Inside AGC Advocacy Update

May/June 2008

AGC Members Discuss Pressing Issues on Capitol Hill

Top concerns include 3% withholding tax on government contracts and fixing the Highway Trust Fund

AGC’s 2008 National and Chapter Leadership Conference and the Federal Contractors Conference were held back to back April 27–May 2 in Washington, D.C.

Karl Rove (left) meets with chapter leaders before his presentation April 28 at the National and Chapter Leadership Conference.

AGC’s 2008 National and Chapter Leadership Conference was held April 27-30 at the Willard Hotel in Washington, D.C. More than 200 participants attended the conference, making it the most successful to date. Chapter presidents, vice-presidents and executives in attendance represented 67 chapters from across the country.

The conference included a presentation from Karl Rove and a visit to the White House for a briefing on the state of the economy. Information was provided on national AGC programs that are being delivered locally, such as Project Management courses, Building to LEED-NC, Supervisory Training Program and safety programs such as the Susan Harwood Grant Focus Four training, AGC Safety Management Training and Advanced Safety Management Training.

AGC’s Federal Contractor’s Conference, presented annually by the Federal & Heavy Construction Division, attracted more than 200 attendees this year. Contractors, suppliers, attorneys and other stakeholders took advantage of the opportunity to meet with federal agency personnel in a series of neutral forums to review issues and trends around the U.S.

Tony Zelenka (left), AGC’s Army Corps of Engineers Committee chairman (Bertucci Contracting Corp., Jefferson, La.) and John Paul Woodley (right), Assistant Secretary of the Army (Civil Works).

The conference continued its long tradition of producing insightful and highly successful meetings, allowing both parties to share information and foster better communication and real solutions on a wide variety of issues affecting the federal construction market. Attendees held meetings with the Air Force, Overseas Building Operations, NAVFAC (Naval Facilities Engineering Command), General Services Administration, the Army Corps of Engineers and 10 other federal agencies.

Recognizing that constituent visits are vital to a successful advocacy strategy, attendees of both meetings visited congressional representatives to discuss their top concerns, including repealing the 3% withholding tax on government contracts and increasing investment in infrastructure.

AGC Continues Fight for Repeal of 3% Withholding

In April the House of Representatives once again voted to delay implementation of the 3% withholding for one year, until 2012. If the law goes into effect, it will require that 3% of every payment be withheld from all contracts with federal, state and some local governments. Under current law, the withholding requirement begins on payments starting in 2011. AGC and its membership must continue to educate members of both the House and Senate that the only sensible option is permanent repeal of 3% withholding.

Social Security No-Match Letters

At the end of March 2008, the Dept. of Homeland Security published a supplemental proposed rule that would direct employers on how to react to the receipt of Social Security no-match letters. The rule is open for comment but cannot go into effect until DHS returns to court to remove an injunction issued on the last version of the rule published by DHS.

DHS issued a final rule in August 2007 that was supposed to go into effect in September 2007, but action was delayed after the U.S. District Court for the Northern District of California blocked implementation of the rule. AGC financially supported the litigation against the rule because it and its proposed guidance document imply “constructive knowledge,” that an employee is unauthorized to work in the U.S. simply through receipt of a Social Security no-match letter.

The new proposed rule is an attempt by DHS to address the concerns laid forth in the lawsuit, but on initial examination, appears to fall far short. AGC’s legislative affairs team is working to educate lawmakers on several other issues that could adversely affect contractors.

SAVE Act

In late 2007, the SAVE (Secure America through Verification and Enforcement) Act was introduced in Congress with the intention of strengthening our borders, increasing enforcement and mandating an electronic employer verification system. While AGC supports efforts to strengthen our borders, the employer enforcement and electronic verification system provisions mandated in the bill are of great concern to AGC due to, among other things, limited liability protections for employers. The bill would mandate that all employers use E-verify (formerly called Basic Pilot) on both current employees as well as new hires. AGC is concerned about mandating the use of a program with a high error rate without setting thresholds for the Social Security Administration and DHS to improve their databases. In addition, the bill lacks AGC supported federal preemption to end the growing patchwork of state and local immigration laws being passed around the country.

Water and Wastewater Infrastructure Funding

The nation has an estimated need between $400 billion and $600 billion over the next 20 years for clean drinking water and wastewater treatment infrastructure. Recent polling shows 86% of Americans would support congressional legislation to create a trust fund for clean and safe water infrastructure. In a recent Gallup poll, 53% of Americans ranked clean drinking water as their number one environmental concern. AGC urges Congress to restore funding levels for the Clean Water and Safe Drinking Water State Revolving Loan Funds (SRFs) to a minimum of $1.35 billion and $850 million, respectively. Even with these historical funding levels the SRFs would be significantly underfunded. AGC also backs creation of a long-term, sustainable, off-budget source of funding for clean water by creating a trust fund to finance construction and maintenance of this critical environmental infrastructure.

Senate Debates Highway Trust Fund Solvency Fix, Delays Further Consideration

As part of the Federal Aviation Administration reauthorization bill, the Senate began consideration of a plan to supplement revenue into the highway account of the Highway Trust Fund to ensure that states’ federal-aid highway funding will be available in fiscal year 2009. In early 2008, the U.S. Treasury forecast that revenue into the highway account will fall short of meeting next year’s SAFETEA-LU guarantees by $3.3 billion. As a result of this projected shortfall, the highway account would only be able to support a $29.7-billion highway program in FY 2009, a cut of nearly $13.5 billion, or 31% below the amount guaranteed by SAFETEA-LU.

The Senate plan—sponsored by Senate Finance Committee Chairman Max Baucus (D-Mont.) and ranking Republican Chuck Grassley (Iowa)—would provide $5.1 billion in additional revenue for the highway account to meet SAFETEA-LU commitments, with an additional cushion should receipts decline below estimates.

The Senate was unable to complete consideration of the FAA measure because of concerns about non-aviation related items in the bill, including the Highway Trust Fund fix. AGC has made enactment of a measure to fix the Highway Trust Fund a top priority.

AGC Works to Halt Clean Water Expansion Bill

AGC, along with a broad-based coalition of industry, agriculture and local government stakeholders, has worked to delay action on a measure that would greatly expand jurisdiction of the federal Clean Water Act. The bill—the Clean Water Restoration Act of 2007—would insert a new legislative definition of “waters of the United States” that would include all waters and wet areas within a state and greatly increase the circumstances under which contractors would be required to obtain federal discharge permits. Enactment of the legislation would result in greater costs and longer permitting delays and potentially stop construction projects nationwide.

Transportation and Infrastructure Committee Chairman Jim Oberstar (D-Minn.), who has made passage of the bill a priority for this Congress, introduced the bill to the House. The chairman has not been able to schedule further action on the bill because of concerns raised by committee members on both sides of the aisle.

Senator Russ Feingold (D-Wis.) introduced a similar measure in the Senate. The Senate Environment and Public Works Committee also conducted two hearings on the issue. AGC submitted statements for the House and Senate hearings’ records detailing AGC’s concerns with the bills.

811 One-year Anniversary AGC CEO Stephen E. Sandherr spoke at the National Press Club on the 811 “Know What’s Below – Call Before You Dig” campaign anniversary. AGC was honored at a press conference and reception celebrating the one-year anniversary of the 811 “Know What’s Below—Call Before You Dig” campaign at the National Press Club on May 5. AGC was the first National Launch Partner to promote the program, which kicked off on May 1, 2007. 811 is the FCC-designated number created to eliminate confusion of multiple “Call Before You Dig” numbers across the country. The service connects callers with local One Call Centers that notify appropriate local utilities, which then send crews to the requested site to locate and mark underground lines.