TAUC Legislative & Regulatory Update, June 2021
Washington remains focused on President Biden's broad infrastructure and economic investment programs – the "American Jobs Plan" and "American Families Plan" proposals, respectively. The American Jobs Plan would investment $2.3 trillion in a broad range of infrastructure and infrastructure-related activities. The $1.8 trillion America Family Plan would, among many other things, provide extended child, earned income, and dependent care tax credits, as well as establish a national program that guarantees 12-weeks of paid family and medical leave. Congress is expected to spend much of this session working through the various proposals laid out by the President.
While Republicans have widely panned both proposals as too big and too broad and expressed strong opposition to the proposed tax increases, Senate Republicans – led by Senator Capito (R-WV) – continue to negotiate with the President. They released their latest counteroffer last week, calling for $928 billion over eight fiscal years for certain kinds of core physical Infrastructure. It is important to note that Capito's proposal is inclusive of ongoing infrastructure program spending. The President's plan is on top of ongoing spending.
With negotiations continuing, several Congressional committees have begun work on legislative packages to authorize various programs and tax provisions that will increase infrastructure investment. How and if these legislative vehicles interact with the broader infrastructure negotiations remains to be seen. As these discussions play out, here is an exclusive update from TAUC on policy and regulatory issues of vital interest to contractors and the union construction and maintenance industry.
Clean Energy for America Act
The Senate Finance Committee recently approved legislation by Senate Finance Chairman Ron Wyden (D-OR) to revise and streamline clean energy tax provisions. As we discussed last month, the proposal, the Clean Energy for America Act, consolidates over 40 existing energy tax provisions into three technology-neutral incentives: for power generation, transportation fuels and energy efficiency. The Wyden proposal would also tighten emission limits, while eliminating tax treatment fossil fuel sectors. Read last month's article
Carbon Capture Legislation
There continues to be significant bipartisan interest in legislation to spur investment in carbon capture technology.
Senators Michael Bennet (D-CO) and Rob Portman (R-OH) have introduced legislation that would help businesses finance carbon capture technology at power plants and other industrial facilities. The Carbon Capture Improvement Act would authorize the use of tax-exempt private activity bonds (PABs) to help finance the purchase and installation of carbon capture, utilization, and storage equipment, as well as the installation of retrofit equipment at power plants and industrial facilities.
Under the legislation, if more than 65 percent of CO2 emissions are captured by a project financed through tools, then all the eligible equipment could be financed with the bonds. This bond funding can also be done on a prorated basis for facilities that fall under that 65 percent threshold. Read the legislation here.
In the House, Rep. Tim Ryan (D-OH) introduced bipartisan legislation that would increase the value and eliminate the cap on the 45Q tax credits. The Coordinated Action to Capture Harmful Emissions Act would expand a tool utilized by power plants and other industrial facilities for carbon capture projects.
These bills add to the number of bipartisan proposals that have been introduced in both the House and the Senate calling for extending and enhancing tax credits to support investment in carbon capture technologies. Enactment of these policies would be important to supporting domestic energy and industrial production, protecting, and creating jobs, and reducing emissions.
FAST Act Reauthorization
As of this point, it is not clear if a multiyear surface reauthorization legislation will pass as a stand-alone measure or as part of the larger infrastructure package. Currently, federal surface transportation programs are operating under a one-year extension of the FAST Act. The extension provides the same level of investment as was authorized in FY 2020 and will expire on September 30 of this year.
President Biden hosted an Oval Office meeting with a bipartisan group of House members led by House Transportation and Infrastructure Committee Chair Peter DeFazio (D-OR) and Ranking Member Rep. Sam Graves (R-MO) to discuss infrastructure legislation. This follows a meeting he hosted in February with the leaders of the Senate Environment and Public Works Committee. While those meetings were cordial discussions, they highlight the challenge of reaching a bipartisan agreement on a surface transportation reauthorization proposal. After the meeting with the House T&I Committee leadership, Chairman DeFazio renewed his calls for a "transformational infrastructure bill." Graves stated that there "needs to be a transportation bill that primarily focuses on fundamental transportation needs, such as roads and bridges. Republicans won't support another Green New Deal disguising itself as a transportation bill." He also urged that the proposal provide "equity" for rural communities, which was lacking in both a House proposal last Congress and the American Rescue Plan's transportation provisions.
Given the uncertainty over the specific timing, vehicle, or funding mechanisms for the infrastructure negotiations, both the House and the Senate committees with jurisdiction over surface transportation programs are advancing multiyear authorization bills. The Senate EPW Committee unanimously approved its portion of the Senate surface transportation reauthorization package through the Committee in late May. The committee provided $303 billion in investments for the Federal aid highway program – a 34 percent increase from the last reauthorization. The House T&I Committee plans to consider its reauthorization bill on June 9. While details of this year's legislation have not been released, last year the House approved the "INVEST in America Act," which included a 42 percent increase in Federal aid highway funding.
The major challenge with passing a long-term surface reauthorization continues to be identifying a pay-for to support the authorized investment levels. The most recent projections from the Congressional Budget Office (CBO) found that the Highway Trust Fund will remain solvent and able to support the current highway and transit investment levels until summer 2022. This means that Congress will need to generate additional revenues or transfer additional General Fund revenue into the HTF to be able to continue to support the current investment levels – let alone provide for the significant increases in investment both committees are seeking.
The U.S. DOL Wage and Hour Division issued a final rule formally withdrawing the Trump-era rule relaxing the factors for determining Independent contractor status under the Fair Labor Standards Act. The rule would have made it easier for businesses to misclassify their workers as independent contractors. TAUC joined with the Construction Employers of America in submitting comments in support of the U.S. DOL's proposal to withdraw Trump Administration's final rule (see last month's article for more info).
DOL rescinded the regulation without replacing it with a new interpretation of when workers can function as independent contractors and when they must be classified as employees under federal law. DOL will not rely on a longstanding seven-factor "economic realities" test established by judicial precedent in determining questions of employee status.
In response to the DOL's decision to formally withdraw of the rule, the Associated Builders and Contractors, the Financial Services Institute, and the Coalition for Workforce Innovation updated the lawsuit they initiated on DOL's decision in February 2021 to freeze the rule's effective date while the Biden Administration reviewed the final rule. The lawsuit by these groups is now objecting to the repeal of the final rule.
Biden's DOL Budget
President Biden issued his first full budget proposal last week. While Congress will have to enact the final funding levels through the annual appropriations process, the President's budget provides a framework for the initiation of these discussion on developing the Fiscal Year 2022 tax and spending bills. The proposal includes an additional $1.7 billion in discretionary funds for the Labor Department — a 14 percent increase over the amount enacted for DOL in fiscal year 2021. Of particular interest, the plan calls fo:
COVID-19 Emergency Temporary Standard
The White House Office of Management and Budget (OMB) continues to review an "emergency temporary standard" establishing Covid-19 workplace safety rules. DOL sent the standard to the OMB in April. With CDC guidance relaxing mask and social distancing requirements due to increasing vaccination numbers, opponents of the ETS have urged rejection of the proposed standard.
TAUC and its partners in the CEA continue to urge the Administration – regardless of its decision to issue an ETS or not – to respect labor management relationships and not apply the ETS to workplaces in which an employer and its union mutually agree on best practices.
COBRA Subsidy for Joint Labor Management Health and Welfare Plan Participants
The IRS issued guidance to employers and plans on providing former employees the COBRA coverage authorized in the American Rescue Plan (ARP). The guidance also explains how to calculate the tax credit available to employers for providing the COBRA subsidy. The ARP provides COBRA continuation coverage subsidizing 100 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 jobs or had their hours reduced.