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Contractors See Pure Water Case as a Test for Big Projects Across the Region

A legal case brought by the Associated General Contractors has delayed the Pure Water project, one of the city’s most ambitious undertakings ever. Hundreds of jobs are on the line, but the stakes may be even higher regionally.

Inside of the North City Pure Water Facility / Photo by Megan Wood

Scientists suspect hydrogen first met oxygen and formed water amid interstellar clouds as the earliest stars began to die, a billion years after the creation of our universe.

With that perspective in mind, the city of San Diego’s plan create a third of the city’s drinking water from recycled sewage isn’t taking that long. But it is definitely delayed.

That’s thanks to a dispute between non-union contractors and the city. In November, the City Council required builders looking to work on a big part of the water recycling project, known as Pure Water, to agree to union-friendly contracts.

The Associated General Contractors, a group of non-union and union contractors, warned the city that it was running afoul of a 2012 ballot measure designed to prevent unions from dominating city construction contracts. The measure prohibits the city from requiring project labor agreements on construction efforts. The agreements, known as PLAs, generally mean labor unions guarantee that a project will have workers – and they won’t go on strike – but in exchange, all workers must pass through union halls with potential added fees and benefits.

The contractors’ lawsuit says that by acquiring union apprentices to work on two major parts of the Pure Water project, the city is dismissing the will of city voters.

“We raised the legal issues far in advance to resolve them, but they had no appetite to resolve them,” said Eddie Sprecco, the contractors association’s CEO.

Last week, Superior Court Judge John S. Meyer sided with Sprecco and his allies and issued an injunction that prevents the city from awarding a contract using the union-friendly language.

It’s unclear how the city is going to react beyond canceling plans to open the bids it’s already received – bids it was supposed to open weeks ago. The dispute centers on just one part of the separate construction contracts that make up Pure Water, but this contract is a big one – the $400 million water treatment plant at the heart of the whole project.

The city has other contracts out, like for pipelines, but work on most everything else may have to stop while the legal issues with the plant are worked out. Otherwise, the city could be building a pipeline to nowhere.

City officials warn that any significant delay is going to be costly. In declarations submitted to the court, the head of the city water department, Matt Vespi, said construction costs would increase by $4 million for each month of delay beyond August.

In balancing that harm, the judge said non-union apprentices are likely to suffer significant harm, while the city is “likely to suffer a slight delay.”

The city, though notoriously bad at estimating such things, is nonetheless just one California agency with a big, bold water project on its hands but shovels and dreams stuck on the wrong side of the ground.

Almost every major project in the state faces some sort of legal obstacle, though often they involve the California Environmental Quality Act, known as CEQA, rather than labor law. (Indeed, the city is also facing a CEQA lawsuit from a University City community group upset about the path of a pipeline connecting the Pure Water plant to the rest of the city.)

Marco Gonzalez, an environmental attorney who has long supported the Pure Water project, said the judge’s preliminary injunction may delay Pure Water, but it would not derail it.

“Ultimately, this extremely necessary and beneficial project is caught in the crosshairs of people who want to challenge the scope of Proposition A,” he said in an email. “Frankly, the [contractors association] cares more about attacking organized labor than providing the full suite of training taxpayers deserve and benefits to which workers are entitled.”

This dispute between non-union contractors and union-friendly contracting requirements has been a long time coming, even over Pure Water – a project nearly everyone in the city now supports.

In 2012, city voters approved Proposition A, which made it illegal for city construction projects to give the upper hand to union-only contractors. The city argued that language didn’t apply to the Pure Water project for a variety of reasons. The judge clearly disagreed.

The union-friendly language itself was a compromise, though. In spring 2018, the City Council expressed interest in having all of the work on Pure Water done using union-friendly language. Mayor Kevin Faulconer’s office responded with a compromise, which was accepted. Of the 11 different contracts, the two largest would have language that requires contractors to use union apprentices.

Everyone agrees that, no matter what, union workers are going to handle most of the work, so the fight is over the relatively small portion of the work that will be handled by these apprentices. Associated General Contractors has its own apprentice program – which it calls “the largest apprenticeship training in the city of San Diego and its surrounding areas not restricted to union members” – and it wants people going through those programs to have jobs.

In a labor-friendly state, though, the contractors risk facing backlash from the Legislature even if they win in court. State lawmakers have already passed one law designed to nudge San Diego into floating union-friendly contracts if the city wants to continue receiving state funding for major infrastructure projects.

Pure Water is one of the largest projects the city has ever undertaken, so hundreds of jobs are on the line, but the stakes may be even higher regionally.

Eric Christen, executive director of the Coalition for Fair Employment and Construction, which battles with unions, said the judge’s ruling could be used to keep union-friendly language out of other major projects funded by city taxpayers.

That means if voters approve a Convention Center expansion, or a major transit bond or a major affordable housing bond, the same arguments used against union-friendly language in the Pure Water contract may be used against any union-friendly language for a host of other major new projects.

Christen also said to expect a similar lawsuit soon against the Chula Vista Bayfront project. In 2010, Chula Vista voters approved a ballot measure similar to the city’s. Both measures made it illegal for many public construction projects to require a project labor agreement. Those agreements are supported by labor unions that generally end up with more work and better pay, and opposed by contractors for increasing project costs and favoring unions.

Meyer, the judge in the case, found that the language, at least in San Diego’s case, is broad enough to apply to things that aren’t technically a “PLA” but are PLA-like because they favor union workers.

“Knowing what is coming in the next 16 months, it’s a very big shot across the bow,” Christen said.

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