TAUC Legislative and Regulatory Update, March 2016
It’s been a busy month on Capitol Hill. From pension reform to environmental regulations, here’s an exclusive update from TAUC on the issues of vital interest to contractors and the union construction and maintenance industry as a whole.
Multiemployer Pension Reform
On March 1, the Senate Committee on Finance held a hearing on the status of the multiemployer pension plan system. The hearing also focused on legislative efforts to address the UMWA Health and Retirement Fund, which provides benefits to coal industry employees and their beneficiaries. It is facing insolvency due to losses during the financial crisis and the wave of bankruptcies in the coal industry. The Construction Employers of America (CEA), of which TAUC is a founding member, issued a press statement after the hearing that will be entered into the hearing record. The statement urges senators to reject efforts to undermine the Multiemployer Pension Reform Act (MPRA) and to authorize composite plans. Read the statement here.
At the hearing, there was bipartisan support for addressing the financial situation of multiemployer pension plans and the untenable position in which many plan participants now find themselves. Nearly all of the Committee members agreed that the current situation is unacceptable and something must be done. However, there was little consensus on what the next policy options should be. Committee Chairman Sen. Orrin Hatch (R-UT) stated he was in favor of keeping MPRA in place, recognizing that repeal will not make the situation better. Hatch said that the MPRA was “the best option available at the time” and it would be difficult to pass legislation bailing out the Pension Benefit Guaranty Corporation (PBGC).
One of the witnesses, former PBGC Director Joshua Gotbaum, agreed with the Chairman. He stated that repealing MPRA would make things worse for participants in plans that are heading towards insolvency, forcing them to rely on lower current PBGC benefit limits. According to Gotbaum, repeal of the MPRA would likely cause the PBGC’s multiemployer pension plan insurance system to crash.
Sen. Rob Portman (R-OH) stated that while he “understood the math” facing plans like the Central States Pension Fund, he felt the results of the MPRA process are not fair to participants in insolvent plans. He suggested that members should work together to find a solution that was fairer, and raised legislation he has introduced — the Pension Accountability Act (S.2147) — which he believes would increase transparency in pension decisions and result in a more fair process for participants. TAUC and our construction trade association and union partners have worked against Senator Portman’s bill, which would fundamentally undermine the reforms contained in MPRA and make it very unlikely that rescue plans developed by plan trustees would be approved.
While much of the hearing focused on MPRA, there was some discussion of composite plans. Gotbaum suggested that authorizing new plan designs would be the best approach to help retain existing employers and attract new employers necessary to stabilizing troubled multiemployer plans. He also urged senators to strengthen the PBGC through premium increases so that it had the resources to “do its job.” Sen. Tim Scott (R-SC) raised questions about the ability of composite plans to sustain troubled plans. Another witness, Andrew Biggs from the American Enterprise Institute, agreed with Scott’s assessment of hybrid plans, since such plans would rely heavily on investment returns.
After the hearing, the Democratic members of the Finance Committee sent a letter to Hatch urging that they work together to find a comprehensive solution to the multiemployer pension crisis, and to work together to resolve the system’s challenges by finding “alternative and balanced solutions.”
• Pensions Letter to Chairman Orrin Hatch
• Chairman Sen. Orrin Hatch Statement at Finance Committee Hearing on Multiemployer Pension Plans
• Ranking Member Sen. Ron Wyden Statement at Finance Committee Hearing on Multiemployer Pension Plans
• Joshua Gotbaum Testimony before the Senate Committee on Finance
• Rita Lewis Testimony before the Senate Committee on Finance
• Andrew Biggs Testimony before the Senate Committee on Finance
While the U.S. Supreme Court issued a stay on President Obama’s Clean Power Plan until it can be fully litigated, cases continue to advance through the lower courts. The D.C. Circuit Court of Appeals has put the appeal on a fast track and opening briefs were filed on February 19th. Currently, 29 states and multiple other entities have filed lawsuits in opposition to the plan, and arguments could be heard as early as June. We also anticipate that Congress will continue its legislative efforts to prevent the Administration from implementing environmental regulations. It is likely that efforts will be made once again to block the EPA from issuing these regulations through the appropriations process.
Paid Sick Leave Executive Order: On February 25, the Department of Labor issued a notice of proposed rulemaking (NPRM) to implement Executive Order 13706, Establishing Paid Sick Leave for Federal Contractors. The order was issued by President Obama on September 7, 2015, and requires contractors that enter into contracts with the federal government (including contracts covered by the Davis-Bacon Act) after January 1, 2017 to provide employees with up to seven days of paid sick leave annually. The E.O. only applies to contracts for direct federal projects, and does not apply to projects supported by federal grants. Comments on the NPRM are due on March 28, 2016. The NPRM and other information can be found here.
DOL’s Silica Rule: We are still waiting on the release of the final DOL Silica Rule, which was sent to the Office of Management and Budget (OMB) at the end of 2015. The rule, which was proposed by OSHA in 2013 and would reduce the permissible exposure of silica over an eight-hour period to 50 micrograms per cubic meter to 250 micrograms per cubic meter in the construction industry, was expected to be finalized in February. When asked about the delay in issuing the final rule, an Administration spokesperson said the rule would be issued “soon.”
Senate Energy Bill, S.2012: The Senate continues its efforts towards completing work on comprehensive energy legislation. Congress last enacted energy legislation into law in 2007. Since that time, the nation’s energy infrastructure has not kept pace with changes occurring in the energy industries. The bipartisan bill attempts to put in place policies that would update and modernize the nation’s power grid and oil and gas transportation systems to address major changes in the United States power and energy production sectors.
The bill creates a number of grant, pilot, and demonstration programs designed to modernize the power grid and improve energy efficiency in energy production. TAUC worked with our building trades union partners to ensure that funds provided under these federal grant programs were covered by federal labor protections.
The House has passed its own energy bill, which would have to be reconciled with the Senate bill before final legislation can be sent to the President.
• S.2012: Energy Policy Modernization Act of 2015
• HR.8: North American Energy Security and Infrastructure Act of 2015
Check back next month for another exclusive TAUC Capitol Hill update!