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TAUC Legislative & Regulatory Update, August 2016

TAUC Legislative & Regulatory Update, August 2016

Congress broke early for its annual August recess to accommodate the Republican and Democratic conventions. Despite the fact that the politicans are gone, there is still a lot of activity related to policy issues that will impact TAUC members, their employees, and their customers. Here is an exclusive update from TAUC on issues of vital interest to contractors and the union construction and maintenance industry as a whole.

Multiemployer Pension Reform

Moody's Investors Service issued a report that concluded that U.S. multiemployer pension plans are likely to see funding levels deteriorate due to aging participants, low interest rates and a sluggish global equity market. Moody's examined 124 multiemployer pension plans, finding the plans were short by $337 billion at the end of 2014. Highlighting the challenges facing multiemployer plans and plan trustees, the report found that investment returns boosted plan assets 4.5% to $302 billion in 2014, but obligations rose 5% to $639 billion.

This report comes on the heels of two reports issued in June by the PBGC that found (1) 10 to 15 percent of multiemployer plans are at risk of becoming insolvent over the next 20 years, threatening the retirement benefits of 1 to 1.5 million participants; and (2) the PBGC is expected to run out of resources prior to 2025. The PBGC concluded that a substantial premium increase will be necessary to avoid cuts in multiemployer insurance program guarantees.

Additionally, on June 28 the pension fund of the Bricklayers & Allied Craftsmen Local No. 7 Pension Plan, based in Ohio, filed a rescue plan with the Treasury Department. The Treasury Department has yet to approve a pension fund's application file under the provisions of the Multiemployer Pension Reform Act (MPRA). The Bricklayer & Allied Craftsmen's Pension Plan will become insolvent in 2025 unless it reduces benefits.

TAUC and our construction trade association and union partners continue to meet with members of congress and their staff to warn them of the impact of significant premium increases and need for congressional action to authorize the use of hybrid composite plans.

Prevailing Wage

Davis-Bacon Prevailing Wage protections were once again under attack on the floor of the U.S. House of Representatives this past month. During consideration of the Fiscal Year 2017 Interior, Environment, and Related Agencies Appropriations Act. Representative Steve King (R-Iowa) offered an amendment to prevent any project constructed with funds made available under the bill from being subject to prevailing wage standards. TAUC sent a letter to members of the House opposing this amendment. The amendment was defeated by a vote of 188-238, with 54 Republicans voting against the amendment.

Environmental Regulations

Prior to leaving for recess, the House continued its efforts to prevent the implementation of the Obama Administration's environmental regulations through the use of legislative "riders" attached to fiscal year 2017 funding bills. The House has approved appropriations legislation that include "riders" to prevent EPA from using funds made available to implement the Clean Power Plan, the agency's carbon limits for new and modified power plants, and delay implementation of EPA's ozone standard. Given that Congress is only scheduled to be in session for four weeks prior to the beginning of fiscal year 2017, the probability that any of the appropriations bills are enacted into law freestanding is low, making an end of year continuing resolution or omnibus spending package the likely outcome of this year's appropriations process. The riders will be opposed by the President and will draw a veto threat, making it very unlikely any of the riders will be included in an end of year package.

Clean Power Plan: There have been two recent developments with regard to the Clean Power Plan. States opposing the Clean Power Plan are pointing to the 5th Circuit's stay on EPA's regional haze plan for Texas and Oklahoma. In a court filing, the 27 states challenging the Clean Power Plan state that the stay evidences EPA is not sufficiently capable of managing electric generation and that the agency has not proved that the Plan will not undermine grid reliability. Additionally, the Competitive Enterprise Institute recently submitted a filing to the D.C. Circuit stating that its recent ruling on a case involving EPA's retroactive veto of a water permit for a mining project holds significance for the upcoming Clean Power Plan case. Although the Court ruled in EPA's favor, CEI believes that the only judge to consider cost-benefit issues found that the veto should be vacated. CEI believes that this dissent upholds their argument that EPA did not adequately consider cost-benefit issues when devising the Clean Power Plan. The D.C. Circuit is scheduled to consider the Clean Power Plan in September.

Mercury and Air Toxics Rule: Murray Energy Corp. recently filed a statement with the D.C. Circuit stating it plans to challenge EPA's Mercury Rule. In the statement, Murray Energy provides eighteen different reasons as to why it believes the rule is illegal, including EPA's inadequate response to the Supreme Court's instruction to consider the rule's cost.

Energy Bill

The House and Senate have formally agreed to go to a conference committee to reconcile their respective comprehensive energy proposals so that final legislation can be sent to the President. Prior to deciding to begin a conference, the House agreed to back away from provisions in its bill that had caused the President to threatened to veto the House-passed version of the bill. Congress does not return until September, and timing of the conference and final consideration of the final conference report remains unclear.

08/02/2016