Tell Congress to Repeal Blacklisting and Other Midnight Obama Regulations
This week, Congress is considering the repeal of last minute Obama administration regulations, including the Blacklisting regulations. Urge your members of Congress to repeal this and other Obama regulations now.
AGC'S POLICY PRIORITIES
AGC works with the Legislative Action Committee to set the legislative agenda every two years, to coincide with the start of each new congressional session. Issues are added or removed from the legislative agenda based on three factors: the top issues of importance for a majority of AGC members, the timeliness of each individual issue and the achievability of success.
Once the legislative agenda is set, AGC's government affairs subject matter experts create one-pagers to provide talking points for issues currently moving through the legislative or regulatory process. Subject matter experts focus on issue areas such as: infrastructure funding, labor, tax, federal procurement, environment and safety.
Prepare the Next Generation of Skilled Construction Workers through Perkins Act Reauthorization
- AGC contractors are reporting difficulty finding qualified professionals to work in craft positions, which is the bulk of the construction workforce. The craft worker shortage comes at a time when contractors view the pipeline for recruiting and training new workers as poor. As a result, AGC is looking for measures that will make it easier for schools to establish programs to train future workers. The Perkins Act is one measure that will help to close the skills gap.
- Perkins Should Align Education with Local and Regional Economic Needs. States need flexibility in how they select and fund high-quality training programs, as the most successful form of engagement with employers varies widely from region to region. The states should also be required to report on the mechanisms used for alignment and how they are consulting with employers and industries, without specific mandates, which will provide the ability to evaluate the success of programs across the country.
- Perkins Should Encourage and Promote Work-Based Learning. The bill should define work-based learning – an essential element of effective career & technical education – that recognizes the varying arrangements used across industries and local education authorities should assist in facilitating work-based learning opportunities. The sustained interaction between students and industry professionals in real workplace settings are the best environments to foster a career in the construction industry.
- Perkins Should Take Steps to Spur the Development and Acceptance of Industry-Recognized Credentials. Industry credentials are a proven method to distinguish applicants who have the requisite skills for working in the construction industry. The bill should also distinguish between industry credentials and other postsecondary awards.
- Increase Career & Technical Education Funding. Given the higher graduation and job placement rates of career and technical programs and the expanding demand for construction jobs, Congress needs to increase funding for Perkins. Additional flexibility and a modest funding increase will make it easier for school districts to expand their career and technical program offerings.
Support Adoption of the Composite Plan Design
- The Multiemployer Pension Reform Act of 2014 was modeled after the proposal, Solutions Not Bailouts, and includes many (but not all) of the proposed reforms. One reform not included was the creation of a plan option that is a hybrid between a defined contribution and a defined benefit plan, the composite plan.
- Composite Plans Offer Advantages Over Existing Plan Designs. Composite plans take the best features from each type of plan by combining the predictable costs of 401(k)-style defined contribution plans with the lifetime income features of traditional defined benefit plans. Composite plans provide for professional asset management and the pooling of risks.
- Mechanics of Composite Plans Ensure Fiscal Viability. The design creates a benefit formula to determine the retirement income each participant receives. A Board of Trustees consisting of both employee and employer representatives sets the plan’s provisions. Employers contribute based on bargaining agreements’ contribution rates with no liability outside the negotiated rate or withdrawal liability. The composite plan design would not eliminate legacy liabilities under existing defined benefit plans. Employers would continue to contribute to the pension trust where a portion of the contribution would pay down legacy costs and a portion would go towards the new composite plan.
- Composite Plans Improve Upon the Current Multiemployer Pension System. Composite plans project funding for 15 years to help guarantee solvency. A plan’s funding ratio must equal or exceed 120 percent. If the ratio falls below 120 percent, the plan is required to improve its projected funding level. The composite plan is a better alternative than a traditional defined benefit plan because the 120 percent funding cushion, emphasis on responsible funding policies, early intervention to address funding imbalances, and the ability to attract and retain contributing employers limit the chance of plan failure.
- Composite Plans Have Been Stress Tested and Have a Proven Track Record. The proposed composite plan model has been thoroughly reviewed and stress tested. Modeling shows that a composite plan would have survived a comparable 2008 financial crisis without causing undue harm to either contributing employers or participants. Additionally, the design is common practice throughout much of Canada, where they are highly successful with a growing employer base.
- The Combination of Composite Plans and Provisions in the Multiemployer Pension Reform Act Should Alleviate the Need for a PBGC Premium Increase. The PBGC has reported significant funding shortfalls of its multiemployer program. Defined benefit plans pay a yearly insurance premium to the PBGC on a per participant basis. Any future premium hikes should first consider the impact that the Multiemployer Pension Reform Act may have on large, insolvent plans. The ability for plans to take earlier, corrective action and increase premium revenue may be enough to put the PBGC on a better fiscal path.
One-Size-Fits-All Executive Order on Paid Sick Leave for Federal Contractors Does Not Fit the Construction Industry
On Sept. 7, 2015, President Obama signed Executive Order 13706 that requires federal contractors and subcontractors to provide employees up to seven days of paid leave for sickness and other purposes annually. On Feb. 25, the Wage and Hour Division of the U.S. Department of Labor issued an 81-page notice of proposed rulemaking. A final rule is expected on or before Sept. 30, as required by the Executive Order.
- The Executive Order Does not Account for the Project-based, Transitory and Seasonal Aspects of Construction. Most craft workers, laborers and mechanics move from project to project or employer to employer, often within short periods of time. They may earn fluctuating rates of pay due to changes in project type, location or assigned tasks. They may also experience long periods of layoff due to seasonal weather or a downturn in the demand for construction. The Order requires that employers reinstate paid leave for employees rehired by the same employer or a successor employer within 12 months after job separation. However, in the transitory construction industry, knowing what constitutes “job separation” and what constitutes “reinstatement” is nearly impossible, particularly for union workers where contractors obtain workers from hiring halls on an “as-needed” basis for the portion of a project that requires the skills of the workers’ particular trade.
- Legislators and Regulators Generally Recognize the Uniqueness of Construction in Broad-Based Policy Making. Congress and federal regulators have established many special rules for the industry to accommodate that uniqueness, such as special affirmative action rules under Executive Order 11246, special voter liability rules under the National Labor Relations Act, and special pension plan withdrawal liability rules under the Employee Retirement Income Security Act, to name a few. State and municipal lawmakers have also recognized it in their adoption of paid leave laws, many of which expressly limit or exempt construction industry coverage.
- Prime Contractors are Liable for Subcontractor Violations for Which Primes Could Not Know About. The Executive Order places liability upon prime and upper-tier contractors for violations by their subcontractors. However, determining whether a subcontractor is abiding by this Order is impossible for prime and upper-tier contractors. A prime contractor has no available means to determine whether or not a subcontractor happens to be working for that prime contractor at the time of the paid leave request. Given the carryover provisions of this Order, subcontractor violations can occur years after the relationship between subcontractor and prime contractor has ended.
- The Executive Order Will Punish Innocent, Compliant Contractors for Violations of Bad Actors. A federal agency contracting officer can withhold payments to the prime contractor as necessary to pay employees the full amount owed. However, the prime contractor may not be the violator. Rather, a subcontractor could be. So, when a contracting officer withholds payment to a prime contractor for one subcontractor’s violation on a project involving 100 subcontractors, the compliant prime contractor and 99 compliant subcontractors will not receive payment for work they completed and their employees may not be paid.
Oppose All Efforts to Encourage the Use of Government-Mandated Project Labor Agreements on Federal Construction Projects
- A government-mandated project labor agreement (PLA) requires contractors to negotiate a pre-hire collective bargaining agreement that establishes the terms and conditions of employment for a specific construction project with one or more labor unions working on the project. PLAs typically restrict the majority of employment to those workers whom unions are willing to refer to the project. It can also create long-term obligations to union benefit plans. This discourages non-union companies, small companies, and other disadvantaged businesses from participating in these public contracting opportunities.
- AGC is Committed to Full and Open Competition for All Public Projects. The choice of whether to adopt a collective bargaining agreement should be left to the contractor-employers and their employees, and such a choice should not be imposed as a condition to competing for, or performing on, a publicly funded project. Government mandates and preferences for PLAs can restrain competition, drive up costs, cause delays, lead to jobsite disputes, and disrupt local collective bargaining. In cases where the use of a PLA would benefit a particular project, the contractors qualified to perform the work would be the first to recognize that fact and adopt a PLA voluntarily.
- Government-Mandated PLAs Can Limit the Number of Competitors on a Project. Government mandates for PLAs typically require contractors to make fundamental, often costly, changes in the way they do business. For example, a PLA may require a contractor to recognize the local unions as the representatives of their employees on that job, use the union hiring hall to obtain workers, and pay into union-benefit and multi-employer pension plans that nonunion employees will never be able to access, forcing non-signatory employers to pay twice for retirement and health care benefits. Such changes are impracticable for many contractors and subcontractors.
- There is No Evidence Proving that PLAs Will Improve the Economy or Efficiency of a Project. Case studies of the economic benefits of PLAs have had varying conclusions. The Government Accounting Office reported that it could not document the alleged benefits of past mandates for PLAs on federal projects and that it doubted such benefits could ever be documented due to the difficulty of finding projects similar enough to compare and the difficulty of conclusively demonstrating that performance differences were due to the PLA versus other factors.
Fully Fund Federal Transportation Programs and Fix the Highway Trust Fund
- The “Fixing America’s Surface Transportation Act” (FAST Act) authorized federal highway and transit programs and provides the Highway Trust Fund (HTF) with enough money to fund those programs through Fiscal Year 2020. Although the FAST Act failed to provide a long-term revenue source for the Highway Trust Fund, it does provide yearly increases in highway and transit funding over the lifetime of the Act. The FAST Act authorizes $43.2 billion for highway projects and $12 billion for transit programs in Fiscal Year 2017. However, the House and Senate have yet to finalize their Fiscal Year 2017 funding bills for the Department of Transportation.
- Congress Must Pass a Full Year Appropriations Bill for Fiscal Year 2017 that Provides FAST Act Funding Levels for Federal Highway and Transit Programs. Any continuing resolution should be for the shortest length possible. Congress must have in place funding for Fiscal Year 2017 to allow states to properly plan for next year’s construction season.
- The final Fiscal Year 2017 Transportation Appropriations Bill Should Not Include the $2.2 Billion Cut That Was in the Senate Transportation Appropriations Bill. The Senate bill provided this cut – known as a rescission – which will impact every state’s highway and transit funding for next year.
- The Provision to Prohibit the Use of Geographic, Economic or Other Hiring Preferences Must be Included in the Final Appropriations Bill. These provisions would ensure that there is a qualified pool of available workers and that any such preference wouldn’t displace a contractor’s existing employees.
- Congress Needs to Start Working to Fix the Highway Trust Fund. Without Congressional action, the Highway Trust Fund will face annual revenue shortfalls of $18 billion when the FAST Act expires. A permanent Highway Trust Fund fix should be considered as part of any tax reform plan.
Block the Occupational Safety & Health Administration (OSHA) from Implementing Crystalline Silica Rule
- OSHA has issued a final rule that would revise the standard on occupational exposure to respirable crystalline silica. The rule would significantly reduce the permissible exposure level for silica in the workplace to 50 micrograms per cubic meter. Crystalline silica is found in numerous building materials and a number of construction activities result in the release of crystalline silica. Silica can be found in concrete, brick, gravel, stone, tile, as well as many other construction materials. Because of the ubiquitous nature of silica, nearly every employee who performs work on a construction site will work with or near a product that contains it. While safety is the number one priority for the construction industry, the approach OSHA has taken to regulate crystalline silica exposure in the construction industry could actually compromise safety rather than improve it.
- The Rule is Not Technologically or Economically Feasible. OSHA’s rule prescribe control methods that contradict existing safety practices and compliance with it will ultimately cost the construction industry nearly $5 billion annually. This cost estimate makes the rule potentially the most expensive OSHA regulation ever for the industry. About 80 percent of the cost will be direct compliance expenditures and 20 percent will come in the form of increased prices for construction materials and building products.
- Laboratories that are Responsible for Analyzing Air Samples do not have the Ability to Measure Exposures Accurately. Independent studies, and even OSHA’s own testing, have shown that the laboratories are only able to determine within a margin of error of ± 50% what level of silica is present in the samples at the rule’s lower exposure level. This means that employers will not be able to reliably determine whether they have met the requirements of the standard.
- OSHA has not estimated the impact on small employers in over 10 Years. OSHA last convened a small business advocacy review (SBAR) panel to consider an earlier proposed rule regulating crystalline silica in 2003. The 2003 panel recommendations resulted in OSHA withdrawing their original proposed silica rule. Since that time, the economy and the construction industry have changed drastically. In proposing this new rule regulating silica, OSHA has not only failed to convene a new small business advocacy review panel, but has also ignored the original 2003 panel recommendations.
- The Rules Fails to Explain How Silica-Related Illnesses and Deaths will be Reduced. The agency itself has admitted a failure to properly enforce existing standards, while the Centers for Disease Control (CDC) has reported a 93 percent drop in silica-related deaths between 1968 and 2007. Further reductions through 2010 under the current regulation are expected.
Block OSHA from Prohibiting Post-Accident Drug Testing (Injury and Illness Reporting Rule)
- OSHA issued a final rule requiring employers to publicly and electronically report workplace injuries. The rule also suggests that the risk of employer retaliation against workers for reporting injuries is so great that there must be a limitation of post-accident drug testing as a means to determine whether drugs or alcohol was a factor. This could have a chilling effect on deterring employee use of drugs on the jobsite.
- The Rule Could Enable Employee Use of Drugs on Construction Sites. The rule suggests that post-accident drug testing could be considered a practice that would discourage employees from reporting work-related injuries or illnesses. However, nothing can be further from the truth. While OSHA states that the final rule does not ban employee drug and alcohol testing, the rule is already causing employers to rethink their drug testing program despite its effectiveness.
- Construction Contractors And Unions Agree On The Need For Drug Testing Of Employees. Construction is not office work. Even the most innocent mistake can result in serious bodily injury and death. One employee’s drug use can expose many others to harm. As such, labor unions and construction contractors across the country include provisions for post-accident drug testing in their collective bargaining agreements.
- The Rule was Crafted Outside the Regulatory Process, without Stakeholder Input. The rulemaking process was controversial and OSHA failed to solicit comments on post-accident drug testing when the rule was proposed. The process they chose didn’t allow input from stakeholders and even failed to recognize that employers and unions have historically permitted post-accident drug testing in their collective bargaining agreements. Further, OSHA has not cited any data that validates OSHA’s controversial position that these drug policies deter injury and illness reporting by employees.
Ensure Reforms to Tax Policies Promote Long-Term Growth
- AGC’s members are engaged in all forms of non-residential construction and consist primarily of small businesses, with more than 70 percent organized as S-corporations.
- Reform Onerous Tax Accounting Calculations by Cosponsoring the “American Job Builders Tax Reform Act.” Revise the long-term contract accounting rules for contractors in Section 460, which places an unfair burden on smaller construction companies. Eliminate the burdensome look-back accounting requirement for long-term contracts and Repeal the Alternative Minimum Tax (AMT), which will similarly reduce complexity and free up capital needed for businesses to grow and invest.
- Tax Reform Should Not Pick Winners and Losers. The ability to recover capital costs in the current system is vital for construction companies. Accelerated and bonus depreciation allow businesses to write off expenditures to incentivize capital investments, as well as new and used equipment purchases.
- Tax Reform Should Address Infrastructure Investment and the Federal Trust Funds.
- Cosponsor H.R. 5361/S. 3177, the “Public Buildings Renewal Act of 2016.” AGC supports the continued tax preferential treatment of municipal bonds, the expansion of the private-activity bond (PAB) cap to include additional types of public infrastructure and the expansion of other financing options that promote the construction of needed public infrastructure at the federal, state and local levels. This financing facilitates traditional public infrastructure investments and provides a catalyst for Public-Private Partnerships.
- Address the Long-Term Viability of the Highway Trust Fund. Congress must act beyond the current reauthorization and solve the dilemma for future generations in need of safe and sufficient infrastructure. A sustainable user fee-based model must be considered before the expiration of the FAST Act.
- Oppose Treasury’s Detrimental Section 385 Regulations that go far beyond cross-border mergers and would apply to a wide range of ordinary business transactions by domestic companies – including U.S.-based construction companies structured as S-corporations – by characterizing regular business loans as equity, thereby creating a second class of stock, as well as potentially violating the shareholder eligibility rules under subchapter S.
- Oppose Treasury’s Section 2704 Regulations that are Designed to Increase Estate Taxes Owed by Family Businesses. They accomplish this by forcing business owners to disregard important facts like control and marketability when ownership of the business is being passed on to the next generation. These sweeping regulations will force more companies to contend with complicated and costly estate taxes.
Federal Procurement Issues
Support Reforms that Benefit the Government, Small Businesses and the Entire Construction Industry
- AGC co-founded the Construction Industry Procurement Coalition, a coalition of 15 construction organizations representing tens of thousands of firms and individuals engaged in all facets of construction, to promote common sense procurement reforms that benefit the government, taxpayers, small businesses and the entire industry.
- Such common sense, bipartisan reforms are currently included in the Construction Consensus Procurement Improvement Act, which would help restrict federal agencies from procuring construction services through reverse auctions and make the design-build construction process more competitive.
- Prohibit Federal Agencies from Procuring Construction Services through Reverse Auctions. Procuring design and construction services is different than procuring off-the-shelf, manufactured commodities. In 2004, the U.S. Army Corps of Engineers (USACE) determined that procuring design and construction services through reverse auctions “should be the very rare exception and not the rule—if used at all.”
- However, several federal agencies—the Departments of Veterans Affairs and Interior—continue to use reverse auctions for construction. GAO recently reported that federal agencies conducted over 3,600 single-bid reverse auctions.
- In reverse auctions, each bidder recognizes that he will have the option to provide successively lower bids as the auction progresses. As a result, a bidder has no incentive to offer its best price and subsequently may never offer its lowest price.
- Make the Design-Build Construction Process More Competitive by Limiting One-Step Design-Build Procurements. Many qualified design/construction teams—especially small businesses—cannot risk the high cost of producing complete design and engineering technical proposals and, consequently, do not compete in design-build contract competitions where the number of competing teams is unknown. When designers choose not to compete, it limits the prime contractor pool selection on design-build projects.
- Reasonably limiting one-step, design-build competitions will help spur more design-build competition within the construction industry, leading to more innovative and better value proposals. This reform would reduce government resources spent on reviewing unqualified proposals and increase competition by providing predictable business risks.
Repeal the Prior Approval Regulation Imposed on Corporate Member Trade Association Political Action Committees (PACs)
- The Federal Election Campaign Act of 1971 requires that corporate member trade association PACs obtain separate and specific written approval from member corporations before talking in depth about the PAC and/or soliciting their executive and/or administrative staff. Furthermore, the regulation states that a corporation may approve solicitations by only one trade association per calendar year.
- Requiring Trade Associations to Seek Prior Approval Is Inequitable. Trade association PACs are heavily regulated by the Federal Election Commission (FEC). There is no “dark” undisclosed money. There are no “mega-donors,” because $5,000 is the maximum amount an individual can contribute in a calendar year. Yet, no other class of PAC – including corporate, labor union, and individual membership association PACs – is subject to the prior approval requirement.
- The First Amendment Rights of AGC Member Company Employees Are Restricted. Members of AGC have a Constitutional right to join together in support of or in opposition to candidates for political office. Requiring prior approval discourages our members from participating in the association’s PAC, and creates an unequal playing field that constrains our members’ First Amendment rights to free speech.
- The Requirement Creates Unnecessary Confusion for Thousands of AGC Member Companies. Individuals who are eligible to contribute to a trade association PAC are confused as to why their company must first grant permission for them to be solicited. Most often, AGC representatives have to repeatedly explain the arduous process.
- Companies that are members of multiple corporate trade associations are confused as to why they cannot allow their employees to be solicited by these groups. Per the regulation, prior approval can only be granted to one PAC in a calendar year. As a result, many are apprehensive to choose one PAC over another, and simply choose not to participate at all.
- Multiple individuals from the same company may participate in different trade associations, so they may not know who has granted authorization to which trade association in a given year.