Court Opinion

ID: 9860351
Source: CourtListenerOpinion
Date Created: 2023-09-24 23:18:53.360138+00
Date Added: 2024-06-11T11:21:13.315392
License: Public Domain

HANDLER, J.,
concurring.
This appeal presents the issue whether a governmental agency has the power in prescribing specifications for bids to do public work to require a prospective contractor to enter into an agreement under which the contractor becomes obligated to use the members of a specified labor organization on the public project in exchange for guarantees of labor stability. Specifically, this appeal asks the Court to consider the validity of two resolutions passed by the New Jersey Turnpike Authority (TPA or Authority), which require contractors who are awarded contracts on an extensive TPA project to enter into such a prehire agreement with the Building and Construction Trades Council (BCTC).
*46The resolutions were challenged by the George Harms Construction Company, a contractor which had successfully bid for a project contract before the contract was rebid with a specification requiring the use of a prehire project-labor agreement; by individual employees of Harms; and by the Utility and Transportation Contractors Association.
The Court today holds that our State public bidding laws and the policies underlying them do not allow State agencies to require contractors to enter into project-labor agreements with designated labor organizations. The Court also suggests that such project-labor agreements might, even if expressly authorized by the Legislature, violate article I, section 19 of the New Jersey Constitution. Because the Court now invalidates the challenged resolutions, it declines to consider whether the resolutions should have been subject to the procedural requirements that accompany formal administrative agency rulemaking.
I write separately because I disagree with the Court’s conclusion that the State bidding laws prohibit the use of project-labor agreements. Further, I deem unwise the Court’s extensive discussion of the constitutional implications of the challenged governmental actions presaging their constitutional infirmity. A narrower and firmer ground on which to rest a decision exists. I would find that the challenged resolutions constitute rulemaking, and that, therefore, this case should be remanded to the Authority so that it can comply with the rulemaking requirements that govern administrative agency action.
I
The Appellate Division determined that a project-labor agreement does not conflict with the statutory duty of the Authority to award the contract to “the lowest responsible bidder.” N.J.S.A. 27:23-6.1. In that regard, the court noted that the Authority has discretion to fix appropriate contract requirements to ensure the effective completion of its work. The court found that given the complexity of the Turnpike project referred to as the Widening *47Project, the numerous contracts involved, the time constraints and the necessity for all persons to work in close proximity and harmony, the Authority’s determination that project-labor agreements will advance the public interest by promoting the timely and economic completion of the Widening Project was entirely reasonable and appropriate.
The Appellate Division distinguished Wittie Electric. Co., Inc. v. State, 139 N.J.Super. 529, 354 A.2d 659 (App.Div.1976), relied on by appellants, in which the court found that a public agency could not reject the lowest responsible bidder, a non-union employer, in favor of a union employer. That case, as pointed out by the Appellate Division, did not include specifications concerning the identity or status of the labor force.
The Court, however, concludes that project-labor agreements violate the public-bidding statute, N.J.S.A. 27:23-6.1(a). The Court finds that “[o]n balance ... the standards of delegation set forth in our public-bidding laws [do not] embrace specifications for the type of project-labor agreement in this case that designated a sole source of construction services and the exclusive organization with which a construction contractor might enter an acceptable project-labor agreement.” Ante at 44, 644 A.2d at 95. The Court reasons that “the paramount policy of our public-bidding laws fosters ‘unfettered competition’ in public contracts” and that the TPA’s actions are not consistent with that policy. Ibid.
I find nothing in either the language or the spirit of N.J.S.A. 27:23-6.1(a) that precludes the use of project-labor agreements. The Court itself observes that “[i]f in the construction and maintenance of [the] highway system the TPA deems a project-labor agreement necessary, the proposition that the requirement of such an agreement is within the TPA’s mission is difficult to reject.” Ante at 34, 644 A.2d at 90. Thus the Court acknowledges that within the delegated authority of the TPA is the general power to enter into a project-labor agreement.
N.J.S.A 27:23-6.1(a) does not trench on that general power. It provides that the TPA, “in the exercise of its authority to make *48and enter into contracts and agreements necessary or incidental to the performance of its duties and the execution of its powers, ... shall award ... contracts] to the lowest responsible bidder.” Responsibility may involve the financial ability, experience, and skills of the bidder. See Arthur Venneri Co. v. Paterson Hous. Auth., 29 N.J. 392, 403, 149 A.2d 228 (1959). A bidder that satisfies those considerations and complies with the bidding specifications is “responsible,” regardless of the status of the labor it chooses to employ. Thus in Wittie Electric Co., supra, 139 N.J.Super. at 532, 354 A.2d 659, the court held that a contractor’s employment of non-union labor was not an appropriate factor to consider when determining the responsibility of that contractor, which had submitted the lowest bid for a public contract.
The “responsibility” of Harms is not at issue in this case. The TPA has at no point asserted that Harms is not a responsible bidder. Rather, the TPA. has contended only that to be awarded a Widening Project contract, a bidder must be responsive to the explicit specifications that it has chosen to prescribe for the completion of the Widening Project. See Keyes Elec. Serv. v. Board of Chosen Freeholders, 15 N.J.Super. 178, 83 A.2d 61 (Law Div.1951) (holding that county was permitted to reject all bids and to add amended specification to project requiring that prospective contractor hire employees who would work in harmony with other trades employed on public-construction'project and that all labor conform, to practices of local labor unions).
The Legislature’s goals in enacting the statutory requirement of awarding contracts to the lowest responsible bidder, as the Court observes, were to promote competition and to avoid favoritism, improvidence, and corruption. The way the Legislature accomplished those goals was by limiting the discretion of an agency to reject the lowest bid from a contractor that meets all applicable specifications as set forth in provisions inviting bids. The statute is specific in its method of accomplishing its general goals. Thus, the statute does not direct that an agency must, in every action it takes, promote competition at the expense of all other concerns. *49However, the Court, invoking a general policy of the statute, converts that policy into an absolute requirement — the fostering of competition. Implicit in the Court’s reasoning is that any specification that limits the number of bidders simply because some potential bidders cannot .satisfy that specification is unreasonable and invalid. A specification that limits the number of bidders should invite critical scrutiny, but it should not be stigmatized as unreasonable without such scrutiny.
Requiring agencies to accept the lowest bids from responsible contractors that meet publicly-announced specifications accomplishes the goals of promoting competition and preventing favoritism. That requirement serves to prevent an agency from denying a contract to a contractor on non-specific, secretive grounds. The lowest-responsible-bidder statute ensures that a lowest responsible bidder will be denied a contract only for the very clearly-stated and public reason that its bid did not comply with explicit specifications.
Although the lowest-responsible-bidder requirement fosters competition and eliminates favoritism, it does not mandate that those goals must be achieved by limiting the type of specifications that an agency can use in the performance of public works. Public entities “may, without violating the rule requiring freedom of competition, insert proper conditions in their proposals for bids,” as long as bids do “not unduly restrict competition.” 18 Eugene McQuillan, The Law of Municipal Corporations, § 29.44 (3d ed. 1984) (emphasis added). Thus our courts do not invalidate specifications that may incidentally deter competition unless they are not reasonably related to the work to be performed. See, e.g., Waszen v. City of Atlantic City, 1 N.J. 272, 63 A.2d 255 (1949) (striking down bid proposal because it contained several specifications that had effect of eliminating from competition all prospective contractors except the contractor that had previously performed the needed service and that had no reasonable relationship between the purpose of the specification and the character of the work to be performed under the contract).
*50As the Court here notes, “ ‘specifications cannot be so precise as . to knowingly exclude all but one prospective bidder.’ ” Ante at 41, 644 A.2d at 93 (quoting Utilimatic, Inc. v. Brick Township Mun. Util. Auth., 267 N.J.Super. 139, 145, 630 A.2d 862 (Law Div.1993)). The specification challenged in this case, however, does not eliminate all but one bidder. Although the resolutions prescribing the specification designate a single source of labor, the specification does not either directly or indirectly limit the competition to a single bidder. There is no indication in this case that a significant number of contractors were precluded from bidding on the project by the challenged specification. The current specification, unlike those at issue in Waszen, has only a remote and largely speculative effect on competition.
Further, the TPA has put forth evidence suggesting that the challenged specification is “reasonably related” to its legislatively-delegated task. The decision of public agencies throughout the country to usé project labor agreements also supports the position that they are not unreasonable. See, e.g., Building & Construction Trades Council v. Associated Builders and Contractors, Inc., — U.S.-, 113 S.Ct. 1190, 122 L.Ed.2d 565 (1993); Minnesota Chapter of Associated Builders and Contractors, Inc. v. St. Louis County, 825 F.Supp. 238, 244 (D.Minn.1993); Associated Builders and Contractors, Inc. v. City of Seward, 966 F.2d 492, 499 (9th Cir.1992), cert. denied, — U.S.-, 113 S.Ct. 1577, 123 L.Ed.2d 146 (1993); Northern Ohio Chapter of Associated Builders & Contractors, Inc. v. Gateway Elec. Development Corporation, No. 1:92CV0649,1992 WL 119375 (N.D.Ohio May 12, 1992); Glenwood Bridge, Inc. v. City of Minneapolis, 940 F.2d 367 (8th Cir.1991); Utility Contractors Ass’n of New England, Inc. v. Department of Public Works, 29 Mass.App.Ct. 726, 565 N.E.2d 459 (1991). Furthermore, two successive governors in this State have concluded that project-labor agreements are reasonable mechanisms to effectuate labor stability. See Executive Order No. 99 (September 13, 1993) (E.O. 99) and Executive Order No. 11 (March 21,1994) (E.O. 11). The TPA has also set forth plausible reasons for adopting *51project-labor agreements.1 Moreover, given the TPA’s governmental mission, delegated authority and extensive experience in dealing with construction-industry labor, the governmental competence and the expertise reposed in the TPA surely include the ability to determine the advisability of using project-labor agreements. See, e.g., Metromedia, Inc. v. Director, Division of Taxation, 97 N.J. 313, 478 A.2d 742 (1984) (recognizing that agency’s expertise is entitled to great respect by courts, particularly when exercised in specialized area covered by statutory provisions relevant to agency’s purpose).
II
The Appellate Division also determined that a project labor agreement does not undermine the rights of persons “to organize and bargain collectively,” N.J. Const. art. I, § 19, but imposes *52contract obligations only on the employer-contractor and the designated labor organization. The Court today suggests that requiring contractors to enter project-labor agreements with designated labor organizations might infringe on that constitutional right.
The Court does not determine the constitutional issue in this case, but nonetheless intimates that project-labor agreements are constitutionally suspect. I disagree with the Court’s implication that the constitutional right to organize is threatened by the TPA’s actions in this ease. Countervailing considerations can be marshalled to suggest that no violation of constitutional rights will occur as a result of the use of project labor agreements. I think, therefore, the Court should have refrained from its extended discussions of possible constitutional issues and their resolutions. See, e.g., O’Keefe v. Passaic Valley Water Comm’n, 132 N.J. 234, 240, 624 A.2d 578 (1993) (“[Cjourts should not reach constitutional questions unless necessary to the disposition of litigation.”); In re Township of Warren, 132 N.J. 1, 43, 622 A.2d 1257 (1993) (Pollock, J., concurring); Hennessey v. Coastal Eagle Point Oil Co., 129 N.J. 81, 109, 609 A.2d 11 (1992) (Pollock, J., concurring).
There are a number of considerations omitted from the Court’s discussion that should obviate any need to address constitutional concerns. Members of the BCTC, in accordance with their State and federal rights, have chosen the BCTC as their representative. The resulting organization is a powerful one that has acted in the interest of its members. If it fails to act in the interests of its members, the members are free to elect new representatives or to reorganize. That employees who are not members of the BCTC are not privy to the work on this project does not mean that their fundamental right “to organize and bargain collectively” has been undermined. The Steelworkers Union, representatives of the appellant employees, is in no way precluded from negotiating collectively to insure that it is the exclusive source of labor on future projects in which an agency deems that reliance on a sole source of labor is necessary. Further, no evidence shows that the *53TPA’s action was aimed at undermining the rights of the appellant employees to organize and to bargain through the Steelworkers Union. That the TPA deemed the BCTC to be a more appropriate source for labor on the Widening Project does not evidence an intent to undermine the rights of workers to organize as they so choose and bargain accordingly.
Those considerations do not by any means settle the constitutional score. They do, however, militate strongly against the wisdom of the Court’s extended constitutional foray.
Ill
I do not believe the challenged specification violates the lowest-responsible-bidder statute, and therefore, I find necessary consideration of whether the action of the TPA is invalid because it constitutes improper rulemaking. The question is whether in adopting its specification the TPA should have engaged in formal rulemaking.
Whether formal rulemaking procedures must be invoked depends on whether the agency action can be characterized as a “rule.” An agency’s action constitutes a “rule” when it is a formal expression or statement of administrative policy effectuating the agency’s statutory authority. See Administrative Procedure Act, N.J.S.A. 52:14B-1 to -15. N.J.S.A. 52:14B-2(e) provides: “ ‘Administrative rule’ or ‘rule’ when not otherwise modified, means each agency statement of general applicability and continuing effect that implements or interprets law or policy----” Metromedia synthesized the factors to be considered when determining whether an agency should use administrative rulemaking: Agency action must be validated through formal rulemaking if it
(1) is intended to have wide coverage encompassing a large segment of the regulated or general public; (2) is intended to be applied generally and uniformly to all similarly situated persons; (3) is designed to operate only in future cases, that is prospectively; (4) prescribes a legal standard or directive that is not otherwise expressly provided by or clearly and obviously inferable from the enabling statutory authorization; (5) reflects an administrative policy that (i) was not previously expressed in any official and explicit agency determination, adjudica*54tion or rule, or (ii) constitutes a material and significant change from a clear, past agency position on the identical subject matter; and (6) reflects a decision on administrative regulatory policy in the nature of the interpretation of law or general policy.
[97 N.J. at 331-32, 478 A.2d 742.]
“All six of the Metromedia factors need not be present to characterize agency action as rulemaking, and the factors should not be merely tabulated, but weighed.” In re the Request for Solid Waste Util. Customer Lists, 106 N.J. 508, 518, 524 A.2d 386 (1987).
The TPA claims that rulemaking is inappropriate because the • Authority’s challenged action applies to only the current project. Although that assertion is correct in a narrow sense, the TPA fails to recognize that, at the time taken, its actions, as applied to the Widening Project, were prospective, or to acknowledge the prospective potential of its actions.
Moreover, the specification requiring a project-labor agreement is a standard that will “have wide coverage encompassing a large segment of the regulated ... public,” Metromedia, supra, 97 N.J. at 331, 478 A.2d 742, because the number of contractors and construction-industry employees affected by the TPA’s decision to use project-labor agreements constitutes a substantial portion of the “regulated public.” Furthermore, the challenged TPA action implicitly “prescribes a legal standard or directive that is not otherwise ... inferable from the enabling statutory authorization.” Ibid. Although I find that the challenged TPA action is within its power, as the Court itself acknowledges, ante at 34-35, 644 A 2d at 90, the decision to use project-labor agreements is not expressly provided for by statute. Additionally, the challenged action “reflects an administrative policy that ... was not previously expressed in official and explicit agency determination or rule” and it “constitutes a material and significant change from a clear, past agency position on the identical subject matter.” Ibid.
That the TPA should have engaged in rulemaking is bolstered by this Court’s decision in Crema v. New Jersey Department of Environmental Protection, 94 N.J. 286, 463 A.2d 910 (1983), in which we held invalid a permit issued by the Department of *55Environmental Protection (DEP) granting “conceptual” approval of a residential/commercial development in an area governed by the Coastal Area Facility Review Act (CAFRA). In Crema, the actions of the DEP were held unacceptable because the issuance of approval could not have fairly been anticipated or addressed by the public and the agency did not establish substantive criteria before the administrative proceedings for determining how to qualify for “conceptual approval.” “The public had no meaningful opportunity to shape the criteria that ultimately affected their interests.” Id. at 302, 463 A.2d 910. Similar concerns attend the actions of the Authority in this case. The TPA failed to establish any criteria against which the decision to use project-labor agreements could be judged. Furthermore, the regulated public had no opportunity to express its concerns and add its views to the process of determining the best method of dealing with the problem of potential labor strife.
Additionally, State of New Jersey, Department of Environmental Protection v. Stavola, 103 N.J. 425, 511 A.2d 622 (1986), supports the proposition that the TPA was required to follow the rulemaking procedures. In Stavola, the DEP attempted to restrain two developers from constructing “deluxe” beach-club cabanas, which the DEP contended were within the CAFRA definition of “facilities” requiring construction permits. The Court held that if the DEP has the implied statutory authority to regulate certain beach-club cabanas, then its ruling in the case before it would apply to all other beach clubs contemplating constructing or renovating cabanas, thus falling in the guidelines of Metromedia. Id. at 438, 511 A.2d 622. The Court also maintained that the DEP’s decision lacked standards by which other clubs could determine whether they were subject to regulation. Ibid. The Stavola analysis compels the conclusion that the Authority’s actions in this case constitute similarly unacceptable, unfettered, standardless administrative-agency discretion. See also In re Certain Amendments to the Adopted and Approved Solid Waste Management Plan, 133 N.J. 206, 627 A.2d 614 (1993) (holding that where emergency order adopted by DEPE redirecting flow of *56solid waste within county as intended to implement county’s amended plan for disposal of waste and to extend beyond 180 days, agency was required to adhere to APA rulemaking requirements).
The Court, although it does not directly address whether rule-making is required, suggests “that whatever policies for project-labor agreements the TPA pursues, it would develop such policies more effectively following a hearing process.” Ante at 19, 644 A.2d at 81. The Court’s vague assertion that “a hearing process” would be helpful undervalues the importance of requiring formal rulemaking procedures when appropriate. Under Metromedia, the Authority should be required to make explicit through rule-making the standard it seeks to follow in deciding whether to require project labor agreements in its public projects.
The Court, in striking down the resolutions of the TPA, takes comfort in the fact that the policy considerations surrounding the use of project-labor agreements are appropriately legislative in nature. Ante at 43, 644 A.2d at 94. It anticipates that the Legislature will undertake to determine whether to authorize the use of such agreements. Id. at 44, 644 A.2d at 95. I agree generally that the practicalities and wisdom of the use of project-labor agreements by governmental bodies in the completion of public works is not a judicial subject. It belongs to the other branches of government. See, e.g., E.O. 11, supra (noting that agencies should determine whether to use project-labor agreements on a case-by-case basis).
As the Court observes, “A project-labor agreement has many subtle and complex facets.” Ante at 19, 644 A.2d at 82. The complexity of project-labor agreements makes all the more important that the solution ultimately arrived at is achieved based on the knowledge, experience and expertise of the Authority. The public process associated with rulemaking will assure that. It will remit this difficult and controversial subject to the other branches of government, where it properly belongs. It will of necessity require the agency through public notice and hearings to expose *57its proposal to vigorous and healthy public debate and will compel agency consideration of the views expressed by the parties and other persons who have construction-industry interests. See N.J.S.A. 52:14B-4. In addition, if the TPA were ultimately to authorize and require project-labor agreements, after going through the rulemaking process, a more complete record concerning the justifications for the use of project-labor agreements would then exist and the courts, if necessary, could better evaluate the reasonableness and validity of its policy. The public nature of rulemaking would also tend to neutralize any charges or implications of favoritism associated with the TPA’s decision to employ project-labor agreements in the absence of proper rulemaking. Finally, the Legislature will retain the power to exercise through legislative oversight its own authority over any such rule that validates the use of project-labor agreements. See N.J. Const. art. V, § 4, ¶ 6; Enourato v. N.J. Building Auth., 90 N.J. 396, 448 A.2d 449 (1982). Thus, an appropriate legislative role need not depend, as it does under the Court’s decision, on the statutory invalidation of the TPA’s resolutions under the public-bidding statutes.
IV
For the foregoing reasons, I concur in the judgment of the Court.
WILENTZ, C.J., joins in this opinion.
WILENTZ, C.J., and HANDLER, J., concurring in the result.
For reversal — Chief Justice WILENTZ, and Justices CLIFFORD, HANDLER, POLLOCK, O’HERN, GARIBALDI and STEIN — 7.
Opposed — None.

The TPA cited the following justifications for the use of project labor agreements:
(1) Strikes and other labor actions could cause delay, disruption and added expense for the Widening Project and significant safety concerns for the public and workers;
(2) The TPA has a tight timetable for the completion of the Widening Project;
(3) There is a great potential for delay, disruption and added expense and danger to the public and workers if the integrated Widening contracts are not coordinated;
(4) BCTC has demonstrated a willingness to picket and strike;
(5) BCTC workers already have an exclusive presence on the Widening Project;
(6) BCTC workers will continue to have an extensive presence on the Widening Project because all the contractors on the Widening Project to date and all or nearly all potential builders other than Harms have collective bargaining agreements with BCTC;
(7) BCTC unions have an adequate workforce to staff the Widening Project;
(8) Project-Labor agreements can expressly prohibit strikes and establish effective and efficient dispute-resolution mechanisms;
(9) Exclusivity is part of the consideration for BCTC agreeing not to strike;
(10) Exclusivity is required for the additional reason that BCTC and the Steelworkers are long-time antagonists and cannot work without strife in the close proximity on the Widening Project’s tight confines of the Southern Mixing Bowl.