.S. 132

(1976). In that case the Court held that neither a state

government nor the National Labor Relations Board may

regulate an aspect of labor relations that the Congress intended "be controlled by the free play of economic forces."

Id. at 140.*

__________

* The Government contends that the "legal principles developed

to govern federal-state relations are ill-suited to cases such as this,

which involve relations between two branches of the federal government." Whatever the merit of that argument, this court on at least

one occasion has applied the doctrine "to federal government behavior that is thought similarly to encroach into the NLRA's regulatory

territory," and specifically to an executive order. Chamber of

Commerce, 74 F.3d at 1335. As the Government recognizes, the

panel is bound to abide by that precedent until it is overturned by

the court sitting en banc or by the Supreme Court.

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The Government argues that we need not determine

whether the Executive Order runs afoul of the principles

established in Garmon and Machinists because "Executive

Order 13202 clearly constitutes proprietary action rather than

regulation." We agree.

As the plaintiffs expressly recognize, the principles of

NLRA preemption come into play only when the Government

is "regulating within a protected zone," and not when it is

acting as a proprietor, "interact[ing] with private participants

in the marketplace." Bldg. & Constr. Trades Council v.

Associated Builders & Contractors, 507 U.S. 218, 227 (1993)

(Boston Harbor). The relevant distinction is whether, in

placing a labor-related condition upon its award either of a

construction contract or of funds to another entity that will

award the construction contract, the Government "acts just

[as] a private contractor would act, and conditions its purchasing upon the very sort of labor agreement that Congress

explicitly authorized and expected frequently to find," id. at

233, or instead seeks to affect conduct "unrelated to the

employer's performance of contractual obligations to the

[Government]," id. at 229; accord, Chamber of Commerce, 74

F.3d at 1335.

As the Government maintains, s 1 of the Executive Order

embodies just "the type of decision regarding the use of labor

agreements that a private project owner would be free to

make." The construction proviso of the NLRA, 29 U.S.C.

s 158(f), "explicitly permits employers in the construction

industry ... to enter into pre-hire agreements," Boston

Harbor, 507 U.S. at 230, but nothing in that proviso prevents

an employer from refusing to enter into such agreements.

Thus, s 1 leaves contractors free to determine whether they

will use PLAs on government contracts, just as they may

determine whether to use PLAs on projects for private

owner-developers that neither require nor prohibit their use.

The plaintiffs argue that at least s 3 of the Executive

Order is regulatory rather than proprietary because it applies

only to federally funded rather than to Government-owned

projects; but that argument proceeds from too crabbed an

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understanding of proprietorship. First, the Government unquestionably is the proprietor of its own funds, and when it

acts to ensure the most effective use of those funds, it is

acting in a proprietary capacity. Second, that the Government is a lender to or a benefactor of, rather than the owner

of, a project is not inconsistent with its acting just as would a

private entity; a private lender or benefactor also would be

concerned that its financial backing be used efficiently. In

sum, the distinction between federally owned and federally

funded projects is not relevant here.

The plaintiffs also contend that "when the Government acts

through blanket, across-the-board rules that 'flatly prohibit'

... certain actions on the part of its contractors and recipients of its financial assistance, its conduct is clearly regulatory," whereas it acts in a proprietary capacity when it makes

an "ad hoc" contracting decision. According to the plaintiffs,

this distinction finds support in Chamber of Commerce, 74

F.3d at 1337 (observing Executive Order No. 12,954 "cannot

be equated to the ad hoc contracting decision made by [the

State] in seeking to clean up Boston Harbor"); but the

plaintiffs misread that case, as did the district court, see

BCTD, 172 F. Supp. 2d at 170 ("EO 13202 sets a blanket rule

and does not require government agencies to act on a projectby-project basis, as was the case in Boston Harbor"). In

Chamber of Commerce, we held that Executive Order No.

12,954 was regulatory not because it decreed a policy of

general application, as opposed to a case-by-case regime, but

because it disqualified companies from contracting with the

Government on the basis of conduct unrelated to any work

they were doing for the Government. See 74 F.3d at 1338

(executive order "ha[d] the effect of forcing corporations

wishing to do business with the federal government not to

hire permanent replacements even if the strikers are not the

employees who provide the goods or services to the government"). It is not surprising, therefore, that neither the

district court nor the plaintiffs offer any good explanation

why a "blanket rule" -- applicable to all government contracts, but not to the non-government contracts of those who

do business with the Government -- is somehow inconsistent

with the action of a proprietor. We agree with the GovernUSCA Case #01-5436 Document #689066 Filed: 07/12/2002 Page 12 of 14
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ment that there simply is "no logical justification" for holding

that "if an executive order establishes a consistent practice

regarding the use of PLAs, it is regulatory even though the

only decisions governed by the executive order are those that

the federal government makes as [a] market participant."

See Kahn, 618 F.2d at 789 (under Procurement Act, President

may exercise "authority over those larger administrative and

management issues that involve the Government as a whole").

A condition that the Government imposes in awarding a

contract or in funding a project is regulatory only when, as

the Supreme Court explained in Boston Harbor, it "addresse[s] employer conduct unrelated to the employer's performance of contractual obligations to the [Government]."

507 U.S. at 228-29. Here the Government correctly notes

that "the impact of [the] procurement policy [expressed in

Executive Order No. 13,202] extends only to work on projects

funded by the government." Because the Executive Order

does not address the use of PLAs on projects unrelated to

those in which the Government has a proprietary interest, the

Executive Order establishes no condition that can be characterized as "regulatory."

Finally, the plaintiffs point out that s 1(a) of the Executive

Order could be read to prohibit any recipient of federal funds

from using a PLA for work on "related construction project(s)" that are not funded by the Government. The meaning of the word "related" in s 1(a) is indeed unclear. The

plaintiffs argue that as a result the Executive Order "cannot

fairly be characterized as affecting only the particular contract in which the Government has a financial interest."

When confronted with this reading, however, the Government

disavowed any construction of the Executive Order that

would prohibit an entity that uses a PLA in a non-federally

funded project from receiving federal funds. We have no

reason to doubt, and every reason to hold the Government to,

that interpretation of s 1(a).

III. Conclusion

For the foregoing reasons, we conclude that the President

acted within his constitutional authority in issuing Executive

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Order No. 13,202 and that the Executive Order expresses a

proprietary policy that is not subject to preemption by the

NLRA. Therefore, the judgment of the district court is

reversed and its injunction is vacated.

So ordered.

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