Tag Archive for Labor-Management Cooperation Act of 1978

How Are Unions Funding Opposition to a Vote on Public Funding of the New Sacramento Kings Arena?

A few construction trade unions have joined a Sacramento-based political committee and have made or pledged contributions to this committee to ensure that citizens in the City of Sacramento don’t get to vote to derail the city’s arrangement with the owners of the Sacramento Kings professional basketball team to build a new arena.

As I most recently reported in Request for Proposal for Prime Contractor for New Sacramento Kings Arena Refers to Project Labor Agreement with Construction Unions, contractors will probably be required to sign a Project Labor Agreement with unions as a condition of working on the arena construction. Unions have been waiting for the opportunity to build a new arena for many years, and they are intent on seeing it built – under a union monopoly.

An August 1, 2013 article in the Sacramento Bee (PAC Pushes Sacramento Arena Vote but Won’t Say Where It Is Getting Money) reported that an organization called DowntownArena.org revealed the source of “nearly $15,000” of contributions received or pledged for a campaign opposed to a ballot initiative that would stop the arena arrangement. This group consists mainly of local business groups (including construction trade associations) and unions.

Meanwhile, many ordinary citizens in Sacramento (and the surrounding region as well) are unhappy with the idea that the city will borrow $212 million for construction of the $448 million arena by selling bonds, with the principal and interest paid back through fees on people who park in downtown Sacramento. A law firm in Southern California that has represented the former owners of the Kings has reportedly funded a campaign (STOP – Sacramento Taxpayers Opposed to Pork, aka Stop Arena Subsidy) to collect signatures on petitions to qualify a ballot measure that would stop it. The initiative would prohibit the City of Sacramento from spending public money on a professional sports arena without approval of a majority of voters in an election.

Apparently based on information provided by the executive director of Region Builders, a trade association that established the DowntownArena.Org campaign, the Sacramento Bee article states that the “International Brotherhood of Electrical Workers donated $2,500.” Under the article, a list of donors includes “National Electrical Contractors Association/International Brotherhood of Electrical Workers: $2,500.”

The first reference is simply a union (with no local affiliation indicated), but the second reference combines a union AND a construction trade association. A contractor trade association and a union would not be making a joint contribution if the money came from their PACs or from their general operating budgets.

To confuse matters, the DowntownArena.org web site lists “IBEW Local 340” and “National Electrical Contractors Association (NECA) of Sacramento” separately (not jointly) as supporters.

I’m wondering if the donor is actually the NECA/IBEW Northern California Labor-Management Cooperation Committee (LMCC). Why is the distinction important?

  1. If money comes from the union PAC and/or the association PAC, it means the source of the money to DowntownArena.org is voluntary political contributions from either union members or contractors to a state-regulated Political Action Committee. These PACs have detailed reporting requirements.
  2. If money comes from the general operating expenses of the union and/or the association, it means the people running the organizations simply made a decision to send some of their income or assets to DowntownArena.org. The right to do this under state election law is quite limited.
  3. If money comes from the NECA/IBEW Northern California Labor-Management Cooperation Committee (LMCC), it means the source of the money to DowntownArena.org is employer payments mandated in collective bargaining agreements that are sent by contractors to a trust fund authorized under the obscure federal Labor-Management Cooperation Act of 1978. These LMCCs are generally unregulated and have few reporting requirements. It’s easy to get this money – the employer payments are even incorporated into state prevailing wage rates.
  4. It’s even possible that the money came from another trust fund managed by NECA and IBEW and authorized under the Employee Retirement Income Security Act (ERISA).

I suspect the donor of the $2500 is the NECA/IBEW Northern California Labor-Management Cooperation Committee (LMCC). But no one will know until February 2014, after DowntownArena.org submits its semi-annual report to the Fair Political Practices Committee. I’ll update this post at that time.

Analysis of the Phony Community Benefits and Other Provisions in the Union Project Labor Agreement for the First Segment of California’s High-Speed Rail

At the link immediately below is a copy of the DRAFT Project Labor Agreement (aka Community Benefits Agreement) between the California High-Speed Rail Authority and the State Building and Construction Trades Council of California and the Signatory Craft Councils and Local Unions. It was Addendum 8, issued on December 26, 2012, for the Request for Proposal for Design-Build Services for the first construction segment between Madera and Fresno. Tutor Perini/Zachry/Parsons, a Joint Venture, won the contract.

California High-Speed Rail Authority Addendum 8 Community Benefits Agreement

At the link immediately below is the FINAL executed version of the Project Labor Agreement for California High-Speed Rail, signed by the CEO of the California High-Speed Rail Authority on August 13, 2013.

California High-Speed Rail Authority Executed Community Benefits Agreement


A draft Project Labor Agreement for the first segment of the California High-Speed Rail is now included as Addendum 8 in the Request for Proposal (RFP) to the five pre-qualified design-build consortiums. These entities have a January 18, 2013 deadline to bid on design and construction of the first 28-mile segment of the high-speed rail line in the San Joaquin Valley, from Madera through Fresno.

Consistent with the Community Benefits Agreement resolution approved at the December 6, 2012 meeting of the California High-Speed Rail Authority board of directors, the Project Labor Agreement is disguised under the term “Community Benefits Agreement.” But as you’ll see below, it’s the standard boilerplate language used in most Project Labor Agreements that contractors must sign with unions to work on government projects in California. And a close reading of the specific provisions in the agreement shows that the alleged benefits are nothing but efforts, goals, acknowledgement, an exercise of full support, and even one recognition of a desire!

And a close reading of the specific provisions in the agreement shows that the alleged benefits are nothing but efforts, goals, acknowledgement, an exercise of full support, and even one recognition of a desire!

Here’s a little more, buried deep in the bid documents:

Section 7.11.3 of the Request for Proposal for Design-Build Services for the first segment of the California High-Speed Rail project states that “Proposers are advised that, subject to FRA [Federal Railroad Administration] approval, the Authority intends to develop a Community Benefits Agreement consistent with the Community Benefits Policy adopted by the CHSRA [California High-Speed Rail Authority] Board at its December 6, 2012 meeting with which the Contractor will be required to comply.”

And Section 10.1 of the Request for Proposal states that  “The Authority [that is, the California High-Speed Rail Authority CEO Jeff Morales] will not make a recommendation for award of the Contract [to the California High-Speed Rail Authority Board of Directors] unless the successful selected Proposer has submitted the following: Escrowed Proposal Documents and corrected any deficiencies identified by the examination of the EPDs, and A letter of assent executed by the Proposer agreeing to be bound by the Community Benefits Agreement.” This indicates a government-mandated Project Labor Agreement.California High-Speed Rail Project Labor Agreement Mandate

Obviously the California High-Speed Rail Authority‘s inclusion of this Project Labor Agreement as an addendum in the RFP is also a strong suggestion for pre-qualified design-build entities to commit to signing this agreement in order to fulfill the conditions of the Community Benefit Agreement resolution. A contractor who commits to sign the union agreement will likely receive the full amount of points assigned to this objective in the “best value” scoring criteria used by the California High-Speed Rail Authority as the basis to award the design-build contract.

This long-anticipated union agreement will be signed by Robbie Hunter, new President of the State Building and Construction Trades Council of California, by a representative of the California High-Speed Rail Authority, and by representatives of the design-build entity and its subcontractors.

The Project Labor Agreement’s Phony Community Benefits: Just Nice Words 

Pages 3 and 4 of the draft Project Labor Agreement identifies certain kinds of special workers who will allegedly get the community benefits:

Section 1.15 states that aNational Targeted Worker” means (a) an individual whose primary place of residence is within an Economically Disadvantaged Area or an Extremely Economically Disadvantaged Area in the United States; or (b) a Disadvantaged Worker.

Section 1.9 states that anEconomically Disadvantaged Area” means a zip code that includes a census tract or portion thereof in which the median annual household income is less than $40,000 per year, as measured and reported by the U.S. Census Bureau in the 2010 U.S. Census and as updated by the parties upon the U.S. Census Bureau issuing updated Median Annual Household Income data by census tract in the American Community Survey.

For some reason, this definition does not limit the area to the San Joaquin Valley or even to California. And how many zip codes qualify?

Section 1.10 states that anExtremely Economically Disadvantaged Area” means a zip code that includes a census tract or portion thereof in which the median annual household income is less than $32,000 per year, as measured and reported by the U.S. Census Bureau in the 2010 U.S. Census and as updated by the parties upon the U.S. Census Bureau issuing updated Median Annual Household Income data by census tract in the American Community Survey.

Once again, this definition does not limit the area to the San Joaquin Valley or even to California. And how many zip codes qualify?

Section 1.8 states that aDisadvantaged Worker” means an individual who, prior to commencing work on the project, resides in an Economically Disadvantaged Area or Extremely Economically Disadvantaged Area as defined in Sections 1.9 and 1.10, and faces at least one of the following barriers to employment: (1) being homeless; (2) being a custodial single parent; (3) receiving public assistance; (4) lacking a GED or high school diploma; (5) having a criminal record or other involvement with the criminal justice system; (6) suffering from chronic unemployment; (7) emancipated from the foster care system; (8) being a veteran; or (9) being an apprentice with less than 15% of the apprenticeship hours required to graduate to journey level in a program as described in Section 1.2.

Keep in mind, this definition does not limit the area to the San Joaquin Valley or even to California.

Seven – and possibly eight, depending on the individual veteran – of the nine barriers to employment listed in the definition of “Disadvantaged Worker” are significant liabilities for getting into a state-approved apprenticeship program and more importantly, staying in it. But it’s easy to see that #9 is a loophole for how the contractors and unions could fulfill the goal for a “Disadvantaged Worker” – they’ll simply dispatch apprentices who are in their final 15% of the number of hours needed to qualify to graduate from their union apprenticeship program.

The language in the Project Labor Agreement associated with actually finding and employing National Targeted Workers is vague and sometimes unintentionally humorous in its exaggerated sincerity.

The language in the Project Labor Agreement associated with actually finding and employing National Targeted Workers is vague and sometimes unintentionally humorous in its exaggerated sincerity:

[Page 15] Section 7.1  The Unions will exert their best efforts to recruit and identify individuals, particularly National Targeted Workers, as well as those referred by the Jobs Coordinator, for entrance or reentrance into the labor/management apprenticeship programs, and to assist individuals in qualifying and becoming eligible for such programs.

[Page 17] Section 7.3.1  The C/S/Es [that is, the contractors, not the unions] must document all efforts made to comply with the targeted hiring process to locate and hire National Targeted Workers.

Note that the unions give the responsibility for documenting recruitment and hiring to the contractor, even though it’s the unions that run the hiring halls and dispatch the workers.

[Page 17] Section 7.4  Unions will make their best effort to recruit sufficient numbers of skilled craft persons to fulfill the requirements of the Contractors/Employers.

[Page 17] Section 7.5.1  The Unions will make every effort to recruit National Targeted Workers and to refer and utilize National Targeted Workers on the Project.

This provision also contains a subtle but useful conditional loophole: “National Targeted Workers” will be recruited, referred, and used “as long as they possess the requisite skills and qualifications…” How many National Targeted Workers (such as homeless people) can be reasonably expected to possess these skills and qualifications?

[Page 18] Section 7.5.3 (A)  All Contractors/Employers performing Project Work will every effort [sic] to employ the maximum number of Apprentices allowed by State Law.

[Page 19] Section 7.8.1 The C/S/Es and Unions recognize a desire to facilitate the entry into the building and construction trades of veterans…

How touching!

[Page 2] WHEREAS, the Parties signatory to this Agreement acknowledge the Authority’s Small Business Policy and established overall 30% Small Business Goal, inclusive of microbusinesses, a 10% DBE and a 3% DVBE goal within the 30% overall goal and shall exercise full support of this Policy in the implementation of this Agreement in ensuring maximum utilization of Small Businesses on the project…

The “Jobs Coordinator” is going to be busy.

Section 1.12 defines “Jobs Coordinator” as “the Prime Contractor designee responsible for the facilitation and implementation of the Targeted Hiring Requirements of this Agreement. The Jobs Coordinator must be able to demonstrate or document to the AUTHORITY the requisite qualifications and/or experience to fulfill the duties and responsibilities.”

Section 7.6 states that “Disadvantaged Workers will be referred to the Unions from the Jobs Coordinator qualified to perform construction jobs coordination and related services…” 

It appears that the design-build consortium will need to hire internal staff or an outside firm to handle the Jobs Coordinator responsibilities. Once again, the unions give the responsibility for documenting recruitment and hiring to the contractor, even though it’s the unions that run the hiring halls and dispatch the workers.

Hiring of Veterans: A Lot of Talk, but What Is the Actual Performance?

Section 7.8 of the Project Labor Agreement is a vague summary of Helmets to Hardhats. Unions that are pressuring public officials for Project Labor Agreements focus quite a bit of their lobbying and public relations message on their “Helmets to Hardhats” program, meant to initiate veterans into careers in the construction trades – or more accurately, careers in the unionized construction trades. The program is operated through a union-affiliated program authorized by the Labor-Management Cooperation Act of 1978. The program appears to be a contact point for veterans looking for construction trade work. It refers them to the applicable local union office.

The one case I’ve seen in which someone tried to measure the success of Helmets to Hardhats revealed a stunning 100% failure. See my article www.PublicCEO.com Exposes Empty Promises of Helmets to Hardhats Program Under Project Labor Agreement in Northern California.

Here’s something particularly outrageous in this Project Labor Agreement related to the Helmets to Hardhats program:

[Page 20] Section 7.8.3  In recognition of the work of the Center and the value it will bring to the Project, the Authority shall make a contribution of $2,000 per month to the Center on behalf of itself and all other Employers employing workers under the terms of this Agreement. The contribution shall begin the first month during which Project Work is performed and end upon completion of all Project Work. Section 7.8.5  If the Authority fails to pay contributions owed to the Center within thirty (30) days of the date when such contributions are due, it shall be liable to the Trust for all costs of collection incurred by the Trust, including, attorneys’ fees and court costs. The Trustees are empowered to initiate proceedings at law or equity, and to take any other lawful action necessary to collect contributions due.

These unions are so cheap that they are contractually requiring the taxpayer-funded California High-Speed Rail Authority to pay $2000 per month to their own Helmets to Hardhats program. And they threaten to take the High-Speed Rail Authority to court if it doesn’t pay on time!

Terms and conditions of employment and labor peace procedures are the real meat in this Project Labor Agreement, of course.

Terms and conditions of employment and labor peace procedures are the real meat in this Project Labor Agreement, of course. Here’s my analysis of key provisions:

[Page 1] The purpose of this Community Benefits Agreement (Agreement) is to facilitate careers in the construction industry and to promote employment opportunities during the construction of the High Speed Rail System (Project) awarded by the California High Speed Rail Authority, remove potential barriers small businesses may encounter in participating in this Project…

Comment: The requirement to sign a 29-page union agreement would normally be regarded as a barrier for a small business to participate in a project, rather than the removal of a barrier. Also, the requirement to pay union dues and fees (Article 6.2) and be referred to a job by a union (Article 7.1) would seem to complicate employment opportunities.

[Pages 1-2] The purpose of this Community Benefits Agreement (Agreement) is…to provide for the orderly settlement of labor disputes and grievances without strikes or lockouts…the interests of the general public, the Authority, the Unions, contractors, subcontractors, employers and workers would be best served if the construction work proceeded in an orderly manner without disruption because of strikes, sympathy strikes, work stoppages, picketing, lockout, slowdowns or other interferences with work…

Comment: Do union officials anticipate that there may be strikes and other union work disruption during the construction of the California High-Speed Rail unless all contractors sign the Project Labor Agreement with the unions? Someone needs to ask!

[Page 1] WHEREAS, increasing access to employment opportunities with prevailing wages is one way for the Authority to directly combat poverty and unemployment;

Comment: Contractors are already required by state law to pay state-mandated wage rates (“prevailing wages”) to construction workers on projects of the California High-Speed Rail Authority. And the Project Labor Agreement actually EXEMPTS the project from state monitoring and enforcement compliance programs that would normally apply!

California Labor Code Section 1773.1(b)(3) – enacted through Assembly Bill 436 (2011) and supported by the State Building and Construction Trades Council of California – exempts a project funded by state bonds from making payments to the State Public Works Enforcement Fund of the California Department of Industrial Relations for prevailing wage compliance and enforcement “if the awarding body has entered into a collective bargaining agreement that binds all of the contractors performing work on the project and that includes a mechanism for resolving disputes about the payment of wages.” This is the definition of a Project Labor Agreement.

Section 8.3 of the Project Labor Agreement states that “the Authority shall monitor the compliance of all Contractors and Subcontracts with all Federal and state prevailing wage laws and regulations. All complaints regarding potential wage violations shall be referred to the Authority for processing, investigation and resolution.” It appears that unions are using the Project Labor Agreement to compel the California High-Speed Rail Authority to establish a labor compliance program (internally or contracted to an outside firm) for prevailing wage compliance and monitoring (as opposed to using the Department of Industrial Relations Compliance Monitoring Unit). Are the unions too cheap to do it themselves through their own union-affiliated labor compliance programs?

[Page 4-5] Section 1.17 …On-site fabrication work includes work done for the Project in temporary yards or areas near the Project. All fabrication work over which the AUTHORITY possesses the right of control…and which is traditionally claimed as on-site fabrication shall be performed on-site…such work may be performed off-site. In that event, such fabrication work shall be performed in accordance with the union standards established by this Agreement for the appropriate craft Union or a fabrication agreement approved by the craft’s International Union. On-site construction shall also include…

Comment: This long section is meant to prevent a contractor from classifying work covered under union Master Labor Agreements (collective bargaining agreements) as off-site fabrication in order to evade the conditions of the Project Labor Agreement or state-mandated construction wage rate (“prevailing wage”) requirements. The Sheet Metal Workers Union is especially concerned about off-site fabrication of duct work, and the Project Labor Agreement specifically cites coverage of their classifications of work.

[Page 6] Section 2.3  Project Labor Disputes: The provisions of this Agreement, including the Schedule A Agreements, (which are the local collective bargaining agreements of the signatory Unions having jurisdiction over the work on the Project, as such may be changed from time-to-time and which are incorporated herein by reference) shall apply to the work covered by this Agreement. All Project Work shall be performed as provided in the applicable Schedule A Agreement. Where there is a provision in a Schedule A Agreement and not covered by this Agreement, the provision of the Schedule A Agreement shall prevail. Where there is a provision in this Agreement, it shall prevail over any conflicting provision of a Schedule A Agreement. All disputes relating to the interpretation or application of this Agreement shall be subject to resolution by the dispute resolution procedures set forth herein.

Comment: As acknowledged in the section of this provision surrounded by parenthesis, a contractor that signs this Project Labor Agreement is not only bound by its provisions, but is also bound by certain provisions of the standard Master Labor Agreement (collective bargaining agreement) that applies to work classifications within the jurisdiction of the applicable union in that applicable geographical region. Some non-union contractors foolishly sign a Project Labor Agreement without realizing that it extends to provisions in other union agreements.

However, notice that Section 3.1 states that “This Agreement is not intended to supersede collective bargaining agreements between any of the Contractors/Employers performing construction work on the Project and Union Signatory thereto except to the extent the provisions of this Agreement are inconsistent with such collective bargaining agreement, in which event the provisions of this Agreement shall apply.” In other words, the Project Labor Agreement is supreme. Some union contractors and unionized construction associations object to government-mandated Project Labor Agreements because those agreements – often negotiated with deference to the demands of the unions – subvert the collective bargaining agreements they worked hard to negotiate.

[Page 7] Section 2.4.6  Notwithstanding the foregoing, it is understood and agreed that Building/Construction Inspector and Field Soils and Material Testers (inspectors) are a covered craft under this Agreement. This inclusion applies to the scope of work defined in the State of California Wage Determination for that Craft. Every Inspector performing under these classifications pursuant to a professional services agreement or a construction contract shall be bound to all applicable requirements of this Agreement…

Comment: Construction trade unions such as the Operating Engineers continue their efforts to organize workers in construction-related professional services into unions, as if these occupations were traditional building trades. In 2000, Governor Gray Davis signed into law Senate Bill 1999, which added a section to the definition of “public works” in California Labor Code Section 1720(a)(1) to include “design and preconstruction phases of construction including, but not limited to, inspection and land surveying work.” This placed such work under state-mandated construction wage rate (“prevailing wage”) requirements.

[Page 7] Section 3.2  It is understood that this Agreement constitutes a self-contained, stand-alone agreement…[the contractor] will not be obligated to sign any local, area or national collective bargaining agreement as a condition of performing work within the scope of this Agreement…Section 3.3  Contractors not signatory to the established Joint Labor/Management Trust Fund Agreements, as described in the Schedule A Agreement(s) for the craft workers in their employ, shall sign a “subscription agreement” with the appropriate Joint Labor/Management Trust Funds covering the work performed under this agreement before work is commenced on the Project.

Comment: This provision means that if a non-union contractor signs the Project Labor Agreement, it is not bound to the collective bargaining agreement for the applicable union for that trade in that geographic region. However, the contractor WILL have to sign “subscription agreements” binding it to the terms and conditions of the union-affiliated health insurance programs, pension programs, vacation programs, apprenticeship programs, and “other” union-affiliated slush funds used for labor compliance monitoring, contract administration, and a wide variety of vague “industry advancement” programs authorized under the obscure federal Labor-Management Cooperation Act of 1978. (Some of that “other” money is contributed to California state and local campaigns for and against ballot measures – a practice becoming more common each election.) All of these employer payments are incorporated into state prevailing wage determinations.

[Page 8] Section 3.4  So that the public, the Unions and the employees have complete information, the AUTHORITY shall immediately post copies of all executed Letters of Assent on a dedicated page on its website…[the contractor] shall be removed from the Project unless an executed Letter of Assent is posted within 48 hours.

Comment: As the former head of the Los Angeles-Orange County Building and Construction Trades Council, new State Building and Construction Trades Council of California president Robbie Hunter is surely aware of how small contractors sometimes try to slip in and out of construction projects for local governments such as the Los Angeles Unified School District without signing the Project Labor Agreement and making the fringe benefit payments to the union trust funds. There will be extra accountability on the High-Speed Rail project.

[Pages 9-14] Article 4  Work Stoppages and Lockouts

[Pages 21-24] Article 9  Dispute Resolution Procedure

[Pages 24-25] Article 11  Jurisdictional Disputes

[Page 25] Article 12  Employee Grievance Procedure

[Page 27] Article 16  Pre-job Conference

Comment: These are the substantial provisions about procedures and arbitrators in Project Labor Agreements that governments and developers hope will prevent strikes and other work disruption directed by top union officials. It doesn’t always work: sometimes workers decide on their own to walk off the job (note the provision in Section 4.4 that No Union shall be liable for independent acts of employees), and sometimes a union is simply determined to make a statement about a grievance during a jurisdictional dispute with another union over work classifications. Nevertheless, Section 4.3 states that “the Union will promptly make good efforts to cease such Project work disruption. (A For Effort.)

[Page 15] Section 6.1  [the contractors] recognize the Unions as the sole and exclusive bargaining representatives of all craft employees working within the scope of this Agreement.

Section 6.2  No employee covered by this Agreement shall be required to join any Union as a condition of being employed, or remaining employed, for the completion of the Project work…employees working on the Construction Contract…comply with the applicable Union’s security provisions for the period during which they are performing on-site Project work to the extent, as permitted by law, of rendering payment of the applicable monthly dues and any working dues…

Comment: Workers don’t have to be full-fledged members of the union, but they have to pay union initiation fees, monthly dues, and working dues as the cost of union representation. California is not a Right-to-Work state, and unions don’t want any “freeloaders” on the job who don’t pay dues and fees.

[Page 15] Section 7.1  [Contractors] recognize that the Unions shall be the primary source of all craft labor employed on the Construction Contract for the Project. For each craft, the local Union with geographic jurisdiction over the work to be performed shall make referrals of employees to the requesting [contractor]. [Contractors] utilizing core employees shall follow the procedures outlined below…

Section 7.2. [Contractors] shall be bound by and utilize the registration facilities and referral systems established or authorized by this Agreement and the signatory Unions…

Comment: Contractors will obtain their workers from the “hiring halls” of the construction trades through the unions’ internal dispatching procedure for workers waiting for a job. Unions have certain rules about who gets priority in the list of workers waiting to be dispatched.

[Page 16] Section 7.1.2  The number of Core Workers on the Project for C/S/Es covered by this Agreement shall be governed by the following procedure: one Core Worker shall be selected and one worker from the hiring hall of the affected trade or craft and this process shall repeat until such C/S/E’s requirements are met or until such C/S/E has hired five (5) such Core Workers for that craft., whichever occurs first. Thereafter, all additional employees in the affected trade or craft shall be hired exclusively from the applicable hiring hall list.

Comment: There is one limited exception in the Project Labor Agreement to the requirement that a contractor obtain workers via the union hiring hall dispatching process. As stated in Section 7.1, a contractor can keep a limited number of “Core Workers” whom the company has employed for 60 of the 100 days immediately before the job is awarded (apparently by the design-build entity) to the contractor. But the contractor has to alternate between using a Core Worker and getting a worker dispatched from the union, and no more than five Core Workers can be used.

[Page 21] Section 8.1  All employees covered by this Agreement (including foremen and general foremen if they are covered by the Schedule A Agreement) shall be classified and paid wages, benefits, and other compensation including but not limited to travel, subsistence, and shift premium pay, and contributions made on their behalf to multi-employer trust funds, all in accordance with the then current multi-employer Schedule A Agreement of the applicable Union. 8.2  Each [contractor] adopts and agrees to be bound by the written terms of the applicable, legally established, trust agreement(s), to the extent said trust agreements are consistent with this Agreement…[contractors] further agree to sign the applicable trust agreement “subscription” agreement(s) if required by the Craft Union on behalf of the Craft employees in order to make the employee contributions to the pension, annuity, health and welfare, vacation, apprenticeship, training trusts, etc.

Comment: Contractors pay fringe benefits (health care, retirement, training, etc.) to the unions. If contractors have their own employee benefit programs (401k, etc.) independent of unions, they are still required to pay their employees’ fringe benefits to the union programs. This can be a supplemental flow of money into underfunded union-affiliated pension plans, as such employees will not enjoy those benefits unless they remain with the union until eligible or vested.

The requirement for non-union contractors to pay fringe benefits to union programs instead of their own benefit plans (unless they want to pay benefits twice) is a major deterrence and competitive disadvantage for non-union contractors that might otherwise consider signing a Project Labor Agreement. Other ramifications of this provision include possible contractor liability for unfunded multi-employer pension plans and exposure of company financial data to union officials for audits.

Is this what 52.5% of California voters wanted in November 2008 when they approved Proposition 1A, the Safe, Reliable High-Speed Passenger Train ballot proposition? Of course not!

$348 Million Measure Q for Solano Community College: Yes on Q Campaign Fails to Submit Latest Legally-Required Campaign Finance Report

UPDATE: The Yes on Q campaign for Solano Community College District submitted its overdue Form 460 today (Monday, October 29, 2012). Better late than never.

As of October 20, 2012, the campaign has raised over $200,000. Big contributions between October 1 and October 20 include $15,000 from Swinerton (a construction management firm) and $10,000 from MuniBond Solar, run by someone named Steve Nielsen, which has collaborated with companies such as SunPower Corp to secure “Qualified Energy Conservation Bonds” (QECBs) for several California educational districts. (An executive with SunPower Corp also contributed $1000.) As shown in this May 2, 2012 Solano Community College Financial and Budget Planning Advisory Council meeting, MuniBond Solar wants a relationship with Solano Community College District.

Other contributors include the usual suspects: architects, construction trade unions, and unionized construction associations that look forward to a Project Labor Agreement.


Yesterday (October 26, 2012) I went to the Solano County Registrar of Voters office to obtain the paper copies of the Form 460 reports that the “Yes on Q – Solano College” campaign must legally submit to the county. These reports are meant to inform the public about campaign receipts and expenditures. The staff there was quite professional and helpful, but I left knowing that the Yes on Q campaign was breaking the law and getting away with it.

Measure Q asks Solano County voters to let the Solano Community College District Governing Board borrow $348 million for construction by selling bonds to institutional investors. Solano County taxpayers must pay this money back to the investors – with interest! It will cost at least $500 million – perhaps more if the district is lured into selling Capital Appreciation Bonds.

The Solano Community College District Governing Board wants to borrow $346 million by selling bonds

The Solano Community College District Governing Board wants to borrow $348 million by selling bonds.

The Solano College governing board voted 6-1 in 2003 and 2004 to require its construction contractors to sign Project Labor Agreements with unions as a condition of working on projects funded by bonds authorized by the $124.5 million Measure G, barely approved by 55.6% of Solano County voters in November 2002. A majority of governing board members are likely to again make a deal to give unions control of additional projects funded by Measure Q. Project Labor Agreements raise costs and cut competition, as shown by the failure of the Project Labor Agreement pilot project at Solano Community College in 2005. (No one on the board cared at the time.)

The Yes on Q campaign finance report for the period from October 1 to October 20 was due by October 25, but it was not at the Solano County Registrar of Voters on October 26. After further inquiry, I learned this afternoon that an official of the Solano County Registrar of Voters had contacted the treasurer of the “Yes on Q – Solano College” campaign to check on the status and was told the report would not be turned in until Monday or Tuesday of next week.

So much for openness and transparency for citizens as they fill out their absentee ballots this weekend. I guess the local newspapers won’t be informing the voters in their Sunday editions who is giving to the Yes on Q campaign and who is getting from the Yes on Q campaign. Does anyone care?

I did get a copy of the campaign finance report of the “Yes on Q Solano College” for the period from July 1, 2012 to September 30, 2012. Here are a few items of interest:

1. This Campaign Is a Sitting Duck for Accusations of “Pay-to-Play”

Here’s a list of all of the campaign contributors through September 30, 2012, with links to the company web sites, the amounts contributed, and the business interest of the contributor.

DONOR INTEREST AMOUNT
Piper Jaffray Investment Bank/Bond Broker $25,000
Kitchell Construction Construction Manager for Solano College Measure G $25,000
RBC Capital Markets Investment Bank/Bond Broker $18,000
Steinberg Architects Architect $10,000
VBN Architects Architect $10,000
[Sheet Metal Workers Local Union No. 104] Bay Area Industry Promotion Fund Construction trade union-affiliated Labor-Management Cooperation Committee $5,000
Stradling, Yocca, Carlson and Rauth Bond counsel – worked before with Solano College on bond sales $3,500
Keenan and Associates Insurance broker for school districts $2,500
B&L Properties Property holding company in Fairfield $2,500
Dannis Woliver Kelley Law firm for school & college districts $2,500
The Lew Edwards Group Political consulting firm in Oakland, works to pass bond measures $1,000
LPAS Architect $1,000
Roy Stutzman Consulting Financial consulting for school & college districts $1,000
Student Insurance Insurance company for school districts $1,000
Fairbank, Maslin, Maullin Metz & Associates Polling firm for political campaigns $500
Bricklayers and Allied Craftsworkers Local Union No. 3 Construction trade union $200
Sarah Chapman Solano College Board Member $100
Rosemary Thurston Solano College Board Member $100
Anne Marie Young Solano College Board Member $100
James Dekloe Solano College Faculty Member $100
TOTAL $109,100

There’s very little financial participation in this campaign from anyone in Solano County, but there is much interest from various professional service firms that do business with Solano Community College District and/or want business if voters approve Measure Q and let the Governing Board sell $348 million in bonds. I guess that’s how the world works, but taxpayers will pay the bill.

2. Underwriters Among Top Contributors – These Firms Get Fees When Selling Bonds

After the investment bank/bond underwriter Piper Jaffray got smacked around along with other financial service firms earlier this year about contributing to campaigns for bond measures for which it subsequently became the underwriter for those bonds, I figured that firm would back off from the practice. I was wrong.

Piper Jaffray $25,000 campaign contribution to Yes on Measure Q Solano College November 2012

Piper Jaffray $25,000 campaign contribution to Yes on Measure Q – Solano College (November 2012)

Piper Jaffray is tied with Kitchell Construction – the construction management firm for Solano Community College’s Measure G (2002) program – for making the largest contribution to the Yes on Q campaign.

3. Another Labor-Management Cooperation Committee Contributes to a Campaign.

Bay Area Industry Promotion Fund - $5000 Contribution to the Yes on Measure Q Solano College

Bay Area Industry Promotion Fund – $5000 Contribution to Yes on Measure Q Solano College

I snickered when I saw this one: how many people in Solano County know about the Bay Area Industry Promotion Fund? There’s only one place on the web where you’ll read about labor-management cooperative trusts, and you’re reading it now. These trusts are arcane entities authorized by the obscure Labor-Management Cooperation Act of 1978, a law signed by President Jimmy Carter and implemented by the Federal Mediation and Conciliation Service. There are no federal or state regulations specifically addressed toward these trusts, and these trusts do not have any reporting requirements to the U.S. Department of Labor’s Office of Labor-Management Standards.

This committee receives employer payments as indicated in the Master Labor Agreement negotiated between the Sheet Metal and Air Conditioning Contractors’ National Association (SMACNA) and the Sheet Metal Workers International Association Local Union No. 104. Here are references to the Bay Area Industry Promotion Fund in their Master Labor Agreement. It says the fund pays to replace stolen tools, but says nothing about political contributions, of course. Note also that employer payments to the Bay Area Industry Promotion Fund are incorporated as part of “Other” into the State of California’s government-mandated construction wage rates (so-called “prevailing wages”).

4. If Yes on Q Raised $109,100 by September 30, 2012, How Was It Spent?

Solano County newspapers have noted the lack of visible campaign activity in support of Measure Q. In fact, this situation apparently deprived Yes on Q of an endorsement from the Vacaville Reporter newspaper:

The Reporter Editorial Board likes the vision and very much wants to support it. But board members have qualms about this bond. The impact of the state’s fiscal mess has meant the college can’t afford to operate the programs it has now. Is it wise to add new programs before the state’s budget is under control?

There are also qualms about the way the bond campaign has been mishandled. In July, when the Editorial Board supported trustees’ decision to put the bond on the ballot, it was with the caveat that an aggressive campaign be mounted to educate the community about its need.

Instead, the campaign has been lackluster and late, not ratcheting up until after mail-in ballots were already out. Where are the trustees, who can speak as individuals in support of the measure and who should have lined up supporters to drive it? Where are the other public agencies and private businesses that stand to benefit from these plans? Where is the faculty, whose union put on a get-out-the-vote drive for Propositions 30 and 32 without even mentioning Measure Q in its publicity? Does the lack of organization in the campaign reflect a lack of organization and follow-through by campus leaders?

I drove on the major thoroughfares of Vacaville, Fairfield, and Vallejo on October 26. I only saw THREE signs supporting Measure Q – all close to the entrance to the main Solano Campus campus in Fairfield.

An elusive Yes on Q campaign sign in Solano County.

An elusive Yes on Q campaign sign in Solano County.

Not that I put much value on campaign signs stuck in public areas, but I would have expected more for a campaign that already had over $100,000 by the end of September. This lack of visibility is so pitiful that it was tied with the three No on Q signs I saw in Solano County. That campaign is a small, committed group of informed local taxpayer activists with very little money to spend.

Say "No" to $348 Million Bond - No on Q - Taxed Enough Already!

Say “No” to $348 Million Bond – No on Q – Taxed Enough Already!

The September 30 campaign report for Yes on Q shows about $25,000 spent on consultants, slate mailers, some apparent development of signs and mailers, and people at phone banks. It will be interesting to see how the remaining money was spent, provided the Yes on Q campaign ever submits its campaign finance reports.

Feds Need Better Oversight of Labor-Management Cooperation Committees, Such as the Union Slush Fund that Spent $1.1 Million in the June 2012 Election in the City of San Diego

An August 27, 2012 article on the Investigative Newsource – Southern California web site contains the latest fleeting news reference to the California Construction Industry Labor-Management Cooperation Trust. The last two paragraphs of “Outside Donors Fuel Prop. Opponents, Fund Mayoral Hopefuls” states the following about Proposition A campaign in the City of San Diego for the June 6, 2012 election:

The California Construction Industry Labor Management Cooperation Trust, a nonprofit located in Sacramento that promotes and protects project labor agreements around the state, donated more than $1 million to try unsuccessfully to defeat Prop. A, which banned project labor agreements. The agreements set some of the terms of employment, such as wage rates, on construction projects.

The Trust gets much of its money from laborers themselves. Clauses in some project labor agreements dictate that a portion of money per hour worked goes to the Trust.

The same Investigative Newsource was alone among news media groups in highlighting the extensive campaign involvement of this obscure organization before the June 6, 2012 election. From the May 25, 2012 article “Business Groups, Builders and Labor Battle over Propositions:”

All of the money for the one of the committees opposing Proposition A has come from the same donor.

Since March 18, the California Construction Industry Labor Management Cooperation Trust donated $675,000 to Taxpayers to Preserve Community Jobs.

The California Construction Industry Labor Management Cooperation Trust is a tax-exempt Sacramento-based organization, which says its mission is, among other things, to “improve public awareness of the benefit of using organized labor contractors and workers.” The group is not required by the IRS to list specific sources of funding, but in general, it reported on its 2010 tax returns collecting $678,000 in membership dues. It reported more than $3 million in assets.

And the trust fund is also cited in the June 1, 2012 Investigative Newsource article “Fundraising Amps Up for Proposition A, B Committees:”

In the past week, a union trust gave an additional $320,000 into defeating Proposition A, a ballot measure that would ban project labor agreements for San Diego city projects if passed.

That brings to $1.18 million the amount raised by the anti-Prop. A forces, far outpacing the business interests pushing Proposition A. That committee, Fair and Open Competition, has raised $755,000 so far.

Taxpayers to Preserve Community Jobs — an anti-Prop. A committee — has benefited mainly from the California Construction Industry Labor Management Cooperation Trust. The trust is responsible for more than 90 percent of its donations.

The labor trust is “heavily involved” with promoting and protecting project labor agreements (PLAs) around the state, according to secretary/treasurer Scott Strawbridge. A PLA is a type of collective bargaining agreement that a city can enter into with workers for city projects.

“We think (PLAs) are good business for our contractors and union members,” Strawbridge said.

A big part of the money in the trust comes from laborers themselves, he said. Clauses in certain PLAs specify that a small amount of money per hour worked goes into the trust.

The San Diego Union-Tribune briefly and generally mentioned the fund after the election, in the June 7, 2012 article “Impact of Proposition A on State Funds in Dispute:”

The major backer of the No on A campaign was a Sacramento-based group headed by Robert Balgenorth, the president of the State Building and Construction Trades Council of California, a statewide union, which donated $1.1 million to stop it from passing.

This brief public reference was enough to provoke Scott Strawbridge (cited in the Investigative Newsource article above) to defend the California Construction Industry Labor-Management Cooperative Trust publicly with an opinion piece in the Union-Tribune. (“In Response: Prop. A Put San Diego Citizens in Difficult Position,” June 22, 2012)

In doing so, he provided a public service in highlighting the unregulated slush fund that spent $1,095,000 to oppose Proposition A, a fair and open competition ordinance approved by 58% of San Diego voters on June 5.

This mysterious, Sacramento-based California Construction Industry Labor-Management Cooperative Trust is authorized by the obscure Labor-Management Cooperation Act of 1978, a law signed by President Jimmy Carter.

The law lists specific purposes for these trusts: “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.” And many trusts operating under this law do just that.

Nevertheless, the California Construction Industry Labor-Management Cooperative Trust circumvents these purposes without consequence.

The Federal Mediation and Conciliation Service hasn’t implemented regulations to monitor or limit how such trusts operate. And these trusts don’t have any reporting requirements to the U.S. Department of Labor’s Office of Labor Management Standards.

Who wouldn’t enjoy having a slush fund with minimal oversight and controls?

The California Construction Industry Labor-Management Cooperative Trust recently gave $100,000 to the Apollo Alliance, $250,000 to a campaign committee opposing reforms to state eminent domain laws, and $770,000 to the biased California Construction Academy of the University of California Miguel Contreras Labor Program. It also gave $164,550 to “Other.”

How does the California Construction Industry Labor-Management Cooperative Trust get its money? Do people contribute to it through the goodness of their hearts?

Actually, owners of proposed power plants (and their construction contractors) fund it when they sign Project Labor Agreements (PLAs) that require payments to it.

Power plant owners don’t sign these union agreements because they want union monopolies on construction or appreciate the California Construction Industry Labor-Management Cooperative Trust.

Instead, they sign them to discourage California Unions for Reliable Energy (CURE) from exploiting environmental laws to interfere with approval of their proposed power plants at the California Energy Commission and other government agencies.

It’s a tangled conspiracy. Especially intriguing is that one union official is the head of the State Building and Construction Trades Council of California, the California Construction Industry Labor-Management Cooperative Trust, and California Unions for Reliable Energy.

Another interesting angle: when publicly-owned utilities sign these Project Labor Agreements, their electric customers ultimately fund the California Construction Industry Labor-Management Cooperative Trust through their bills.

Senate Bill 790 – signed into law by Governor Jerrry Brown in 2011 – allows publicly-owned utilities to pass through to ratepayers the cost of payments to trusts authorized by the Labor Management Cooperation Act of 1978.

In its annual Form 990 statements to the IRS, the California Construction Industry Labor-Management Cooperative Trust classifies its receipts as “membership dues.” How do “members” such as the Northern California Power Agency and the Southern California Public Power Authority decide to contribute $1,095,000 to the No on A campaign in the City of San Diego?

It’s time to stop these abuses. If Mitt Romney is elected President, his appointees to oversee the Federal Mediation and Conciliation Service and the Office of Labor Management Standards need to implement reasonable regulations for trusts authorized under the Labor-Management Cooperation Act of 1978.

Who Defeated the City of Auburn’s Proposed Charter, and How Was It Done? (Answer: Three Union Entities, by Spending $56.40 Per NO Vote)

Tonight I spoke during public comment at the Auburn City Council meeting to encourage the five city council members after last week’s defeat of Measure A, a proposed charter for the City of Auburn. I’m sure it was frustrating for them to see 65% of city voters reject an ordinary, reasonable proposal to shift government authority from the state to the local level.

Measure A lost on a vote of 1409 to 748 in the June 5, 2012 election.

As I mentioned in an earlier post, construction unions derailed the proposed charter for the City of Auburn using the same methodology used to defeat the proposed charter for the City of Rancho Palos Verdes in an election on March 8, 2011. In both cases, professional, experienced, and well-funded regional union political operations overwhelmed a local grassroots movement. (In Rancho Palos Verdes, 69% of voters rejected the charter after the unions flooded the city’s voters with deceptive mailers.)

The campaign in support of Measure A scraped together $8,671.00, mostly in small contributions from Auburn residents and local businesses. They spent $2,200 on advertising in the Auburn Journal newspaper and printed some flyers and campaign signs. Nothing unusual for a local campaign in a city with a total population of 13,300.

Meanwhile, as seen in this campaign finance report and this campaign finance report, three union entities contributed a total of $75,000 (plus $4,463.83 in non-monetary contributions) to the campaign opposing Measure A, as a result spending $56.40 per NO vote to defeat the proposed charter. The ratio of union spending (in opposition to Measure A) to local spending (in support of Measure A) was 9 to 1.

The steamrolling was so bad in Auburn that the union opponents of the proposed charter spent more than twice as much on legal/accounting services ($17,618.20 billed by Olson, Hagel & Fishburn LLP) than the local Measure A supporters raised for their entire campaign ($8,671.00).

There were only three donations to the campaign against Measure A, which would have enacted a charter that included provisions allowing the city to establish its own government-mandated construction wage rates (“prevailing wages”) for municipal construction and permanently exempt the city from potential state requirements that volunteer labor be paid at state-mandated wage rates.

Here is an analysis of the three contributions to “Preserve Auburn, No on Measure A, sponsored by California Alliance for Jobs” campaign:

1. $25,000 from the International Union of Operating Engineers Local No. 3, which represents union workers who operate equipment such as excavators and cranes in Northern California.

This contribution appears to come from the union’s general fund. (It is classified in the campaign finance report as “Other” and not as a political committee.) According to its Form LM-2 for 2011 filed with the U.S. Department of Labor’s Office of Labor Management Standards, the multi-state Operating Engineers Local No. 3 had total receipts in 2011 of $41,851,469. It spent $630,837 on political activities and lobbying. This union spent more than twice as much in 2011 at Give Something Back Office Supplies ($62,285) than it did against Measure A in 2012.

So what is the typical state-mandated wage rate for an operating engineer in Auburn? The state sets the wage package for a bulldozer driver in the City of Auburn (Group 4, Area 1) at a straight time total rate of $62.00 per hour$37.15 + $24.12 in fringe benefits + $0.73 for “Other.”

2. $25,000 from the Northern California Carpenters Regional Council Issues Political Action Committee (PAC). (The Carpenters also reported $4,463.83 in web site development expenditures against Measure A.)

According to its latest Form 460 filed with the California Secretary of State, this PAC started the year with $223,739.45 and collected another $72,340.12 in 2012, up to May 19. It had money to burn for a campaign in Auburn.

So what is the typical state-mandated wage rate for a carpenter in Auburn? The state sets the wage package for a basic carpenter in the City of Auburn (Area 3) at a straight time total rate of $56.60 per hour$31.62 + $22.69 in fringe benefits + $2.29 for “Other.”

3. $25,000 from the California Alliance for Jobs, an example of an arcane type of union trust authorized by the obscure Labor-Management Cooperation Act of 1978, a law signed by President Jimmy Carter and implemented by the Federal Mediation and Conciliation Service.

Inspired by the decline of unionized manufacturing in the Northeast, this federal law was meant to help industrial management and union officials build better personal relationships and cooperate against the threat of outside competition. There are no federal or state regulations specifically addressed toward these trusts, and these trusts do not have any reporting requirements to the U.S. Department of Labor’s Office of Labor-Management Standards. (Another example of this kind of trust is the California Construction Industry Labor-Management Cooperative Trust, explained in my past blog posts here and here.)

Collective bargaining agreements for the Laborers and the Operating Engineers in Northern California include mandatory employer payments to the California Alliance for Jobs trust based on hours worked by trade workers represented by those unions. Those payments are incorporated into the state’s construction wage rates (“prevailing wages”) in the Other component established in 2003 through Senate Bill 868 (signed into law in 2003 by soon-to-be-recalled Governor Gray Davis) as California Labor Code Section 1773.1(a)(7-9).

The latest available IRS Form 990 for the California Alliance for Jobs (for 2010) indicates expenses of $2,391,938, including $685,000 in lobbying and political expenditures. So $25,000 sent to a campaign in the City of Auburn is peanuts to this group.

As a major participant in the California Alliance for Jobs, the Northern California District Council of Laborers must be included as the third construction trade union that opposed Measure A.

So what is the typical state-mandated wage rate for a laborer in Auburn? The state sets the wage package for someone holding a stop/slow sign at a road site in the City of Auburn (Group 3, Area 2) at a straight time total rate of $42.93 per hour$25.89 + $16.91 in fringe benefits + $0.13 for “Other.”

Perhaps these wage rates accurately reflect the true prevailing wage rates in Auburn, and Auburn taxpayers are getting their money’s worth when they pay for purely municipal construction performed under these rates. Perhaps it is reasonable to require businesses to make their contractors pay these rates on private construction projects that receive any sort of city financial assistance.

But shouldn’t that be a decision for the Auburn City Council, rather than the California State Legislature and the Division of Labor Statistics and Research (DLSR) in San Francisco?

Tonight I urged the Auburn City Council to prepare another proposed charter, and this time don’t make it typical, ordinary, and reasonable. Develop a manifesto of local control against the power of the state government and the special interests that control it. Offend every group in Sacramento. And then bring it before the voters of Auburn.

I don’t think the people of Auburn will be fooled again, especially if the supporters of the charter abandon the low-key grassroots operation and fight fire with fire in Round Two.

California’s Top Construction Union Boss Opens the Slush Fund Hydrant: $1.14 Million Full-Blast Against San Diego’s Proposition A Voter Initiative

Here’s yet another scoop from the Dayton Public Policy Institute about how unions are influencing the June 2012 elections in California: one supreme union official based in Sacramento has pumped $1.14 million into San Diego to defeat a city voter initiative called Proposition A. And some of the cash originally comes from utility ratepayers.

For readers unfamiliar with Proposition A, read immediately below. Those who know about Proposition A can proceed down to read about the union sources of $1.14 million for the No on A campaign.

Who Supports Proposition A in San Diego, and Why?

In 2011, San Diego voters signed petitions to qualify a Fair and Open Competition ordinance for consideration in the June 5, 2012 election. It was the first measure placed by voters on the city ballot since 1998. Now designated on the ballot as Proposition A, the Fair and Open Competition ordinance would prohibit the City of San Diego from requiring construction companies to sign a Project Labor Agreement (PLA) with unions as a condition of working on a taxpayer-funded project. It also contains language requiring the city to post certain contract information on-line.

The campaign to enact Proposition A is strongly supported by construction companies and construction trade associations. This is no surprise, since most construction companies work directly with their employees (either individually or collectively through a union) to determine the terms and conditions of work. They don’t want two-bit local politicians to negotiate separate 30-page to 60-page labor agreements with union officials (i.e. the politicians’ campaign contributors) and then impose those agreements on their businesses.

Many companies refuse to bid on work that includes a government-mandated Project Labor Agreement in the bid specifications. The resulting reduction in the number of bidders competing for contracts results in higher costs for taxpayers (as academic studies, basic economic theory, and common sense would predict).

See the YES on A campaign web site here and contributors to the YES on A campaign here.

Who Opposes Proposition A in San Diego, and Why?

The main opponents of Fair and Open Competition policies are obviously construction trade unions, which regard government-mandated Project Labor Agreements as an effective political tactic to cut bid competition and raise costs for their own benefit. With Project Labor Agreements, union organizers can completely avoid the unpleasant and time-consuming task of selling the benefits of unionization to skeptical workers. Instead, they simply ask their political allies in government to give them a union monopoly on construction!

Most construction unions in California belong under the umbrella of the State Building and Construction Trades Council of California, a union conglomerate based in Sacramento under the leadership of president Bob Balgenorth. If you look at the list of contributors to the No on A campaign (Taxpayers to Preserve Community Jobs, No on Measure A, sponsored by labor and management organizations), you’ll see the top two donors are Sacramento-based union-affiliated organizations under the direction of Bob Balgenorth. These two entities contributed $1.14 million to the No on A campaign, comprising 96% of all campaign receipts.

Let’s take a closer look at these two massive organizations funding the No on A campaign. One of them is a routine political action committee, but the other is a conspiracy theorist’s dream come true.

A Union Political Action Committee Gave One $45,000 Late Contribution, Comprising 3.8 Percent of the Contributions to the No on A Campaign

The Sacramento-based committee known as “Members’ Voice of the State Building Trades Council of California” made a late expenditure contribution of $45,000 to the No on A campaign on May 24. As you can see on the California Secretary of State’s web site, this committee collects money from various local construction unions and disburses the money to various campaigns for candidates and ballot measures. The Assistant Treasurer of the Members’ Voice of the State Building Trades Council of California is Bob Balgenorth.

A Mysterious Union Slush Fund, Authorized by an Obscure 1978 Federal Law to Encourage Better Relationships Between Unions and Manufacturers, Gave $1,095,000 to No on A – a Whopping 92% of All Receipts!

Something called the California Construction Industry Labor-Management Cooperative Trust contributed a total of $1,095,000 to the No on A campaign. This is an extraordinarily high amount for a political contribution from one entity, especially concerning a local ballot measure! The head of the California Construction Industry Labor-Management Cooperative Trust is Bob Balgenorth.

This is NOT a traditional Political Action Committee. It is an arcane type of union trust authorized by the obscure Labor-Management Cooperation Act of 1978, a law signed by President Jimmy Carter and implemented by the Federal Mediation and Conciliation Service. Inspired by the decline of unionized manufacturing in the Northeast, this federal law was meant to help industrial management and union officials build better personal relationships and cooperate against the threat of outside competition. There are no federal or state regulations specifically addressed toward these trusts, and these trusts do not have any reporting requirements to the U.S. Department of Labor’s Office of Labor-Management Standards. This is an ambiguous and forgotten law that’s ripe for abuse.

It’s Not Union Members that Give the Money to the California Construction Industry Labor-Management Cooperative Trust: It’s Utility Ratepayers and Contractors Working for Extorted Power Plant Owners

Since the 1990s, whenever an energy company or public utility submits an application to the California Energy Commission seeking approval of a new power plant, an organization called California Unions for Reliable Energy (CURE) often “intervenes” in the licensing process. Represented by a South San Francisco law firm called Adams Broadwell Joseph & Cardozo, CURE submits massive data requests and environmental objections to the California Energy Commission. The applicant by law is required to answer CURE’s submissions, at significant cost and delay. The chairman of California Unions for Reliable Energy (CURE) is Bob Balgenorth.

If the power plant owner agrees to sign a Project Labor Agreement and require its construction contractors to sign a Project Labor Agreement with the State Building and Construction Trades Council of California or its regional affiliates, CURE’s objections go away and the power plant can proceed unhindered through the licensing process. If the company or utility does not surrender to CURE’s demand, then CURE’s interference and lawsuits continue.

This racket – sometimes called “greenmail” because it’s the use of environmental laws to pressure developers to sign Project Labor Agreements – is well-known to the energy industry in California and has been extensively reported in the news media over the past dozen years. (For example, see Labor Coalition’s Tactics on Renewable Energy Projects Are Criticized – Los Angeles Times – February 5, 2011.)

For cases in which the power plant applicant succumbs to CURE’s harassment, the Project Labor Agreement that the power plant owner signs usually contains a provision requiring the owner or its contractors to make a lump-sum payment or series of payments to the California Construction Industry Labor-Management Cooperative Trust.

For example, the Project Labor Agreement signed by the Northern California Power Agency (a conglomerate of publicly-owned utilities) for the construction of the Lodi Energy Center required the agency to shell out $90,000 to the California Construction Industry Labor-Management Cooperative Trust. That amount was dutifully mailed to Bob Balgenorth on August 17, 2010. (For more on this payment, see High Energy: Lodi Center Designed to be a Powerhouse for Chunk of State – Stockton Record – October 4, 2011; also, the union rebuttal on the California Building Trades Council web site – ABC Falsehoods Refuted in Letter to Stockton Record – a denial that the California Construction Industry Labor-Management Cooperative Trust is used for political contributions.)

And the Project Labor Agreement signed by the Southern California Public Power Authority (another conglomerate of publicly-owned utilities) for the construction of the City of Anaheim’s Canyon Power Plant required the agency to shell out $65,000 to the California Construction Industry Labor-Management Cooperative Trust. See Section 13.1 of the Project Labor Agreement here.

The California Construction Industry Labor-Management Cooperative Trust reports these payments as “membership dues” to the Internal Revenue Service. Which brings up a question: are the local elected officials who serve as commissioners for the Northern California Power Agency and the Southern California Public Power Authority exercising their responsibilities as “members” to approve $1,095,000 in political contributions to the No on A campaign?

But Wait a Minute…Is It Legal to Have Utility Ratepayers Fund a Mysterious Union Trust Fund that Contributes to Political Campaigns, Such as No on A?

Well, in 2009 an internal committee of the Northern California Power Agency discussed whether or not a payment to the California Construction Industry Labor-Management Cooperative Trust was an illegal gift of public funds. (See here. Note the original amount to the California Construction Industry Labor-Management Cooperative Trust was supposed to be $150,000, but aggressive opposition to the Project Labor Agreement forced the unions to cut it down to $90,000 in order to win approval from the board of commissioners.)

To solve this uncertainty, in May 2011 State Senator Mark Leno (D-San Francisco) added a cryptic amendment at the request of union lobbyists and lawyers to the end of a large unrelated public utilities bill (Senate Bill 790) regarding “community choice aggregation.” It added Section 3260 to the Public Utilities Code: “Nothing in this division prohibits payments pursuant to an agreement authorized by the National Labor Relations Act (29 U.S.C. Sec. 151 et seq.), or payments permitted by the federal Labor Management Cooperation Act of 1978 (29 U.S.C. Secs. 173, 175a, and 186). Nothing in this division restricts any use permitted by federal law of money paid pursuant to these acts.”

No one in the California State Legislature – apparently not even Senator Leno – initially knew what this strange new provision meant. In the end, a few legislators such as Assemblywoman Shannon Grove (R-Bakersfield) came to understand and reveal in floor debate that it authorized public utilities to pass on the costs of payments to labor-management cooperation committees to ratepayers. Governor Brown signed the bill into law with the language tacked on the end.

For more information, see the investigative report of the Coalition for Fair Employment in Construction at this September 23, 2011 post at www.TheTruthaboutPLAs.com: A Genuine California Union Conspiracy: Senate Bill 790 and the California Building Trades Council’s Ratepayer Funded Political Slush Fund

Confused about the Conspiracy? Here’s a Chart.

A public utility or private energy company applies to the California Energy Commission for approval to build a power plant.

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California Unions for Reliable Energy (CURE) uses its “intervenor” status at the California Energy Commission to submit massive data requests and environmental complaints about the proposed power plant, as a result gumming up the licensing process and causing costly and lengthy delays for the applicant.

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Applicant for prospective power plant surrenders and agrees to sign Project Labor Agreement with State Building and Construction Trades Council of California or its regional affiliates. CURE releases its grip of legal paperwork and the project moves forward unimpeded and acclaimed as environmentally sound.

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The Project Labor Agreement contains a required payment or payments to the California Construction Industry Labor-Management Cooperative Trust. California Public Utilities Code Section 3260 – enacted by Senate Bill 790 in 2011 – allows public utilities to pass costs through to ratepayers.

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California Construction Industry Labor-Management Cooperative Trust reports those payments to the IRS as “Membership Dues,” creating questions about the rights inherent for dues-paying members.

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California Construction Industry Labor-Management Cooperative Trust makes contributions to political campaigns, such as $1,095,000 to fund 92% of the No on A campaign (Taxpayers to Preserve Community Jobs, No on Measure A, sponsored by labor and management organizations) in the City of San Diego in 2012.