Construction Legislative Week in Review
www.agc.org June 23, 2016
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On the Inside
TAX
Treasury Inversion Regulations Could Re-Characterize Many S-Corps as C-Corps
WATER INFRASTRUCTURE
AGC Urges Senate to Move Water Infrastructure Bill
LABOR
Supreme Court Ruling Allows Preliminary Injunction to Stay in Place on President Obama’s Executive Action
LABOR
AGC Supported Health Care Legislation Passes House
REGULATIONS
FAA Finalizes New Federal Rules on the Commercial Use of Drones; AGC Schedules Follow-Up Programs Specifically for Construction Contractors
TRANSPORTATION
AGC Webinar Addresses Mileage Based User Fees
ENVIRONMENT
Army Corps of Engineers Seeks Public Comments on Proposal to Renew, Revise Nationwide Permits
UTILITY INFRASTRUCTURE
Registration Open for the 2016 Utility Infrastructure Conference
TAX
Treasury Inversion Regulations Could Re-Characterize Many S-Corps as C-Corps
 

AGC continues to address the Department of Treasury and Internal Revenue Service’s proposed regulations impacting debt-equity regulations under Internal Revenue Code section 385, released April 4, 2016 (Notice of Proposed Rulemaking). Visit AGC’s Action Center and urge your members of Congress to oppose the 385 regulations in their current form!!

If finalized in their current form, the proposed 385 regulations would have broad, negative ramifications on the domestic construction industry. This view has been advanced by the general business community and was recently reinforced by members of the AGC Financial Issues Committee.

AGC membership consists primarily of small businesses, with the vast majority of our members (nearly 80 percent) organized as pass-through entities. Several provisions in the proposed 385 regulations have the potential to disqualify a large percentage of S-corporations, as they would re-characterize regular business loans as equity. This re-characterization would in turn create a second class of stock, and would potentially violate the shareholder eligibility rules under subchapter S.

On Wednesday, 11 Democrats on the House Ways and Means Committee wrote to Treasury Secretary Jack Lew to request a meeting and to clarify how they might protect ordinary-course business transactions in certain sectors (financial services, insurance, and utilities) from being adversely affected by the 385 regulations. It is yet to be seen how Republicans in the House and Senate, as well as Senate Democrats, will respond to modify the regulations on domestic businesses.

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

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WATER INFRASTRUCTURE
AGC Urges Senate to Move Water Infrastructure Bill
 

This week, AGC sent a letter to Majority Leader Mitch McConnell (R-KY) asking for the Senate to take up and pass the Water Resources and Development Act (WRDA) of 2016 before the Senate adjourns in July for their summer recess. Additionally, the AGC co-chaired Water Infrastructure Network (WIN) sent a similar letter, and we joined 86 other associations in a separate letter further reiterating our desire for the Senate to take action.

Passed out of the Environment and Public Works Committee by a large bipartisan majority in April, the Senate WRDA bill authorizes Army Corps of Engineer construction projects and creates a Clean Water Trust Fund—a longtime AGC priority. Creation of a trust fund solely dedicated to water infrastructure opens up many new possibilities for future dedicated revenue prospects.

Other provisions of note include State Revolving Fund and Water Infrastructure Financing and Innovation Act funding for cities with declared lead in water emergencies (like Flint, Mich.), reauthorizing sewer overflow control grants, new funding for technical assistance to small treatment plants, Safe Drinking Water Act compliance assistance for small disadvantaged communities, reauthorizing funding for desalination, and assistance for low-income residents when replacing lead service lines to homes.

AGC, along our fellow water infrastructure stakeholders, will continue to press the Senate and the House to move their respective WRDA bills so a final bill can be sent to the President’s desk as soon as possible.

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

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LABOR
Supreme Court Ruling Allows Preliminary Injunction to Stay in Place on President Obama’s Executive Action
 

Today the Supreme Court issued a decision on President Obama’s 2014 executive actions on immigration. The court was split, 4-4, therefore the preliminary injunction by a Texas federal court to block implementation of the actions stays in place. The challenge was filed by 26 states and is likely to be blocked through the remainder of Obama’s term. The actions would, among other provisions, suspend deportation orders for millions of unauthorized immigrants and grant them temporary permits to legally work in the U.S. if they have lived here for at least five years, have no criminal record, register with the federal government and pay a fee.

The executive actions failed to address the overall broken immigration system. AGC has long advocated for comprehensive immigration reform. In fact, the 2013 Senate-passed bipartisan, comprehensive legislation generally met AGC’s priorities for reform. However, the House failed to act and chose a piecemeal strategy that never fully materialized. It had been AGC’s hope that Congress could again attempt to address immigration last year. The decision by the court this week further complicates the prospects for comprehensive immigration reform, and it remains uncertain if 2017 offers a realistic opportunity to make permanent, long-term changes to our nation’s immigration system.

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

 

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LABOR
AGC Supported Health Care Legislation Passes House
 

This week the US House unanimously passed, via voice vote, the Small Business Health Care Relief Act. The bill allows small businesses with fewer than 50 employees to offer Health Reimbursements Arrangements (HRAs) to employees for the payment of premiums or qualified medical expenses associated with insurance coverage without facing an outrageous fine. AGC joined a multi-industry letter in support of the legislation and is urging the US Senate to consider the legislation soon.

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

 

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REGULATIONS
FAA Finalizes New Federal Rules on the Commercial Use of Drones; AGC Schedules Follow-Up Programs Specifically for Construction Contractors
 

On June 21, 2016, the Federal Aviation Administration (FAA) finalized a new and comprehensive set of rules for the commercial use of small drones in all industries, including construction.   This action completes a rulemaking process that the FAA began in February of 2015 – in an effort to meet Congressional demands and to stem a rapidly rising tide of applications for individual exemptions from longstanding rules that make no distinction between manned and unmanned aircraft.   Through January 20 of this year, the FAA had granted 3,136 of these exemptions for the commercial use of drones, and significantly, 48% of that total were for uses in the construction and engineering.

AGC Success

AGC submitted detailed comments on the proposed rules and continues to assess the FAA’s response.  At the outset of its letter to the agency, AGC encouraged the FAA “to create a straightforward and streamlined process for companies to request exemptions from the agency’s [proposed] requirements and restrictions” where alternative approaches to “specific aircraft operations” would be “equally effective” in addressing the agency’s concerns.

The FAA has taken that advice, adding “waiver authority to the regulatory text in order to accommodate ... unique operational circumstances.”  The agency has created a new “certificate-of-waiver process” specifically to give the agency the flexibility “to assess case-specific information concerning a small UAS operation that takes place in a unique operating environment,” such as a construction jobsite.   

Follow-Up Programs

AGC continues to study the final rules.  It is also scheduling a series of educational programs on the specific questions drones operations will require construction contractors to address.  The dates and times for the individual programs included in this WebEd series, and the topics that each will address, are the following:

 Date

 Time

 Topic

 September 28

 2:00 p.m. Eastern

 How Construction Contractors Are Already Using Drones

 October 5

 2:00 p.m. Eastern

 The New Federal “Rules of the Road”

 October 12

 2:00 p.m. Eastern

 Privacy, Nuisance and Other Legal Doctrines Restricting Drone   Operations

 October 19

 2:00 p.m. Eastern

 Insurance and Outsourcing Strategies for Drone Operations

 October 26

 2:00 p.m. Eastern

 How to Manage the Additional Data that Drones Generate

 

For more information, including links to the FAA’s summary of its new rules, to its Fact Sheet on the new rules and to the full text of the rules themselves, simply click here.  

Please go ahead and mark your calendar for the follow-up programs!  They are specifically intended for construction contractors and will address the many unique characteristics of the construction industry!

For more information, contact Mike Kennedy at kennedym@agc.org  or (703) 837-5335.

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TRANSPORTATION
AGC Webinar Addresses Mileage Based User Fees
 

AGC held a webinar this week to inform members and chapters about developments in the use of mileage based user fees to fund future transportation infrastructure investments at the federal and state levels. Participants heard from Jack Basso, former DOT Budget Director and Chairman of the Mileage Based Use Fee Alliance (MBUFA), who discussed the current depleted status of the Highway Trust Fund and the need to find alternative revenue sources to supplement (and possibly replace) the gas tax. Basso reported that numerous studies and research reports have supported the move to mileage based fees, and currently 29 states are examining how this funding system might be used in their state. MBUFA’s role is to educate and advocate for mileage based user fees.

Bob Arnold, Director of DOT’s Office of Transportation Management, reported on provisions in the FAST Act, which provided $95 million in grant funding to support states in implementing pilot programs to test various alternative user fee initiatives for purposes of maintaining the future long-term solvency of the Federal Highway Trust Fund. The first round of grant solicitations received as many as 17 requests for part of the $15 million in available funding this year, including two from groups of states that wanted to work together on a pilot program. Grant recipients will be identified by the end of the summer. One more grant solicitation will go out in the first quarter of 2017 to allow additional states to organize their own pilot programs. The remaining $80 million in funding may be fully committed during the second round. Interested states need to act quickly to receive this federal funding support.

Finally, Malcolm Dougherty, Director of CalTrans, reported on California’s road charge pilot program. The state plans a nine month demonstration project which will be a “paper” exercise without actually collecting fees to identify implementation issues. They hoped for 5,000 volunteer participants statewide, and instead, they received applications from almost 8,000 interest parties, including business fleet operations. Several construction companies applied to participate in the experiment. Participants can use one of five mileage reporting concepts to determine which works best. The pilot includes 10 data security features to ensure privacy concerns are addressed. While legislation wasn’t necessary, the CalTrans asked for legislation to ensure buy-in from the legislature and the public. California has submitted a request to US DOT for grant funding to support its pilot. The state is also part of a 14 western state consortium working together to test the mileage fee concept, and this consortium also applied for a grant.

The slides and audio from the webinar are available here.

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

 

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ENVIRONMENT
Army Corps of Engineers Seeks Public Comments on Proposal to Renew, Revise Nationwide Permits
 

The U.S. Army Corps of Engineers (Corps) recently published a proposal to reissue and modify the nationwide (general) permits (NWPs). The Corps issues NWPs to authorize a variety of construction operations in “Waters of the U.S.” (WOTUS) that have minimal individual and cumulative adverse environmental effects. Based on recent data, the Corps has authorized roughly 30,000 projects through the NWP program each year.  AGC invites members to provide their feedback to the Association by Friday, July 8, 2016, using AGC’s NWP Discussion Document (click here). 

Public comments are due to the Corps by August 1.  You may submit your own/company comments directly to the Corps via e-mail at: NWP2017@usace.army.mil or through the Federal eRulemaking portal at http://www.regulations.gov (Docket ID No. COE-2015-0017).  

Click here to find out more.

For more information, please contact Leah Pilconis at pilconisl@agc.org or (703) 837-5332.  

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UTILITY INFRASTRUCTURE
Registration Open for the 2016 Utility Infrastructure Conference
 

The 2016 AGC Utility Infrastructure Conference will bring together contractors, owners, and key industry constituents involved in every aspect of utility and infrastructure construction for a day and a half-long program. The conference will focus on the latest legislative and regulatory issues affecting the industry, technology and operation trends shaping the market, and updates on AGC’s efforts to fund infrastructure investment.

This event is an opportunity to connect not only with fellow utility infrastructure contractors, but also with emerging construction leaders from across the country attending the co-located AGC CLC Leadership Development Conference. This event will also feature an informative jobsite tour and a tour/reception at the College Football Hall of Fame.

Register here

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

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