SALEM, Ore. (CN) — Did the Oregon Department of Transportation exceed its authority when it greenlit an agreement to require that certain standards set by union contractors be imposed on non-union contractors for certain road improvement projects?
Attorneys for a trade association argued before the state Supreme Court on Monday that the answer is yes.
“Agencies are creatures of statute and the authority they derive is specifically from a statute — there is no statute that authorizes ODOT to enter into these agreements with unions to establish these contracts,” Joshua Dennis, an attorney with the Portland-based Schwabe Williamson & Wyatt firm representing the plaintiffs, said.
At issue is whether the department neglected to follow standard rulemaking procedures when it entered into the community workforce agreement, like allowing public comment and giving notice, or if the agreement even qualifies as a rule subject to those requirements.
Jona J. Maukonen, assistant attorney-in-charge with the state attorney general’s office, argued that the agreement is not a rule and pointed to the state statute concerning community benefit contracts.
“It does give agencies a significant amount of discretion in how they want to proceed,” Maukonen said.
In denying that the agreement was a rule subject to Administrative Procedure Act requirements, Maukonen argued that by opposing counsel’s line of logic, every contract the department drafted would qualify as a rule.
In late 2022, the department introduced a community workforce agreement after negotiating with local unions and building trades councils.
Under the terms of the agreement, the department would require contractors to meet a number of requirements intended to bolster opportunities for highway projects around the state, such as using the union hiring hall, ensuring opportunities for apprentices and trying to boost the number of women, minority and veteran workers.
The agreement specifies that department contractors are bound by collective bargaining agreements for the lifespan of the project. There are currently eight Department of Transportation projects subject to the agreement, and five have been completed.
The Oregon-Columbia Chapter of the Associated General Contractors of America, a trade association comprising both union and non-union contractor members, took issue with the agreement and filed a petition for judicial review of the rule in early 2023, challenging the agreement itself and the department’s authority to issue it. Three private construction firms joined the lawsuit as co-plaintiffs.
“This is not about the policy behind what ODOT did,” Dennis said. Rather, private contractors were improperly denied the opportunity to comment on the agreement before it was adopted, Dennis argued.
The Associated General Contractors of America filed a petition for judicial review of the department’s rule allowing the agreement to be retroactively applied, which remains pending in the Oregon Court of Appeals.
Then, while waiting for the appeals court, the trade association filed a third suit in Marion County Circuit Court, seeking to block the department from imposing the agreement until the Court of Appeals came back with a decision.
In January, a Marion County Circuit Court judge granted the request, issuing a temporary restraining order against the department, which later became a preliminary injunction, to prevent the department from enforcing the agreement until it had been litigated in the appeals court.
The Oregon State Building and Construction Trades Council, one of the groups that negotiated the terms of the agreement and intervened as a defendant on behalf of the department, told the state Supreme Court that the lower court had gotten the decision wrong.
“The circuit court’s handling of plaintiffs’ claims was highly irregular,” Donald “Max” McCullough III of the McKanna Bishop Joffe firm in Portland, told the court on behalf of the council.
The circuit court “essentially conducted a bench trial” at the preliminary injunction stage without consolidating the cases and ruled on the merits without holding proper hearings, McCullough argued.
“It strikes me that the arguments that you’re making are interesting and important and difficult issues that we may have to decide in some case, do we have to decide it in this case given that we’ve accepted the certified question on the rule challenge from the Court of Appeals?” Oregon Supreme Court Justice Stephen Bushong asked.
McCullough argued that the court should reach the question, particularly since the issue has spawned multiple lawsuits.
On rebuttal, Dennis argued that the lower court merely maintained the status quo by issuing the preliminary injunction and that even if the court determines the agreement is not a rule, there remain issues.
“ODOT does not have discretion as to whether to impose those requirements on those covered projects,” Dennis said.
The Supreme Court did not indicate when it would rule.
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