Legislative & Regulatory Update, August 2021
The Senate-driven infrastructure legislation process remains the focus of Congress and the Biden administration ahead of the upcoming August recess. After weeks of back-and-forth, Senate negotiators struck a deal in late July on revenue sources and $550 billion in new infrastructure investments. While progressives in the House are displeased with the proposal, Speaker Pelosi will likely face immense pressure to bring the bipartisan legislation to the House Floor.
Here is an exclusive update from TAUC on policy and regulatory issues of vital interest to contractors and the union construction and maintenance industry.
Bipartisan Infrastructure Negotiations Continue to Dominate Washington
After the breakthrough deal, the Senate quickly voted 67-32 on a Motion to Proceed to debate how to proceed with the House-passed INVEST in America Act. The text of the bipartisan agreement will replace the INVEST in America Act text, which is now the legislative vehicle. The exact process and timing for complete consideration of the package remain uncertain. However, it is expected to develop relatively quickly in the coming week.
While the legislative text has not been released, there are detailed descriptions of funding levels included in the bipartisan infrastructure proposal. Relevant surface transportation provisions include:
- $110 billion increase over existing levels for roads and bridges, including:
- $55.48 billion plus-up in FHWA formula funds; and
- $55.52 billion in one-time general fund guaranteed appropriation to provide:
- $36.74 billion for new bridge program
- $7.5 billion for RAISE grants
- $5 billion for megaprojects program
- $3.2 billion for INFRA grants
- $1.25 billion Appalachian Development Highway System
- $500 million for Surface transportation PAB volume increase
- $1 billion for culvert removal and replacement
- $66 billion for freight and passenger rail
- $11 billion for safety programs
- $39.2 billion for transit, including:
- $65 billion for broadband
- $17.3 billion for ports and waterways
- $25 billion for airports
- $55 billion for water infrastructure
- $73 billion for grid upgrades
- $46 billion for resiliency
- $7.5 billion for Low-carbon and zero-emission school buses and ferries
- $5 billion for EV and low-carbon school buses and $2.5 billion for ferries
The package also includes portions of the Senate Energy and Natural Resource Committee's Energy Infrastructure Act. Specifically, the package includes the following energy provisions:
- Electrical Grid - Provides $5 billion to enhance the resilience of the nation's electrical grid; and $5 billion to upgrade grid reliability, transmission, and storage.
- Carbon capture commercialization industrial hubs - Provides $2.5 billion to DOE to expand its large-scale carbon capture testing and commercialization program and $3.5 billion for four regional direct carbon capture hubs. It would also authorize $3.5 billion in funding for carbon capture pilot and demonstration projects.
- Nuclear power support - Includes energy legislation approved earlier this month by the Senate Energy and Natural Resources Committee, including a new program within the Energy Department to provide $6 billion over the next five years
- Construction of battery manufacturing industries - Includes $6 billion over five years for battery material processing grants and battery manufacturing and recycling grants to help boost the American industry.
- Hydrogen manufacturing support - the bill directs $8 billion for four regional clean hydrogen development hubs, plus another $500 million to spur hydrogen manufacturing.
The bill would apply Davis-Bacon prevailing wage requirements to all projects receiving federal assistance under the Energy title of the bill. Finally, the bill would also allow projects receiving surface transportation funding or assistance under this legislation to include local hire requirements. Currently, PLAs or local hire agreements are not permitted under the competitive bidding requirements of Federal aid highway law.
As mentioned earlier, despite concerns from the progressives in the House, Speaker Pelosi will likely bring the bipartisan legislation to the House Floor. It is likely that she will move the infrastructure legislation with a budget reconciliation package that addresses some of the concerns of the progressives. Earlier this month, Democrats announced their intent to advance a package providing $3.5 trillion in additional investment.
Democrats have indicated that they plan to use the reconciliation package to provide funding for their climate priorities, including electric vehicles (EVs), EV charging infrastructure, climate resilience, low-carbon energy sources, among others. It is possible that elements of S.1298, the Clean Energy for America Act, which advanced through the Senate Finance Committee in May, including various clean energy tax incentives, will be included in the multi-trillion-dollar measure. However, without bill text, it is difficult to anticipate which policies will be included.
PBGC Releases Interim Final Rule on Special Financial Assistance Program for Financially Troubled Multiemployer Plans
The Pension Benefit Guaranty Corporation (PBGC) released an interim final rule implementing a new Special Financial Assistance Program for financially troubled multiemployer defined benefit pension plans (SFA). While the agency will be accepting comments before implementing the final rule, they are now accepting applications for SFA assistance. The 30-day comment period closes on August 9.
The SFA was included in the American Rescue Plan and establishes a fund for the 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 2:3 active to inactive ratio;
- critical and declining status for any plan 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 all plan obligations -- with no reduction to a beneficiary's accrued benefit -- through plan year 2051 (30 years) and would not have to be repaid. Funding for assistance under the SFA will be provided from general revenue transfers to the PBGC, not through PBGC premiums.
The deadline for plans to apply for special financial assistance is December 31, 2025. The interim final rule states that the PBGC plans to prioritize the most impacted plans and participants first.
Plans receiving special financial assistance would be required to meet several conditions, including:
- Reinstate any benefits that were reduced as a result of an MPRA benefit suspension.
- May not retroactively increase benefits other than any required reinstatements of suspended benefits.
- Future increases may be adopted during the SFA coverage period only if the plan actuary certifies that employer contribution increases are projected to be sufficient to fully pay for the increases.
- Contribution rates cannot be reduced from those contained in the collective bargaining agreement or plan document in effect on March 11, 2021.
- SFA funds must be
- used only to make benefit payments and pay administrative expenses;
- segregated from plan assets; and
- invested in investment-grade bonds or other permissible investments
- Employer withdrawal liability must be calculated using the mass withdrawal interest assumptions under PBGC regulations, which will inflate the dollar amount of an employer's allocable share of a plan's underfunding. However, SFA funds are treated as plan assets for withdrawal liability purposes, which could limit the impact of using these assumptions.
The Senate Health, Education, Labor, and Pensions Committee held a hearing to examine the Protecting the Right to Organize (PRO) Act of 2021.
The legislation would make significant changes to dozens of labor laws - including:
- 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 that 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.
The bill also:
- Includes provisions designed to address employee misclassification, including establishing a new "ABC" test for determining independent contractor status; and
- Over-rides "right to work" laws by allowing employers and unions to enter into a contract that allows unions to collect fair-share fees that cover the costs of collective bargaining and administering the agreement.
At the hearing, Democrats called for the need to update the National Labor Relations Act (NLRA) to facilitate union organizing and highlighted their support for unionization and increasing union density to help mitigate inequalities in the workplace. They also pointed to the importance of provisions in the PRO Act designed to fight employee misclassification. Republicans questioned the need for legislation, which they stated would harm small businesses and inhibit economic growth. Committee members also discussed provisions of the bill, including those related to employee misclassification, joint employer standards, and information sharing with union organizers.
The PRO Act passed the House earlier this year. However, it faces exceedingly long odds to pass the Senate without Republican support.
Senate Budget Chairman Bernie Sanders (I-VT) told the press that he plans to include parts of the PRO Act in the next round of budget reconciliation. While most of the legislation likely cannot be included in the budget reconciliation process due to the Byrd Rule, which precludes the inclusion of any provision that does not directly impact the budget, some elements could be eligible. This could include a proposal to impose fines of up to $50,000 on firms for labor rights violations. Sources in the White House also echoed Senator Sanders, stating that provisions of the PRO Act should be included in the reconciliation bill. Details on what will be included in the reconciliation package will not be known until the text of budget resolution publicly available.
Biden Administration Examines IRAP
The Office of Management and Budget's Office of Information and Regulatory Reform issued a notice indicating that the Biden Administration plans to consider a proposed rule to cancel a Trump-era rule establishing industry-recognized apprenticeship programs (IRAPs). IRAPs were created to work outside of the existing registered apprenticeship system by allowing employers to design and certify their own federally assisted training programs with minimal government oversight. Since taking office, President Biden has highlighted concerns regarding the lack of standards and regulation surrounding IRAPs, and the potential to establish lower quality training programs that compete with and undermine registered apprenticeship programs.
Joint Employer Rule
The Department of Labor published a final rule to rescind the Trump-era rule regulating joint employer status under the Fair Labor Standards Act (FLSA). With the rescission, DOL will revert to joint employer rules that were issued under the Obama Administration. TAUC and our union contractor trade association partners in the CEA supported DOL's efforts to withdraw the rule, which narrowed the definition under the FLSA of what constitutes a "joint employer" and addressed the standard for determining whether an employee may be deemed to be jointly employed by two or more employers. The rescinded rule encouraged employee misclassification and undermined the competitiveness of contractors who properly classify their employees.