The Biden administration issued a final rule implementing a 2022 executive order that will now require project labor agreements on federally funded projects with an estimated cost of $35 million or more.

The rule will affect about 120 projects worth a total of $10 billion to $14 billion. Building trades unions praised the measure while the open-shop Associated Builders and Contractors denounced it and pledged to challenge it in court.

Although the rule gives contracting officers at federal agencies some latitude to opt out of adopting a labor agreement through a variety of exceptions, industry groups say the mandate could raise the costs of construction and discourage contractors who choose not to affiliate with a union from bidding on larger projects that use federal dollars. 

The new rule differs from a similar order by former President Barack Obama early in his first term that encouraged, rather than required, PLAs on federal projects, and raises the threshold to $35 million, compared to $25 million during the Obama administration. 

Tensions between labor unions and predominantly non-union trade groups tend to wax and wane depending on who is in the White House. Unions contend that the private sector has voluntarily adopted PLAs for decades because they work, and that the agreements ensure a cadre of well-trained, qualified workers, most of whom have gone through rigorous training in registered apprenticeship programs.

Open-shop employers, which have substantial apprenticeship training programs of their own, would disagree. What characterizes open-shop craft labor is cross-training that allows one worker to do tasks associated with different crafts—an advantage for employers not available where union work rules apply.