Construction Legislative Week in Review
www.agc.org September 20, 2012
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On the Inside
BUDGET
Senate Delays Vote on Six Month Funding Bill
Administration Releases Report Guessing at the Possible Agency Cuts Under Sequestration
WATER INFRASTRUCTURE
TAKE ACTION: Senate Panel Holds Hearing on WRDA; Tell Congress to Continue WRDA Work
ENVIRONMENT
AGC Challenges EPA’s Authority to Revoke Previously Issued, Valid Section 404 Permit
EPA Revamps Plans to Regulate Lead Paint
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BUDGET
Senate Delays Vote on Six Month Funding Bill
 

This afternoon, the Senate voted 67-31 to proceed on a six-month, FY 2013 continuing resolution (CR),funding the government through March 27, 2013 at about FY 2012 levels. However, because the Senate was not able to reach unanimous consent on the motion, Majority Leader Harry Reid (D-Nev.) filed a cloture motion, which requires 30 hours of debate before a vote on passage of the CR can be brought to the Senate floor. Unless an agreement can be reached, the vote to pass the CR will take place at approximately 1:00 a.m. on Saturday morning.  The House passed the CR on Sept. 13.

The impact of passing a continuing resolution rather than individual appropriations bills  has serious consequences for construction projects let directly from the federal government. Specifically, under the CR, federal agencies are generally prohibited from beginning work on new and necessary projects for the next six months.  In addition, the CR underfunds the highway and transit investment levels in the recently enacted transportation authorization bill, MAP-21.  As a result, construction contractors will likely see fewer opportunities for work, and, in turn, less reason to hire more employees.

When Congress faced a similar situation in 2011, it cut $40 billion in the FY 2011 appropriations CR the following spring. Although some welcomed the cuts, federal construction investment accounts absorbed more than half of them—about $21 billion.

The U.S. interstate system was built in 1956, most locks and dams have exceeded their 50 year life span, and the average age of failing water mains is 47 years old, representing 22 percent of all water mains.  AGC will continue to strongly urge Congress to enact adequate levels of construction investment to ensure that America’s aging infrastructure and facilities receive required maintenance and expand to meet growing economic and population demands. 

For more information, contact Sean O’Neill at 202-547-8892 or oneills@agc.org or Jimmy Christianson at 703-837-5325 or christiansonj@agc.org.

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Administration Releases Report Guessing at the Possible Agency Cuts Under Sequestration
 

On Sept. 14, the Obama administration released a report to Congress providing a first guess at how they will implement $1.2 trillion in automatic budget cuts—called sequestration—slated to begin on Jan. 2, 2013. This sequestration process comes as a result of the debt ceiling deal –enacted under the Budget Control Act of 2011 (BCA)—for which background information can be found here and here.

According to the report, if Congress and the president cannot reach a deal to avert sequestration after the election, many direct federal construction accounts could see anywhere from a 7.6 to 9.4 percent cut from “budgetary resources” in FY 2013.  These “budgetary resources” include new budget authority, unobligated balances, direct spending authority, and obligation limitations. Simply stated, available federal funds both from current and past fiscal years will likely be subject to across-the-board cuts, with limited exceptions.  

According to the report, the construction accounts seeing the greatest cuts include the Department of Defense military construction account ($1,392 million—a 13 percent cut from FY 2012 funding levels) and major USACE civil works construction accounts ($546 million—a 12 percent cut from FY 2012).  Other construction accounts facing potential cuts include those within the National Resources Conservation Service ($19 million—a 63 percent cut from FY 2012) and the Bureau of Reclamation ($89 million—an 11 percent cut from FY 2012). The report also outlines cuts to Department of Transportation accounts, impacting highway and transit funding. While the Highway Trust Fund is not included in sequestration, general fund transfers into the trust fund resulting from the recently enacted MAP-21 would be cut by $471 million, hastening the date when the trust fund will once again be unable to support annual funding levels. A portion of the transit funds (which are primarily capitol grant funds) are from general revenue and these could be cut by $156 million. For more information on additional construction accounts, click here.

As noted, though the report provides an estimate as to sequestration’s possible impact on some construction accounts, it does not provide information on other such accounts. In many cases, the report merely articulates top line budget accounts and does not delve into how the subaccounts within are specifically impacted.  Additionally, it is worth noting that sequestration takes effect in January 2013—three months into the 2013 fiscal year. As a result, these cuts meant for the full 12 month FY 2013 will only be instituted over 9 months of FY 2013.

These possible construction investment account cuts, coupled with the six-month prohibition on new project starts in the recently passed continuing resolution funding the government through March 27, 2013, add insult to injury to an industry that’s already suffered severe economic hardship for more than four years and a federal infrastructure and facility system with critical needs that continue to go unmet.

For some construction accounts, at least, there is a bit of good news. All Department of Veterans Affairs accounts, the General Services Administration’s Federal Buildings account and the Highway Trust Fund itself are exempt from sequestration and do not face budget cuts in the report. However, these accounts could face cuts under BCA-enacted spending caps for FY 2014 through FY 2021.  AGC continues to advocate on Capitol Hill for adequate investment in our nation’s federal infrastructure and facilities.

For more information, please contact Jimmy Christianson at (703) 837-5325 or christiansonj@agc.org. Return to Top

WATER INFRASTRUCTURE
TAKE ACTION: Senate Panel Holds Hearing on WRDA; Tell Congress to Continue WRDA Work
 

On Sept. 20, the Senate Environment and Public Works Committee held a hearing on the need for a Water Resources Development Act (WRDA) reauthorization bill. AGC submitted a letter for the record, thanking the committee for beginning work on WRDA reauthorization and highlighting the importance of needed investment in our nation’s flood risk management, inland waterway, marine port and environmental restoration projects. It is important for AGC members to contact and remind their federal elected officials of the critical need for this legislation, laying the foundation for the new Congress.  Take action NOW and contact your senators and representative by clicking here.

In addition to noting water infrastructure system needs and benefits, AGC’s letter also highlights the fact that Congress should act now on a WRDA bill because some on-going water infrastructure project priorities could be stopped without additional budget authority, while other projects could be de-authorized completely. Section 902 of WRDA 1986 (33 U.S.C. § 2280) allows for increases in total project costs of up to 20 percent without additional authorization for modifications that do not materially change the project’s scope or function. However, as Congress passed the last WRDA in 2007, inflationary pressures and other economic concerns may have increased estimated costs beyond this 20 percent threshold, endangering the delivery of some currently authorized projects.

Again, your contractor voice is essential for underscoring the importance of WRDA reauthorization. Contact your federal elected officials NOW by clicking here.

For more information, contact Sean O’Neill at 202-547-8892 or oneills@agc.org or Jimmy Christianson at 703-837-5325 or christiansonj@agc.org. Return to Top

ENVIRONMENT
AGC Challenges EPA’s Authority to Revoke Previously Issued, Valid Section 404 Permit
 

AGC and a coalition of industry groups filed a friend-of-the-court brief in a federal appeals court arguing that the U.S. Environmental Protection Agency (EPA) exceeded its authority under the Clean Water Act (CWA) when it revoked a Section 404 dredge-and-fill discharge permit duly issued by the U.S. Army Corps of Engineers (Corps).  If EPA is allowed to revoke this permit, every valid Section 404 permit held by any entity — construction companies, public works agencies and individual citizens — would be stuck in regulatory limbo and potentially subject to the same unilateral, after-the-fact revocation. AGC’s brief lays out the staggering economic, policy and legal implications that would follow such an unprecedented action.

EPA’s after-the-fact veto has caused concern and anxiety for members of the business community because it threatens the finality of their wetland and stream permits.  Entities requiring permits for private real estate development, transportation and other critical infrastructure projects could find that, even when they are in full compliance, their permits do not provide them certainty.  Eliminating finality from the Section 404 permit process would have a significant economic impact on AGC members because lenders and investors would be less willing to extend credit and capital if every construction project involving jurisdictional waters could be “subject to an open-ended risk of cancellation.”  Billions of dollars in economic activity could be adversely affected if EPA’s unprecedented grab for veto authority goes unchecked.

AGC’s brief stresses that “EPA has injected a new and untenable level of uncertainty into the investment planning process for the thousands of project proponents requiring Section 404 permits.”  It goes on to explain how “EPA’s unprecedented move to invalidate the permit at issue in this case will require dramatic adjustments to the cost-benefit analysis for future permit applicants.”

For more information, please contact Leah Pilconis, at pilconisl@agc.org. Return to Top

EPA Revamps Plans to Regulate Lead Paint
 

The U.S. Environmental Protection Agency (EPA) has completely revamped its timeline and approach to regulating lead paint dust in commercial and public buildings.  The Agency recently signed a revised litigation settlement with environmental groups that gives EPA four more years—until December 31, 2016—to take final action.  AGC will continue to call for greater transparency, accountability and oversight in the development of national rules covering Lead Renovation, Repair and Painting (LRRP) activities. As reported by AGC at great length, EPA formally announced in an April 2010 Advance Notice of Proposed Rulemaking that it was on its way to proposing brand new federal rules to guard against lead-based paint hazards that may occur during the renovation or repair of commercial and public buildings.    

AGC’s efforts, through letters to EPA and push for more Congressional oversight, have resulted in a significant delay in EPA’s issuance of new regulations.  For nearly two years, AGC has worked with a coalition of real estate development groups to submit multiple letters to EPA questioning the science and legal basis behind expansion of the LRRP program; the lack of lead test kits with improved false/positive readings; the inability of EPA to properly monitor compliance; and the detrimental impact on the current administration’s focus on job creation and energy-efficient renovations.

EPA has four more years to finalize an approach to regulating lead paint dust in commercial and public buildings. The current LRRP Program applies to paid contractors who perform renovation, repair, and painting projects that disturb lead-based paint in pre-1978 housing and child-occupied facilities and schools.

Recently, EPA’s Inspector General reported on the findings of an investigation into the agency's economic analysis of the LRRP rule, as it's currently in the books. Not surprisingly, that report determined that EPA underestimated the rule’s cost and overestimated its benefits.  The Inspector General's report underscores the need for Congressional oversight of EPA’s lead program.  The report recommends that EPA reexamine the costs and benefits of the current rule to determine whether it should be modified in accordance with the Obama Administration's directive to reform unnecessary and burdensome regulations. The inspector's report further recommends that the EPA revise its training manual to more clearly distinguish which work practices are mandatory.

Senate legislation introduced last March (S. 2148) would require EPA to carefully study any possible lead-based paint hazards in commercial buildings — and submit its findings to Congress for review — before proposing regulations covering the commercial and public building sectors. Companion legislation has also been introduced in the House (H.R. 5911).See below for related efforts on Capitol Hill.

AGC supports both pieces of legislation currently under consideration in Congress and will remain actively engaged in congressional outreach, small-business review and legal research efforts designed to hold EPA accountable for the quality of the data and information it uses to support any expansion of this federal program. For more in-depth information on AGC’s efforts, please click here.

For more information, please contact Leah Pilconis at pilconisl@agc.org. Return to Top

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