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ABC Underscores the Negative Impact of Encouraging Government-Mandated PLAs in Treasury Rulemaking

On July 15, ABC called for changes to the U.S. Department of the Treasury’s interim final rule encouraging project labor agreements and other anti-competitive and costly labor policies on certain state and local projects funded by the American Recovery Plan Act of 2021.

Treasury issued the May 17 rulemaking, titled Coronavirus State and Local Fiscal Recovery Funds, along with its Compliance and Reporting Guidance: State and Local Fiscal Recovery Funds, to provide guidance on eligible uses for $350 billion in fiscal recovery funds established under the ARPA. The guidance specifically includes language promoting certain controversial labor provisions, including project labor agreements, community benefits agreements and prevailing wage and local hire requirements on eligible water, sewer and broadband infrastructure projects exceeding $10 million funded by the State and Local Fiscal Recovery Fund program.

In its comments, ABC expressed concerns with the Treasury’s encouragement of government-mandated PLAs and the negative impact of these PLAs, which harm businesses and their employees, reduce competition, needlessly increase construction costs by up to 20% per project and more.

Additionally, ABC called for Treasury to remove all language and state and local reporting requirements related to government-mandated PLAs for eligible projects or to clarify that PLA mandates and other labor provisions are not mandated as a condition of accessing SLFRF program funding.

ABC also recommended that Treasury eliminate burdensome reporting requirements on state and local government recipients of SLFRF program funding if they choose not to require costly PLA mandates on eligible infrastructure projects exceeding $10 million.

“It’s concerning to see the Treasury attempt to push state and local procurement officials into using PLA requirements and other schemes designed to steer taxpayer-funded construction contracts to unionized contractors when the ARPA bill text said nothing about these specific anti-competitive and costly policies,” said Ben Brubeck, ABC’s vice president of regulatory, labor and state affairs. “ABC will continue to explore legal options to challenge this likely illegal policy and will be working with stakeholders to help them understand their options and federal reporting requirements when building eligible infrastructure projects.”

ABC has made multiple efforts to express concerns with the IFR’s language encouraging state and local governments to mandate PLAs, including a letter to U.S. Treasury Secretary Janet Yellen and an ABC member grassroots campaign that resulted in over 425 comments being sent to the Treasury in opposition to its misguided pro-PLA policy. Additionally, U.S. Rep. Ted Budd, R-N.C., chief sponsor of the ABC-priority Fair and Open Competition Act (H.R. 1284), led a congressional letter to the Treasury concerning the pro-PLA language in their rulemaking.

ABC encourages stakeholders to monitor the Treasury’s Coronavirus State and Local Fiscal Recovery Funds FAQ document, which was most recently updated July 14 with new details about the applicability of the Davis-Bacon Act and prevailing wage laws, PLAs and other labor policies to eligible projects (see section 6.17).

More information on the SLFRF program and rulemaking can be found in the Compliance and Reporting GuidanceTreasury fact sheet and on the department’s website.

ABC chapters, members and stakeholders with questions or concerns about ARPA projects subjected to these policies are encouraged to contact ABC National.