The Truth About Project Labor Agreements

How are California construction unions able to make $50,000 political contributions to local campaigns?  In one case, a union trust fund that made such a contribution in California received funding from ratepayers of a publicly-owned utility through a mandated payoff included in a Project Labor Agreement.

A year ago (November 2, 2009), the 20 commissioners of the Northern California Power Agency (NCPA) (based in Roseville, near Sacramento) voted 9-2 with four abstentions and five absences to approve a Project Labor Agreement (PLA) and Maintenance Labor Agreement for the proposed Lodi Energy Center power plant.

The commissioners approved this Project Labor Agreement with a provision (Section 13.1) that mandated a $90,000 direct payment from the NCPA (ratepayers) to a union trust fund called the California Construction Industry Labor-Management Cooperation Trust.  This mysterious and unaccountable trust fund is controlled by the State Building and Construction Trades Council of California, an umbrella group for the state’s construction unions.  Under the terms of the Project Labor Agreement, NCPA was to make this $90,000 payment within 10 business days of the first hour of work on the Lodi Energy Center.  (As construction work has started at the power plant, the NCPA has presumably paid the $90,000 by now.)

Update: Here is a copy of the check and correspondence, along with the relevant sections of the Project Labor Agreement, sent from the Northern California Power Agency to the State Building and Construction Trades Council of California.

Here is what NCPA commissioners were told regarding how the California Construction Industry Labor-Management Cooperation Trust would spend the $90,000 provided by NCPA ratepayers:

• NCPA commissioners received an email of talking points on October 21, 2009 from an NCPA executive claiming that “it is a one-time payment to the Trust that coordinates activities of multiple unions that are covered under the terms of this agreement.”  This explanation was produced and provided to NCPA administrators on October 21, 2009 by an outside public relations consultant.

• An email from an NCPA executive on October 30, 2009 in response to an inquiry by an NCPA commissioner, copied to several top NCPA administrators, stated that “It’s (sic) goals include supporting the construction industry in California generally (often through the support of legislation), promoting workers and contractors in the power industry specifically, and fostering training of workers.”

• An article in the November 2, 2009 Lodi News-Sentinel newspaper quoted the president of the State Building and Construction Trades Council of California as stating that “the union trust is used to finance ‘things that are beneficial to industry’ such as training for union workers or political battles.”

So how does the California Construction Industry Labor Management Cooperation Trust really spend its money?  No outsider knows for sure, but ABC recently stumbled on ONE $50,000 expenditure!

• A late campaign contribution report filed on June 8, 2010 with the City Clerk of the City of Chula Vista, California shows that the California Construction Industry Labor-Management Cooperation Trust contributed $50,000 to a local political campaign to defeat a measure (Proposition G) in Chula Vista that was placed on the June 8 ballot by Chula Vista citizens (who had signed petitions).

• This is not the first time mandatory payments in Project Labor Agreements for publicly-owned power plants have been sent to a construction union political fund.  It’s difficult to identify and track all of the trust funds operated by the state’s construction unions, but in 2006, the State Building and Construction Trades Council reported that its Labor-Management Cooperation Trust contributed $1 million to a political campaign to defeat a statewide ballot measure (Proposition 90).  It appears this was the fund receiving payments at the time from power plant owners under their PLAs.

What are Labor-Management Cooperation Trusts?  These programs were authorized by Congress and President Jimmy Carter through the “Labor-Management Cooperation Act of 1978,” which became 29 USC Sec. 175a, for “the purpose of improving labor-management relationships, job security, organizational effectiveness, enhancing economic development or involving workers in decisions affecting their jobs including improving communication with respect to subjects of mutual interest and concern.”  Nowhere in federal law are such trusts authorized to make political contributions to campaigns.

Attorneys affiliated with Associated Builders and Contractors speculate that the $90,000 from the NCPA to the California Construction Industry Labor-Management Cooperation Trust is an illegal gift of public funds.  In fact, this very concern was discussed at the NCPA’s Lodi Energy Center Project Participant Committee meeting on October 5, 2009.

Will electric utility ratepayers in Northern California try to put a stop to payoffs mandated in Project Labor Agreements to union funds that are used for politics?