Construction Legislative Week in Review
www.agc.org December 3, 2015
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On the Inside
TRANSPORTATION
Transportation Bill Passes House and Senate
FEDERAL CONTRACTING
President Signs AGC Procurement Priorities into Law
APPROPRIATIONS
AGC Tells Congress About Needed Policy Riders and its FY 2016 Funding Priorities
TAX
AGC Responds to IRS Section 199 Comment Period
AGC Meets on Extenders as Rumors Abound
REGULATIONS
Administration Releases Regulatory Plan for 2016
TRANSPORTATION
Transportation Bill Passes House and Senate
President Plans to Sign Bill Quickly
 

This afternoon by a vote of 359-65 passed the conference report to H.R. 22, the Fixing America’s Surface Transportation (FAST) Act, which is the first long-term transportation bill in more than a decade.  The Senate passed the bill this evening by a vote of 83-16. The president will sign it prior to the expiration of the current extension tomorrow.  Thank you to everyone who met with their members of Congress or wrote letter, urging passage of a long-term highway & transit bill.  Hardhats for Highways has generated more than 25,000 letters to Congress.  Please visit Hardhats for Highways and thank your members of Congress for supporting passage of the FAST Act.

AGC and our coalition partners in the Americans for Transportation Mobility Coalition and the Transportation Construction Coalition urged support for the FAST Act, which provides funding authorization for five years for federal highway and transit programs at increased funding levels.  The Act does not increase the gas tax or create any new on-going revenue source for the Highway Trust Fund but instead continues the trend of general fund transfers off set with non-transportation revenue, allowing the Act to be fully funded through the five year period. The Act calls for adjustments in authorized funding levels should Highway Trust Fund revenue increase or decrease beyond the projected annual income amounts.

The year-by-year funding levels are below.

2015 (Current)

2016

2017

2018

2019

2020

Highways

$37.798 B

$39.727 B

$40.771 B

$41.424 B

$42.359 B

$43.373 B

TIFIA

$ 1.00 B

$275 M

$275 M

$285 M

$300 M

$300 M

NSFHP (grants)

$800 M

$850 M

$900 M

$950 M

$1.00 B

Transit Formula

$8.595 B

$9.347 B

$9.733 B

$9.733 B

$9.939 B

$10.150 B

Transit Capital Grants

$2.12 B

$2.301 B

$2.301 B

$2.301 B

$2.301 B

$2.301 B

The Act creates a new National Highway Freight Program funded at $1.26 billion per year distributed to states by formula for highway freight improvement projects.  It also converts the Surface Transportation Program (STP) to a block grant program, giving states more flexibility in the use of these funds but increasing the amount going to local governments from 50 percent to 55 percent over the life of the bill.

The Act continues to make improvements in the environmental review and planning process to expedite project delivery, including giving the U.S. Department of Transportation more authority to set schedules and deadlines. The Act also aligns environmental reviews for historic properties. In addition, the bill creates a pilot program that allows up to five states to substitute their own environmental laws and regulations for the National Environmental Policy Act (NEPA) review process if the state’s laws and regulations are at least as stringent as NEPA.

The Act creates a new requirement for states to provide an annual report on all projects over $25 million comparing the estimated cost at the beginning of the project with its final cost and includes an explanation about revisions in scope or other factors impacting project costs or overruns.

The Act expands the current exemption to the hours-of-service rule for drivers of construction vehicles, allowing those operating within a 75-mile radius to restart the weekly driving limit after 24 hours of rest, rather than 34 hours, which is the standard for other drivers.  Ready mix concrete delivery drivers are exempted from logging requirements and 30 minute break requirements if they operate within a 100-mile driving radius.

The passage of the FAST Act is a tremendous accomplishment and AGC members should be proud of the work that they have done in educating members of Congress of the importance of passing a long-term bill.  However, our job is not done.  The bill does not provide a long-term sustainable solution to the structural imbalance that has plagued the Highway Trust Fund since 2008 and we must immediately get to work and find sustainable funding mechanisms for the Highway Trust Fund.

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

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FEDERAL CONTRACTING
President Signs AGC Procurement Priorities into Law
 

Prior to Thanksgiving, the president signed into law the National Defense Authorization Act of FY 2016 (NDAA Bill), which includes several AGC-backed federal procurement reform provisions that will help prevent individual surety fraud, allow joint ventures to submit individual businesses’ relevant past performance evaluations as part of their proposals—not merely the relevant past performance of the joint venture itself—and fix a recent court decision that would have required small business construction contractors to purchase all their materials and supplies from other small businesses.

AGC testified in support of these reforms earlier this year before the House Small Business Committee. AGC has also lead a coalition of 15 national construction trade associations in an effort to push such construction procurement reforms through Congress. The president vetoed a similar bill just several weeks ago. Compared to the vetoed version of the bill, this NDAA bill has slightly lower levels of spending for Department of Defense programs.

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

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APPROPRIATIONS
AGC Tells Congress About Needed Policy Riders and its FY 2016 Funding Priorities
Congress Drafting an End-of-Year Funding Bill
 

Last week, AGC sent a letter to congressional leaders and members of the House and Senate Appropriations Committees detailing the construction industry’s priorities for the fiscal year 2016 funding bill.  In the letter, AGC urged appropriators to prioritize infrastructure investment and pro-infrastructure policies, which include prohibiting implementation of a number of regulations like the Environmental Protection Agency and U.S. Army Corps of Engineers’ “Waters of the U.S.” rule, the Federal Acquisition Regulation Council and Department of Labor’s Blacklisting proposed rule, and the U.S. Department of Transportation’s local hiring initiatives for federal-aid highway and transit projects.

Congress has not passed any FY 2016 funding bills to date. In September, Congress passed a three-month continuing resolution that prevented a federal government shutdown on October 1. That CR funds federal government agencies at FY 2015 levels through December 11. Congressional leaders and appropriators are currently negotiating a FY 2016 omnibus appropriations bill, which would likely fund the federal agencies through September 30, 2016. AGC continues to meet with members of Congress to press for the importance of infrastructure investment and the need to slow down the regulatory onslaught.

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

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TAX
AGC Responds to IRS Section 199 Comment Period
 

Last week, AGC submitted a comment letter in response the IRS Notice Of Proposed Rulemaking issued in August on proposed amendments to regulations involving the domestic production activities deduction under Section 199 of the Internal Revenue Code. Specifically, the comments addressed the definition of “substantial renovation” in Prop. Treas. Reg. §1.199-3(m)(5), which indicates that activities constitute substantial renovation where they would be a capitalizable improvement under Section 263(a).

Section 199 was added to the Code by the American Jobs Creation Act of 2004. For construction activities, gross receipts derived from construction of real property performed in the United States by the taxpayer in the ordinary course of business are domestic production gross receipts. The final regulations issued by the IRS in May 2006 provide that activities constituting construction include activities performed by a general contractor, including management and oversight of the construction process such as approvals, periodic inspection of progress of the construction project, and required job modifications.

Over the years, proposed and temporary regulations originally have intended to address a number of legislative changes to Section 199. However, the IRS determined that it also needed to address a variety of other issues that have arisen over the years at IRS exam, Appeals, and in the courts. The topics and associated comments will be discussed at a public hearing scheduled for Dec. 16 at 10:00 AM.

The preamble to the newly proposed regulations states that some taxpayers have interpreted the 2006 regulations to mean that a taxpayer that only approves or authorizes payments is engaged in activities typically performed by a general contractor. To clarify the definition of construction, the proposed regulations would add that a taxpayer whose engagement in the activity is primarily limited to approving or authorizing invoices or payments is not considered engaged in a construction activity as a general contractor or in any other capacity.

AGC notes in the letter that the proposed definition of substantial renovation would lead to significant controversies between taxpayers and the IRS since it does not correspond with the broad rules for determining construction activities; and would not be administrable, since it would require construction firms to step into the shoes of property owners and determine whether costs are capitalizable under Section 263(a) where the E&C taxpayers lack the information to make such determinations. Therefore, AGC proposed that Treasury and the IRS retain the current definition, which has generated little controversy, or alternatively, modify the proposed definition of substantial renovation as described above.

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

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AGC Meets on Extenders as Rumors Abound
Visit AGC’s Action Center to Urge Congress to Support Renewal of AGC-Supported Extenders
 

As of publication time, a deal to extend the 50 plus tax provisions that expired at the end of 2014 remained in flux, with few reliable details coming from the lead congressional negotiators. AGC has had a multitude of meetings with congressional offices before and after the Thanksgiving Day recess to promote our nine extender priorities. Please visit AGC’s Action Center to send a letter to your members of Congress in support of these nine extender priorities.

In a meeting with House Ways and Means Chairman Kevin Brady (R-Texas) on Wednesday, Chairman Brady said negotiators were approaching extenders in a three-step process:  first, agree on the permanent items being sought (i.e. research and development (R&D) tax credit, deductions for teachers' out-of-pocket expenses, and the deduction for state and local sales taxes); second, agree on integrity/anti-fraud measures for the Earned Income Tax Credit and indexing for the Child Tax Credit; and third, examine what other issues might be able to get into the extenders deal. On the third point, Chairman Brady made the point about regular order, saying that items that had already been considered in some way by the Committee would get priority.

Observers believe the extender debate will leak into next week, at a time when congressional leaders are signaling that all remaining legislative priorities (i.e. highway conference bill, nominations, budget reconciliation, Syrian refugees, education reform conference and a government funding measure) would be cleared by Dec. 11. Even with the cramped schedule, there has been chatter that Chairman Brady would convene a formal markup meeting next week to take a permanent extenders package through his committee as part of the regular order edict ordered by the new Speaker of the House. AGC believes, at this point in time, the best case scenario would be a three year deal for the renewal of all expired extenders to 2017, but a likely outcome is a two-year deal for 2015 and 2016, similar to the package as approved by the Senate Finance Committee in July.

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

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REGULATIONS
Administration Releases Regulatory Plan for 2016
Regulatory Onslaught on Your Construction Company Will Continue
 

Prior to the Thanksgiving holiday, the administration released the semiannual Unified Agenda of Federal Regulatory and Deregulatory Actions, which includes a timelines for all federal agency rulemaking processes planed and underway, including those that impact the construction industry.  Please see below a list of agencies and their plans for new regulations in 2016 that will impact your construction businesses and how AGC is working to mitigate that impact.

Small Business Administration

The U.S. Small Business Administration (SBA) plans to move on several important rulemaking processes that will only impact direct-federal contractors (those contractors with contracts directly with a federal agency; not contractors that hold federal-aid contracts through state departments of transportation). Those rulemakings include:

  • Small Business Mentor-Protégé Program. The SBA issued a proposed rule in February 2015 that would expand the agency’s mentor-protégé program to all small businesses regardless of set-aside category. The SBA plans to issue a final regulation in April 2016. For more information and AGC’s comments on the proposed rule, click here.
  • Small Business Limitations on Subcontracting. The SBA issued a proposed rule in December 2014 that would that would change the performance of work requirements small business general and specialty subcontractors must self-perform.  The SBA plans to issue a final regulation in April 2016. For more information and AGC’s comments on the proposed rule, click here.
  • Credit for Lower-Tier Small Business Subcontracting. The SBA issued a proposed rule in October 2015 that would allow prime contractors to count small business subcontracts at all tiers—not only the first subcontracting tier—towards the prime contractor’s small business subcontracting goals. Through AGC’s efforts, Congress passed and the president signed this reform into law. The SBA plans to issue a final regulation in July 2016. For more information on the proposed rule, click here. Comments are due Dec.7 and AGC will submit its comments supporting the proposed rule then.

Federal Acquisition Regulation Council

As with the SBA rules, Federal Acquisition Regulation (FAR) Council rules only apply to direct-federal contractors. Important rulemakings construction contractors should be aware of include:

  • Blacklisting Executive Order. The FAR Council issued a proposed rule in May 2015 to implement the president’s “Fair Pay and Safe Workplaces” Executive Order—referred to as Blacklisting. Under the proposed rule, both prime and subcontractors must report violations of 14 federal labor laws and “equivalent” state labor laws during the previous three years, and again every six months, on federal contracts over $500,000. Prime contractors would also be responsible for evaluating the labor law violations of its subcontractors at all tiers. The FAR Council plans to issue a final rule in February 2016. For more information and AGC’s comments, click here.
  • Improvements to Design-Build Construction. The FAR Council issued a proposed rule in October 2015 to limit the second-step (“short-list”) of the two-step design-build procurement process to no more than five teams. Through AGC’s efforts, this reform was passed into law last year. The FAR Council plans to issue a final rule in April 2016. For more information on the proposed rule, click here. Comments are due Dec. 7 and AGC will submit its comments supporting the proposed rule then.

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

Occupational Safety and Health Administration (OSHA)

  • Silica: OSHA plans to issue a Final Rule on Occupational Exposure to Crystalline Silica in February. AGC is urging the final funding bill to limit OSHA’s ability to finalize this rule until its impact can be further studied. The rule reduces the permissible exposure limit to airborne crystalline silica in half. Independent analysis of the rule reveals that complying with the rule is neither technologically or economically feasible; control methods outlined in the rule contradict existing safety practices in the industry; and OSHA has failed to detail how the new requirements would reduce illnesses. More information on the rule can be found on the Construction Industry Safety Coalition.
  • Walkaround Inspections: In 2013 OSHA issued a letter of interpretation giving unions the ability to accompany OSHA inspectors on a walk-around inspection. AGC is urging the final funding bill to prohibit OSHA from allowing these walk-around inspections without the approval of the employees on a worksite. The changes were made outside of the regular rulemaking process and have created an environment of uncertainty for employers trying to comply.
  • Reporting of Workplace Injuries and Illnesses: OSHA has targeted March 2016 for a Final Rule to Improve Tracking of Workplace Injuries and Illnesses. The rule will require the electronic submission and public dissemination of company injury and illness information.
  • Crane Operator Certification: OSHA targets March 2016 for a Notice of Proposed Rulemaking for Crane Operator Qualification in Construction. The rule will identify criteria for employers to follow to ensure crane operators are qualified and certified to operate cranes.
  • Training Programs: The draft funding bills include non-binding language to zero out funding for Susan Hardwood Grant Training Programs. AGC is urging the final funding bill to fully fund the important programs because they offer valuable safety and health training on critical industry topics at no cost to small and hard-to-reach employers.

Departments of Homeland Security and Labor (DHS/DOL)

  • H-2B immigration program: AGC is advocating for the final funding bill to reinstate an expired provision of the law that would exempt returning workers from the H-2B cap. The H-2B program is essential to employers who cannot find local, temporary workers which will contribute to local economies.

Office of Federal Contract Compliance Programs (OFCCP)

  • Affirmative Action: The fall agenda targets May 2016 for a Notice of Proposed Rulemaking on the Construction Contractors' Affirmative Action Requirements. The rule would establish a new method for meeting affirmative action goals and requirements for minorities and women in construction – the first change to the process since 1980.
  • Compensation Data Collection Tool: OFCCP targets May 2016 for a Final Rule on the Requirement to Report Summary Data on Employee Compensation (Compensation Data Collection). The rule would be used to identify contractors violating sex and race-based compensation discrimination laws.
  • Sex Discrimination Guidelines: OSHA has indicated that they will issue a Final Rule on Discrimination on the Basis of Sex in December 2015. The rule will update the agency’s sex discrimination guideless.

Office of Labor Management Standards (OLMS)

  • Persuader Agreements: The fall agenda targets March 2016 for a Final Rule on Persuader Agreements: Employer and Labor Relations Consultant Reporting Under the Labor-Management Reporting Disclosure Act. The rule would limit the “advice” exception under the Act so that all consultation with labor lawyers and/or consultants will be subject to disclosure to the Department of Labor.  This rule will significantly impact employers’ ability to retain counsel. 

Wage and Hour Division (WHD)

  • Overtime: The Agenda targets July 2016 for a Final Rule on Defining and Delimiting the Exemptions for Executive, Administrative, Professional, Outside Sales, and Computer Employees otherwise known as the Overtime Rule. AGC is urging the final funding bill to prohibit funds to change the exemptions for executive, administrative, and professional employees to the Fair Labor Standard Act’s overtime pay requirements. The rule will be unduly burdensome on employers–especially small businesses–and ultimately result in significant, unintended consequences on employees.
  • Paid Sick Leave: The fall agenda targets February 2016 for a Proposed Rule and September 2016 for a final rule on Establishing Paid Sick Leave for Contractors. The proposed rule will require federal contractors and subcontractors to provide up to seven days of paid leave for sickness and other covered purposes to covered employees annually.
  • Electric Devices: The fall agenda targets February 2016 for a Request for Information on the Impact of the Use of Electric Devices by Nonexempt Employees on Hours Worked Issues.

National Labor Relations Board (NLRB)

  • Joint Employer: On Aug. 27, the NLRB issued a decision in the Browning-Ferris case relaxing the standard for determining when separate companies are “joint employers” under the National Labor Relations Act. AGC is urging the final funding bill to prohibit funds for enforcement of its broad “joint employer” definition. Under the new standard, an employer may be deemed a “joint employer” of another company’s employees not only if it exercises direct control over terms and conditions of employment, but also if it exercises indirect control or has an unexercised right to control. AGC joined the Coalition for a Democratic Workplace in a letter to Congress in support of an appropriations rider.
  • Quickie Elections: Earlier this year the NLRB’s rule on representation elections – often called the “quickie election” or “ambush election” rule became effective. AGC is urging the final funding bill to prohibit the NLRB from using funds to enforce the rule. The rule denies employers due process, expedites the union organizing election time frame, is particularly burdensome and impractical for the construction industry and is even bad for union contractors.
  • Electronic Voting. The NLRB has been exploring changing representation elections from paper ballots to electronic voting. AGC is urging the final funding bill include a prohibition on any regulations from the NLRB that would allow employees to vote through electronic means in determining representation in union organizing elections. Off-site, electronic voting for union certification elections would remove the privacy workers have in secret ballot elections.

Pension Benefit Guaranty Corporation (PBGC)

  • Multiemployer Pension Reform Act of 2014: AGC is urging that the final funding bill exclude any changes to the Multiemployer Pension Reform Act of 2014 in regards to the voting process for plans that receive Treasury Department approval to reduce benefits. Plans that receive approval for a reduction of benefits would otherwise become insolvent and become a ward of the Pension Benefit Guaranty Corporation (PBGC). This would result in further benefit reductions for participants, place additional strains on the PBGC and put the retirement benefits of more than 10 million participants in jeopardy.

For more information, please contact Jim Young at youngj@agc.org or (703) 837-5325.

Environmental Protection Agency (EPA)

While these items are future regulatory actions, three major regulations that impact construction were finalized in 2015 and no longer appear on the regulatory agenda (waters of the US, ozone, and e-reporting). Despite no longer being regulatory actions, AGC and its chapters will be primarily focused on the implementation phase of each of the regulations in 2016 and beyond. In addition, AGC will be monitoring:

  • Lead-based Paint; Amendment to Renovator Refresher Training Requirements: The EPA proposed several AGC-supported amendments to the EPA lead-based paint program that would improve efficiencies and save resources for those involved.  Under the EPA renovation, repair and painting rule, renovators must take a certification training course every five years. The renovator refresher training requires an hour of hands-on learning and therefore cannot be completed online. EPA proposed modifying the "hands-on" component for the refresher training requirements. The proposed rule was published on Jan.14, 2015. Promulgation of the final rule is now anticipated in February of 2016.
  • Reissuance of EPA’s Construction General Permit: EPA has begun work on updating its federal Construction General (stormwater) Permit, which is due to expire in Feb. 2017, and serves as a model for the nation. AGC’s environmental leaders have engaged with EPA staff in a preliminary conversation about permit changes including: assigning the project owner with the responsibility for drafting the initial “stormwater pollution prevention plans” (SWPPP) pre-bid (which AGC is soliciting member feedback on); and making site-specific SWPPPs publicly available via the Internet (which AGC strongly opposes).  Follow-up AGC-EPA discussions will take place in throughout 2015 and into 2016.  EPA expects to publish a draft of the 2017 CGP for public comment in early 2016.
  • Reissuance, Issuance of Nationwide Permits – U.S. Army Corps of Engineers action: The nationwide permits (NWPs) streamline permit requirements by providing expedited authorization for projects that are minimally impacting both individually and cumulatively. The U.S. Army Corps of Engineers (Corps) issues nationwide permits to authorize specific categories of activities in jurisdictional waters and wetlands that have minimal individual and cumulative adverse environmental effects. Nationwide permits cannot be issued for a period of more than five years. The issuance and reissuance of nationwide permits must be done every five years to continue the Nationwide Permit Program. Currently, there are 50 NWPs that expire on March 18, 2017. In addition to proposing to reissue some or all of the 50 existing NWPs, the Corps may also propose to issue new NWPs to authorize categories of activities that are not currently authorized by the existing program. This action would go into effect on March 19, 2017, to authorize regulated activities over the subsequent five years. The proposed 2017 NWPs are now expected to be published for public comment in February of 2016, for a likely 60-day comment period. A final rule is anticipated in December of 2016 for an effective date of March 2017.
  • Municipal Separate Storm Sewer System General Permit Remand Rule: The EPA's Phase II stormwater regulations detail, among other things, how the nation's 6,700 regulated small municipal separate storm sewer systems can obtain authorization to discharge under an available general permit. This action will propose modifications to the regulations for municipal separate sewer system NPDES permits to address a U.S. Circuit Court of Appeals for the Ninth Circuit remand (EDC v. EPA, 2003). The provisions that are the subject of the remand involve requirements for the use of small MS4 general permits, with potential implications for runoff from construction sites and completed projects within urbanized areas. The proposed rule is anticipated on December 17, 2015, and a final rule is expected in November of 2016.
  • Treatment of Data Influenced by Exceptional Events – Rule Revisions: EPA recently proposed changes to its “Exceptional Events Rule” (EER) that allows the agency to exclude certain air-quality monitoring data – associated with uncontrollable or unpreventable emissions – when determining whether or not an area violates a National Ambient Air Quality Standard (NAAQS). The EER proposal is getting close attention in light of the agency's new 70-parts-per-billion standard for ground-level ozone, and may help arid western states that face significant air quality challenges brought on by natural events comply with the new rule. The EER rule was proposed in November of 2015 and a final rule is expected in August of 2016.

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

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