TAUC Legislative & Regulatory Update, May 2016

May 13 2016

TAUC Legislative and Regulatory Update, May 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 May 6, 2016, the U.S. Department of Treasury rejected an application from the Central States Pension Fund to implement a rescue plan to save the fund from insolvency. Central States is currently projected to run out of funds in 2026, and the plan would have preserved the fund by reducing the benefits of 270,000 union drivers and retirees. In rejecting the trustees’ application, Treasury stated that the rescue plan in the application failed to satisfy the statutory criteria under the Multiemployer Pension Reform Act, and questioned whether the restructuring would allow the plan to avoid insolvency.

TAUC and the other union construction trade associations of the Construction Employers of America (CEA) released a statement expressing deep concerns over the Treasury’s rejection of the Central States’ application, raising concerns that it will cause greater uncertainty for the trustees, increases the possibility of greater benefit cuts to the participants, and threatens the entire multiemployer pension system. The CEA urged Congress to enact legislation to strengthen the multiemployer pension system by authorizing the use of hybrid composite plans that would allow trustees to voluntarily develop plans to offer participants lifetime benefits at a fixed cost to employers.

Prior to the Treasury’s rejection, a group of Central States participants who worked for Kroger Co. filed a complaint against the trustees, alleging a breach of fiduciary duty. The participants argue that Kroger had arranged a retirement plan with the International Brotherhood of Teamsters that would transfer their retirement funds from the Central States plan to a ‘stable, defined-benefit pension plan.’ The plaintiffs allege that Central States breached its ERISA fiduciary duty by refusing to consider the plan.

Environmental Regulations

Legal action continues against the Obama Administration’s Clean Power Plan, despite the stay issued by the Supreme Court in February of this year. Most recently, a group of over 150 challengers to the Clean Power Plan filed two briefs with the DC Circuit Court of Appeals, citing the regulation’s many flaws. The first brief concerns the regulation’s legal issues and alleges that the Clean Power Plan is an example of regulatory overreach and violates the 10th Amendment “by commandeering and coercing state officials.” It also argues that the Plan violates the Clean Air Act. The second brief argues that because the final rule diverged significantly the proposed rule, it breaks administrative law. All parties involved in the suit against the Clean Power Plan have now submitted their briefs, and the D.C. Circuit Court of Appeals is scheduled to hear oral arguments on June 2.

The EPA recently released an economic review of its Mercury and Air Toxics Standards (MATS), the 2012 regulation that would limit mercury emissions and other pollutants from coal-fired power plants. The agency conducted the review following the Supreme Court ruling in Michigan v. EPA, which ruled that the EPA had not accurately considered compliance costs when designing the rule. The ‘supplemental finding’ released by the EPA states that the benefits of the rule, which the agency estimates to be $37 to $90 billion annually, outweigh the estimated compliance cost of $9.7 billion. Despite the review, we fully expect legal action against the mercury rule to continue. The review opens new avenues to litigate against the rule, and the Supreme Court is currently evaluating a request submitted by 20 states that contends the DC Court of Appeals’ decision to keep the rule in place following their petition of it was illegal. Chief Justice John Roberts had previously refused to stay the rule in March, after the States brought the case to the Supreme Court after the DC Court of Appeals refused to block the rule.

On May 12, the House Energy and Commerce Committee’s Subcommittee on Energy and Power approved legislation that would phase in implementation of the 2008 and 2015 ozone standards, extending to 2025 the date for final designations under the 2015 standards. H.R. 4775, the Ozone Standards Implementation Act of 2016, would address challenges facing state and local governments 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 full Energy and Commerce Committee is expected to consider the bill the week of May 16th.

Other Issues

Worker Misclassification: On April 20, bipartisan legislation was introduced in the House to require the Department of the Treasury to initiate an enforcement initiative to increase tax compliance in the construction industry. H.R.5008, the “Clarify Workers Misclassification in the Construction Industry Act” is sponsored by Congressman Tom MacArthur (R-NJ) and Congressman Ron Kind (D-WI), and is the first bipartisan effort to increase enforcement efforts to prevent worker misclassification.

DOL’s Silica Rule: On March 24, 2016 the Department of Labor’s Occupational Safety and Health Administration issued a final rule reducing the permissible exposure of silica in the construction industry from 50 micrograms per cubic meter to 250 micrograms per cubic meter over an eight-hour period. In order to do so, the rule requires employers to control silica dust through various methods including engineering controls or respirators, limiting access to areas with high levels of dust, and providing medical exams to employees at high risk of exposure. Construction industry employers will have until June 2017 to meet the rule’s requirements.

The Education and Workforce Subcommittee on Workforce Protection held a hearing on the new standard on April 19th and heard concerns from representatives of the business committee and public health experts. Chairman Rep. Tim Walberg (R-MI) argued against the standard, claiming that it is impractical, expensive, and unnecessary. Witnesses Ed Brady of the National Association of Homebuilders, Janis Herschkowitz of the American Foundry Society, and Henry Chajet of the U.S. Chamber of Commerce agreed with him and spoke about the overly burdensome nature of the standards. Since the rule’s publication, lawsuits have been filed in six courts concerning the Labor Department’s final rule. These cases will be consolidated at the D.C. Circuit Court. TAUC has joined a petition filed by the Construction Industry Safety Coalition.

OSHA Record-Keeping Rule: On May 12, OSHA issued is final rule requiring employers to submit workplace illness and injury records to OSHA electronically for posting on its web site. The requirements will apply to businesses with 250 or more employees that are already required by OSHA to keep such records. Smaller businesses (20-249 employees) have to comply if they’re in particularly dangerous industries, such as construction. The rule also prohibits employers from retaliating against employees for reporting occupational injuries or illnesses. TAUC had filed comments on the proposed rule expressing concerns that the rule required duplicative paperwork, was overly burdensome, and exposed contractors to unnecessary citations and fines.

DOL’s Overtime Rule: The Senate Committee on Small Business and Entrepreneurship is holding a hearing focused on the Obama Administration’s new overtime rule. The Department Of Labor recently sent the rule to the White House Office of Information and Regulatory Affairs (OIRA) for approval. The rule would increase the number of employees eligible for overtime. DOL’s proposed rule would raise the salary threshold for those eligible for overtime from $23,660 to $50,440 per year. Opponents argue that the regulation is overly burdensome and would be costly and negatively impact workplace flexibility. Sen. Tim Scott (R-SC) and Rep. Tim Walberg (R-MI) have introduced the Protecting Workplace Advancement and Opportunity Act, which would prevent the rule from being implemented. Given the backlash, the White House is considering lowering the threshold to $47,000 per year. The DOL is expected to release the final rule very soon.

Senate Energy Bill (S.2012): The Senate passed its bipartisan energy bill, written by Senate Energy and Natural Resources Chairman Lisa Murkowski (R-AK) and ranking member Maria Cantwell (D-WA). The bill was previously stalled over a provision that would have provided aid to Flint, Michigan.

The bipartisan bill includes policies that would update and modernize the nation’s power grid and oil and gas transportation system to address major changes in U.S. power and energy production sectors. The bill also 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 funds provided under these federal grant programs were covered by federal labor protections.

The House passed its own energy bill last year, which will have to be reconciled with the Senate bill before final legislation can be sent to the President. The two chambers should hold a conference on the bills soon.