Building & Construction Trades Department v. Allbaugh

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 Jus-
tice, Alisa B. Klein and Ara B. Gershengorn, Attorneys.

 Jerry W. Kilgore, Attorney General, State of Virginia,
Roger L. Chaffe, Senior Assistant Attorney General and
Chief, and William E. Thro, Special Assistant Attorney Gen-
eral, 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, Mi-
chael 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. Bur-
ton, 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, Attor-
ney 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 pro-
vides that, to the extent permitted by law, no federal agency,
and no entity that receives federal assistance for a construc-
tion 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 Con-
struction Trades Department of the AFL-CIO (BCTD), the
Contra Costa Building and Construction Trades Council

(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 work-
ing 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 specifi-
cation, 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 Gov-
ernment Contractors' Labor Relations on Federal and Feder-
ally 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

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 sub-
contractors to enter into or adhere to agreements with one or
more labor organizations, on the same or other related pro-
ject(s)." Section 3 applies the same prohibition to "any
executive agency issuing grants, providing financial assis-
tance, or entering into cooperative agreements for construc-
tion 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 Depart-
ment 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 meet-
ing 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 Secre-
tary 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 Execu-
tive 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

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 bil-
lion 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 respon-
sibility 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 Ad-
ministration 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
preliminary injunction "prohibiting the defendants from en-

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 Su-
preme 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 Con-
gress, 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 Execu-
tive 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).

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." Youngs-
town, 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 Presi-
dent'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 "execu-
tive 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 con-
trol 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 faithful-
ly 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

 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 assis-
tants 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 fund-
ed projects, but only "[t]o the extent permitted by law."
Thus, if an executive agency, such as the FEMA, may lawful-
ly implement the Executive Order, then it must do so; if the
agency is prohibited, by statute or other law, from imple-
menting 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 mis-
placed because the present Executive Order is not self-
executing. 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 Govern-
ment'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.

 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, complain-
ant 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 conduct-
ed 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 grant-
ee"; a single judicial determination that an agency lacks
authority to implement the Executive Order in its administra-
tion 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 cor-
rectly 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.

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 pro-
jects," 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 Presi-
dent's conception of open competition among labor and man-
agement," BCTD, 172 F. Supp. 2d at 167, the NLRA
preempts the Executive Order under the teaching of Interna-
tional 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 in-
tended "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 govern-
ment." Whatever the merit of that argument, this court on at least
one occasion has applied the doctrine "to federal government behav-
ior 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.

 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 pur-
chasing 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

understanding of proprietorship. First, the Government un-
questionably 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 Govern-
ment 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 recipi-
ents of its financial assistance, its conduct is clearly regulato-
ry," 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 project-
by-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 govern-
ment"). 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 con-
tracts, 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 Govern-

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 "ad-
dresse[s] employer conduct unrelated to the employer's per-
formance 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 charac-
terized 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 pro-
ject(s)" that are not funded by the Government. The mean-
ing 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 con-
tract 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

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.