TAUC Legislative & Regulatory Update, July 2016

July 8 2016

TAUC Legislative & Regulatory Update, July 2016

As summer kicks into high gear, there continues to be a great deal of legislative and regulatory 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

Last month, the PBGC issued two reports on its insurance program: the “FY 2015 Projections Report” and the “Multiemployer Pension Reform Act Projects” report (MPRA report). The MPRA report was required under MPRA to a) notify Congress whether premium revenue is sufficient to meet PBGC’s future financial assistance obligations over 10-year and 20-year periods, and b) if that revenue is insufficient, to project the amount of additional premiums that will be necessary to meet the agency’s obligations.

The reports found that 10 to 15 percent of multiemployer plans are at risk of becoming insolvent over the next 20 years, putting the retirement benefits of 1 million to 1.5 million participants at risk. The Projections Report found that PBGC is expected to run out of resources prior to 2025.

The MPRA report found that a substantial premium increase will be necessary to avoid cuts in multiemployer insurance program guarantees. Premium revenue in the multiemployer program is projected to be less than $300 million this year, and the report shows that premiums will need to increase to over four and one half times the current rates in order for the PBGC to meet average projected financial assistance obligations though 2035. Finally, the report discusses the importance of carefully designing premium increases in order to avoid accelerating plan insolvency and increasing the amount of premiums needed.

Responding to concerns over potential PBGC premium increases as a result of the findings in the reports, LIUNA General President Terry O’Sullivan wrote U.S. Department of Labor Secretary Tom Perez urging the administration not to increase annual PBGC premiums for multiemployer pension funds. He warned that the premium increases would encourage employers to leave the plans because of high costs, further weakening the multiemployer pension system. He also urged authorization of the voluntary use of composite plans as a means of sustaining multiemployer funds.

Meanwhile, the back-and-forth over the Department of Treasury’s decision to reject the Central States rescue plan continues. The Washington Post editorial board laid out the difficult choices facing such troubled plans and pointed out that there are no easy options. TAUC joined other construction industry trade associations in sending a letter to the congressional committees with jurisdiction over multiemployer pension plans expressing concerns over the impact of Treasury’s decision on the multiemployer pension system, and urging enactment of legislation to authorize composite plans.

Environmental Regulations

Clean Power Plan: Legislative and legal wrangling continues over the Administration’s Clean Power Plan, which is aimed at cutting carbon dioxide emissions from existing coal-fired power plants.

The U.S. Court of Appeals for the District of Columbia Circuit recently made an unexpected decision to bypass the typical hearing before a panel of three judges, which had been scheduled for June 2. Arguments on whether EPA has the legal authority to implement this rule will instead be heard by the full court in September.

The House Appropriations Committee approved appropriations legislation that included a “rider” to prevent EPA from using funds made available under the bill to implement the Clean Power Plan and the agency’s carbon limits for new and modified power plants. The bill was defeated on the floor over an unrelated item. It is unclear whether it will be considered again free-standing or incorporated into a larger funding package. Such riders will be opposed by the President and will draw a veto threat. The Senate version of this bill does not include a similar provision blocking EPA from undertaking work on the Clean Power Plan.

Mercury and Air Toxics Rule: The U.S. Supreme Court refused to review a federal appeals court decision that left the EPA’s Mercury and Air Toxics Standards in place while the agency works to address a legal flaw in the rulemaking process. A 20-state coalition, led by Michigan, wanted the Supreme Court to stay the rule while EPA addressed concerns successfully raised by the states over whether the agency erred when it did not consider cost in its threshold decision that found it was “appropriate and necessary” to regulate hazardous air pollutant emissions from power plants under the Clean Air Act.

Ozone Standard: The House approved legislation that would delay the deadline for states to meet the EPA’s 70 parts per billion standards by eight years – from October 2016 until October 2024. H.R. 4775, the Ozone Standards Implementation Act of 2016, would address challenges state and local governments face in complying with the new ozone standards issued by EPA last fall, while still trying to comply with the most recent standards, which were issued in 2008. The Senate Environment and Public Works subcommittee held a hearing last month on S. 2882, the companion bill to the House measure. If the legislation manages to receive a committee markup, it is doubtful it will make it to the floor given Democrats’ opposition to the bill. Additionally, the President has stated that he would veto such legislation, making it even more unlikely that it will become law.

The House plans to vote on its FY2017 Interior and Environment Appropriations bill next week, and it includes a provision that would delay implementation of EPA’s ozone standard for one year. The Senate version of this bill does not include a similar provision. Again, the President is very unlikely to sign legislation delaying implementation of the Ozone rule and Congress lacks the votes to override his veto.

Other Issues

Energy Bill: The Senate may vote as soon as this week to go to conference with the House to reconcile their respective comprehensive energy proposals so that final legislation can be sent to the President. The President has threatened to veto the House-passed version over a number of provisions included in their package. Timing of the conference is unclear.

TAUC has worked with our building trades union partners to ensure funds provided under newly created federal grant programs to modernize the power grid and improve energy efficiency in energy production are covered by federal labor protections.