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TAUC Legislative & Regulatory Update, August 2020
As we enter the dog days of summer, Congress is struggling to respond to the COVID-19 crisis and resulting economic fallout, while continuing to work on annual spending bills and expiring authorizing legislation. This difficult task is made even more challenging against the backdrop of a Presidential election and a battle for control of the Senate. There are a number of important legislative and regulatory activities under consideration that will impact the union construction and maintenance industry.
Here is an exclusive update on policy and regulatory issues of vital interest to TAUC members.
Senate Republican COVID Response Package
The Senate Republicans have introduced a $1 trillion COVID relief package. This package will have to be reconciled with the $3 trillion HEROES Act passed by the House in May. It is not clear when or how these packages can be resolved. A bipartisan agreement will be necessary since the HEROES Act will not pass the Senate and the Senate Republican package cannot pass the Senate without Democratic votes. To complicate matters even further, expanded unemployment benefits expired at the end of July and Congress is scheduled to adjourn soon for the annual summer recess and party presidential nominating conventions. Not surprisingly, there is expected to be a flurry of negotiations in early August. The Senate Republican package includes several provisions that could impact TAUC members:
Liability Protections. The package includes a bill that would limit employer liability for coronavirus exposure. The Safeguarding America's Frontline Employees To Work Opportunities Required to Kickstart the Economy (SAFE TO WORK) Act would limit liability for COVID-19 exposure claims as long as employers followed public health guidance and were not grossly negligent. The bill would preempt state laws that impose liability for coronavirus exposure beyond those contained in the SAFE TO WORK Act. It would also:
PPP, Business Loans, and Tax Credits. The package also provides an additional $190 million for Paycheck Protection Program (PPP) loans and would let businesses apply for a second round of loans. PPP was created to avert layoffs during the pandemic and would allow loans to be converted to grants if employers agree to maintain payroll. The Senate Republican plan also makes available funding for separate low-interest loans to provide working capital and refinance existing debt. Finally, the proposal includes an expansion of the Employee Retention Tax Credit, which provide incentives for businesses to keep employees on their payroll through a refundable tax credit of 50% of up to $10,000 in wages paid by an employer whose business has been financially impacted by COVID-19.
Unfortunately, the proposal does not include several policies important to the union construction and maintenance industry:
Multiemployer Pension Reform. TAUC continues to work with a coalition of union and construction industry allies to advocate for Congress to include multiemployer pension relief and reform in the next coronavirus relief package. The group is working to ensure that any package include the Giving Retirement Options to Workers (GROW) Act, which authorizes the voluntary use of composite plans.
The House-passed HEROES Act includes comprehensive multiemployer pension reform legislation that included the GROW Act. The Senate package introduced by McConnell does not include multiemployer pension reforms, but Senator Grassley (R-IA) and Senator Portman (R-OH) – who will be key to developing any pension language – signaled a willingness to discuss possible multiemployer pension reform legislation with Senate Democrats and the House.
We have also been working to push back against opponents of the GROW Act and respond to inaccurate information being distributed in Capitol Hill re: composite plans. A Groom Law Group report that found that composite plans would have fared better after the 2008 financial crisis and so far during the current coronavirus pandemic than traditional define benefit plans. The Groom report was commissioned by TAUC and other contractor trade associations and building trade unions.
COBRA Subsidy for Recently Unemployed. Unlike the House-passed HEROES Act, the Senate package does not include a provision providing a COBRA subsidy for the recently unemployed to allow them to stay on employer-provided health care for a temporary period during this ongoing public health and economic crisis.
TAUC has signed on to letters organized by the NCCMP and American Benefits Council supporting the inclusion of this subsidy in the final package.
Department of Labor's Proposed Rule on Financial Factors in Selecting Plan Investments
TAUC joined union contractor associations of the Construction Employers of America (CEA) in filing comments on the U.S. Department of Labor's proposed rule on Financial Factors in Selecting Plan Investments. The proposed rule would amend rules governing a fiduciary's investment duties under ERISA. The DOL's stated purpose in adopting the Rule is to confirm that plan fiduciaries must select plan investments solely based on financial considerations that impact the economic value of the investments.
The CEA expressed concern with the impact of the proposed rule the ability of construction industry collectively bargained multiemployer plans to invest in projects that require 100% union labor and generate contributions to these pension plans. Specifically, the comments argued that the proposed rule would require trustees to focus only on investment returns, undermining the ability of collectively bargained plans to investment in opportunities that produce unique "pecuniary" benefits such as additional man hours and plan contributions. Similar concerns were also included in comments submitted by the NCCMP.
The Trump Administration finalized the first major overhaul of the National Environmental Protection Act (NEPA) since the statute was signed into law in 1970. NEPA requires the federal government to analyze the impact of a major project or federal action on the environment — and to seek public input — before approving it. Proponents of the new rule argue that since the enactment of NEPA, implementation has been complex and time-consuming for federal agencies and projects seeking permits or approvals. NEPA analyses are also frequently challenged in the courts, causing additional delays and increasing the cost of delivering infrastructure projects. These delays also impact the ability of businesses and communities to plan, finance, and build projects. The new regulations will go into effect on September 14th. Federal agencies will have one year to revise their implementing NEPA regulations consistent with CEQ's new rules.
The rule is expected to face a series of legal challenges. It will also face efforts to block its implementation during congressional consideration of the fiscal year 2021 appropriations bills.
Infrastructure Investment Legislation
The House passed a broad $1.5 trillion infrastructure package, the "Moving Forward Act." This infrastructure package included $494 billion in surface transportation investments, $130 billion for schools, $100 billion for affordable housing, $100 billion for broadband, $65 billion for water projects, $70 billion for the electric grid improvements, $30 billion for hospitals, and $25 billion for the postal service.
While the President continues to talk about a $1 trillion infrastructure package, the outlook for enactment of a major infrastructure package does not look good. Senate Majority Leader McConnell has said that he would prefer to move infrastructure-related bills – like the surface transportation legislation approved by the Senate Environment and Public Works Committee -through regular order and with the revenues to pay for the increased investment. This is very unlikely given the inability of congress to identify and enact the revenues – particularly in an election year – and the Senate's floor crowded schedule.
Though it is unlikely that a major legislative package can be enacted into law, there is still hope that smaller infrastructure bills like the Water Resources Development Act can be passed.