December 2007: Cover Story

The First Half Action by the 110th Congress Called for Tough Offense and Defense

By Eben Wyman

Major Progress on Water Infrastructure Funding

By the end of the year, more progress was made in terms of water infrastructure funding than has been made since the Republicans took control in 1994. This was made possible in large part by the efforts of Rep. James Oberstar (D-Minn.), the new chairman of the House Transportation and Infrastructure (T&I) Committee, who marshaled several water bills through the House in a matter of a few months and solicited NUCA’s help in doing so.

WRDA Override Was the Biggest Win this Year

The Water Resources Development Act (WRDA) finally passed this year, and it was a long time coming. WRDA legislation is mostly a list of federal projects authorized to address flood control, wetlands conservation and shoreline protection, navigation and environmental restoration overseen by the U.S. Army Corps of Engineers. A WRDA bill is supposed to pass every few years, but because Congress has been unable to pass one in more than seven years, there was a major backlog of projects.
The House passed this year’s legislation in June by a wide margin of 394-25, and the Senate followed suit in September with a 81-12 vote, both of which were “veto-proof” — an important point because that is exactly what the president did when the final conference report reached his desk.

In November, Congress voted overwhelmingly to override the president’s veto and make the WRDA bill law. This was the first successful override of the Bush Administration.

The final $23.2 billion measure included more than 900 projects. NUCA is proud to report that of that amount, approximately $2.4 billion was secured for water and wastewater projects. The override was nothing less than a huge victory for NUCA and the Clean Water Council (CWC), a coalition chaired by NUCA with 30 national like-minded construction organizations that work collectively for increased funding for America’s environmental infrastructure.

SRF Appropriations

Congress often refers to the federal appropriations process as the practice of doling out the “real money.”

Because Congress was unable to complete most of the annual appropriations bills in 2006, the first order of business in January 2007 was to provide the funding needed to keep the government running. Rather than haggle over appropriations, the new Democratic leadership passed a “continuing resolution” that maintained Fiscal Year (FY)2006 funding levels through FY2007. That meant that the EPA’s Clean Water State Revolving Fund (SRF) would continue to be funded at $1.1 billion and the Drinking Water SRF would again run on an $850 million appropriation in 2007. Recognizing that the president’s budget proposed an appalling $688 million, the successful passage of the continuing resolution was very good news for NUCA.

The fight for FY2008 funding began in earnest in the first quarter of the year. As Congress adjourned for the Thanksgiving recess, the House and Senate Interior and Environment Appropriations bills (which provide SRF annual funding) had passed, but a final bill had not been sent to the president’s desk.

The House bill includes $1.125 billion for the Clean Water SRF, while the Senate’s version came in lower at $887 million. Both the House and Senate bills provided approximately $850 million for the Drinking Water SRF program.

At press time, Congress and the White House were engaged in an intense game of chicken over FY2008 spending. More than one bill had already been vetoed and many others faced threats of a veto. The fate of the Interior/Environment spending bill was less than certain, but NUCA expects that SRF funding for both programs will be similar to this year’s levels.

SRF Reauthorization and CSO/SSO Grants

The underlying reason for annual bloodbaths over every nickel of federal money for water and wastewater projects is the fact that the SRF programs have not been officially authorized since the mid-1990s. Recognizing that, Chairman Oberstar set an ambitious agenda, putting several pieces of water infrastructure legislation in pole position and on a fast track. After inviting then-NUCA president Jim Stutler to testify at a hearing on wastewater infrastructure needs in late January, the T&I Committee introduced and passed two water bills, which soon headed to the House floor for a vote.

The Water Quality Financing Act (HR 720), which would authorize $14 billion for the Clean Water SRF over four years, passed in March by a vote of 303-108. The vote was significant in that there were enough votes in favor to override the veto that was threatened by the White House quickly after it passed.

The Water Quality Investment Act of 2007 (HR 569) would authorize $1.7 billion in grants to municipalities and states for grants to control combined sewer overflows (CSOs) and sanitary sewer overflows (SSOs). This legislation also passed the House in March.

Once these bills passed the House, NUCA and the CWC immediately turned their focus on the Senate. Although at press time companion legislation to HR 720 and HR 569 had yet to be introduced in the upper chamber, efforts continued into the final weeks of the first session to get a Senate bill dropped by the end of this year.

Clean Water Act Turns 35

NUCA was again invited to testify in October at Chairman Oberstar’s celebratory hearing on the 35th anniversary of the Clean Water Act (CWA). NUCA president James King joined witnesses from EPA, state and local governments and environmental and recreational groups at the milestone event. Being the only construction industry organization invited to testify, NUCA highlighted the successes and remaining challenges of the CWA, but also reminded the committee of the job creation and many positive economic benefits that come with funding water infrastructure projects. NUCA was honored to participate in this landmark hearing.

Water Infrastructure Trust Fund

NUCA continues to participate in discussions intended to set the stage for a realistic debate about how to establish a dedicated source of revenue for water and wastewater projects. Although strong support exists in Congress, around the industry and especially in the public for the establishment of a “water infrastructure trust fund,” the big question remaining is how it will be funded. Several proposals have been discussed over the past several years, but none have garnered any significant support. While NUCA is heavily engaged in discussions about viable proposals, we continue to encourage Congress to increase immediate funding of the existing SRF program while long-term solutions are developed over the next several years.

Encouragement of Private Investment

The one positive in the FY2008 White House budget proposal was the proposal to eliminate the volume cap on private activity bonds (PABs) for water infrastructure projects. Tax-exempt PABs, mostly used for private use and payable or secured from private sources, are currently subject to an annual unified state volume cap. The White House proposed the removal of this cap for private bonds used for the “furnishing of water” or “sewage facilities” in order to encourage additional needed private investment for water and wastewater infrastructure refurbishment. NUCA recognizes that this is only an attempt by the administration to avoid increasing the federal investment in America’s water infrastructure, but it also recognizes that, at this point, several sources of revenue will be needed to address this overwhelming problem. Therefore, NUCA is working with several organizations on the best ways to advocate the proposal; extensive action on this matter is unlikely in the second session.

Elimination of SRF Arbitrage Requirements

The policy of supporting any and all viable funding opportunities attracted NUCA to new legislation that would simply allow states to make the most of their federal bucks. Legislation (S 1920) introduced by Sens. Jack Reed (D-R.I.) and Olympia Snowe (R-Maine) would significantly enhance the leveraging power of SRF programs. States can currently make direct loans of SRF funds to communities for water infrastructure projects, or they can opt to leverage SRF funds, meaning they can use them as collateral to borrow in the public bond market in order to increase available funding for local projects. However, states that issue tax-exempt bonds to leverage their SRF programs are required to rebate arbitrage earnings to the U.S. Treasury. The Reed/Snowe bill would allow states to retain arbitrage earnings from leveraged funds in order to reinvest them in other water infrastructure projects. Recent estimates indicate that lifting arbitrage restrictions could enable states to leverage SRF capital between $800 million to $1.2 billion for water and wastewater infrastructure improvements annually. S 1910 awaits action in the Senate Finance Committee.

Other Infrastructure Initiatives Repair of America’s Bridges

In response to the tragic collapse of the I-35W Bridge in Minnesota, Chairman Oberstar introduced legislation (HR 3999) to tackle the growing need for bridge improvements across the country. The bill would address existing bridge deficiencies in a variety of ways, including: increasing bridge standards and requirements such as more frequent inspections; enhancing technology and increasing the focus on “problem” bridges across the country; ensuring that bridge inspectors are trained and qualified; requiring states to
establish five-year performance plans for inspection of bridges; and authorizing additional funding for immediate bridge improvements. Although America’s entire infrastructure faces huge problems and scarce resources to deal with them, the bill met with immediate opposition and did not go far after being approved by the T&I Committee this fall.

Infrastructure Bonds and Banks

NUCA supported legislation (S 2021) that would allow the issuance of $50 billion in “Build America Bonds” to finance a broad range of road, bridge, rail and water transportation infrastructure projects. NUCA also supported the National Infrastructure Bank Act of 2007 (S 1926), which would establish an independent entity of the government charged with evaluating and financing infrastructure projects. Both bills were referred to their respective committees and might be considered in the second session of the
110th Congress.

Establishment of New Commission on Infrastructure

NUCA again worked with the American Society of Civil Engineers (ASCE), an active member of the CWC, to advance legislation that would create the National Commission on the Infrastructure of the United States. The National Infrastructure Improvement Act of 2007 (HR 3401/S 775) would require a study on “all matters relating to the infrastructure of the United States,” including the age and condition of public infrastructure, financing methods for the construction and maintenance of public works projects, trends in innovative financing and investment needs and the projected federal-state share of investment. The measure passed the Senate on Aug.12 and was referred to the House T&I Committee.

Contractor Withholding Provision Gains Notoriety

A priority issue this year was one that saw the most progress — the effort to repeal Sec. 511 of the Tax Increase Prevention and Reconciliation Act of 2005. Sec. 511 is a sweeping new requirement that all government entities at the federal, state and local levels withhold 3 percent of all payments to organizations that provide goods and services to it, beginning in 2011.

The withholding provision would sap cash flows needed for day-to-day and future business operations, which will force companies to alter their business models and pricing systems when dealing with government customers. Inevitably, Sec. 511 would drive many small contractors out of the public market. The provision will also impose massive administrative and financial burdens on local governments as they struggle to retool their accounting systems to implement the new law.
During the NUCA Washington Summit in May, legislation (HR 1023) to repeal Sec. 511 had 77 co-sponsors. Within two weeks after the Summit, the co-sponsor list was well over 100 and growing every day. At press time, HR 1023 had 234 co-sponsors (reflecting a majority of support in the House) and companion legislation (S 777) had 10 Senate co-sponsors.

This is extraordinary progress over the course of a year, and a testament to grassroots lobbying organizations like NUCA that can educate the government and help correct a very bad legislative call. NUCA looks forward to continuing its efforts with the Government Withholding Relief Coalition to get the job done next year or at least well before the implementation date of Sec. 511.

Comprehensive Immigration Reform Remains Out of Reach

Despite high-profile failures of several bills intended to “comprehensively” reform America’s immigration policy over the past few years, the issue remained a hot one this year. Unfortunately, the end result was all too familiar. NUCA’s position on immigration reform is two-pronged.

We support a “temporary worker” program, as well as a conditional path to legal residence status, and we oppose new requirements that would unfairly punish employers who work in good faith to ensure that their immigrant workers are here legally.

This year, the president’s new proposal would have established two new visa programs. One would allow undocumented individuals who have been in this country for a certain number of years to remain as long they undergo a series of processes, including extensive background checks, financial penalties and payment of back taxes, education in English and civics and other requirements. These individuals would also have to get in line behind those already waiting for a green card and remain employed while doing so. Unfortunately, political jockeying on both sides killed all chances of a worker program or a path to legalization.

The fight over employer verification requirements proved to be even tougher. Throughout the year, NUCA advanced several concepts regarding employer verification, including: maintaining the “knowing and willful” standard of an illegal hire; ensuring that general contractors are not responsible for verifying the status of subcontractor workers; preserving due process in debarment proceedings to make certain employers are not unfairly blacklisted from public work; and “safe harbor” language to protect employers who in good faith use the recognized verification system in situations when the system fails.

Although the legislation failed, the Bush Administration tried on its own to increase the burden of verification on employers. The U.S. Department of Homeland Security’s (DHS) enhanced “no-match” rule would have expanded the definition of a “knowing and willful” violation by setting new requirements for employers who receive correspondence indicating discrepancies in Social Security numbers for some of its employees. Fortunately, a federal judge ordered an indefinite delay of implementation of the rule, but, rest assured, the many issues involved with immigration reform are not going away anytime soon.

New Meaning of OSHA “Reform”

OSHA “reform” is always an issue on Capitol Hill no matter which party is in control; only its definition changes. When the Republicans were in charge, several bills aimed at simplifying the process of challenging an OSHA violation were in play. Democrats, however, have made it clear that their view of reform is to crack down on employers and expand OSHA jurisdiction.

The “Protecting Americas Workers Act” (HR 2049/S 1244) would, among other things, include provisions to: expand OSHA jurisdiction to federal and state employees; increase civil and criminal penalties when workers are killed or injured because of willful violation by the employer; enhance public “right-to-know” provisions regarding employer violations; protect “whistle blowers;” and clarify the responsibilities of employers regarding worker protections.

Recognizing that this and other OSHA bills were imminent, NUCA and other construction organizations formed the Construction Industry Safety Work Group and made a presentation to the Democratic staff responsible for OSHA issues.
The idea was to describe ongoing safety efforts conducted by the construction industry in order to put NUCA in a position to effectively refute future allegations from lawmakers who might publicly claim that they have not heard from the “employer side” while legislation was being considered.

Other Issues on the Table Wetlands Conservation

NUCA opposes legislation (HR 2421) that would change the CWA definition of “navigable waters.” The legislation would replace the term “navigable waters” throughout the CWA, with the term “waters of the United States,” which would significantly expand wetlands permit requirements. This would unnecessarily burden the construction industry, and NUCA will vigorously fight the bill next year.

Diesel Retrofit Regulation

NUCA is working with several other construction organizations to address a proposed California regulation that would create tough new emissions standards for heavy-duty, off-road construction equipment. This rule would require construction contractors to replace or retrofit existing equipment to reduce emissions at significant cost to fleet owners. The rule has national significance in that it would affect not only contractors in California, but also out-of-state companies working in that state. Additionally, the rule would set a dangerous precedent that other states might consider adopting.

Federal Estate Tax

Democratic control eliminates any real hope of repealing the dreaded “Death Tax,” but reasonable minds in Congress continue to work to develop a permanent compromise.

Following this year’s hearing on the subject, the Senate Finance Committee hopes to introduce legislation next year to set an exemption and a top rate on estate taxes. NUCA will continue its work with the Family Business Estate Tax Coalition to include the lowest possible rate and the highest possible exemption in future legislation to ensure the viability of American family businesses.

Contract “Bundling”

NUCA supported legislation (HR 1873) to increase the number of federal contracts awarded to small businesses by limiting the ability of federal agencies to “bundle” smaller projects into bigger contracts. The bill passed the House by an overwhelming vote of 409-13 in May; the Senate has yet to act on companion legislation.

“Card Check” Legislation

The biggest labor fight of the year turned out to be over the “Employee Free Choice Act,” otherwise known as the “Card Check” bill. The legislation would have made it easier for unions to organize non-union companies by allowing check-off cards to be used in lieu of secret-ballot workplace elections. Business groups claim that the card-check process is a slap in the face of democracy and that eliminating secret ballots would only invite corruption by union organizers. Organized labor maintains the bill is needed because many employers threaten and coerce workers not to vote to unionize under the current system of a secret ballot. Although the House passed its version of the bill in March, the Senate fell far short of the 60 votes needed to bring the bill for a final vote. As always, the possibility exists that a similar bill might be introduced again next year.

As you can see, the first session of the 110th Congress presented significant progress, as well as some serious challenges. NUCA looks forward to pushing as many of our infrastructure proposals into the end zone next year as possible, and taking down as many harmful bills as NUCA can while playing tough defense. This is a team sport, people. NUCA hopes you will continue to suit up.

Eben Wyman is NUCA Vice President of Government Relations.