osw-150x150-2257153The Cuomo administration appears to have violated state law by forcing offshore wind developers to cut deals with construction unions, inflating costs and boxing out non-union subcontractors on billions in construction work.

Bidders seeking state subsidies likely worth billions of dollars to build and operate wind turbines off New York City and Long Island were required to sign project labor agreements (PLAs). These are pacts with trade unions that dictate hours, pay and other rules on construction projects—including requirements that contractors and subcontractors hire most, if not all, trade workers through union hiring halls.

Requiring bidders to sign PLAs is an effective and costly way for politicians to pay back trade unions that back their elections with volunteers and campaign contributions. An enforceable requirement for the offshore wind installations also would effectively disqualify hundreds of non-union New York firms, both downstate and at two upstate ports, from bidding on billions of dollars in contracts.

Mandatory PLAs are lawful as long as the public entity seeking bids “determines” that its interests, as defined by Labor Law section 222(2)(a), are “best met” by requiring such a deal.

But the agency behind the wind bids, the state Energy Research & Development Authority (NYSERDA), failed to perform legally required studies demonstrating that a PLA would reduce construction costs for either of the two awardees, according to a Freedom of Information Law request. That’s telling, since agencies can almost always cook up a dollar amount of savings from trade unions promising not to strike. But the U.S. offshore wind industry is still in its infancy, meaning there may not have been enough data to make even a weak case for a PLA.

The state’s bid solicitation strongly encouraged PLA use without saying it was mandatory—as a draft RFP appendix document had. Instead, it was written to give the impression a PLA was required without saying as much. Bidders had to submit “a plan outlining its intentions with respect to the negotiation of a PLA to cover all construction activities,” and the RFP laid out eight bullet points about what the PLA “should” cover.

Governor Andrew Cuomo, however, made it clear PLAs weren’t optional. His November 8 statement announcing the RFP touted “notable provisions” that included “[r]equiring Project Labor Agreements and prevailing wage for workers associated with the construction of any awarded facility.” The press release also included a quote from trade union boss Gary LaBarbera, who applauded “the inclusion of prevailing wage and Project Labor Agreement requirements in this RFP.”

Two months later—and a month before the bid deadline—a statement from Cuomo’s Labor Department noted “the State’s offshore wind projects will be supported by a requirement for a Project Labor Agreement.” And Equinor Wind US, one of the two winning bidders, included in its bid packet (page 1,496) a letter from the Building and Construction Trades Council of Nassau and Suffolk Counties, which said the Council was “looking forward” to partnering with Equinor “under the terms of a Project Labor Agreement as required by the bid specification for the Empire Wind Project.” [emphasis added]

It wasn’t a surprise when Cuomo announced the winners on July 18 and said “the projects will have a union project labor agreement before they commence.” But it presents a serious problem.

Scrap the bids

Precedent dictates that when an agency is found to have improperly required a PLA on a job, that job needs to be rebid.

In a 2012 case, the state Department of Transportation required a PLA on bids for reconstruction of the Exit 122 interchange in Orange County after companies had begun preparing bids. When DOT tried to bypass the low bidder for one who’d agreed to use a PLA (costing taxpayers an extra $4.5 million), the low bidder sued and a state Supreme Court judge cited the lack of justification and ordered DOT to rebid the project.

Offshore wind was already the most expensive form of renewable energy under consideration before the Cuomo administration rigged the process to benefit the building trades. The PLA mandate likely added considerably to the cost of the project by needlessly saddling the winners with inefficient union work rules while also forcing them to pay into what, in many cases, are sinking union pension funds. That added cost will be passed on to every electricity customer statewide, since more than half the subsidies are coming from ratepayers north of New York City.

NYSERDA should immediately demonstrate the financial basis on which PLAs were required. If it can’t, the agreements should be voided by the state Comptroller and NYSERDA should issue a new solicitation without PLA requirements.

And renewable energy advocates would do well to ask whether the Cuomo administration is serious about its carbon-free targets when it keeps insisting certain unions get a piece of the action.

About the Author

Ken Girardin

Ken Girardin is the Empire Center’s Director of Strategic Initiatives.

Read more by Ken Girardin

You may also like

Nursing Home Vacancy Rate Soars, Hinting at a Higher Coronavirus Toll

The vacancy rate in New York's nursing homes has more than doubled since the start of the coronavirus pandemic, suggesting that the death toll among residents may be thousands higher than officially reported. Read More

Hospitalization rising in some areas

Coronavirus hospitalizations are surging in parts of upstate, including three regions that the Cuomo administration authorized to begin reopening today. Read More

Essential Plan surplus hits $3B

As Governor Cuomo pleads for financial help from Washington, one of his state's programs is sitting on $3 billion in unspent federal aid: the Essential Plan. Read More

More fiscal turmoil for Medicaid

In a sign of pandemic-related strain on state finances, the Cuomo administration is postponing a series of multi-billion-dollar Medicaid payments over the next three months. Read More

Upstate escapes the worst

With the coronavirus pandemic hitting some parts of New York much harder than others, Governor Cuomo has signaled that he will begin to relax shutdown restrictions in low-virus parts of the state. Here's a closer look at how infection and fatality rates vary from region to region. Read More

Another Medicaid payment delay

State Medicaid spending dropped to nearly zero in March as the Cuomo administration again delayed payments to balance the state's books. Comptroller Tom DiNapoli's cash report for March, posted on Wednesday, showed just $9.2 million in Medicaid disbursements. The state's share of Medicaid spending averages almost $2 billion per month. The comptroller's numbers reflect so-called Department of Health Medicaid, which covers the bulk of the program but excludes most spending on recipients with mental disabilities. Read More

Why New York?

#NYCoronavirus: It's increasingly apparent that New York is suffering more severely from the coronavirus pandemic than any other part of the U.S. and most of the rest of the world – raising stark questions for city and state leaders. What is it about New York, and especially New York City, that made it especially vulnerable to infection and death? And how can that be changed before the next virus breaks loose? Read More

Covid-19 testing rates vary by region

#NYCoronaVirus: Downstate New Yorkers are three times more likely than upstaters to have been tested for Covid-19 – and four times more likely to have been positive when checked. Read More

Subscribe

Sign up to receive updates about Empire Center research, news and events in your email.

CONTACT INFORMATION

Empire Center for Public Policy
30 South Pearl St.
Suite 1210
Albany, NY 12207

Phone: 518-434-3100
Fax: 518-434-3130
E-Mail: info@empirecenter.org

About

The Empire Center is an independent, non-partisan, non-profit think tank located in Albany, New York. Our mission is to make New York a better place to live and work by promoting public policy reforms grounded in free-market principles, personal responsibility, and the ideals of effective and accountable government.