Non-union contractor association flunks preemption test
When the State of Illinois undertook grant financing of renewable fuel plants,
it stipulated that the grant recipient enter into a project labor agreement. The
Northern Illinois Chapter of Associated Builders and Contractors and Loberg Escavating sued the State
over a grant for an ethanol plant construction project, claiming that the requirement of the project agreement regulated labor relations and that such action was preempted by federal labor law.
The Seventh Circuit Court of Appeals recently upheld a federal judge's ruling out of Rockford
that the State of Illinois was acting in commerce, but not regulating it. The appeals court did distinguish the Boston Harbor case from the Supreme Court, that found the government authority was acting as a proprietor and not a regulator, in the sense that the the State of Illinois did not own any project that was funded by the grant. The private entity owned the ethanol plant building contract. But nevertheless a state acting as Illinois did here could legally insist on master labor agreements as a condition to receiving grant money.