Construction Legislative Week in Review
www.agc.org November 19, 2015
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On the Inside
TRANSPORTATION
Transportation Bill Nearing the Finish Line
IMMIGRATION
AGC Calls on Congress to Reform H2-B Visa Program
FEDERAL CONTRACTING
AGC Testifies in Support of Change Order & Claim Process Reforms
TAX
Tax Extenders and International Reform/Inversions
PENSION REFORM
PBGC Multiemployer Pension Fund Deficit Grows
2016 ELECTIONS
Jindal Exits Stage Right
TRANSPORTATION
Transportation Bill Nearing the Finish Line
 

The conference committee charged with resolving differences between the House and Senate versions of the transportation reauthorization legislation met formally this week. The first action of the committee was to select House T&I Committee Chairman Bill Shuster (R-PA) to serve as chair with Sen. Jim Inhofe (R-OK) as vice chair. The formal meeting consisted primarily of opening statements and pledges to get the bill completed as quickly as possible. Staffs from the appropriate committees from both chambers, however, have been meeting to iron out agreements on issues where there are general similarities.  The big issues will be discussed by key leadership over the next several days. With the clock running out on the November 30 deadline, both the House and Senate passed legislation to extend the deadline to December 4.

Key questions remain about how to fund the package, at what levels and for how long. The Senate version of the DRIVE Act increases funding for highways and transit by about 3 percent per year over six years. The House bill would provide current funding for six years with some growth for inflation. Conferees are considering increasing funding above the Senate levels by using the revenue the House made available in its version of the bill by shortening the reauthorization period to cover five years rather than six.  

AGC is encouraging conferees to provide the highest level of funding possible in order to begin addressing the huge backlog of transportation infrastructure needs that have grown over the years because of the past inadequate funding. A new letter will soon be available on the Hardhats for Highways website to convey this message to your Congressional delegation. Please use this site to contact your Senators and representative.  Return to Top

IMMIGRATION
AGC Calls on Congress to Reform H2-B Visa Program
 

The H-2B visa program is an immigration program that allows U.S. employers who meet specific regulatory requirements to bring foreign nationals to the U.S. to fill temporary nonagricultural jobs, which are common in the construction industry. The program has an annual cap which is typically reached every year and has complex wage and regulatory requirements. Over the course of the past year, the H-2B program experienced a temporary suspension, the Department of Homeland Security (DHS) provided little information on availability of visas, and the Department of Labor (DOL) instituted long delays in the certification process. On top of all this, a final rule from DHS and DOL rules has made the program more complex.

Congress is currently working to finalize the fiscal year 2016 appropriations bill. AGC remains hopeful the funding bill will include an H-2B returning worker exemption from the annual cap and regulatory relief from the recent burdensome rules. AGC joined a broad coalition in sending a letter to Congress in support these provisions.

Also, the Save our Small and Seasonal Businesses Act (SOSBA) and the Strengthen Employment And Seasonal Opportunities Now (SEASON) Act have been introduced in Congress, both of which address the fundamental problems with the H-2B program. The bills exempt returning workers from the annual cap, streamline the H-2B process, provide for a fair wage formula, allow for the use of private wage surveys and address the problems stemming from the new H-2B regulations among other changes. AGC joined a broad group of nearly 1,000 organizations in letters of support of the SEASON Act and the SOSBA ActReturn to Top

FEDERAL CONTRACTING
AGC Testifies in Support of Change Order & Claim Process Reforms
Calls for Faster Implementation of Lower Tiers Counting Law
 

On November 18, AGC testified before the House Small Business Committee and called for oversight into and reform of the federal construction change order and claims processes. AGC noted that federal agencies often delay critical contract modification decisions months and even years, while the realities of project delivery and schedule demand swift action. Though incredibly risky, many contractors preform change work on verbal promises rather than official notices from federal agencies. Small businesses often lack the ability to self-finance such work without pay for extended periods of time, driving some to close their doors. Similarly, AGC also highlighted that the claims process often takes years to resolve disputes, which can leave small businesses in dire financial straits.

AGC also urged the committee to continue to press the administration to issue regulations that will allow prime contractors to count lower tier small business subcontractors toward small business subcontracting goals. Enacted into law through the National Defense Authorization Act of 2014 (NDAA) in December 2013, this reform will help demonstrate true small business participation on federal contracts. Despite the fact that this reform is law, it is not currently implemented on contracts because the Small Business Administration and Federal Acquisition Regulation Council have not issued final regulations on the reform—in spite of the NDAA requirement that these agencies complete the regulatory process this past May.

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

TAX
Tax Extenders and International Reform/Inversions
 
Discussions in Congress are just starting in earnest on tax extenders. In part, some of the delay can be attributed to the change in leadership on the House Ways and Means Committee and related staff changes that were announced this week. At this time, a mid-December tax extenders package seems most likely, but of course that timing can change. An extenders package could be attached to the surface transportation reauthorization, but that idea has been rejected by some Senate Republicans. The context of a likely deal may:
  1. Make a couple provisions permanent, including R&D tax credit, and 179 small business expensing
  2. Include EITC and child tax credit reforms important to the Administration, in which republicans have a verification issue tied to immigrants
  3. Extend the other 50 provisions for two years (2015 – 2016)

It is likely we will see a reprise of the deal nearly closed at the end of 2014. However, a default to the lowest common denominator of a one-year for 2015, expiring January 1, 2016 is the worst case scenario if a broader package fails. This would allow the Administration to advocate on tax policies prior to the 2016 elections. Most of the intel AGC has gathered concludes the likely package will be a straight retroactive extension of all provisions for two years with no permanency. The next possible legislative vehicle for tax extenders is a probable government funding bill (omnibus) by December 11.

Additionally, members of the Ways and Means Committee met on Wednesday to select their subcommittee assignments. The most pertinent change was Chairman Pat Tiberi (R-Ohio) choosing to head the health panel and Chairman Charles Boutany (R-L.A.) assuming the gavel on the rebranded Tax Policy Subcommittee. Return to Top

PENSION REFORM
PBGC Multiemployer Pension Fund Deficit Grows
AGC Opposes Harmful Legislative Proposals to Roll Back MPRA and Calls On Congress to Adopt Composite Plans
 

The Pension Benefit Guaranty Corporation (PBGC) released its annual report this week, which showed the multiemployer pension program deficit growing to $52.3 billion, nearly $10 billion more than last year, the largest deficit on record. Contributing factors to the increase include low interest rates and an additional 17 plans expected to become insolvent within 10 years.  The report highlights that no plans have completed the tools in last year’s Multiemployer Pension Reform Act (MPRA) which give the ability to suspend benefit for deeply troubled plans that otherwise would become insolvent. The risk of insolvency for the PBGC fund has been extended due to the fact that MPRA included a premium increase but the increased revenue falls short of closing the funds deficit.

The only plan under review to use the benefit reduction tools of MPRA is the Central States Teamster Fund. The fund filed an application on September 25, 2015 and if the rescue plan is approved and plan participants accept the benefit reductions through a vote, the reductions could become effective around July 1, 2016. More information on Central States Pension Fund’s proposed rescue plan can be found here.

At the same time, AGC-opposed legislation has been introduced to essentially rollback the MPRA’s provisions and prevent the Central States Pension Fund from availing itself of the benefit reduction options. The legislation, S. 2147/H.R. 4029, changes the way a vote on benefit reductions by plan participants would be deemed successful and removes the ability of the government to override a vote if the plan in question is systemically significant and would crash the PBGC. Supporters of the legislation declare the legislation is in the best interest of the plan participants, but in reality the changes to MPRA would remove the government’s ability to protect the PBGC from becoming insolvent. If the PBGC were to become insolvent and absent a taxpayer bailout of $11 billion, an additional 10 million participants would have their retirements in jeopardy. AGC believes the supporters are well-intentioned, but the legislation places greater strain on the PBGC, results in even greater benefit reductions for retirees and workers, places additional plans and employers at risk and exposes tax payers to a potential cost of tens of billions of dollars.

The PBGC’s new deficit and legislative attempts to change MPRA highlight the vulnerability of the current multiemployer pension plan, and therefore AGC is again pressuring Congress to enact legislation that would allow for the adoption of Composite Plan Design. Composite Plan Design is a noncontroversial change to multiemployer pension system that has the support of labor and management. The design change would allow for the voluntary adoption of a hybrid defined contribution and defined benefit plan and takes the best feature of both to ensure the plan design has been proven to be a viable system. It provides employees and employers better certainty to manage costs and ensure workers have retirement security. In addition, the composite plan model removes the need for PBGC guarantees and greatly eliminates any possibility of plan insolvencies.  Return to Top

2016 ELECTIONS
Jindal Exits Stage Right
 
Louisiana Gov. Bobby Jindal became the third Republican casualty of this 2016 presidential contest by suspending his campaign yesterday.  He joins Gov. Scott Walker (R-WI) and ex-Gov. Rick Perry (R-TX) on the GOP political sidelines.  Former Sen. Jim Webb (D-VA) and ex-Gov. Lincoln Chafee (D-RI) have already exited for the Democrats.
 
Gov. Jindal was hoping to make major inroads in Iowa, notching a respectable score there in the February 1st Caucus vote, which theoretically could give him the momentum to become a top tier candidate.  But, his objective simply didn’t come to fruition.  Though the governor was making some progress in Iowa – at least one poll had him as high as 6% - it was clear that his effort was falling short of what he needed to continue.
 
Therefore, 14 candidates remain, still the largest of all past Republican presidential fields.  The Jindal exit won’t much change the flow of the campaign because he was not a factor anywhere but arguably Iowa.  Never making the prime time debate, and his sagging popularity in his home state where even the Republican nominee to succeed him, Sen. David Vitter, is attempting to tie Democrat John Bel Edwards to his faltering Administration combined to place him in an untenable position for the national race.  Hence, the obstacles proved too large for him to become viable.
 
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