Federal Officials Concede that Key Parts of the 2023 Rule Exceeded Statutory Authority and Were Arbitrary & Capricious in Response to a Lawsuit Filed by the Associated General Contractors of America & Others

By BRIAN TURMAIL

WASHINGTON. D.C. –  The Biden administration’s effort to expand federal Davis-Bacon requirements beyond construction – and to retroactively impose the requirements on certain contracts – has been vacated after the U.S. Dept. of Labor conceded to a final court order that held unlawful and vacated the regulatory provisions challenged by the Associated General Contractors of America and three other entities.

“Our legal challenge was about the prior administration bypassing Congress and attempting to expand a construction wage law to cover a wide range of manufacturing and shipping operations that was not authorized by that law,” said Jeffrey D. Shoaf, the association’s chief executive officer. “AGC respects the purposes underlying the Davis-Bacon Act, and our members recognize the need to comply with Davis-Bacon requirements to the extent authorized by law.”

This ruling by the U.S. District Court for the Northern District of Texas, Lubbock Division, resolves a lawsuit that the association – along with the AGC of Texas, J. Lee Milligan, Inc. and the Lubbock Chamber of Commerce, filed in 2023 challenging a final rule issued by President Biden’s Labor Department.

The suit challenged the administration’s attempt to stretch the applicability of the law to materials suppliers operated by contractors or subcontractors. The lawsuit also challenged the portion of the rule that sought to expand coverage to delivery truck drivers – who are not mechanics or laborers – when they spend an undefined, “not de minimis” amount of time on the jobsite.

The suit also challenged the rule for asserting that Davis-Bacon rules can be retroactively imposed on contracts that omitted inclusion of the Davis-Bacon requirements.

Shortly after the association filed its lawsuit and following an evidentiary hearing, the federal court in Lubbock issued a preliminary injunction barring the Labor Dept. from enforcing the three challenged provisions. The association and its co-plaintiffs then entered into settlement discussions.

The Labor Dept. ultimately stopped contesting the lawsuit, conceding that the plaintiffs were likely to succeed on their claims that the challenged measures exceeded statutory authority and were arbitrary and capricious.

This court order officially holds unlawful and vacates all three challenged parts of the Davis-Bacon rule nationwide.

“The resolution of this lawsuit is an acknowledgement that regulations must follow the letter of the law,” Shoaf said. He added that the ruling will “provide much-needed clarity for contractors preparing bids for work on projects where Davis-Bacon applies.”

The AGC of America and its lawsuit partners were represented by Ogletree, Deakins, Nash, Smoak & Stewart, P.C., the Bustos Law Firm, P.C. and Gavoor PLLC.