Construction Legislative Week in Review
www.agc.org July 25, 2013
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On the Inside
TRANSPORTATION
AGC Tells Senate Committee TIFIA Financing Necessary to Meet Transportation Needs
Highway Trust Fund Hearing – CBO Estimates 100 Percent Cut in 2015
ENVIRONMENT
House Passes AGC-Supported Coal Ash Bill
FEDERAL CONTRACTING
Reverse Auction & Design-Build Bills Introduced In House
BUDGET
House Interior/Environment Appropriations Subcommittee Votes for Extreme 75% Cut to SRFs
TAX
AGC Founding Member of Tax Coalition on Effective Rates
Response to Finance’s Blank Slate Approach
AGC Joins More Than 50 Groups Asking Senate to Keep Municipal Bonds Tax-Free
Max & Dave Road Show Continues
LABOR
AGC Responds to Two NAVFAC PLA Inquiries
New Secretary of Labor Confirmed; Confirmation of New NLRB Members Expected Soon
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TRANSPORTATION
AGC Tells Senate Committee TIFIA Financing Necessary to Meet Transportation Needs
 

James H. Roberts, president and chief executive officer of Granite Construction Inc., represented AGC at a hearing held on July 24 by the Senate Environment and Public Works (EPW) Committee. The hearing was held to examine how the Transportation Infrastructure Finance and Innovation Act (TIFIA) is working in light of the large budget increase it received in MAP-21. Roberts began his testimony by pointing out that, “Our transportation investment needs are great and the funds to fix the problem are running short.” He emphasized the construction industry’s very real concern about the solvency of the Highway Trust Fund and urged the committee to address this problem sooner rather than later.

He went on to say, “The solution to meeting our transportation infrastructure needs is twofold.  First, Congress and the administration must work together in a bipartisan way to increase user fees and identify new revenue sources to address our transportation needs, both now and in the future. Second, there must be more private-sector involvement in the construction of transportation projects. AGC believes the TIFIA program has a proven record of accomplishing this objective.”

The TIFIA program provides states with financing assistance in the form of loans, loan guarantees and letters of credit for large transportation projects. Congress substantially increased TIFIA’s budget authority in MAP-21, going from $122 million in the previous six fiscal years (FY) to $750 million for FY 2013 and $1 billion for 2014. These funds can be leveraged to provide a potential of $17 billion in lending capacity. However, despite the clear priority given to TIFIA in MAP-21, there has been a noticeable slowdown in financing approvals since the law passed. AGC made a list of suggestions that the Department of Transportation (DOT) should implement in order to help speed up credit approvals, including:

  • Redirecting more personnel to the TIFIA review team.
  • Not holding all decisions on TIFIA awards until a record of decision on the project has been issued. This, in particular, seems to be contrary to the concurrent review requirement that is found elsewhere in MAP-21.
  • Developing educational tools and technical advisors to help assist states that lack the experience in applying for this assistance.
  • Providing full transparency in the project selection process to encourage states to continue to make applications.
  • Streamlining the process for rural project approval.
  • Allow TIFIA financing to help projects establish an investment grade rating if they are unable to do so on their own.

EPW Committee Chair Barbara Boxer (D-Calif.) and Ranking Member David Vitter (R-La.) agreed to send a letter to DOT suggesting improvements in the process that would expedite the approval process.

For more information, please contact Brian Deery at (703) 837-5319 or deeryb@agc.org
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Highway Trust Fund Hearing – CBO Estimates 100 Percent Cut in 2015
 

On Tuesday, the House Transportation and Infrastructure Subcommittee on Highways and Transit held a hearing on the fiscal condition of the Highway Trust Fund (HTF).  The subcommittee heard testimony from Polly Trottenberg, undersecretary for policy at the U.S. Department of Transportation (DOT) and Kim Cawley with the Congressional Budget Office (CBO).  In Cawley’s testimony, CBO provided a dire warning about what will happen to federal highway and transit programs dependent on Highway Trust Fund revenue – they will receive no new money.  While Ms. Trottenberg offered no new solutions to the problems facing the trust fund, she instead continued to push for President Obama’s idea to take a piece of the savings from the drawdown from the wars in Iraq and Afghanistan (an idea that has very little chance of happening). 

The members of the subcommittee were told by CBO that unless Congress addresses the fact that the Highway Trust Fund is going broke, sometime soon after the expiration of MAP-21 in September 2014, the HTF will not have enough money to meet all of its obligations.  CBO went on to testify that the fund will need an additional $15 billion in FY 2015, with that number growing in subsequent years.  It was suggested that Congress could address the projected annual shortfalls by substantially reducing spending for surface transportation programs by boosting revenues, or by adopting some combination of the two approaches. Balancing the trust fund by 2015 would require an appropriations funding level nearly equal to the $51 billion authorized for FY 2015, raising the taxes on motor fuels by about 10 cents per gallon, or undertaking some combination of those approaches. While not completely disagreeing with CBO, DOT offered no solutions to the problem; rather an acknowledgment of the situation.

The solvency of the Highway Trust Fund remains a top priority for AGC. We are currently in the process of educating Representatives and Senators about the pending HTF crisis and the need to act sooner rather than later.  As the House and Senate craft a comprehensive tax reform package, AGC is encouraging the Highway Trust Fund revenue gap to be addressed in any final package.  For more information and to contact your elected official, visit AGC’s Legislative Action Center.

For more information, please contact Sean O’Neill at (202) 547-8892 or oneills@agc.org.
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ENVIRONMENT
House Passes AGC-Supported Coal Ash Bill
 

Today, by a vote of 265-155, the House passed H.R. 2218, Coal Residuals Reuse and Management Act of 2013, which prevents the Environmental Protection Agency (EPA) from designating fly ash and other coal ash residuals from being classified as a hazardous waste. AGC sent a letter in June, urging support for the bill.  The legislation, introduced by Rep. David McKinley (R-W.Va.), establishes a regulatory structure for coal ash that would be controlled by states with little EPA oversight. The White House released a statement this week expressing its concerns about the bill and suggesting improvements, but did not threaten a veto. A similar bill is pending in the Senate.

Preventing EPA from taking action to deem fly ash as hazardous has been a top AGC priority. AGC submitted detailed comments in 2010 and 2011 to EPA urging that it weigh the potential impacts of its regulatory options on the beneficial use of these materials and take into consideration the real environmental benefits of reusing these materials and the lack of negative reports (i.e., alleged or proven damage cases) associated with the beneficial use of fly ash in many construction applications including concrete and wallboard. AGC urged EPA to either rely on state requirements or establish non-hazardous waste requirements that protect the beneficial use of fly ash in construction. 

For more information, please contact Brian Deery at (703) 837-5319 or deeryb@agc.org. Return to Top

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FEDERAL CONTRACTING
Reverse Auction & Design-Build Bills Introduced In House
 

On July 19, Rep. Richard Hanna (R-N.Y.) introduced the AGC-supported Construction Contracting Act of 2013, H.R. 2751, which would prohibit federal agencies from procuring construction services from small businesses through reverse auctions. Rep. Sam Graves (R-Mo.) introduced the Design Build Efficiency and Jobs Act of 2013, H.R. 2750, which would limit the second-step of the design-build procurement process to no more than five finalists and limit the use of single-step design-build procurement. Both of these bills apply only to direct-federal agency acquisition and not to state or local agencies.

AGC has long fought reverse auction procurement for construction services and advocated for federal agencies utilizing industry supported best practices for design-build.  On prohibiting reverse auctions, AGC has testified on numerous occasions before Congress, including May 23 of this year when the draft legislation was discussed before the House of Representatives Committee on Small Business. In addition, AGC has opposed recent efforts by the U.S. Department of the Interior and U.S. Department of Veterans Affairs to conduct reverse auctions for construction services.

AGCsent a letter to the sponsors and co-sponsors of the legislation thanking them for their work on these measures.

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

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BUDGET
House Interior/Environment Appropriations Subcommittee Votes for Extreme 75% Cut to SRFs
 

The House Interior/Environment Appropriations Subcommittee finished up its work on a bill that would fund, among other things, the Environmental Protection Agency (EPA) and its programs for fiscal year (FY) 2014.  The EPA saw almost a $3 billion cut to their programs, with the State Revolving Loan Funds (SRFs) taking the brunt of the cuts.

The SRFs are EPA’s primary method of directing water and wastewater infrastructure funding to state and local governments. The Clean Water SRF was funded at $250 million (down from $1.45 billion for FY 2013) and the Drinking Water SRF was funded at $350 million (down from $909 million for FY 2013). This represents a combined $ 1.76 billion hit (or 75 percent reduction) to the nation’s water and wastewater infrastructure programs.

With the State Revolving Loan Funds (SRFs) being the single largest line item in the EPA budget and based on past bills this committee has written, the proposed cuts come as no surprise. The steepness of the cuts, however, is of particular note. If enacted, this would be the single largest SRF cut in the history of the programs. It is important to remember that these are not necessarily the final numbers. This bill must still make it through the full Appropriations Committee before House approval, and the Senate has yet to take up the measure. With few legislative days remaining in FY 2013, it is increasingly likely that both chambers will wrap this funding into a continuing resolution or omnibus agreement (as in previous years), with significantly reduced cuts to funding. AGC will continue to advocate for the SRF programs and their importance as this funding moves through the legislative process.

For more information, please contact Scott Berry at (703) 837-5321 or berrys@agc.org.
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TAX
AGC Founding Member of Tax Coalition on Effective Rates
 

The Coalition for Fair Effective Tax Rates officially launched this week. The focus of the group is to persuade lawmakers, opinion leaders and the public to view tax reform through the lens of effective tax rates, the amount in taxes that businesses actually pay. Coalition members plan to ask members of Congress and administration officials to use effective tax rates as a leading metric – and a key measure of success – as tax reform develops on Capitol Hill. Its members hope effective-tax-rate comparisons will bolster legislation that broadens the tax base while lowering rates for corporations, as well as pass-through businesses.

The construction industry pays one of the highest effective corporate tax rates at 31 percent; more than double the rate some sectors pay. Members also want to impress upon lawmakers and key stakeholders that high effective tax rates have negative consequences for American businesses and the overall economy. The coalition will take no position on any tax preference or provision. Instead, it plans to concentrate on the benefits of viewing tax reform through the lens of effective tax rates with the goal of creating a fair, neutral playing field across all industries and business sectors.

The coalition – collectively representing about 500,000 businesses – is a diverse organization whose members include a wide range of businesses from large corporations paying corporate rates, to small mom-and-pop shops paying individual tax rates. All agree with the tax-writing committee chairmen on Capitol Hill that the federal tax code is broken and comprehensive tax reform is needed. Eliminating tax preferences will allow lawmakers to lower corporate and individual tax rates to promote economic growth and job creation.

The coalition’s management committee members are the Associated General Contractors of America, Associated Builders and Contractors, International Foodservice Distributors Association, International Franchise Association, National Association of Wholesaler-Distributors, National Federation of Independent Business, Retail Industry Leaders Association, S Corporation Association and Small Business & Entrepreneurship Council, plus an additional 48 national organizations on the steering committee and nearly 100 general members.

To demonstrate the support of the business community –including builders and contractors – AGC has worked with the fellow management committee members to attract numerous business organizations. AGS is encouraging its chapters to join as general members of the coalition. 

Visit the coalition’s website: http://www.FairEffectiveTaxRates.com or follow the coalition on Twitter @EffectiveRate and on Facebook.

For more information, please contact Brian Lenihan at (202) 547-4733 or lenihanb@agc.org. Return to Top

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Response to Finance’s Blank Slate Approach
 

On July 24, in response to a Dear Colleague letter from Chairman Max Baucus (D-Mont.) and Ranking Member Orrin Hatch (R-Utah) outlining a basic framework for drafting a tax reform bill, AGC sent a letter to the Finance Committee leaders and members of the Senate highlighting various portions of the tax code affecting construction companies of all sizes and business models. In the Baucus/Hatch letter last month, the leaders of the panel asked all Senators to formally submit legislative language or detailed proposals for what tax expenditures should be included in a reformed tax code by July 26, with special attention given to bipartisan proposals.

The Finance Committee is requiring that tax provisions be justified based on a three-part test (i.e. grow the economy; make the tax code fairer; and/or effectively promote other important policy objectives) before they are incorporated into a bill to reform the tax code. The exercise has had a tepid response from their Senate colleagues, as confidentiality of Senators’ submissions have the potential to rebuff certain industries and partisan disputes remain regarding revenues and base statutory rates. AGC continues to identify and meet with Senate offices that are amiable to submitting comments.

With regard to the Finance panel marking up tax reform legislation this fall, Chairman Baucus said in a June 24 speech on the Senate floor, “I don’t like to predict dates because sometimes they change but it will be sometime in September, October, November.”

For more information, please contact Brian Lenihan at (202) 547-4733 or lenihanb@agc.org
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AGC Joins More Than 50 Groups Asking Senate to Keep Municipal Bonds Tax-Free
 

More than 50 industry and local government groups sent a letter asking Senators to request the Senate Finance Committee leaders maintain the federal tax exemption on municipal bond interest as they consider the chamber’s priorities for its comprehensive tax reform package.

The letter explains that three-quarters of the total United States investment in infrastructure is provided by state and local governments, and tax-exempt bonds are the primary financing tool that are used by over 50,000 state and local governments and authorities to satisfy these infrastructure needs.  On average, state and local governments issue nearly 10,000 bonds a year totaling $300 billion. This has allowed state and local governments to finance more than $1.65 trillion in infrastructure investment over the last decade through the tax exempt market.

For more information, contact Scott Berry at (703) 837-5321 or berrys@agc.org
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Max & Dave Road Show Continues
 

House Ways and Means Committee Chairman Dave Camp (R-Mich.) and Senate Finance Committee Chairman Max Baucus (D-Mont.) announced that on July 29 they will visit two separate small businesses in Philadelphia as part of their nationwide “Simpler Taxes Tour.”  The Philadelphia trip is the second stop in a series of visits across the nation so the Chairmen of the two tax-writing committees can hear directly from Americans about how to spark a more prosperous economy and make today’s broken tax code fairer for both families and job creators.  The focus of the Philadelphia trip will be how a simpler and fairer tax code can help small business and families boost the economy, create jobs and improve wages.

The chairmen will visit Mrs. G’s TV & Appliances, a third generation family-owned business and the Hub Centers for Meeting and Collaboration, which provides fully-equipped meeting space as well as technology and business support services. Throughout the tax reform tour, the two chairmen will hear from a diverse group of voices including large multinational corporations with overseas operations, small, family-run businesses and individual taxpayers.  During their first stop, Chairmen Camp and Baucus traveled to St. Paul, Minn., where they visited both 3M and Baldinger Bakery.

To learn more about the work that Chairmen Camp and Baucus are doing to create a simpler and fairer tax code that boosts the economy, creates jobs and increases wages for families across America, visit http://taxreform.gov.

For more information, please contact Brian Lenihan at (202) 547-4733 or lenihanb@agc.org
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LABOR
AGC Responds to Two NAVFAC PLA Inquiries
 

AGC recently sent two letters opposing the possible use of project labor agreement (PLA) mandates posted by the U.S. Naval Facilities Engineering Command for to repair facades at: (1) Rickover Hall and (2) Nimitz Library, both located at the U.S. Naval Academy in Annapolis, Md.

AGC has sent over 70 letters to federal agencies opposing PLA mandates and bid preferences during the Obama Administration, most in response to agency announcements that a PLA mandate or preference was under consideration for a particular project or an anticipated set of projects in a particular area. Of those, only one PLA mandate has been issued to date.

AGC neither supports nor opposes contractors’ voluntary use of PLAs on government projects, but strongly opposes any government mandate for contractors’ use of PLAs. AGC is committed to free and open competition for publicly funded work, and believes that the lawful labor relations policies and practices of private construction contractors should not be a factor in a government agency’s selection process.

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

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New Secretary of Labor Confirmed; Confirmation of New NLRB Members Expected Soon
 

On July 19, the Senate confirmed Thomas Perez to be the next Secretary of Labor.  The confirmation was part of a bi-partisan compromise over a number of stalled presidential nominations.  The deal includes an agreement over appointments to the National Labor Relations Board (NLRB or Board) that is expected to soon give the Board a full complement of five confirmed members for the first time in several years.

The deal enables the Senate to avoid the so-called “nuclear option,” a change in Senate rules that would have made it easier to end a filibuster.  Senate Majority Leader Harry Reid threatened to invoke the nuclear option after Republicans threatened to filibuster the confirmations of Perez, nominees to the NLRB, and several others.

Perez was serving as the assistant attorney general for the Civil Rights Division of the U.S. Department of Justice at the time of his nomination. He previously served as the secretary of Maryland’s Department of Labor, Licensing and Regulation.  He will replace Deputy Secretary Seth Harris, who has been serving as acting secretary since Hilda Solis resigned as Secretary of Labor in January.

As part of the compromise, Pres. Obama agreed to withdraw his February nominations of Democrats Sharon Block and Richard Griffin to the NLRB and to replace them with two new nominees.  Block and Griffin are currently serving on the Board under unconfirmed and highly controversial “recess” appointments.  The two new nominees are Nancy Schiffer, associate general counsel at the AFL-CIO, and Kent Hirowaza, chief counsel to NLRB Chairman Mark Pearce.  Republicans agreed not to oppose the confirmation of the new nominees or the confirmation of Pearce for a new term.  Also part of the package to restore a five-member Board is the confirmation of management-side labor lawyers Philip Miscimarra and Harry Johnson, III.  Sources say that Pres. Obama intends to nominate Griffin to be the next general counsel of the NLRB, but it is unclear whether this was part of the compromise.

With a new secretary in place, the Department of Labor is expected to move forward on various regulatory initiatives that have been on hold.  Of the greatest concern to AGC are regulations coming out of the Office of Federal Contract Compliance Programs (OFCCP).  These include a late-stage initiative to change regulations concerning the recruitment and employment of veterans and individuals with disabilities and an early-stage initiative to change regulations concerning the recruitment and employment of women and minorities in construction.  (For more information about these initiatives and related advocacy efforts by AGC, click here and here.)  Among AGC’s other concerns is a regulatory initiative known as the “persuader rule” that would broaden reporting requirements of certain labor relations consultants.  (For more information on AGC’s efforts in this area, click here.)

As for the NLRB, the confirmations will provide a new opportunity for the Board to implement its “quickie election rule.”  The rule – which would expedite the election process in union representation elections – has been suspended since a court ruled that the Board adopted it without the necessary quorum.  With a full complement restored, the Board could re-adopt the rule without the procedural inadequacy.  In its adjudicatory role, we expect that the newly constituted Board will continue to act much like the Board has acted throughout the Obama Administration – issuing decisions that tend to favor organized labor and curtail management rights.  One silver lining is that, once the Board has two Republicans again, we can expect more dissenting opinions.  Such opinions can be very helpful in court challenges to Board decisions.

For more information, please contact Denise Gold at (703) 837-5326 or goldd@agc.org.
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