TAUC Legislative & Regulatory Update, April 2021
With the passage of a third COVID-19 response package, discussions in Washington have begun to shift to recovery from the public health crisis. The President rolled out a major aspect of his Building Back Better proposal by calling for over $2 trillion in federal investment in all aspects of the nation's infrastructure. Both Houses of Congress began hearings on aspects of their infrastructure-related proposals — such as surface transportation reauthorization and legislation designed to address climate change and energy resiliency — with legislative action set to begin in committee later this spring.
Here is an exclusive update from TAUC on policy and regulatory issues of vital interest to contractors and the union construction and maintenance industry.
Biden Unveils Build Back Better Infrastructure Framework
President Biden unveiled his "American Rescue Plan" at a United Brotherhood of Carpenters training center in Pittsburgh, Pennsylvania. The plan calls for $2.25 trillion in infrastructure investments over the next eight years. The package will be paid for over 15 years by raising the corporate tax rate to 28% from 21% and increasing taxes on companies' foreign earnings.
Congress will ultimately have to develop legislation to implement the proposal. The specific legislative vehicle and timing for consideration remains very unclear. While the President has said that he is interested in pursuing bipartisan support for the infrastructure package, the size and scope of the proposal and its pay-for make securing bipartisan support difficult. Several Republican lawmakers, including Senate Minority Leader Mitch McConnell, have expressed opposition to the price tag and tax increases included in the proposal. Sen. Roy Blunt (R-MO) has stated that Republicans could support a "trimmed down" measure that addresses just transportation and physical infrastructure.
While the President hopes for bipartisan support and has said that he is open to compromise, it is possible Democrats will have to try to move infrastructure under a budget procedure known as "reconciliation," which would allow them to avoid an expected filibuster. Recently the Senate Parliamentarian ruled that Democrats could use the budget reconciliation process again this fiscal year, creating an opportunity to enact portions of the package without bipartisan backing. While this could provide an opportunity to move a major package, reconciliation would also limit the provisions that could be included, namely the creation of new programs and earmarks. It also remains unclear if all Democratic senators will support the package - particularly the corporate tax increases.
Major provisions include the following categories and dollar figures:
- $571 billion for transportation infrastructure (including $115 billion for highways, $85 billion for transit, and $80 billion for rail).
- $111 billion for drinking water and water infrastructure
- $100 billion for broadband development
- $50 billion for resilience
- Non-Transportation Physical Capital
- $213 billion for affordable housing
- $100 billion for public school construction
- $12 billion for community construction
- $25 billion for childcare facilities
- $18 billion for VA hospital upgrades
- $10 billion for federal buildings
- Other Domestic Investments
- $180 billion for research and development
- $300 billion for manufacturing
- $100 billion for workforce development
- $400 billion for elderly and disabled care
The plan also calls for extending the investment tax credit and production tax credit for clean energy generation and storage. These tax credits allow for investments in projects to improve energy efficiency and meet a new clean electricity standard for the power sector. The President also proposes to establish ten "pioneer facilities" to demonstrate carbon capture retrofits for large steel, cement, and chemical production facilities. In addition, the plan reforms and expands the Section 45Q tax credit, making it easier to use for "hard-to-decarbonize industrial applications, direct air capture, and retrofits of existing power plants." This is part of the Administration's goal of achieving 100 percent carbon-free electricity by 2035. It is not clear if this standard is an aspirational push to reduce greenhouse gas emissions or something the Administration would propose be made mandatory.
The President's proposal also calls for including strong labor standards, such as prevailing wage requirements for projects receiving funding and tax preferential assistance. The plan also calls on Congress to pass the Protecting the Right to Organize Act (PRO Act), which would make significant changes dozens of labor laws, including establishing a new "ABC" test for determining independent contractor status and over-riding state "right to work" laws. The bill:
- Authorizes "card check" organizing
- Repeals restrictions on secondary boycotts and common-situs picketing
- Allows intermittent strikes
- Imposes mediation and binding arbitration
- Establishes joint employer status change could alter well-settled subcontracting practices in the construction industry; and
- Grants the NLRB the power to levy civil fines on employers that violate labor law.
Finally, the proposals call for Congress to provide $48 billion in workforce development and training, including investment in registered apprenticeships and pre-apprenticeships.
Walsh Confirmed as U.S. Secretary of Labor
The U.S. Senate confirmed Boston Mayor Marty Walsh to be Secretary of Labor by a vote of 68-29. TAUC sent a letter to the committee in support of his confirmation. Secretary Walsh had served as Boston mayor since 2013 and previously held a seat in the Massachusetts House of Representatives. He is also the former Secretary-Treasurer of the Boston Building Trades and a member of Laborers' Local Union 22.
COVID-19 Emergency Temporary Standard
TAUC and its partners in the Construction Employers of America (CEA) sent a letter to the U.S. Department of Labor (DOL) regarding a COVID-19 Emergency Temporary Standard (ETS). President Biden's Executive Order (EO) on "Worker Health and Safety" directed the Occupational Safety and Health Administration (OSHA) to consider issuing an ETS. The EO gave OSHA a March 15 deadline to decide whether an ETS was necessary. To date, OSHA has not issued an ETS.
The CEA letter did not recommend for or against the establishment of a COVID ETS but requested that an ETS respect labor management relationships and not apply to workplaces in which an employer and its union mutually agree on best practices.
DOL Will Not Enforce Trump Financial Factors Rule
DOL announced that it will not enforce or pursue enforcement actions against any plan fiduciary based on a failure to comply with Trump-era "Financial Factors in Selecting Plan Investments" rule until further guidance is developed. TAUC and the CEA opposed the rule when it was proposed and sent letters to the Biden-Harris Administration to reconsider it.
American Rescue Plan Act
Congress passed and President Biden signed into law a third round of COVID-19 economic response. The $1.9 trillion package, the "American Rescue Plan Act," included a number of provisions critical to the unionized construction and maintenance industry.
- Special Financial Assistance for Multiemployer Pension Plans: The legislation included a multiemployer pension rescue measure to establish a fund for the Pension Benefit Guaranty Corporation (PBGC) to provide Federal financial assistance to multiemployer pension plans that are:
- in critical status for any plan year from 2020 through 2022 and less than 40 percent funded and have a worse than 2:# active to inactive ratio;
- critical and declining status for any plany year from 2020 through 2022; or
- have suspended benefits applications under the Multiemployer Pension Reform Act (MPRA) as of February 2021.
- The amount of financial assistance would be provided to plans as a lump sum in the amount needed for the plan to be able to pay benefits -- with no reduction to a beneficiary's accrued benefit -- through plan year 20151 (30 years) and would not have to be repaid.
- Additional Provisions to Deal with the Impact of COVID on Multiemployer Pension Plans: The bill also included provisions to allow plans to deal with losses due to the COVID public health crisis, including allowing:
- plans to maintain their 2019 zone status for plan years 2020 and 2021 and to delay updating required funding improvement or rehabilitation plans for one plan year, delaying the need for plans to take steps to offset losses incurred during the pandemic;
- plans in critical or endangered status may also elect to extend their rehabilitation plans by 5 years; and
- plans to amortize investment and related losses incurred in the first two plan years ending after February 29, 2020 over a 30-year period, as opposed to the normal 15-year period.
- Increased PBGC Premium in 2031: The Act increased the PBGC premium rate for multiemployer pension plans to $52 per participant after December 31, 2030. This premium rate is indexed for inflation for years after 2031.
- COBRA Subsidy for Joint Labor Management Health and Welfare Plan Participants: Provides COBRA continuation coverage, which would subsidize 85 percent of the premium for workers who lost their eligibility for health insurance and allow these participants to continue to be able to afford coverage provided through joint labor-management health and welfare plans. The premium subsidy would be available through September 30, 2021 for individuals who lost their job or had their hours reduced.
- Paycheck Protection Program: Provides an additional $7.25 billion in funding for the Paycheck Protection Program.
- Tax Credits for Emergency Sick, Family and Medical Leave: Provides an extension of the Families First Coronavirus Response Act tax credits for emergency sick, family, and medical leave until September 30, 2021 and an increase to the wages covered by the credits from $10,000 to $12,000.