Construction Legislative Week in Review
www.agc.org December 21, 2011
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On the Inside
YEAR IN REVIEW
Tension is High as Congress Moves into Holiday Mode Without Resolving Differences
Looking Back at 2011, Looking Forward to 2012
BUDGET
Details on the Federal Construction Funding for Fiscal 2012
LABOR
NLRB Finalizes “Quickie Election” Regulations
YEAR IN REVIEW
Tension is High as Congress Moves into Holiday Mode Without Resolving Differences
 

The Capitol is nearly empty today. Republicans and Democrats continue to fight in the media over legislation that would extend the payroll tax holiday, extend emergency unemployment and delay cuts in Medicare payments to doctors also known as the “Doc fix”.   The House has passed a one-year extension of these three policies. The Senate has passed a two-month extension.  The Senate has adjourned for the year and the House is demanding a House-Senate Conference to resolve differences between the House and Senate approaches.  Failure to resolve the difference before January 1 will result in cuts in payments to doctors serving Medicare patients, an abrupt end to emergency (99 week) unemployment benefits and of course the full social security withholding (6.2%) beginning the first pay period in 2012.

Both sides appear dug in.   The end of year drama perpetuates the theory of a do nothing Congress.  There is still time for the House to pass the Senate two-month extension and there may even be time to do a House-Senate Conference.  The failure of Congress to resolve their differences is a sign that next year, Congress could be just as dysfunctional as they were this year.  Our advice is to ignore the Congressional drama and instead have a happy holiday season.

For more information, please contact Jeff Shoaf at (202) 547-3350 or shoafj@agc.org. Return to Top

Looking Back at 2011, Looking Forward to 2012
 

The last twelve months have been interesting, aggravating and not very productive. Between Election Day 2010 and Christmas Day 2010, the President, House and Senate agreed to a continuing resolution that funded the government through March, they agreed to an extension of the Bush tax rates, an extension of emergency unemployment benefits and a payroll tax holiday that reduced the employee portion of funds withheld for social security. Those 50 days between November 2 and December 25, 2010 was a temporary flurry of bipartisanship and productivity. There were sporadic outbreaks of bipartisanship over the last twelve months when Congress repealed the 1099 requirement, passed three trade agreements and finished the year with repeal of the 3 percent withholding requirement. There was a drama free six-month extension of the highway program in September after a dramatic shutdown of the FAA and a suspension of the tax revenues flowing into the aviation trust fund. FAA was subsequently temporarily reauthorized and the extensions of these two programs will hopefully turn into multiyear authorizations in 2012.

For the most part, Congress and the American people complained about Congress. Republicans complained about Democrats and Democrats complained about Republicans.  Congress brought the government to the brink of shutdown in March when they couldn’t come to terms on reducing federal spending. In August, Congress threatened to endanger the United State’s credit rating while they fought over raising the debt ceiling and then reached a drama free agreement last week on the FY 2012 budget, giving us nine months before the threat of the next government-wide shutdown.  The majority of the bickering is due to the political nature of the election season.  Unfortunately, it is impossible to remove politics from legislating. The election season now lasts 24 months, not just 6 to 12. 

AGC will continue to work to achieve our legislative priorities for the 112th Congress (2011 and 2012) which include promoting private and public construction investment in a shrinking federal budget. AGC sees value in stabilizing government policies and creating permanent incentives or at least a permanent set of rules surrounding capital investment.  AGC also continues to push back against irrational government regulation that will create inefficiencies rather than improvements. We have been on constant vigil as certainty has been removed from public construction programs, uncertain tax policies make long-term planning impossible and the regulatory environment is peppered with a combination of ineffective and impractical new regulatory proposals.

While there is recognition that the economy is bad and that certain construction programs are both necessary and economically beneficial, Congress has failed to address major infrastructure reauthorizations.  Congress is looking for alternative financing options and is warming up to ideas such as reauthorizing the existing highway program without imposing a 35 percent cut, creating a trust fund for water infrastructure and expanding the use of private activity bonds.  Each of these is a solid proposal, but all are caught up in the irrational expectation that it is easy to balance the federal budget if Congress just puts its mind to it.

We have been successful with two key initiatives: the repeal of the 1099 mandate and the repeal of the 3 percent withholding.  Both were hugely wasteful, poorly targeted and widely derided after passage. With construction unemployment still in double digits, neither repeal bill put AGC members to work, but it did remove some of the useless regulations that are strangling efficiency.  The House has attempted this year to put the reins on major regulatory proposals. However, these attempts are only able to stop a few of the bad ideas being generated.  Many of those key policy riders are mentioned in the next story.

The construction industry has a legitimate case to make construction front and center during any debate over jobs. AGC’s primary goals for the rest of this session of Congress include: jump starting privately funded construction, supporting Congressional oversight of federal agency rulemakings, and finally getting long-term authorizations enacted.  We are still looking for a permanent fix to death tax uncertainty.  We have fought numerous efforts by the DOL and the NLRB to achieve card check’s goals through decisions and rulemakings that make it harder for employers to communicate with their employees during organizing.  We are still looking for a way to restore stability to multi-employer pension plans.  We are guarding against regulatory efforts to push climate change that will limit economic growth.  Without bipartisan cooperation, we have been unable to foster any rational discussion about immigration. We have had, and expect to have, a lot of interaction with the federal agencies and Congress to ensure safety policies focus on safety, and not just on paperwork and penalties.  We are trying to repeal elements of Patient Protection and Affordable Care Act that do not work for our industry.  We have been extremely successful opposing Project Labor Agreements (PLAs).  The legislative efforts have not proved fruitful, but in working directly with the agencies and the procurement officials, we have developed a strong track record successfully blocking 41 attempts to impose PLA mandates on federal contracts. 

The 2012 outlook may provide some opportunities for action on multiyear transportation authorizations in the first quarter of the year before the Aviation and Surface transportation extensions expire.   The Administration will continue to issue more regulations. The expiration of the Bush tax cuts will force another battle over taxes at the end of 2012.AGC will make sure the construction industry’s priorities are front and center  in 2012.

For more information, please contact Jeff Shoaf at (202) 547-3350 or shoafj@agc.org. Return to Top

BUDGET
Details on the Federal Construction Funding for Fiscal 2012
 

After much uncertainty, late last week Congress struck a deal to collectively pass the remaining appropriations measures for FY 2012. The legislation, (H.R. 3671, H. Rept. 112-331) funds the federal agencies under the remaining nine Appropriations bills, including: Defense, Energy and Water, Financial Services, Homeland Security, Interior/Environment, Labor/Health and Human Services/Education, the Legislative Branch, Military Construction/Veterans Affairs, and State/Foreign Operations. AGC has advocated for this measure to come together to ensure predictability for the FY 2012 federal construction programs for both the construction industry as well as the government.

The legislation upholds the overall regular (base) discretionary level of $1.043 trillion as agreed to in the Budget Control Act (BCA). When combined with the previous “minibus” Appropriations bill enacted in November, total discretionary funding for FY 2012 will equal $1.043 trillion – $7 billion less than last year’s level of $1.050 trillion and $98 billion less than the President’s request. Alone, this nine-bill legislation includes a total of $915 billion in regular security and non-security discretionary funding – $6 billion below last year’s (FY 2011) level for these same agencies, and more than $70 billion below the President’s requested levels.

AGC has done an analysis of the FY 2012 appropriations that can be found here.  Of the federal construction accounts tracked by AGC there was an overall decrease of nearly $7.5 billion, or just over 6 percent of the final FY 2011 funding levels.  The FY 2011 federal construction accounts were cut by nearly $18 billion.   Since 2010, these federal construction programs have been cut by approximately $35 billion from an all time high.

The following is a summary of appropriations bills and the federal construction programs that AGC closely monitors:

Energy and Water

The total funding level for Energy and Water programs equals $32 billion – $328 million over last year’s level and $4.5 billion lower than the President’s request.

  • Army Corps of Engineers – The Army Corps of Engineers is funded at $5 billion, an increase of $145 million above last year’s level and $429 million above the budget request. This funding will help advance American competitiveness and export ability by providing $1.8 billion for navigation projects and studies. The bill also provides resources to advance public health and safety by funding flood and coastal storm damage reduction at $1.66 billion – including $437 million for critical dam safety improvements. 
    • Key Policy Rider: The legislation includes an AGC-supported a one-year block on Obama administration efforts to rewrite federal rules so that environmental considerations are given greater weight when planning and designing levees, locks, dams and other water projects, under the massive 2012 spending bill slated for approval. The provision would block USACE from spending FY12 funds to implement the rules, which are known as the "principles and guidelines" for how USACE-built projects are developed. Even if the White House Council for Environmental Quality (CEQ) releases the policy in 2012, the Army Corps would be blocked from implementing it. The provision dictates that the Army Corps should continue to operate from the 1983 rules through the next fiscal year.

Military Construction (MilCon)/Veterans Affairs (VA)

The MilCon/VA section of the legislation includes a discretionary total of $71.7 billion, a decrease of $1.4 billion below last year’s level and a decrease of almost $2.1 billion below the President’s request.

  • Military Construction – The bill provides $13.1 billion for military construction projects – a decrease of $3.5 billion below last year’s level and $1.7 billion below the President’s request. Within the total, the bill funds Military Family Housing Construction at $1.7 billion, which provides for a total of 48 new family housing construction projects, 80 replacement projects, and improvements to 216 family housing units. In addition, the legislation contains $1.1 billion for construction and alterations for new or existing military medical facilities, and fully funds the FY 2012 BRAC request.
  • Veterans Affairs (VA) – The legislation includes a total of $122.2 billion in both discretionary and mandatory funding for the Department of Veterans Affairs. The bill provides $589,604,000 for the construction of “major” projects and an additional $482,386,000 for “minor” construction projects. The legislation includes provisions to increase spending oversight at the VA, including requiring the agency to report on construction savings and restricting the agency from taking certain spending actions without notifying Congress.

General Services Administration

The agency will receive $50,000,000 for the construction and acquisition (including funds for sites and expenses, and associated design and construction services) of new facilities in FY 2012. An additional $280,000,000 shall remain available until expended for repairs and alterations, and design and construction services.

Department of Labor (DOL)

The bill provides $14.5 billion for the Department of Labor, which is $145.4 million above last year’s level and $251.2 million below the President’s request. The increase above FY 2011 is due to a provision that fully funds Job Corps in the current fiscal year (see below). Absent this provision, the conference agreement reduces the Department of Labor’s budget by $545.6 million below last year and $942.2 million below the request.

  • Occupational Safety and Health Administration (OSHA) – The conference agreement includes $565,857,000 for the Occupational Safety and Health Administration (OSHA).
    • Key Policy Riders: The legislation includes several legislative provisions to reduce government overreach, rein in excessive regulation, and help foster a good economic environment for job growth. Some of these provisions include:
      • A prohibition on OSHA’s development of the AGC-opposed musculoskeletal disorders (MSD) reporting requirement, otherwise known as the “ergonomics” regulation. The conferees noted that OSHA's National Emphasis Program (NEP) on Recordkeeping has been underway since October, 2009 to assess the accuracy of injury and illness data recorded by employers. The conferees direct the Secretary of Labor to submit a report, not later than 90 days enactment of this Act, to the Committees on Appropriations of the House and the Senate detailing the findings of this NEP, as well as other Department activities, related to the accuracy of employer reporting of injury and illness data.
      • A prohibition on the implementation of the H-2B Wage Methodology rulemaking – saving employers millions in unnecessary costs;
      • A prohibition on the implementation or enforcement of DOL’s “coal dust” rule until an independent assessment of the integrity of the data and methodology behind the rule is conducted;
      • A prohibition on the National Labor Relations Board from implementing electronic voting procedures, preserving the integrity of the secret ballot election;

State and Foreign Operations

The Legislation provides $42.1 billion in regular discretionary funding for the State Department and foreign operations. This is more than $6 billion below last year’s level and $8.7 billion below the President’s request.

  • Overseas Buildings Operations (OBO) - The conference agreement provides $1,537,000,000 for Embassy Security, Construction, and Maintenance for the Office of Overseas Buildings Operations (OBO). Accordingly, OBO will receive $762,000,000 for preserving, maintaining, repairing, and planning for buildings that are owned or directly leased by the Department of State. In addition, OBO will receive an additional $775,000,000 for worldwide security upgrades, acquisition, and construction.
    • Key Policy Rider: The conferees are concerned with the long-term sustainability of the operating, maintenance, and utility costs of new diplomatic and consular facilities and directs the Secretary of State to impose a moratorium on beginning any new Capital Security construction projects until the Secretary provides the following information to the Committees on Appropriations: (I) the additional annual costs for operations and maintenance, including utilities and salaries, and the number of additional facilities and engineering staff that have been hired to operate the diplomatic and consular facilities that have become operational since the CSCS program began; (2) the estimated additional costs for operations and maintenance, including utilities and salaries, and the number of additional facilities and engineering staff necessary to operate the diplomatic and consular facilities that have been funded and/or are being constructed; and (3) the plan for addressing the $111,000,000 in deferred maintenance at existing diplomatic and consular facilities reported in the Department's 2010 financial statements.

As previously reported, Congress approved a measure that fully funded the Agriculture, Commerce/Justice/Science (CJS), and Transportation/Housing and Urban Development (THUD) Appropriations bill -- also known as the “Mini-bus” – for Fiscal Year 2012.

The minibus is an improvement over an earlier House appropriations transportation bill that would have cut federal highway funding by $14 billion.  The Senate version of that same bill would have maintained current funding levels.  AGC communicated with members negotiating the final minibus bill, urging them to accept the Senate funding levels.  AGC succeeded in getting the final funding level for the highway program at $39.883 billion (including $1.662 billion in emergency relief) which is nearly identical to the prior years’ funding level.  Below is a list of other programs and their fiscal year 2012 funding levels as provided in the "minibus."

FY 2011(enacted)

FY 2012 (conference)

Federal-aid Highways (obligation limit)

$41.107 billion

$39.144 billion

Federal-aid Highways (obligation limit)

$41.107 billion

$39.144 billion

Federal-aid Highways (Emergency Relief)

$1.663 billion

FTA Formula/Bus Grants (Obligation Limit)

$8.343 billion

$8.361 billion

FTA Capital Investment Grants

$1.597 billion

$1.955 billion

TIGER Discretionary Grants

$527 million

$500 million

Amtrak

$1.503 billion

$1.439 billion

FAA Airport Grants (Obligation Limit)

$3.515 billion

$ 3.350 billion


AGC will continue to educate members of Congress on the impact of the budget cuts on the overall economy, the construction industry, and their district and state.  Please take this opportunity to understand what construction programs are being cut and talk to your members of Congress about how these cuts will impact your area, your company and your employees.  Here is a short-hand method for analyzing the impact of nonresidential construction on GDP, earnings and jobs:

  • An extra $1 billion in nonresidential construction spending would add about $3.4 billion to GDP, about $1.1 billion to personal earnings and create or sustain 28,500 jobs.
  • 9,700 jobs would be directconstruction jobs located in the state of investment.
  • 4,600 jobs would be indirectjobs from supplying construction materials and services. The majority of these jobs would be located within the state of investment but there would be some out of state jobs supported.
  • 14,300 jobs would be induced when workers and owners in construction and supplier businesses spend their incomes locally and nationwide.

Currently, AGC follows annual appropriations for more than 70 federal construction accounts, totaling more than $100 billion annually. We realize that Republicans and Democrats are looking for ways to reduce spending, and we are making the case that construction improvements are a necessary investment in national economic competitiveness that should not be postponed.

For more information, please contact Sean O’Neill at (202) 547-8892 or oneills@agc.org. Return to Top

LABOR
NLRB Finalizes “Quickie Election” Regulations
 

The National Labor Relations Board (NLRB) finalized its representation-case procedures, also known as the “quickie elections” or “ambush elections” rule, and they will be published in the Federal Register on December 22, 2011 or can be viewed electronically here.

The NLRB’s rule would be particularly difficult to apply in the construction industry given the complexity of defining an appropriate bargaining unit and determining voter eligibility as well as the decentralized nature of the workplace.  AGC submitted comments to the Board in August explaining these concerns and urging the Board to withdraw the proposed rule.  AGC will be reviewing the 200+ page rule and its specific impact on the construction industry and will provide future updates to the membership.

In response to the final rule, the Coalition for a Democratic Workplace (CDW), which AGC is a member of, filed a lawsuit on December 20th in the Federal District Court for the District of Columbia challenging the rule. The complaint can be found here.

In addition to the final rule, many questions remain whether President Obama will make recess appointments to various agencies, including the NLRB.  If the President again makes recess appointments to the NLRB it will be viewed as controversial. The NLRB will have only two members after the end of the year and will be unable to exercise its full authority.  Earlier this week, all 47 Senate Republicans wrote a letter to the President asking him not to make any recess appointments to the NLRB.

For more information, please contact Jim Young at (20) 547-0133 or youngj@agc.org. Return to Top

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