Construction Legislative Week in Review
www.agc.org March 5, 2015
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On the Inside
WATER RESOURCES
Help Support WRRDA Levels of Funding for Harbor Maintenance
TRANSPORTATION
CBO Reports on Infrastructure Spending
House Passes Bill to Improve Passenger Rail
DOT Allows Use of Local Hire Preference on Highway and Transit Contracts
ENVIRONMENT
AGC Comments on EPA’s Ozone Rule Highlight the Crippling Economic Impacts Possible In Areas of Nonattainment
SMALL BUSINESS
SBA Proposes Mentor-Protégé Program for All Small Businesses
TAX
Letter Circulates Asking Members of Congress to Protect Tax-Exempt Status for Municipal Bonds
Rubio-Lee Tax Reform Plan Released
Senate Committee Action
LABOR
Senate Passes Legislation to Stop the NLRB's “Ambush” Election Rule, House Likely to Follow
AGC Urges Support of Anti-Government-Mandated PLA Bill
WATER RESOURCES
Help Support WRRDA Levels of Funding for Harbor Maintenance
Contact Your Member of Congress and Ask Them to Sign House Letter
 

Representatives Charles Boustany (R-La.) and Janice Hahn (D-Calif.) are currently circulating an AGC-supported letterurging appropriators to utilize Harbor Maintenance Trust Fund (HMTF) revenues at the levels set by the Water Resources Reform & Development Act of 2014 (WRRDA). WRRDA authorizes Congress to spend up to $1.25 billion—69 percent of HMTF revenues—on harbor maintenance activities in fiscal year (FY) 2016. However, the House Appropriations Committee must agree to actually spend that level of funding in FY 2016 for the promise in WRRDA to be realized. As such, AGC urges you to take action and urge your representative to sign onto the Boustany/Hahn letter to the House Appropriations Committee asking appropriators to spend HMTF revenues at the FY 2016 WRRDA levels.

The HMTF funds port and harbor dredging maintenance activities throughout the nation through revenues generated from a tax on shippers based on the value of the goods being shipped through ports. For many years, Congress has spent about half of the HMTF revenues on things other than harbor maintenance. WRRDA, which passed the House by a 412-4 vote last year, increased authorized funding of HMTF revenues for actual harbor maintenance through FY 2020 when all HMTF revenues are authorized for harbor maintenance activities.

Again, please take action and urge your Representative to sign onto the Boustany/Hahn letter.

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

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TRANSPORTATION
CBO Reports on Infrastructure Spending
 

This week, the Congressional Budget Office issued a report detailing public spending on transportation and water infrastructure from 1956 to 2014.  The report showed that public spending on Transportation and Water Infrastructure has been fairly consistent as a share of Gross Domestic Product (GDP) at about 2.4 percent, which is below the 3.0 percent peak in 1959.  It did recently rise to 2.7 percent of GDP in 2009 and 2010 because of the increase in infrastructure investment under ARRA, which temporarily boosted infrastructure spending by $55 billion.

The report provides information on six types of infrastructure: highways, mass transit and rail, aviation, water transportation, water resources, and water utilities.  Public spending – federal, state, and local governments – on transportation and water infrastructure totaled $416 billion in 2014.  The majority of that spending came from state and local governments, providing $320 billion, while the federal government accounted for $96 billion.  Of that spending, 43 percent was for capital expenditures and 57 percent was for operation and maintenance.

AGC will continue to advocate for increased infrastructure investment at all levels of government.

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

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House Passes Bill to Improve Passenger Rail
 

On Wednesday, the House of Representatives passed the Passenger Rail Reform and Investment Act of 2015 (PRRIA) by a vote of 316-101.  The main focus of the bill is to reform and improve our nation’s intercity passenger rail systems.  These reforms are achieved mostly through changes to Amtrak and its operating procedures.  Of interest to AGC and our members, the bill provides $300 million annually for capital grants of which 50 percent is required to go to the Northeast Corridor.  The bill seeks to leverage non-federal participation in intercity passenger rail by creating station development opportunities for the private sector and opening new revenue streams through right-of-way development.

The bill makes changes to the Railroad Rehabilitation and Improvement Financing (RRIF) program, which provides long-term, low interest loans for railroad-related improvements to help advance large-scale infrastructure projects. The changes to the RRIF program are intended to speed up the slow approval process for the loans.  In addition, PRRIA dedicates a significant portion of the RRIF program to the Northeast Corridor to incentivize states and localities to seek loans that advance projects of national and regional significance.  Of particular note, PRRIA contains provisions to streamline the environmental review process and increase project delivery for rail construction projects.

The bill now moves to the Senate for consideration.

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

DOT Allows Use of Local Hire Preference on Highway and Transit Contracts
 

The U.S. Department of Transportation (DOT) announced a pilot program this week that will allow state and local governments to utilize local hiring preferences on their federal-aid highway and federal transit assisted contracts. The pilot program is effective immediately. In addition, DOT issued a notice of proposed rulemaking to alter Federal Highway Administration (FHWA) and Federal Transit Administration (FTA) regulations that will make these changes permanent. DOT has provided a 30-day comment period on these changes.

FHWA and FTA regulations have traditionally prohibited the use of local hire preferences because of their impact on competition; however, there have been efforts by some in Congress to allow the use of local preferences. A provision in last year’s transportation appropriations legislation allowed transit agencies to use local hiring requirements on FTA-funded projects for FY 2015.

AGC has opposed local hiring preferences in the past and will continue to do so. Comments will be submitted challenging the constitutional basis for this proposal.  In addition, AGC is reaching out to Congressional allies who oppose these local preferences, asking them to weigh in with DOT opposing the changes.  

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

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ENVIRONMENT
AGC Comments on EPA’s Ozone Rule Highlight the Crippling Economic Impacts Possible In Areas of Nonattainment
Comments Due by March 17
 

AGC is in the process of evaluating the U.S. Environmental Protection Agency’s proposed revisions to National Ambient Air Quality Standards (NAAQS) for ozone. The proposal would greatly increase the stringency of the ozone NAAQS at a time when implementation of the current 2008 standard is still underway and despite key uncertainties in the underlying science.  There is strong data that casts doubt on whether lowering ozone levels beyond the current standard will have any significant health benefit.  AGC will recommend that EPA retain the current ozone standard, which is set at 75 ppb (parts per billion).  The 90-day public comment period closes on March 17.

EPA is seeking comment on setting the standard anywhere from 60-70 parts per billion (ppb).  Stricter rules would impact construction in the 358-558 counties that are predicted to not meet EPA’s proposed range, resulting in non-compliance or “nonattainment.”  The lower ozone concentration ranges being considered by EPA would be at or below naturally-occurring ozone levels in many rural areas, particularly the Western part of the country.  AGC plans to highlight the crippling economic impacts that could come to pass in areas of nonattainment. 

Under existing EPA rules, failing to meet the standard results in a “nonattainment” designation under the Clean Air Act (CAA), which will hurt both large and small businesses and impose major practical consequences for contractors.  Equipment owners may face restrictions on the use and/or operation of their off-road diesels. There is also the potential for federal sanctions, including emissions caps limiting economic development, and the loss of federal highway transportation dollars for any state that fails to develop a suitable State Implementation Plan, plus the halting of federally-supported highway and transit projects in a nonattainment area if the state cannot demonstrate that the project will conform to the aforementioned plan. AGC maintains that restrictions on the use and operation of diesel equipment and the loss of highway funds are, in essence, bans on construction.

Industry groups have billed the new ozone proposal the most expensive regulation ever.  The National Association of Manufacturers has put the costs at $270 billion a year.  AGC is evaluating the rule now, working with other trade association groups representing affected industries, and plans to submit construction industry-specific comments later this month.  For more background, click here.  To file your own comments, visit here and click on the blue "Comment Now!" button on the right side of the screen.     

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

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SMALL BUSINESS
SBA Proposes Mentor-Protégé Program for All Small Businesses
 

The U.S. Small Business Administration (SBA) recently issued a proposed rule that would expand mentor-protégé arrangements to all federal small businesses. In a mentor-protégé arrangement, a small business—i.e., the protégé—can joint venture with non-small businesses—i.e., large or mid-tier businesses acting as the mentor—and bid on small business set-aside contracts.

Currently, the SBA has a mentor-protégé program for minority, disadvantaged 8(a) small businesses. The proposed rule would expand the program to all small businesses (i.e., veteran/service disabled veteran owned, HUBZone, women-owned, as well as small businesses without any other designation).  Comments on the rule are due April 6, 2015.

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

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TAX
Letter Circulates Asking Members of Congress to Protect Tax-Exempt Status for Municipal Bonds
 

Reps. Randy Hultgren (R-Ill.) and Dutch Ruppersberger (D-Md.) are circulating a "Dear Colleague" letter in support of tax-exempt municipal bonds. The letter urges Speaker of the House John Boehner and Democratic Leader Nancy Pelosi to support municipal bonds and oppose proposals that would cap or eliminate the deduction for municipal bond interest. 

As tax reform discussions resume in the 114th Congress, proposals that would cap certain tax benefits, including the exemption for municipal bond interest, continue to be considered as a way to help address the federal debt and deficit. In the president's FY 2016 Budget Proposal, the administration reiterated its proposed 28 percent cap on the value of certain tax benefits, including interest earned on new and outstanding state and local tax exempt bonds. Last year’s comprehensive tax reform legislation offered by former House Ways and Means Chairman Dave Camp (R-Mich.) H.R. 1, the “Tax Reform Act of 2014,” would have placed a 10 percent “surtax” on tax-exempt interest for high income taxpayers based on their modified adjusted gross income ($400,000 for single filers, $450,000 for married filers).

Tax-exempt municipal bonds have been a fundamental feature of the United States tax code since 1913. They remain the primary method used by state and local governments to finance public capital improvements and public infrastructure projects that are essential to creating jobs, sustaining economic growth and improving the quality of life for Americans in every corner of this country. Between 2003 and 2012, counties, states and other localities invested $3.2 trillion in infrastructure through long-term tax-exempt municipal bonds – 2.5 times more than the federal investment. AGC continues to vigorously support efforts that preserve the tax-exempt status of municipal bonds as the cornerstone of infrastructure finance that they are.

For more information, please contact Scott Berry at berrys@agc.org or (703) 837-5321. Return to Top

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Rubio-Lee Tax Reform Plan Released
 

On Wednesday, presumed 2016 presidential candidate, Senator Marco Rubio (R-Fla.) and Senator Mike Lee (R-Utah) released an anticipated tax reform plan that seeks to move to full business expensing, reduce corporate tax rates to 25 percent for both C and S corporations, while eliminating both capital gains and dividend taxes and moving to two tax brackets for individuals (15 and 35 percent).

Additionally, the Rubio-Lee proposal would move to a territorial system, thus domestic corporations would pay a 6 percent one-time tax on the $2.1 trillion in profits they are currently deferring overseas. Moreover, the Rubio-Lee proposal would eliminate interest deductibility for businesses outside of the financial-services industry.

At the individual level, the standard deduction would be replaced with a $2,000 personal credit, and all itemized deductions would be eliminated, except for the deduction for charitable contributions and a limited version of the home mortgage interest deduction. As reported by new outlets, the 35 percent rate would apply to income over $75,000 for individuals ($150,000 married filing jointly).

Based on what was released, it is not clear how the proposal would affect the federal budget deficit. Senator Lee, a favorite among conservatives, released a tax reform bill in 2013 that focused on the individual system and sought more robust preferences for families. The Tax Policy Center, a project of the Brookings Institution and the Urban Institute, reported that the Lee plan would lose around $2.4 trillion over a decade, or about 6 percent of projected federal revenue.

Former Ways & Means Committee Chairman Dave Camp’s 2014 legislation repealed a range of special depreciation and cost recovery schedules, as part of his plan to reduce the top corporate tax rate from 35 percent to 25 percent over a five-year period without adding to the deficit. The Camp legislation would also have extended depreciation schedules raising hundreds of billions of dollars in revenue over a 10-year period.

AGC will review the Lee-Rubio proposal more closely when the details are released in full, and continue to engage lawmakers and policy experts on comprehensive pro-growth tax reform.

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

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Senate Committee Action
 

On Tuesday, the Senate Finance Committee conducted a hearing on the progressivity of the tax code with a three-witness panel of former economic advisors. Steve Rattner suggested eliminating carried interest for money managers as well as raising tax rates on capital gains since recent studies show that investments would not be discouraged. Deroy Murdock called for cutting the corporate tax rate at least to 25 percent, as well as instituting a 5 percent tax on repatriation of $2.1 trillion in offshore profits.

In advance of the hearing, Ranking Member Ron Wyden (D-Ore.) released a report detailing a number of strategies sophisticated taxpayers use to substantially lower their tax burden. “How Tax Pros Make the Code Less Fair and Efficient: Several New Strategies and Solutions” benefited from contributions by the Joint Committee on Taxation (JCT) and outside experts at the request of Wyden and his staff. The full report can be found here. The report lays out regulatory steps President Barack Obama should take to eliminate top earners' tax avoidance through financial products like derivatives as well as deferred compensation.

The Finance Committee announced a tax reform hearing for March 10 on compliance and simplification of the tax code with four witnesses scheduled to appear including: Carol Markman, Certified Public Accountant; Dr. Mihir A. Desai, Professor, Harvard University; Bruce Bartlett, Former Deputy Assistant Secretary for Economic Policy; and T. Keith Fogg, Professor, Villanova University.

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

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LABOR
Senate Passes Legislation to Stop the NLRB's “Ambush” Election Rule, House Likely to Follow
President Obama Expected to Veto
 

On March 4, the Senate passed a resolution that would nullify the National Labor Relations Board’s (NLRB) rule on representation-case procedures, which will go into effect on April 14, 2015. The vote fell mostly along party lines with Republicans supporting and Democrats opposing. The procedure was unique in that it only requires a simple majority vote in the U.S. Senate, therefore avoiding the 60-vote threshold usually required to advance legislation. While the resolution will likely be approved by the House in short order, it will still be subject to a presidential veto. This week, the president did announce that he would veto the resolution should it reach his desk.

The rule is known as the “quickie election” or “ambush election” rule, and it would expedite the union representation election cycle to as few as 14 days from the union’s filing of a petition for an election. It is bad for both employers and employees. It would deny employers due process by limiting review of critical issues such as identifying the appropriate bargaining unit and voter eligibility potentially until after the vote is held. It would also limit workers’ access to information and provide inadequate time for workers to consider information about joining the union.

The rule would have a particularly difficult application in the construction industry due to the complexity of identifying the appropriate bargaining unit and determining voter eligibility in the industry due to the decentralized nature of construction workplaces operated by the same employer.

While the legislative attempts may not be able to overcome presidential opposition, there is a lawsuit making its way through the court system. This may be the best chance at blocking the rule.

For more information, please contact Jim Young at youngj@agc.org or (202) 547-0133. Return to Top

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AGC Urges Support of Anti-Government-Mandated PLA Bill
AGC Opposes USACE-Mandated PLAs
 

AGC joined with a coalition of construction and business associations urging members of the Senate to cosponsor legislation prohibiting federal government-mandated project labor agreements (PLAs). The legislation, Government Neutrality in Contracting Act (S. 71), introduced by Senator David Vitter (R-La.), falls in line with AGC’s position on PLAs.  

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. Visit AGC’s Legislative Action Center to write to your Senators urging their support of legislation opposing government mandated PLAs. AGC is working with members of the House to introduce the same bill in that chamber.  

AGC also sent two letters opposing the possible use of a project labor agreement mandate posted by the U.S. Army Corps of Engineers. One letter opposed a possible PLA mandate for a  design-build contract on Edwards Air Force Base in California, while the other  opposed consideration of a PLA for the New Orleans to Venice construction of the Hurricane Protection System in Louisiana.

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

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