Construction Legislative Week in Review
www.agc.org December 21, 2017
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On the Inside
TAX/ACCOUNTING
AGC Achieves Construction Victories in Tax Reform
INFRASTRUCTURE
House Passes AGC-Supported Emergency Disaster Relief
ENVIRONMENT
EPA Deregulatory Actions to Outweigh Impact of New Rules in 2018
FEDERAL CONTRACTING
New Cybersecurity Requirements for Defense Contractors Begin Dec. 31
AGC IN THE NEWS
The Key to More Efficient Construction Projects is Collaborative Contracts
TAX/ACCOUNTING
AGC Achieves Construction Victories in Tax Reform
Legislation Heads to Presidentís Desk for Signature
 

Earlier this week, both houses of Congress passed the Republican tax reform bill, H.R. 1, the Tax Cuts and Jobs Act.  For a full accounting of the tax reform bill and its impact on provisions important to the construction industry, please consult this comparison chart.  During the conference negotiations between the House and Senate, AGC outlined the construction industry’s priorities for tax reform. The legislation now heads to President Trump for his signature, which could be signed as early as this week or as late as January, depending on year-end spending negotiations.

Of the priorities AGC identified as critical to the construction industry, the conferees adopted a host of AGC’s recommendations, including:

  • Reducing the corporate tax rate—to 21 percent;
  • Providing tax relief for pass-through businesses—lower individual rates, and a new 20 percent pass-through deduction;
  • Ensuring trust owners of pass-through businesses are eligible for the deduction;
  • Repealing the corporate Alternative Minimum Tax (ATM);
  • Substantially increasing the individual AMT thresholds, reducing its overall impact;
  • Increasing the “small contractor exemption” from the percentage-of-completion method of accounting to $25 million;
  • Increasing the exemption from the uniform capitalization rules (UNICAP), and availability of cash accounting to $25 million;
  • Preserving the tax exemption for private activity bonds (PABs);
  • Preserving a modified version of the historic tax credit;
  • Doubling the estate tax exemption level to $10.98 million;
  • Allowing used equipment to be fully expensed; and
  • Preserving the work opportunity tax credit (WOTC).

Unfortunately, the conference report does retain the individual AMT (albeit at a much higher level than under current law), allows the individual tax relief (including the pass-through tax relief) to expire after 2025, does not fully repeal the estate tax, and does not include a long-term funding solution for the Highway Trust Fund, but, on balance, the final bill contains many construction industry priorities and AGC supported final passage.

It’s important to note that AGC did not support the initial tax reform bill as it provided little relief for construction firms organized as pass-throughs, eliminated Private Activity Bonds, and repealed the Historic Tax Credit.  Whereas other construction groups endorsed that version of tax reform, AGC continued to fight for a better bill for our industry. By undertaking a rigorous direct lobbying campaign, connecting construction company CFOs and CPAs with tax writers, and generating thousands of pro-construction messages from members to key legislators, AGC helped ensure Congress understood the impact of these provisions on the industry.

Nevertheless, there is still much work to be done in the New Year. Though Congress missed an opportunity to address the long-term solvency of the Highway Trust Fund, we remain focused on ensuring that this administration keeps its promise to rebuild the nation's infrastructure. We are also committed to modernizing multiemployer pension plans for the future, among other priorities for this industry.

We look forward to providing educational resources and opportunities soon via webinars and in-person conferences—like the AGC Convention—to help you and your construction business plan for future growth under this new tax law.

For more information contact Matthew Turkstra at matt.turkstra@agc.org or (202) 547-4733. Return to Top

INFRASTRUCTURE
House Passes AGC-Supported Emergency Disaster Relief
 

On Dec. 21, the House of Representatives voted 251-169 for AGC-supported legislation – the Emergency Disaster Aid Package – which provides $81.2 billion in emergency funding for Hurricane and wildfire relief in Texas, Florida, California, Louisiana, Puerto Rico, and the U.S. Virgin Islands. It remains uncertain whether or not the Senate will vote on its version of the bill; however, senators from impacted states are strongly advocating for the bill.

The bill’s funds are critically needed to assist with the rebuilding efforts in communities impacted by this year’s devastating natural disasters. The majority of the funding will be distributed through the Federal Emergency Management Agency—$27.5 billion; the Department of Housing and Urban Development’s Community Development Block Grant Program –$26.1 billion for housing and infrastructure needs; and the Army Corps of Engineers Construction Account – $10.5 billion for ongoing construction projects and to expedite construction projects that will help mitigate future disaster damage.

The legislation will also provide $1.4 billion for Federal Highway Administration emergency relief funding and an increase for other transportation accounts.  A summary of the construction accounts in the bill can be found here.

Additionally, the bill reforms the Federal Emergency Management Agency’s disaster response and recovery program.

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

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ENVIRONMENT
EPA Deregulatory Actions to Outweigh Impact of New Rules in 2018
 

On Dec. 14, the U.S. Environmental Protection Agency (EPA) released its Semiannual Agenda of Regulatory and Deregulatory Actions and Regulatory Plan as part of the government-wide Unified Agenda—setting the path for the agency over the next yearOf particular interest to contractors, the Regulatory Agenda includes the repeal and replacement of the 2015 Waters of the United States Rule (see related article), which will remain a focus for the agency.  AGC also notes that the agency is reworking the 2015 coal combustion residual disposal rule (e.g., fly ash).

Although AGC was pleased that EPA preserved many forms of recycling/beneficial use common to construction, the rule itself has been controversial and is currently under litigation. AGC also has been tracking a new spill prevention rule for hazardous substances that EPA included on the current actions list. Finally, the agency will continue to fulfill its statutory obligation to periodically review National Ambient Air Quality Standards, on which AGC reports frequently because of the potential for disruption of highway funding in areas that are not in attainment of the standards.

Another issue of note is the delayed schedule for determining whether or not to propose lead paint “work practice” rules for public and commercial buildings (which moved to EPA’s long-term list in the spring and has remained there this fall).

For more information contact Melinda Tomaino at tomainom@agc.org or (703) 837-5415. Return to Top

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FEDERAL CONTRACTING
New Cybersecurity Requirements for Defense Contractors Begin Dec. 31
 

Defense contractors will now need to implement security control requirements and ensure sensitive federal information remains confidential when stored in any nonfederal electronic system beginning December 31, 2017.  Earlier this year AGC hosted awebinar giving an overview of the new cybersecurity requirements to AGC members.

The purpose of the new requirements is to ensure that unclassified DoD information residing on a contractor’s internal information system is safeguarded from cyber incidents, and that any consequences associated with the loss of this information are assessed and minimized through cyber incident reporting and damage assessment processes. It is not required to be applied retroactively, but a contracting officer may modify an existing contract.  DoD has consistently stated that the agency does not plan to audit contractors’ electronic devices, but will rely on contractor’s attesting to their compliance with the requirements.

AGC has communicated to DoD the difficulty many contractors have had in implementing these new cybersecurity requirements. According to a DoD spokeswoman, contractors must still comply by Dec. 31, but compliance means documenting the state of your company’s information system in a security plan (SSP) and documenting how and when your company will implement any requirements that have not yet been implemented.  Further, individual, isolated, or temporary deficiencies should be managed through Plans of Action/Milestones (POAM). 

For more information contact jordan.howard@agc.org or (703) 837-5368. Return to Top

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AGC IN THE NEWS
The Key to More Efficient Construction Projects is Collaborative Contracts
 

AGC recently participated in a Construction in America campaign where we united with likeminded industry leaders to advocate for how modern technology, people and equipment are helping our construction professionals manage risk and build quality projects safely, on time and within budget. The campaign was distributed through USA TODAY on Dec. 19, 2017 and is published online here.

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