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ACCNJ LEGAL & INSURANCE UPDATE JANUARY 2025 |
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LEGAL CHALLENGES TO FEDERAL GOVERNMENT MANDATED PROJECT LABOR AGREEMENTS
In recent years, the federal government has made over $1 trillion worth of industrial investments resulting from the Infrastructure Investment and Jobs Act, the CHIPS and Science Act, and the Inflation Reduction Act. As a result, the Country has seen a noticeable increase in federally funded construction projects, which, in turn, opens the door to President Biden’s project labor agreement (PLA) mandate, prompted by his Executive Order 14063 (Executive Order).
As you know, the federal PLA mandate, which went into effect in January, requires PLAs on contracts that meet the definition of federal “large-scale construction projects,” or projects estimated to cost the U.S. government at least $35 million. Historically, PLAs have helped streamline large-scale construction projects by establishing clear labor standards, improving coordination among contractors, and supporting local hiring and workforce development initiatives. However, various associations including the Associated General Contractors of America (AGC) do not share the same sentiment, and, instead, have mobilized their efforts to strike down the Executive Order.
The AGC’s legal theory uses federal bid protests (7) that object to project solicitations requiring PLAs to oppose the lawfulness of the government’s mandate as an unlawful socio-economic set aside they claim was unauthorized by Congress. In support of its position, the AGC argues that mandates and preferences for PLAs restrain competition, drive up costs, aggravate the existing nationwide labor shortage, and disrupt local collective bargaining. Importantly, these seven bid protests (mostly Army Corps. projects) have been consolidated into one lead case in the Court of Federal Claims. All projects have stayed award in anticipation of the outcome of the case.
As the ACCNJ continues to closely monitor the AGC’s efforts to thwart the implementation of federally mandated PLAs, the government has neither received nor granted any exceptions but, instead, supplemented sparse market research existing in the administrative record to justify the PLA requirement. That said, oral arguments in the AGC’s case will be heard this month, with a decision anticipated in February or March. Accordingly, ACCNJ staff will continue to observe how the court reacts and alert members of noteworthy updates. |
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UNCERTAINTY SURROUNDING THE INFLATION REDUCTION ACT WITH PRESIDENT TRUMP TAKING OFFICE
Signed into law in August 2022, the Inflation Reduction Act (IRA) represents the most substantial investment in clean energy and climate action to date, providing over $270 billion in tax credits for the construction of solar, wind, hydrogen, carbon sequestration, electric vehicle charging stations, and other clean energy projects. However, with President-elect Trump set to take office, there has been uncertainty surrounding the future of the IRA due to his past comments, in which he indicated his plan to repeal it, at least partially, and rescind its unspent funds.
As we await the fate of the IRA, ACCNJ staff performed outreach to AGC representatives in Washington D.C. and participated in election-focused webinars to gain insight into President-elect Trump’s next steps. From this, it appears that the Trump administration does not plan to completely roll back the IRA but, instead, “tweak” it, as many IRA projects are concentrated in traditionally Republican states and create permanent jobs. In fact, although no Republican lawmaker voted to pass the law, 75% of the job creation and the capital spending on new manufacturing and other clean energy resources has gone to red states or red counties within blue states. As a result, the Trump administration will be hard-pressed to find support for repealing the IRA’s manufacturing tax credits.
According to energy and tax policy experts, the most politically vulnerable IRA provisions appear to be its electric vehicle subsidies, which are expensive and politically unpopular with Republicans, followed by its energy efficiency incentives. But, with Trump set to enter office in the coming days, nothing is set in stone, and questions remain as to the extent to which he will amend the law. |
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Associated Construction Contractors of New Jersey |