(This syllabus is not part of the opinion of the Court. It has been prepared by the Office of the Clerk for
the convenience of the reader. It has been neither reviewed nor approved by the Supreme Court. Please
note that, in the interests of brevity, portions of any opinion may not have been summarized).
AUTHORITY (A-113/114-93)
Argued January 31, 1994 -- Decided July 7, 1994
O'HERN, J., writing for the Court.
This appeal presents the question whether a governmental agency has the power in setting bid
specifications for public work to require a prospective contractor to enter into a "project labor agreement"
with designated unions, under which the contractor must use the members of a specified labor organization
on the project in exchange for the member unions' guarantees of labor stability.
The New Jersey Turnpike Authority (TPA) began a project of widening a portion of the New Jersey
Turnpike in 1990. After receiving from George Harms Construction Co., Inc. (Harms) the low bid for part
of the widening project on August 24, 1993, the TPA adopted a resolution requiring contractors awarded
contracts on the widening project to enter into project-labor agreements with Building and Construction
Trades Council (BCTC) unions. The asserted basis for the resolution was the TPA's interest in avoiding
labor disturbances, such as work stoppages that had previously occurred or been threatened at other TPA
project sites, in part because of an ongoing conflict between a BCTC-affiliated local and the Steelworkers
union to which Harms's employees belong.
In addition to passing the resolution requiring project-labor agreements, the TPA passed another
resolution that rejected all current bids on the contract on which Harms was the low bidder in order to allow
re-bidding under the new policy. Harms protested the rejection by the TPA of its bid, but the TPA refused
to reinstate the bid.
Two weeks after adoption of the TPA resolutions, then-Governor Florio signed Executive Order No.
99, which required all State agencies to adopt project-labor agreements with BCTC affiliates whenever
feasible and whenever such agreements would substantially advance, among other things, the interests of
costs and efficiency.
Harms and some of its Steelworkers employees appealed the TPA's adoption of the two resolutions.
Another appeal was brought to the Appellate Division by the Utility & Transportation Contractors
Association of New Jersey, Inc. (UTCA). The Appellate Division issued a single opinion that sustained the
validity of the TPA resolutions, finding project-labor agreements not to be barred by federal law, the New
Jersey Constitution or State public-bidding laws.
The Supreme Court granted certification. Subsequent to oral argument, Governor Whitman issued
Executive Order No. 11, which superseded Executive Order No. 99. The new executive order allows on a
prospective basis project-labor agreements "on a project-by-project basis" and does not require the use of any
particular union.
HELD: Although project-labor agreements serve important purposes in assuring efficient and economical
administration of large construction projects, the public-bidding laws of New Jersey and the policies
underlying them do not permit State agencies to require contractors to enter into project-labor agreements
with designated labor organizations to the exclusion of all others. Resolution 19-93 of the TPA therefore is
invalid.
1. Harms was provided administrative due process because the company's attorney was given the
opportunity to attend and to speak at the TPA Executive Session during which the resolutions establishing
the project-labor-agreement requirement and vacating Harms's bid were adopted. The TPA is not required
to reinstate Harms's bid. The Court does not decide whether the action of the TPA is subject to the notice-and-comment provision of New Jersey's Administrative Procedure Act, but suggests that the TPA would be
well-served to conduct hearings before developing future policies for project-labor agreements. (pp. 10-14)
2. The United States Supreme Court decision known as Boston Harbor, on which the TPA relied in
part in adopting its resolution, holds that federal labor law does not bar a state from using project-labor
agreements on public projects because in that situation a state is acting like any other purchaser of
construction services and such other purchasers are freely permitted to enter into prehire agreements. (pp.
19-22)
3. The Court does not decide whether the New Jersey Constitution, which grants the right to persons
in private employment to organize and bargain collectively, prohibits project-labor agreements that require
the use of specific unions on public projects, but sets forth the factors to be addressed in deciding whether
the denial of public work because of union affiliation violates a fundamental constitutional right. (pp. 23-31)
4. As a State agency the TPA is required to advertise publicly for bids and must award contracts to the
lowest-responsible bidders in carrying out its responsibility to acquire, build, maintain, repair and operate
turnpike projects. Competitive-bidding statutes serve important public purposes. Union affiliation has not
been recognized in New Jersey as a criterion for determining the lowest-responsible bidder. (pp. 31-41)
5. Bid specifications that designate a sole supplier of labor on a public project do not promote
competition. Executive Order No. 11 recognizes the use of project-labor agreements when appropriate but
does not designate a particular union or labor organization to be used on public projects. The executive
order was intended to increase competition for public contracts. Because the TPA resolution requires the
use of only BCTC-affiliated unions, it is not consistent with the policies of the public-bidding laws of New
Jersey. (pp. 43-45)
6. In delegating to State agencies authority to purchase construction services, the Legislature has not
conferred on those agencies the authority to designate a sole source of construction services or to identify a
particular union affiliation as a characteristic of the lowest-responsible bidder or as a bid specification.
Although project-labor agreements may foster the important goals of labor peace, efficiency and cost savings,
they have the effect of decreasing competition, which places them in conflict with the policy of this State's
public-bidding laws to promote unfettered competition in public contracts. (pp. 45-49)
The judgment of the Appellate Division is REVERSED.
JUSTICE HANDLER, concurring, in which CHIEF JUSTICE WILENTZ joins, is of the view that
the resolutions adopted by the TPA constitute rulemaking by a State agency and that, therefore, the case
should be remanded to the TPA to permit it to comply with the rulemaking requirements for administrative
agency action. The use of project-labor agreements is not barred by public-bidding laws. Also, Justice
Handler disagrees with any implication by the majority that the constitutional right to organize is threatened
by the resolution of the TPA and believes that such a question, not decided by the Court, should not have
been the subject of extended discussion by the majority.
JUSTICES CLIFFORD, POLLOCK, GARIBALDI and STEIN join in JUSTICE O'HERN's opinion.
JUSTICE HANDLER filed a separate concurring opinion in which CHIEF JUSTICE WILENTZ joins.
SUPREME COURT OF NEW JERSEY
A-113/
114 September Term 1993
GEORGE HARMS CONSTRUCTION CO., INC.,
a New Jersey corporation, RONNIE
ALLEN, CARLOS ALVAR, DAVID BADER,
CHRISTINE BALIKO, WILLIAM
MCMULLAN and BRUCE ROBERTSON,
Appellants-Appellants,
v.
NEW JERSEY TURNPIKE AUTHORITY, a
body corporate and politic,
Respondent-Respondent.
--------------------------------------
IN THE MATTER OF THE ADOPTION OF A
RESOLUTION BY THE NEW JERSEY TURNPIKE
AUTHORITY REQUIRING CONTRACTORS TO
ENTER INTO PROJECT AGREEMENTS WITH
LABOR UNIONS
Argued January 31, 1994 -- Decided July 7, 1994
On certification to the Superior Court,
Appellate Division.
Theodore W. Geiser argued the cause for
appellant George Harms Construction Co., Inc.
(Connell, Foley & Geiser and Grotta, Glassman
& Hoffman, attorneys; Mr. Geiser and Theodore
M. Eisenberg, of counsel; Mr. Geiser, John F.
Neary, Vincent E. McGeary, Guy T. Lytle,
Michael Barabander, and Mark E. Tabakman, on
the briefs).
Morris M. Schnitzer argued the cause for
appellants Ronnie Allen, Carlos Alvar, David
Bader, Christine Baliko, William McMullan and
Bruce Robertson.
Steven E. Brawer argued the cause for
appellant Utility & Transportation
Contractors Association of New Jersey, Inc.
(Mandelbaum, Salsburg, Gold, Lazris, Discenza
& Steinberg, attorneys).
Jeffrey J. Greenbaum argued the cause for
respondent, New Jersey Turnpike Authority
(Sills, Cummis, Zuckerman, Radin, Tischman,
Epstein & Gross, attorneys; Mr. Greenbaum and
Clive S. Cummis, of counsel; Mr. Greenbaum,
Kenneth F. Oettle, Mark S. Olinsky, and Paul
P. Josephson, on the briefs).
Vincent J. Apruzzese argued the cause for
amicus curiae United States Chamber of
Commerce (Apruzzese, McDermott, Mastro &
Murphy, attorneys; Mr. Apruzzese, Francis A.
Mastro, and Daniel F. Crowe, on the brief).
Christine Piatek, Deputy Attorney General,
argued the cause for amicus curiae Attorney
General of New Jersey (Deborah T. Poritz,
Attorney General, attorney; Joseph L.
Yannotti, Assistant Attorney General, of
counsel).
Michael J. Herbert submitted a brief on
behalf of amici curiae American Road &
Transportation Builders Association, The New
Jersey Asphalt Pavement Association, and The
National Utility Contractors Association
(Picco, Mack, Herbert, Kennedy, Jaffe &
Yoskin, attorneys; Mr. Herbert, Patrick D.
Kennedy, and Gregory J. Sullivan, of counsel
and on the brief).
Frederick J. Rohloff and John C. Connell
submitted a brief on behalf of amici curiae
The Associated Builders and Contractors,
Inc., Associated Builders and Contractors of
New Jersey, and Associated Builders and
Contractors of Northern New Jersey (Archer &
Greiner, attorneys).
Richard D. Wilkinson submitted a brief on
behalf of amicus curiae National Constructors
Association (Lowenstein, Sandler, Kohl,
Fisher & Boylan, attorneys; Robert W. Kopp, a
member of the New York bar, of counsel).
Michael Critchley submitted a brief on behalf
of amici curiae New Jersey State Building and
Construction Trades Council and Building and
Construction Trades Department, AFL-CIO.
The opinion of the Court was delivered by
O'HERN, J.
This appeal presents the question of whether a State agency
has the power to require a contractor doing business with it to
enter into a "project labor agreement" with designated unions. A
"project labor agreement" is a form of prehire agreement with
labor organizations under which a contractor agrees to use the
members of specified labor organizations on a project in exchange
for the member unions' guarantees of labor stability. Such
agreements serve important purposes in assuring efficient and
economical administration of large construction projects. We
hold, however, that our State public-bidding laws and the
policies underlying them do not now contemplate the use of such
agreements by State agencies to require contractors to hire
members of only certain designated labor organizations to the
exclusion of all others.
We base our opinion on the facts as represented by respondent, New Jersey Turnpike Authority (TPA).
In 1990, the TPA began to widen the Turnpike between Interchanges 11 and 15E (the Widening Project). The contracts for the Widening Project were subject to the competitive-bidding provisions of the "lowest responsible bidder" statute, N.J.S.A. 27:23-6.1(a). On August 24, 1993, George Harms Construction Co.,
Inc. (Harms) bid the lowest price to perform Contract No. W-6411,
which covered the stretch of the Turnpike between Interchanges 14
and 15E, known as the "Southern Mixing Bowl." Harms's bid price
was $20,464,360, and the next lowest bid was $20,542,393.
However, on the same day, the TPA's Director of Law issued an
internal memorandum recommending that the TPA award Widening
Project contracts only to contractors that had entered into
"project labor agreements." For authority, that memo relied on
Building & Construction Trades Council v. Associated Builders &
Contractors, Inc., ___ U.S. ___,
113 S. Ct. 1190,
122 L. Ed.2d 565 (1993) (Boston Harbor), which established that the National
Labor Relations Act (NLRA),
29 U.S.C.A.
§§151 to 169, does not
preempt the use of project-labor agreements by state agencies
acting as market participants in the construction industry. On
August 31, 1993, the TPA adopted Resolution 19-93, which
provided, in pertinent part, the following:
WHEREAS, in consideration of the
critical nature of timely completion of the
1990-95 Widening Project * * * and the recent
labor disruption affecting the Widening
Project, it is in the best interest of the
Authority to implement the use of project
labor agreements with respect to all
construction contracts awarded heretofore and
hereafter as part of the Widening Project;
NOW THEREFORE, BE IT RESOLVED that, for the foregoing reasons, as a condition of all contracts heretofore and hereafter advertised by the New Jersey Turnpike Authority in connection with the Widening Project, the Chief Engineer shall require contractors and subcontractors of all levels to enter into project labor agreements with the appropriate
affiliated locals of the Building and
Construction Trades Council of the AFL-CIO of
the State of New Jersey * * * .
Resolution 19-93 defined a "project labor agreement" as
an agreement that recognizes designated
unions as the exclusive bargaining
representatives for all construction and
craft employees, in exchange for the
stipulation that there be no work stoppages,
slowdowns, or disruptions during the life of
the construction contract to which it
applies, and which, therefore, contributes to
a spirit of harmony, labor-management peace
and stability during the life of that
contract * * * .
Thus, Resolution 19-93 would have required the TPA to award the
contract to the lowest-responsible bidder that had entered into a
project-labor agreement with Building and Construction Trades
Council (BCTC) unions.
The preference in the awarding of contracts allegedly
stemmed from the State's concern that, in the words of Resolution
19-93, "the Authority ha[d] recently experienced labor
disturbances namely work stoppages * * * ." The TPA's Director
of Law explained at the August 31, 1993, Executive Session that
"[l]abor disturbances were threatened at Harms' construction site
in the vicinity of Interchange 8A, and Harms requested that the
[TPA] provide Harms' forces with State Police protection." The
TPA's Chief Engineer was more specific: "[I]n light of the July
1993 statewide strike of highway and utility construction sites
by Local 825 and the refusal of other AFL-CIO locals to cross
Local 825's picket lines, any further strikes would cause
intolerable delays in light of the [TPA's] December 1995 deadline
for completion of the Widening." Such delays would have hampered
New Jersey's efforts to comply with federal clean-air
requirements by 1996 to obtain federal transportation funds, and
certain permits from the Army Corps of Engineers might have
expired if work had been interrupted.
The conflict between the BCTC-affiliated Operating Engineers
Local 825 and the United Steelworkers of America (the
Steelworkers), to which Harms's employees belong, apparently
stems from a jurisdictional dispute. As we understand that
dispute, it revolves around the contrasting work patterns of the
two unions. Steelworkers members will apparently perform a wide
variety of different tasks, such as operating heavy machinery,
digging ditches, and carpentry. Members of Local 825, on the
other hand, only operate heavy machinery. When BCTC unions are
involved, carpentry and digging must be performed by members of
the Carpenters' and Laborers' Unions, not by the International
Union of Operating Engineers.See footnote 1
On August 27, 1993, the TPA's Chief Engineer delivered a
letter to Harms's president notifying Harms of a proposed
project-labor-agreement requirement. The letter stated that the
TPA would adopt the policy on August 31, 1993, and that the
policy would apply to Contract No. W-6411 retroactively. The
letter did not state that the policy would require Harms to sign
the project-labor agreement with a BCTC affiliate. Harms
assertedly discovered that fact when its counsel appeared at the
TPA's Executive Session on August 31, 1993. Harms's counsel
protested the policy because inasmuch as Harms had a long-standing collective-bargaining agreement with the Steelworkers,
the NLRA precluded Harms from signing a project-labor agreement
with any other union. However, the TPA disregarded Harms's
objections and passed Resolution 19-93 as well as Resolution 25-93, which provided for the rejection of all current bids on
Contract No. W-6411 to allow rebidding under the new policy. On
September 15, 1993, the TPA's Executive Director denied Harms's
appeals protesting the TPA's rejection of Harms's bid and refused
to reinstate the bid.
On September 13, 1993, then-Governor Florio executed
Executive Order No. 99, which required all State agencies to
adopt project-labor agreements with BCTC affiliates "whenever
feasible and whenever such agreement[s] substantially advance[]
the interests of costs, efficiency, quality, safety, timeliness
and the State's policy regarding minority- and women-owned
businesses * * * ."
25 N.J.R. 4543 (Oct. 4, 1993).
On September 14, 1993, Harms and some of its employees who
belong to the Steelworkers appealed the TPA's adoption of
Resolutions 19-93 and 25-93. The Appellate Division heard that
appeal with another appeal brought by the Utility and
Transportation Contractors Association of New Jersey and
subsequently issued a single unreported opinion sustaining the
validity of the TPA's resolutions. The court held that the TPA's
project-labor-agreement requirement for the Widening Project is
permissible under the NLRA and that such agreements do not
infringe on a person's constitutional right "to organize and
bargain collectively." N.J. Const. art. I, ¶ 19. Further, the
court rejected Harms's contention that the TPA could not
incorporate project-labor agreements into bid specifications
without agency rulemaking. It found that those agreements do not
conflict with the statutory duty of the TPA to award contracts to
"the lowest responsible bidder."
We granted certification,
134 N.J. 560 (1993).
Subsequently, on March 21, 1994, newly-elected Governor Whitman
issued Executive Order No. 11,
26 N.J.R. 1558-59 (Apr. 18, 1994),
which superseded Executive Order No. 99. Executive Order No. 11
allows project-labor agreements only "on a project-by-project
basis" and does not require the use of any particular union.
Because Executive Order No. 11 explicitly declares that it is "to
have prospective effect only," 26 N.J.R. at 1559, the appeal
before us is not moot.
Did the TPA comply with administrative due
process in its adoption of the project-labor-
agreement requirement and its rejection of
Harms's bid?
Appellants argue that the agency's resolutions are rules
within the statutory definition of the Administrative Procedure
Act (APA), N.J.S.A. 52:14B-1 to -21, and therefore that the
agency must comply with the notice-and-comment provision of
N.J.S.A. 52:14B-4. That provision essentially requires that
prior to the adoption of any rule, the agency shall give at least
thirty-days notice of its intended action; provide a summary of
the proposed rule, with an opportunity for all interested persons
to submit data, views, or arguments in writing or orally; and
prepare a report summarizing the content of such submissions and
the agency's response to those views, data, and arguments.
This Court's decision in Metromedia, Inc. v. Director,
Division of Taxation,
97 N.J. 313 (1984), delineates the
appropriate test to apply when determining whether an agency
action constitutes rulemaking. Among the factors to be
considered are: (1) the segment of the public to be affected;
(2) the generality of application; (3) the prospectiveness of the
result; and (4) the novelty of the legal standard announced. Id.
at 331-32. All such factors need not be present for an agency
determination to constitute rulemaking. Id. at 332. The agency
should balance the factors according to weight, not number. In
re Request for Solid Waste Util. Customer Lists,
106 N.J. 508,
518 (1987).
The TPA denies that the Metromedia factors are implicated.
It contends that the specification of project-labor agreements is
altogether exploratory and tentative as applied to the Widening
Project and thus does not constitute rulemaking. Appellants
contend that the policy is far more extensive than that because
it will apply to all succeeding Turnpike-improvement projects.
They further contend that the agency adopted the policy
hurriedly, without consultation or comment from any members of
the interested public. We do not resolve in this case whether
this agency action is subject to the strict requirements of
N.J.S.A. 52:14B-4. We believe that the substantive issues
transcend those procedural issues. We are certain, however, that
whatever policies for project-labor agreements the TPA pursues,
it would develop such policies more effectively following a
hearing process. In addition, that process would establish a
record against which the contesting claims under constitutional
and statutory guidelines could be better assessed by a reviewing
court. Specifically, if the record clearly established the
relationship between the specifications and the policies of the
bidding laws, we could better resolve the question of compliance
with public-bidding laws. For example, a detailed record with
comment and response as frequently occurs in the rulemaking
context, see N.J.S.A. 52:14B-4, might have better explained how
Harms's present employees might have fit into the bidding scheme.
Could Harms have retained them as the TPA believes, or did the
hiring-hall provisions effectively exclude them? A project-labor
agreement has many subtle and complex facets, infra at ___ (slip
op. at 14-18), and overall agency policy should address the
merits of the plethora of issues that are proper for inclusion in
a project-labor agreement.
Although the APA might not have required notice and a hearing prior to the adoption of the project-labor-agreement requirement, we address the notion of administrative due process. The APA alone does not exhaust the requirement of administrative due process; "the fact that [ ] agency action is not subject to the strict requirements of [the APA] does not mean that no process is required." In re Dep't of Ins.'s Order Nos. A89-119 & A90-125, 129 N.J. 365, 382 (1992). If the APA does not apply, we have held that "so long as the parties had adequate notice, a chance to know opposing evidence, and the opportunity to present evidence and argument in response, due process would be fundamentally satisfied." Ibid. The TPA argues that due-process requirements have been met in this case because it provided Harms's counsel with the opportunity to attend and to speak at the Executive Session during which both the resolution
establishing the project-labor-agreement requirement and the
resolution vacating Harms's bid were adopted. We agree.
Principles of administrative due process do not require that we
reinstate Harms's bid.
Although the TPA did not deny Harms administrative due
process, we resolve here the remaining question whether the TPA
had the authority to reject all bids after it had opened Harms's
bid. In Cardell, Inc. v. Township of Woodbridge,
115 N.J. Super. 442, 450 (App. Div. 1971), the court noted that public entities
do not have "unbridled power to reject bids, even where such
right is served in the invitation for bidding" because such power
would violate public policy and competitive-bidding laws.
However, the court stated:
We do not imply that a [public entity]
is without power to reject all bids under
proper circumstances. No [public entity]
could effectively engage in competitive
bidding without such power. At the very
least, the existence of the possibility of
total rejection of bids serves as a strong
inducement to bidders to keep their bids as
low as circumstances permit. Suffice it to
say that when a [public entity] concludes in
good faith that the purposes of the public
bidding statute are being violated, it may
reject all bids submitted and in its
discretion order a readvertising of the
contract. Furthermore, * * * should
circumstances arise which might cause the
[public entity] to abandon or substantially
revise the project, then a total rejection of
bids might well be required.
The Appellate Division, in M.A. Stephen Construction Co. v.
Borough of Rumson,
117 N.J. Super. 431, 438 (1971), applied the
Cardell rationale and held that a public entity could not
circumvent the requirement of our public-bidding laws to award
contracts to the lowest responsible bidder by the entity's
arbitrary or unreasonable action. Further, the M.A. Stephen
court held that a public entity had the right to reject all bids
and the duty to exercise that right "in good faith and for sound
public reasons." Ibid.
The TPA's Resolution 25-93 rejected all bids received for
Contract No. W-6411 because the bid specifications provided to
prospective contractors lacked the requirement that contractors
enter into a project-labor agreement with appropriate BCTC
unions. That resolution, together with Resolution 19-93,
contained the TPA's reasoning for rejecting the bids. The TPA
materially changed its specifications incorporating the project-labor requirement to ensure prompt settlement or prevention of
labor disputes in the public sector, which is our State's
declared policy, see N.J.S.A. 34:13A-2; to guarantee labor
stability; and to advance harmonious labor-management relations.
In the best interest of the TPA and the public, the TPA wanted to
complete in a timely manner the Widening Project within the
Project's budget. The TPA had experienced work stoppage on the
Widening Project for approximately three weeks in July 1993.
That circumstance, along with the Boston Harbor decision, caused
the TPA to "substantially revise the project" by including a bid
specification requiring potential contractors to enter into
project-labor agreements with BCTC unions and rejecting all bids
submitted on Contract No. W-6411. Cardell, supra, 115 N.J.
Super. at 451. The TPA may have erred in its view of the law,
but on this record, no evidence exists to show that in rejecting
all bids the agency acted other than in good faith, in its
interest, and in the interest of the public.
We do not intend this to be a treatise on economics or labor relations but merely general background for the issues as we understand them. For background information on collective bargaining in the construction industry, we draw on general reference materials, and primarily on an overview of the construction industry set forth in David B. Brenner, The Effect of ERISA Preemption on Prevailing Wages and Collective Bargaining in the Construction Industry, 1 993 Det. C.L. Rev. 1123.
In that article, Mr. Brenner explains the tremendous economic significance of the construction industry:
The construction industry plays a strategic role in determining the health and vitality of the U.S. economy. Construction accounts for an estimated 7-15" of the nation's total economic activity. As of April 1993, Department of Commerce estimates for the total value of new construction at a seasonally adjusted annual rate was $444.4 billion. Public construction comprised $116.2 billion of that amount.
Because of its large size, construction
exerts its influence on other sectors of
industry and impacts their labor relations.
However, the author proceeds to observe that although the
construction industry's economic significance may be national in
scope, "[t]here can be no replacement for the reality that, even
if some of the individual components may change or are imported
from outside a local labor market, the ultimate assembly of a
bridge or a building remains a localized affair." Ibid.
The pattern of employment in the construction industry is
characterized by employee mobility. Workers are assembled for
specific jobs. A general contractor often subcontracts portions
of the job according to interest and ability. The subcontractors
may also delegate various aspects of their work. As a result,
the industry uses union hiring halls as a primary source of
labor. (A hiring hall is a place where workers report and the
union refers those workers to contractors for employment.)
Obviously, to compete successfully in the market, a bidder
must know the cost of labor for a job. What is known as a
"Little Davis Bacon Act" or a "Prevailing Wage Statute" requires
New Jersey contractors, as it does those in other states, to pay
the prevailing-wage rate on public-bidding projects. N.J.S.A.
34:11-56.27. Because the construction industry is still
substantially unionized, that requirement in effect means paying
union wages on public jobs. Consequently, most public
contractors have used union employees on public-works projects.
Different unions, however, have different work practices. See
supra at ___ (slip op. at 6).
Contractors also use prehire agreements to ensure labor-cost
predictability. "A pre-hire agreement is a contract agreed to by
an employer and a union before the workers to be covered by the
contract have been hired." International Ass'n of Bridge,
Structural & Ornamental Iron Workers v. NLRB,
843 F.2d 770, 773
(3d Cir.), cert. denied,
488 U.S. 889,
109 S. Ct. 222,
102 L. Ed.2d 213 (1988). Initially, the National Labor Relations Board
(NLRB) had determined that prehire agreements were illegal in
that they designated an exclusive union representative for the
employees before an election had been held. Recognizing the
impact of that holding in the construction industry, Congress
added section 8(f) to the NLRA in 1959. That section provides:
It shall not be an unfair labor practice
* * * for an employer engaged primarily in
the building and construction industry to
make an agreement covering employees engaged
(or who, upon their employment, will be
engaged) in the building and construction
industry with a labor organization of which
building and construction employees are
members * * * because (1) the majority status
of such labor organization has not been
established * * * or (2) such agreement
requires as a condition of employment,
membership in such labor organization * * *.
Thus, section 8(f) expressly authorizes negotiation, adoption,
and implementation of collective-bargaining agreements in the
construction industry without initial reference to the union's
actual majority status and permits such agreements to contain
union-security clauses. In that amendment, Congress specifically
sanctioned established industry practices that the NLRB had
previously found unlawful. However, although section 8(f)
permits employers and unions in the construction industry to
enter into prehire agreements that designate a union as the
exclusive representative without a formal election, the
employees, now union members, may vote to decertify the union as
their exclusive representative, using the formal NLRA procedures.
29 U.S.C.A.
§159(e).
Employees may belong to a local union of their craft that
sends representatives to a council such as the BCTC. Among its
other functions, a council may act as bargaining agent and it may
conduct negotiations for its member unions. Generally, a council
is financially supported by the local unions, which in turn pass
on the cost to their members. Employers will often enter master
agreements with councils such as BCTC to mitigate the effect of
jurisdictional disputes among unions on the progress of
construction projects. Such councils have been recognized as
labor organizations for purposes of the NLRA. NLRB v. Metallic
Bldg. Co.,
204 F.2d 826 (5th Cir. 1953), cert. denied,
347 U.S. 911,
74 S. Ct. 473,
98 L. Ed. 1068 (1954); Southeast La. Bldg. &
Constr. Trades Council v. Scheyd, Brennan, Inc.,
334 F. Supp. 720
(E.D. La. 1971).
A project-labor agreement is a form of master agreement
limited to one project. Most such agreements
require[] the contractors and subcontractors
to recognize [a particular labor
organization] as bargaining representative
for all craft employees, to hire workers
through the hiring halls of the
[organization's] constituent unions, to
require hired workers to join the relevant
union within seven days, to follow specified
dispute-resolution procedures, to apply the
[organization's] wage, benefit, seniority,
apprenticeship and other rules, and to make
contributions to the * * * unions' benefit
funds. In return for the [proprietor's]
promise to insist that contractors sign the
agreement, the [organization] * * *
promise[s] the [proprietor] labor peace
throughout the * * * life of the construction
project.
[Associated Builders & Contractors, Inc.
v. Massachusetts Water Resources Auth.,
935 F.2d 345, 360 (1st Cir. 1991)
(Breyer, C.J., dissenting), rev'd sub
nom. Building & Constr. Trades Council
v. Associates Builders & Contractors,
Inc., ___ U.S. ___,
113 S. Ct. 1190,
122 L. Ed.2d 565 (1993).]
In this case, the TPA required contractors and subcontractors
working on the Widening Project to enter into a project-labor
agreement with the New Jersey BCTC, an AFL-CIO organization
comprised of several different unions representing various
crafts.
Does the Boston Harbor decision preemptively
determine the validity of the TPA's
project-labor-agreement resolution?
In his August 24 memorandum to the Executive Director of the
TPA, the agency's Director of Law referred to the Boston Harbor
decision as the legal basis for the TPA's adoption of Resolution
19-93:
Recent analysis by General Counsel of
the [Boston Harbor] case confirms that the
New Jersey Turnpike Authority could legally
enforce pre-hire arrangements between
contractors and labor unions working on the
Turnpike. Specifically, the Authority, by
way of supplemental bid specifications, could
require that a contractor on a given
construction project enter into a project
labor agreement guaranteeing stability for
the life of the project.
The issue in Boston Harbor was whether the Massachusetts
Water Resource Authority could require as a condition for a
contract award that the winning bidder and its subcontractors
abide by a project-labor agreement previously negotiated between
Kaiser Engineers, Inc. and the Boston Metropolitan District BCTC.
That agreement recognized BCTC as the exclusive bargaining
representative for all workers employed to build sewage-treatment
facilities for the cleaning of Boston Harbor in return for BCTC's
promise of labor peace throughout the ten-year life of the
construction project. Specifically, the question was whether the
agreement violated the NLRA.
Two types of federal-labor-law preemption forbid certain
kinds of state action. They are succinctly described in Boston
Harbor as follows:
The first, "Garmon pre-emption," forbids
state and local regulation of activities that
are "protected by § 7 * * *, [which
establishes the right of employees to
organize, bargain collectively, and engage in
peaceful picketing and strikes,] or
constitute an unfair labor practice under §
8." * * *
A second pre-emption principle,
"Machinists pre-emption," prohibits state and
municipal regulation of areas that have been
left "`to be controlled by the free play of
economic forces.'"
[Boston Harbor, supra, ___ U.S. at ___,
113 S. Ct. at 1194-95, 122 L. Ed.
2d at
574-75 (citations omitted) (quoting San
Diego Bldg. Trades Council v. Garmon,
359 U.S. 236, 244,
79 S. Ct. 773, 779,
3 L. Ed.2d 775, 782 (1959), and
Machinists v. Wisconsin Employment
Relations Comm'n,
427 U.S. 132, 140,
96 S. Ct. 2548, 2553,
49 L. Ed.2d 396, 403
(1976) (quoting NLRB v. Nash-Finch Co.,
404 U.S. 138, 144,
92 S. Ct. 373, 377,
30 L. Ed.2d 328, 333 (1971))).]
That latter preemption principle is well illustrated by Golden
State Transit Corp. v. City of Los Angeles,
475 U.S. 608,
106 S.
Ct. 1395,
89 L. Ed.2d 616 (1986), in which the Court held that
federal labor law preempts a city's power to condition the
renewal of a taxi franchise on settlement of a labor dispute.
The theory of the Boston Harbor decision is that when a
state acts as a market participant, it does not act as a
regulator in areas of national labor policy that are preempted by
the NLRA. Justice Blackmun wrote:
When we say that the NLRA pre-empts
state law, we mean that the NLRA prevents a
State from regulating within a protected
zone, whether it be a zone protected and
reserved for market freedom, or for NLRB
jurisdiction. A State does not regulate,
however, simply by acting within one of these
protected areas. When a State owns and
manages property, for example, it must
interact with private participants in the
marketplace. In so doing, the State is not
subject to pre-emption by the NLRA, because
pre-emption doctrines apply only to state
regulation.
It is evident from the face of the
statute that in enacting exemptions
authorizing certain kinds of project labor
agreements in the construction industry,
Congress intended to accommodate conditions
specific to that industry. Such conditions
include, among others, the short-term nature
of employment which makes post-hire
collective bargaining difficult, the
contractor's need for predictable costs and a
steady supply of skilled labor, and a long-standing custom of prehire bargaining in the
industry.
There is no reason to expect these
defining features of the construction
industry to depend upon the public or private
nature of the entity purchasing contracting
services. To the extent that a private
purchaser may choose a contractor based upon
that contractor's willingness to enter into a
prehire agreement, a public entity as
purchaser should be permitted to do the same.
[Boston Harbor, supra, ___ U.S. at ___,
___, 113 S. Ct. at 1196, 1198, 122 L.
Ed.
2d at 575-76, 578-79 (citations
omitted).]
Thus, under Boston Harbor, federal labor law does not prohibit a
state entering the construction market from using the same
construction-industry exception regarding project-labor
agreements that private purchasers of construction labor use.
However, a state's laws may prohibit a project-labor-agreement
specification in public contracts without running afoul of the
NLRA. Garmon preemption does not apply because a state-law
prohibition of project-labor agreements on public projects is
merely one way in which a state may choose to act as a market
participant in the construction industry. In other words, a
state may choose to enter or not to enter a project-labor
agreement just like any other purchaser of construction services.
Machinists preemption also does not apply because a state-law
prohibition of project-labor agreements on public projects does
not constitute impermissible regulation of an area that the NLRA
contemplated would be left to the free play of economic forces.
Such a prohibition amounts to nothing more than the public
equivalent of a corporation's by-law regarding the purchase of
construction services. In short, when a state uses project-labor
agreements on public projects, it is not acting as a regulator of
private actors; rather, it is merely defining its role as a
proprietor/purchaser of labor in the construction industry.
Thus, because the NLRA does not preempt the field, we must
determine whether New Jersey law prohibits project-labor
agreements.
using project-labor agreements designating particular unions?
Courts have only a limited role to play in reviewing the actions of other branches of government. In light of the executive function of administrative agencies, judicial capacity to review administrative actions is severely limited. Gloucester County Welfare Bd. v. New Jersey Civil Serv. Comm'n, 93 N.J. 384, 390 (1983). Courts can intervene only in those rare circumstances in which an agency action is clearly inconsistent with its statutory mission or with other State policy. Although sometimes phrased in terms of a search for arbitrary or unreasonable agency action, the judicial role is restricted to four inquiries: (1) whether the agency's decision offends the State or Federal Constitution; (2) whether the agency's action violates express or implied legislative policies; (3) whether the record contains substantial evidence to support the findings on which the agency based its action; and (4) whether in applying the legislative policies to the facts, the agency clearly erred in reaching a conclusion that could not reasonably have been made on a showing of the relevant factors. Campbell v. Department of Civil Serv., 39 N.J. 556, 562 (1963); In re Larsen, 17 N.J. Super. 564, 570 (App. Div. 1952). We address in this opinion only the first two factors, i.e., whether the action violates either constitutional principles or express or implied
legislative policies. Before we consider the issues of
legislative policy, we examine the implications of the TPA's
actions in light of the New Jersey Constitution's collective-bargaining-rights provision.
Does the New Jersey Constitution prohibit the
State from using project-labor agreements
designating particular unions?
Certain appellants and certain amici contend that the New
Jersey Constitution prohibits project-labor agreements that
require the use of specific unions on public projects. They
believe that even if authorized by the Legislature, such project-labor agreements do not accord with constitutional principle.
Other appellants and amici disagree. Because we decide this case
on statutory grounds alone, we need not resolve the
constitutional questions. See, e.g., O'Keefe v. Passaic Valley
Water Comm'n,
132 N.J. 234, 240 (1993) (holding that "courts
should not reach constitutional questions unless necessary to the
disposition of the litigation"). However, we set forth the
arguments of the parties and some of the concerns a court would
have to address in deciding the constitutional issues.
The New Jersey Constitution declares in paragraph 19 of
article I that "[p]ersons in private employment shall have the
right to organize and bargain collectively." Although "we regard
the 'experience and adjudications' under the N.L.R.A. as
appropriate and helpful guides for the implementation of Article
I, paragraph 19," Comite Organizador de Trabajadores Agricolas v.
Molinelli,
114 N.J. 87, 98 (1989), NLRA precedents do not define
the State constitutional right in the absence of preemption.
(Paragraph 19 was intended to protect workers who are not covered
by the NLRA. See Richard A. Goldberg and Robert F. Williams,
Farmworkers' Organizational and Collective Bargaining Rights in
New Jersey: Implementing Self-Executing State Constitutional
Rights,
18 Rutgers L.J. 729, 742 (1987).) Thus, State law
defines the scope of the constitutional right guaranteed by
paragraph 19. In that respect, our courts have held that "the
right to organize and bargain collectively is not only
constitutional in its dimension but should be accorded the `same
stature as other fundamental rights.'" Communication Workers v.
Atlantic County Ass'n for Retarded Citizens,
250 N.J. Super. 403,
408 (Ch. Div. 1991) (quoting Cooper v. Nutley Sun Printing Co.,
36 N.J. 189, 197 (1961)).
Under federal Fourteenth Amendment analysis, "[w]hen * * *
legislation regulates `fundamental rights' * * *, it will be
subject to `strict scrutiny' and the state will be required to
demonstrate (1) that a compelling need justifies the legislation
and (2) that no less restrictive alternative will accomplish that
state objective." United States Chamber of Commerce v. State,
89 N.J. 131, 157-58 (1982). However, we have held that
[t]he analysis of fundamental rights
under the New Jersey Constitution differs
from analysis of those rights under the
United States Constitution. Starting with
our decision in Robinson v. Cahill,
62 N.J. 473, 491-92, cert. denied sub nom. Dickey v.
Robinson,
414 U.S. 976,
94 S. Ct. 292,
38 L.
Ed.2d 219 (1973), we began to develop an
independent analysis of rights under article
1, paragraph l. Thereafter, we rejected two-tiered equal protection analysis and employed
a balancing test in analyzing claims under
the state constitution. In striking the
balance, we have considered the nature of the
affected right, the extent to which the
governmental restriction intrudes upon it,
and the public need for the restriction.
[Greenberg v. Kimmelman, 99 N.J.
552, 567 (1985) (citations omitted).]
In applying that three-part balancing test, the more personal the
right, the greater the public need must be to justify
governmental interference with the exercise of that right. See
Taxpayers Ass'n v. Weymouth Township,
80 N.J. 6, 43 (1976), cert.
denied,
430 U.S. 977,
97 S. Ct. 1672,
52 L. Ed.2d 373 (1977).
Whether characterized as the denial of equal protection or the
infringement of a fundamental right, the analysis would largely
be the same.
"Freedom of choice in selecting one's bargaining agent is
the very essence of collective bargaining. The courts of this
State have recognized, at least inferentially, that N.J. Const.
1947, Art. I, sec. 19, guarantees this freedom of choice * * * ."
Independent Dairy Workers Union v. Milk Drivers and Dairy
Employees Local No. 680,
23 N.J. 85, 96 (1956) (citations
omitted). That freedom of choice demands that "when a group of
persons in private employment [has] freely exercised [its] right
to choose a bargaining representative, the will of the majority
may not be undermined by picketing where the sole object is
economic duress upon the employer and the employees." Id. at 97-98. Thus, no third party, including another union, may exert
economic coercion on a group of employees to influence its choice
of bargaining representatives.
The question presented by some of the plaintiffs here is
whether the State or one of its agencies has improperly coerced
New Jersey construction workers in their choice of bargaining
representatives by favoring one group of unions over others in
the award of public contracts. The TPA's Resolution 19-93
required all contractors performing Widening Project contracts to
sign project-labor agreements with a designated labor
organization. Then-Governor Florio's Executive Order No. 99
broadened that requirement to include all State construction
contracts. Efforts by a labor organization to interfere with the
statutory rights of workers under the NLRA to elect a bargaining
representative of their own choosing are questionable under
Independent Dairy Workers, supra,
23 N.J. 85. See
29 U.S.C.A.
§158(b)(4)(ii)(D) (making it unfair labor practice for labor
organization to strike or engage in other coercive activity for
the purpose of "forcing or requiring any employer to assign
particular work to employees in a particular labor
organization").See footnote 2 Accession to demands that infringe
constitutional rights has been held elsewhere to comprise a
civil-rights violation. See, e.g., Redgrave v. Boston Symphony
Orchestra, Inc.,
502 N.E.2d 1375 (Mass. 1987) (holding that under
Massachusetts Civil Rights Act, defendant may be liable for
interference with rights of another even if defendant had no
personal desire to abridge those rights, but merely acquiesced to
pressure from third parties who did wish to abrogate such
rights). Of course, this begs the question of whether any rights
have been infringed. The parties disagree about that point.
Employees of Harms argue as appellants that the TPA has
diminished the State constitutional rights of New Jersey
construction workers to choose a union free from external
pressure. The TPA counters that it has not denied any Harms
employees the right to be represented by labor organizations of
their own choosing and that Harms is free as well to obtain
workers through its preferred labor organization. The TPA
essentially argues that it has denied neither Harms nor its
employees any rights; rather, it has merely denied Harms and its
employees the privilege of obtaining Turnpike contracts. That
reasoning recalls Justice Holmes's famous aphorism: "A policeman
may have a constitutional right to talk politics, but he has no
constitutional right to be a policeman." McAuliffe v. Mayor of
New Bedford,
29 N.E. 517, 517-18 (Mass. 1892). More subtle and
indeed more complex principles are now employed to analyze the
dispensation of government benefits. The question today is
whether the government has unreasonably burdened the exercise of
a constitutional right by conditioning the dispensation of a
government benefit (i.e., a public contract) on how one has
exercised that right (i.e., which union a bargaining unit has
chosen). See, e.g., Sherbert v. Verner,
374 U.S. 398,
83 S. Ct. 1790,
10 L. Ed.2d 965 (1963) (striking down denial of
unemployment benefits to Seventh-day Adventist whose employer had
discharged her because she refused to work on Saturday in
accordance with her religious beliefs). Through restrictive
conditions on the award of public contracts, the State could
theoretically limit the freedom of choice that New Jersey
construction workers currently exercise in designating unions to
bargain for them. And if the State could favor one union over
another, it could favor, by the same logic, nonunion contractors
over union contractors.
Although "[t]he right to employment on a local public works
project, like the right to a city job, is not fundamental for
purposes of equal protection analysis," United Bldg. & Constr.
Trades Council v. Mayor & Council,
88 N.J. 317, 343 (1982), rev'd
on other grounds,
465 U.S. 208,
104 S. Ct. 1020,
79 L. Ed.2d 249
(1984), the right not to be denied a public contract for
invidious reasons, such as race, or religion, is a fundamental
right.See footnote 3 Does the denial of public work because of union
affiliation violate a similar fundamental right?
Were we to resolve that question, we would have to determine
(1) the nature of the right to choose one's bargaining
representative, (2) whether a public-contract specification that
does not by its terms prohibit the free choice of a bargaining
representative may still impinge on that right, and (3) if the
specification does impinge on that right, whether the public need
for the restriction justifies its imposition.
Among the factors to be considered in assessing that public
need would be the availability of other mechanisms to achieve the
same substantive goal, such as a no-strike clause requiring all
workers to work without interruption during the term of the
project or an agreement to resolve jurisdictional disputes by
reference to independent arbitrators. For example, the State
might consider a bid specification that would require
jurisdictional disputes to be mediated by an "impartial
jurisdictional disputes board." See, e.g., Drywall Tapers &
Pointers of Greater New York, Local 1974 v. Local 530 of
Operative Plasterers & Cement Masons Internat'l Assoc.,
954 F.2d 69, 71 (2d Cir. 1992) (discussing both national Plan of
Settlement of Jurisdictional Disputes in the Construction
Industry and New York Plan for the Settlement of Jurisdictional
Disputes). Finally, we would consider the extent to which we
must defer to legislative action in defining the contours of a
constitutional right. Hills Dev. Co. v. Township of Bernards,
103 N.J. 1 (1986).
We are certain that the Legislature is as fully aware as we
of the nature of the affected rights, the extent of any intrusion
thereon, and the public need for such intrusion.
Does the TPA have the statutory power
to require project-labor agreements that
designate exclusive labor representatives for
workers on public projects?
To resolve this inquiry we must consider two questions: (1)
did the Legislature delegate to the TPA the power to require
project-labor agreements with a designated union, and (2) would
the exercise of such power conflict with other statutory
requirements?
Has the Legislature delegated to the TPA
the power and established proper standards to
require contractors on projects to enter
project-labor agreements with designated unions?
On the first point, appellants argue that the Legislature
would not intend that an executive agency adopt so far-reaching a
policy in the absence of express statutory authorization.
Appellants support their argument by the separation-of-powers
doctrine.
"[W]ithin limits the legislature may delegate its authority
to a government agency." Township of Mount Laurel v. Department
of Pub. Advocate,
83 N.J. 522, 532 (1980); New Jersey State
Chamber of Commerce v. New Jersey Election Law Enforcement
Comm'n,
82 N.J. 57, 82-83 (1980). "[T]he Legislature may not
vest unbridled or arbitrary power in [an] administrative agency,"
Ward v. Scott,
11 N.J. 117, 123 (1952), but "[a]s long as the
discretion of administrative officers is `hemmed in by standards
sufficiently definitive to guide its exercise,' the delegation of
legislative powers is not unconstitutional." Township of Mount
Laurel, supra, 83 N.J. at 532 (quoting Cammarata v. Essex County
Park Comm'n,
26 N.J. 404, 410 (1958)); accord In re Egg Harbor
Assocs.,
94 N.J. 358, 372 (1983).
Standards must accompany the delegation of power for three
reasons:
First, [they] prevent[] the Legislature from
abdicating its political responsibility and
prevent[] undemocratic, bureaucratic
institutions from wielding all-encompassing,
uncontrollable government power. Second,
limiting standards define the area in which
the agency develops the experience and
expertise that the legislature has neither
the time nor resources to develop. With too
broad a standard the agency stands in no
better position than the legislature that
created it. Third, and most important,
standards facilitate judicial review of
agency decisions, which guards against
arbitrary and capricious governmental action.
As long as the statutory standards achieve
these purposes, such standards should be
considered sufficiently definite to pass
constitutional muster.
[Township of Mount Laurel, supra,
83 N.J. at 532-33.]
Our courts have consistently sustained the delegation of
legislative authority under broad and general statutory standards
governing the manner in which administrative agencies must
exercise the authority delegated. Thus, against constitutional
attacks, we have upheld standards authorizing the Public Advocate
to represent the "public interest" in administrative and court
proceedings, Township of Mount Laurel, supra,
83 N.J. 522, and
standards requiring the Department of Environmental Protection to
"use its power to promote the health, safety, and welfare of the
public." Egg Harbor Assocs., supra, 94 N.J. at 372. In other
circumstances, we have given broad latitude to executive agencies
to flesh out the contours of a statutory mission. See, e.g.,
GATX Terminals Corp. v. New Jersey Dep't of Envtl. Protection,
86 N.J. 46 (1981).
Obviously, the mission of the TPA is to operate and maintain
the most efficient roadways possible for the citizens of the
State. N.J.S.A. 27:23-5. If in the construction and maintenance
of that 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.
The more difficult question is whether standards exist to
guide the agency's discretion. For example, how far does the
agency's discretion extend, and may that discretion be delegated
to third parties? For example, in Utility Contractors Ass'n of
New England, Inc. v. Department of Public Works,
565 N.E.2d 459
(Mass. App. Ct. 1991) (Central Artery), the consultant for the
Department of Public Works actually negotiated the project-labor
agreement with the building-trades council, an organization
representing the building-trades unions. The Department of
Public Works intended to require prospective contractors to
execute such an agreement. Among the features of that agreement
were provisions that:
1. Dictated the scheduling of hours of work;
2. Limited the contractor's right to select supervisors;
3. Determined the circumstances under which employees might
be discharged;
4. Precluded in effect the hiring of any employees not
members of the unions.
Brief for the Utility Contractors Association of New England,
Inc. at 10-12, Central Artery, supra,
565 N.E.2d 459 (Nos. 90-P-921, 90-P-1062).
Here the TPA did not use an independent agent to