The passing of Sen. Ted Kennedy (D-MA) will not just impact the health care debate he so passionately was a part of for half a century, but will reverberate to other issues as well. The loss of Kennedy leaves the Democrats with 59 votes in the Senate, one short of a filibuster-proof majority, until a special election is held in January.  Prior to his death, Democrat leaders had threatened to use a seldom-used procedural maneuver to pass health care reform without Republican support. It is not yet clear how the loss of Kennedy will play into the possibility of leaders using this procedure or if Democrats will work on getting bipartisan support.

Kennedy had chaired the Senate Health, Education, and Labor Committee which will be responsible for crafting much of the health care legislation in the Senate. Kennedy was the lead sponsor of the Employee Free Choice Act which had stalled in the Senate because it was unable to attract the 60 votes needed for cloture.  Among other major issues that he worked on were education and immigration.

The comment period on the proposed rule relating to project labor agreements, which had expired August 13, was extended for 30 days, with a new deadline of September 23. The proposed rule would implement President Obama's executive order encouraging (but not requiring) agencies to consider requiring PLAs on projects over $25 million.  Read more about the rule and find AGC's comments here.

The Federal Highway Administration (FHWA) has notified states that, as required by SAFETEA-LU, $8.7 billion in budget authority will be rescinded from their unobligated Federal-aid highway balances on September 30, 2009. While for some states this will not have a direct effect, in many states this will result in an actual cut in funding for highway construction projects.

Each state will lose budget authority in a proportion that matches its percent of the total highway funds that were provided over the six year life of SAFETEA-LU (FY 2004-2009). Senator Kit Bond (R-MO) attempted to remedy this situation with an amendment in July when Congress was taking action to keep the Highway Trust Fund solvent by transferring $7 billion from the general fund. While there was significant support to correct the rescission problem, it was not acted on and, therefore, FHWA is required to take this action. AGC is working to have this rescission corrected when Congress returns from its summer recess.

EFCA remains in a holding pattern on Capitol Hill at this time.  Right before the August break there were rumors that some movement had been made in finding a potential compromise to EFCA by removing the card check portion of the bill.  The group of Senators seeking to find a compromise are all past EFCA supporters and despite a New York Times article saying that card check had been dropped, no agreements have been reached. 

While the House has the votes to pass EFCA as is at any time, the barrier remains 60 Senators voting to end cloture to move the bill to the Senate floor.  It is important to continue to communicate to Capitol Hill about opposition to EFCA. 

AGC of America has said that compromise is not an option.  There remains deep concerns that even well intended compromise proposal could become a "Trojan horse" that EFCA's proponents would simply use to sneak EFCA past cloture. Unless and until EFCA's proponents completely and irreversibly abandon that legislation, the risk of a compromise becoming a "Trojan horse" for EFCA will remain too great for this industry to entertain any discussion of compromise.

As many construction employers are trying to figure out exactly what health care reform will mean for them, one issue that raises questions for employers, insurers and employees alike is that of a "qualified health benefits" plan.  As mentioned in AGC's What Does a Health Insurance Mandate Mean for Construction Industry Employers, employers will be required to provide a "qualified health benefits" plan for all employees and their dependents or face stiff penalties.  That is, if H.R. 3200, the much-debated proposed bill known as America's Affordable Health Choices Act of 2009, is passed by Congress.

According to H.R. 3200, employers must provide health benefits plans deemed "qualified" by the federal government, or face penalties of up to $100 per day, per employee.  A newly appointed Commissioner of the Health Choices Administration would set many of the standards that would be designed to:

• Prohibit coverage exclusions of pre-existing health conditions;
• Require premiums to be determined using adjusted community rating rules, which prohibit insurers from pricing health insurance policies based on health factors;
• Require coverage to be offered on both a guaranteed issue and guaranteed renewal basis;
• Impose new, non-discrimination rules; and
• Comply with a medical loss ratio - the portion of health plan revenue that does not cover administrative or marketing expenses, taxes and profits.

Once deemed qualified, health plans will be able to participate in a newly created, state-run Health Insurance Exchange, similar to Travelocity for the travel industry, which will help individuals and small businesses comparison shop for health insurance.   The Exchange would be regulated by the Commissioner so that insurance companies cannot charge wildly different amounts for similar health coverage.  They will, however, be able to set rates based on age.  Uninsured individuals and employers with 10 or fewer employees would be able to participate in the exchange during year one (2013), while employers with 20 or fewer employees will be able to participate in year 2014.   The Commissioner would have the authority to allow larger employers to participate during subsequent years. 

Although the commissioner would be responsible for setting many of the standards required for qualified health plans, H.R. 3200 specifically details minimum requirements that must be included in each plan before the additional standards are imposed.  These standards would form an "essential benefits package" and would be required to cover:

• Hospitalization;
• Outpatient hospital and clinic services, including emergency room services;
• Services of physicians and other health professionals;
• Services, equipment and supplies necessary to the services of a physician or health professional in appropriate settings;
• Prescription drugs;
• Rehabilitative and "habilitative" services (i.e., services to maintain the physical, intellectual, emotional and social functioning of developmentally delayed individuals);
• Mental health and substance use disorder services;
• Certain preventive services (with no-cost-sharing permitted) and vaccines;
• Maternity care;
• Well-baby, well-childcare, oral health, vision, hearing services, equipment and supplies for those under age 21.

In addition to the requirement that each plan must cover at least 70 percent of the full value of benefits in the essential benefits package, employers must also contribute a minimum of 72.5% of the premium for the lowest cost qualified plan offered by the employer for individual coverage, and at least 65% for families.  This contribution would be prorated for part-time employees, based on the employee's weekly hours worked, and out of pocket maximums will be capped at $5,000 for individuals and $10,000 for families.

For employers who currently provide health insurance to their employees, there is a 5-year grace period (beginning 2013) for which employment-based plans could keep their existing coverage and not have to comply with the minimum requirements of the bill.  Upon expiration of the grace period, the plan would have to meet the minimum essential benefits requirements or face all required penalties.  The only exception is for health plans that are subject to collective bargaining agreements (CBA), which are exempted from providing the minimum essential benefits as defined in the bill through the expiration of the CBA or one year after enactment of the legislation, whichever is later.

While the final picture of health care reform is vague, it is likely that employers will have to comply with widespread changes over the next several years.   Before change is mandated, employers should take this time to review its current benefit structure and compare it with the requirement of the essential benefits plan including:

• Compare actuarial rates and cost-sharing ratios to the proposed mandate;
• Begin introducing wellness and prevention elements into current plans;
• Check out what other employers have done to contain cost and partner your employees to do the same;
• Gradually implement changes during your open enrollment periods now through 2012; and
• Communicate honestly and often with employees.

Taking the next two years to get ready by gradually moving toward the minimum requirements of the essential benefits plan will soften the blow for employers and employees alike.

For a complete summary of H.R. 3200, read AGC's Facts about the Proposed Health Care Reform Legislation.  To easily contact your congressman with your company's concerns about H.R. 3200, visit AGC's Legislative Action Center today.

Last week, AGC submitted comments on the  July 14, 2009 Federal Acquisition Regulation (FAR) Council notice of proposed rulemaking, which implemented President Obama's Executive Order 13502 to create new FAR contract clauses to be included in Federal contracts should an agency choose to require a Project Labor Agreement (PLA) on a particular Federal construction project.

The proposed rule encourages (not requires) agencies to consider (not necessarily adopt) a PLA requirement on large-scale construction projects (defined as projects with a total cost to the federal government of $25 million or more) on a project-by-project basis where certain criteria are met. AGC's comments focused on this vague and subjective set of requirements agencies had to meet to impose a PLA on a project. AGC also pointed out that the agency requirement that the PLA must "allow all contractors and subcontractors to compete for contracts and subcontracts without regard to whether they are otherwise parties to collective bargaining agreements" is ostensibly a fair principle, but is unrealistic, considering the very burdensome changes that a public PLA typically imposes on open shop contractors operations.

Read more about AGC's Comments and the Proposed Rule here.

Both the House and the Senate have many ideas when it comes to health care reform, but the one proposal that appears to be present across the board is a requirement for private companies to provide health insurance for all employees and their families.  While this mandate may be well-intentioned, what does it actually mean for America's employers? 

According to H.R. 3200, a proposed bill known as America's Affordable Health Choices Act of 2009, employers will be required to provide a "Qualified Health Benefits" plan for all employees and their dependents or face stiff penalties.  This proposal, commonly referred to as "pay or play," would require employers with an annual payroll of $500,000 or more to either provide the minimum amount of health insurance coverage for their employees and their respective families, or pay a payroll tax penalty of 2-8%, even for employees who decline coverage offered by the company.  It is unclear whether or not coverage will be required for temporary and part-time employees or if coverage will be required for employees on their first day of work.  The bill only states that employers would have to make contributions for their non full-time employees on a pro-rata basis. These two issues raise concerns for the construction industry where many, if not most craft and specialty trade workers may be part-time and/or seasonal employees.  The bill, however, does clearly state that coverage and the tax penalty will not be required for employees who are covered under another qualified plan as a spouse or dependent. 

For years, many employers have voluntarily provided health insurance options to their employees as a means of competing with other employers in order to attract the best talent, while also providing for the well-being of employees and their families.  In addition to health care benefits, many employers also offer other fringe benefits to attract and retain employees, such as paid sick leave, paid vacations and flexible hours, to name a few.  Due to the current state of the economy, construction industry employers are already doing what is necessary to cut costs while trying to save jobs. In order to meet the additional financial obligations of this mandate, many employers may be forced to shift the costs of doing business even more by possibly eliminating some of these fringe benefits, cutting pay or even cutting jobs.  Some employers may also choose to pay the required penalty instead of providing coverage because it may be a less costly option for them, leaving employees without the coverage they previously received. 

There is, however, some saving grace for small construction employers.   According to the bill, small businesses with a payroll of less than $500,000 would be exempt from the payroll tax penalty and certain small businesses would be eligible for a 50% credit toward the cost of health care coverage even if the business already qualifies for the tax exemption.   This credit would be phased out as average employee compensation increased from $20,000 to $40,000, and then as the number of employees increased from 10 to 25.  The credit would not apply toward insurance for employees whose compensation exceeded $80,000 and would be treated as part of the general business credit, making it non-refundable and available only to businesses with a tax liability.  However, the tax credit is of limited value due to its current structure. The average wage of full-time employees at businesses with fewer than 10 employees is more than $30,000, meaning that in many cases, the value of the credit is already cut in half.

For a complete summary of the proposed mandate, payroll tax penalties and tax credits outlined in H.R. 3200, read AGC's Facts About the Proposed Health Care Reform Legislation.

To easily contact your congressman with your company's concerns about H.R. 3200, visit AGC's Legislative Action Center today.

The health care debate continues to dominate much of Congress's recess schedule and it is uncertain what the final legislation will look like.  The most controversial issue remains the creation of the government run public option, and its inclusion in any final bill will make passage in the Senate very difficult.

As a result, the idea of passing the legislation outside of the normal process is gaining steam. A procedural maneuver in the Senate called budget reconciliation could be used by Democratic leaders to pass the most controversial portions of reform because the process limits debate time and amendments and lowers the threshold for passage from 60 votes to 51.  Due to the strings attached to the maneuver, many aspects of the Democratic bill would have to be stripped from the legislation. Thus, if Democrats used reconciliation they would have to pass additional legislation to pass aspects of reform that were not included in the reconciliation motion.

There remains a possibility that the Senate Finance Committee can find a bipartisan compromise to comprehensive health care reform. However, if this lone committee is unable to do so, then Democrats will either try to pass reform without any Republican support, look toward making incremental changes or delay action until next year or later, which is the most unlikely outcome should the Committee fail to find a compromise.

The second installment of AGC's summary of the American Clean Energy and Security Act of 2009 (H.R. 2454) explains the major provisions of Title II (Energy Efficiency) of interest to the construction industry. 

Subtitle A-Building Energy Efficiency Programs

The bill would establish national percentage targets for energy use reductions in new residential and commercial buildings as compared to baseline codes (i.e., 2006 IECC and ASHRAE 90.1-2004).  The targets are as follows:

30 percent effective on the enactment of H.R. 2454;

50 percent effective in 2014 for residential buildings and 2015 for commercial buildings; and

5 percent additional effective 2017 for residential buildings and 2018 for commercial buildings, and every year after through 2029 and 2030, respectively.

The bill would direct the Energy Department to establish national energy efficiency building codes for residential and commercial buildings that meet these targets if the consensus code-setting organizations are unable to do so.  Following the establishment of such codes, states and localities would be required to ensure their codes meet or exceed these targets or the national codes would become the applicable energy efficiency codes in those jurisdictions.  If states are determined to be out of compliance, states would become ineligible to receive funding under the bill or allowance allocations.  Funds would be provided to states to support the implementation and enforcement of the updated codes.

The bill would establish a Building Retrofit Program for residential and nonresidential buildings.  The bill would direct EPA and the Energy Department to develop standards for national energy and environmental retrofitting policies to be implemented through programs collectively known as the Retrofit for Energy and Environmental Performance (REEP) program.  Under the program, emission allowances would be provided to states that have adopted the relevant program standards, including certification and training requirements for auditors, inspectors, raters and contractors, and post-retrofit inspection standards for buildings.  States could administer incentives of up to 50 percent of total retrofit costs to owners of residential and nonresidential buildings.

The bill would establish a Building Energy Performance Labeling Program under EPA to label new buildings for their energy performance characteristics.  The program is designed to increase public knowledge of building energy performance.

Subtitle B-Lighting and Appliance Energy Efficiency Programs

The bill would establish new lighting efficiency standards and other appliance standards that states may include in their building codes if certain requirements are met.

Subtitle C-Transportation Efficiency

The bill would require EPA to establish greenhouse gas emission standards for new heavy-duty vehicles and engines and for nonroad vehicles and engines.

The bill would require EPA and the Transportation Department to issue regulations that establish national goals for reductions in transportation-related greenhouse gas emissions and related models and methodologies.  The bill would also require states and metropolitan planning organizations (MPOs) to develop as part of their transportation planning processes reduction targets for surface transportation-related emissions and strategies to meet those targets.  States and MPOs must also demonstrate progress towards stabilizing and reducing transportation-related greenhouse gas emissions.  The targets and strategies must increase public transportation ridership and walking, biking, bicycling and other forms of nonmotorized transportation.

Subtitle D-Industrial Energy Efficiency Programs

The bill would require the Energy Department to establish standards for industrial energy efficiency that would be recognized by the American National Standards Institute (ANSI).  The bill would also establish a Clean Energy Manufacturing Revolving Loan Fund program under which the federal government would provide grants to states to establish revolving loan fund programs to support manufacturers in their efforts to reduce the energy intensity or greenhouse gas emissions of a U.S. manufacturing facility.  Funds would also be eligible to retool, expand or create manufacturing facilities that produce clean energy and energy efficient products.

Subtitle G-Miscellaneous

The bill would direct the EPA to conduct a study regarding the establishment of a national initiative "for measuring, reporting, publicly disclosing, and labeling products or materials sold in the United States for their carbon content…."  The bill would direct the EPA then to establish a voluntary national product carbon disclosure program.

Subtitle H-Green Resources for Energy Efficient Neighborhoods

The bill includes provisions related to residential energy efficiency, including minimum energy efficiency standards for HUD-owned and assisted housing; promotion of location- and energy-efficient mortgages and solar leasing; energy efficiency demonstration projects for HUD-assisted multi-family housing projects; and a residential energy efficiency block grant program that would distribute grants for single-family or multi-family housing projects that are designed to improve the energy-efficiency of the housing.

This first installment of AGC's summary of the American Clean Energy and Security Act of 2009 (H.R. 2454) explains the major provisions of Title I (Clean Energy).  There are 10 subtitles described below.

Subtitle A-Combined Efficiency and Renewable Electricity Standard

This subtitle would require retail electric suppliers-defined as utilities that sell more than 4 million megawatt hours (MWh) of electricity to customers for purposes other than resale-to meet a certain percentage of their load with electricity generated from renewable resources (e.g., wind, biomass, solar, geothermal, hydropower, nuclear) and electricity savings.  The combined renewable electricity and electricity savings requirement would begin at 6 percent in 2012 and gradually rise to 20 percent in 2020.  Up to one quarter of the 20 percent requirement automatically could be met with electricity savings.

Retail electric suppliers would be required to submit federal renewable electricity credits and electricity savings each year equal to the combined target for that year times the supplier's retail sales.  One renewable electricity credit would be given for each MWh of electricity produced from a renewable resource.  Retail electric suppliers would be able to submit, in lieu of a renewable electricity credits and demonstrated electricity savings, an alternative compliance payment equal to $25 per credit (2.5 cents per kilowatt hour).

Subtitle B-Carbon Capture and Sequestration

This subtitle is designed to address the key legal and regulatory barriers to the commercial-scaled deployment of carbon capture and sequestration (CCS).  The subtitle would establish a Carbon Capture and Sequestration Demonstration and Early Deployment Program and would authorize fossil-based electricity distribution utilities to hold a referendum on whether to establish a Carbon Storage Research Corporation, which, if approved, would be authorized to collect assessments totaling approximately $1 billion annually from retail customers of fossil-based electricity.  The funds would be used by the Corporation to fund the large-scale demonstration of CCS technologies in order to accelerate the commercial availability of the technologies.  The subtitle would also authorize an incentive program that allows the U.S. Environmental Protection Agency (EPA) to distribute allowances to support the commercial deployment of CCS in both electric power generation and industrial applications. 

Subtitle C-Clean Transportation

This subtitle would support the deployment of plug-in electric vehicle infrastructure and large-scale vehicle electrification.  There is also a provision that would allow the Energy Department to provide financial assistance for retooling existing factories for the manufacture of electric vehicles and batteries.  EPA would also be allowed to distribute allowances for these purposes.  This subtitle would also extend the authorization for state grants under the Diesel Emissions Reduction Act (DERA) through 2016.

Subtitle D-State Energy and Environment Development Accounts

This subtitle would create State Energy and Environment Development (SEED) Accounts for each state.  The accounts would serve as a state-level repository for managing and accounting for all emission allowances designated primarily for renewable energy and energy efficiency purposes, including funding to retrofit existing buildings; implementation of the provisions relating to building energy codes; and incentives for retooling, expansion or creation of manufacturing facilities that produce renewable energy.

Subtitle E-Smart Grid Advancement

This subtitle is designed to support the advancement of the Smart Grid.  A Smart Grid delivers electricity from suppliers to consumers using digital technology to save energy, reduce cost and increase reliability and transparency.  The subtitle contains a number of provisions that would: identify Smart Grid benefits and capabilities for consumer products and appliances; increase public information on Smart Grid technologies, practices, and benefits; and expand the energy efficient appliance rebate program to include rebates for efficient appliances with Smart Grid features and capabilities.  There would also be a requirement for a national program for load-serving electric utilities to reduce peak electric demand.

Subtitle F-Transmission Planning

This subtitle would establish a federal policy on electric grid planning that recognizes the need for new transmission capacity to deploy renewable energy as well as the potential for more efficient operation of the current grid through new technology, demand-side management and storage capacity.  Existing regional transmission planning processes would incorporate this federal policy to facilitate transmission planning and siting decision-making to meet these new demands. 

Subtitle G-Technical Corrections to Energy Laws

This subtitle would make technical corrections to existing energy laws.

Subtitle H-Energy and Efficiency Centers and Research

This subtitle would direct funding to higher education institutions for Building Assessment Centers to promote opportunities for building efficiency, including research and training, and promotion of "high-efficiency building construction techniques and materials options."  There would also be a program to create and support Energy Innovation Hubs to promote commercial application of clean energy technologies, as well as an initiative that would establish not more than 10 regional Centers for Energy and Environmental Knowledge and Outreach. 

Subtitle I-Nuclear and Advanced Technologies

This subtitle would promote the domestic deployment of clean energy technologies through the establishment of a self-sustaining Clean Energy Deployment Administration (CEDA).  The CEDA would develop a methodology for assessing clean energy technologies and encouraging their commercial scale deployment and advise on approaches for meeting energy technology deployment goals.  The CEDA would have broad authority to provide direct and indirect support for clean energy technologies, including through the provision of loans, loan guarantees and letters of credit through a Clean Energy Investment Fund.

Subtitle J-Miscellaneous

The final subtitle of Title I includes miscellaneous provisions.  Among them are provisions that would establish a Clean Technology Business Competition Grant Program, a National Bioenergy Partnership, an Office of Consumer Advocacy and a Development Corporation for Renewable Power Borrowing Authority.

What Can Members Do?

• Read the "AGC Looks at Climate Bill H.R. 2454" series, the introduction is posted here.)
• Take action and write your Senator using the AGC Legislative Action Center (AGC, its Chapters and members sent over 2,000 letters to Capitol Hill in response to H.R. 2454).
• Explore the potential for the real estate and construction industries in climate legislation. This is an evolving discussion draft document resulting from AGC's meetings and discussions with representatives of the real estate and construction industries and other related groups.
• Go to www.congress.gov and search under "H.R. 2454" to read the bill.
• Read information about greenhouse gas emissions associated with the construction industry.
• Learn low-cost ways contractors can reduce greenhouse gas emissions from equipment.