AGC on Tuesday announced that the Senate climate change bill neglects efforts to cut traffic congestion and breaks a decades-long promise that transportation user fees will be dedicated to financing highway and transit improvements.

On Tuesday, AGC and transportation partners sent a letter to Senators Kerry and Lieberman, warning that their bill fails to provide enough funding to the Highway Trust Fund to keep it solvent or pay for a multi-year surface transportation reauthorization bill.

The Kerry-Lieberman bill, The American Power Act, places new pollution fees on the gasoline and diesel fuels used by cars and trucks without returning most of the revenue generated from that fee to improving our transportation system. AGC estimates these fees would generate at least $19.5 billion in revenue and divert at least 77 percent of the funds from on-road fuel consumption away from transportation investment. The bill will allocate $6.25 billion annually for transportation. Of that $6.25 billion, $2.5 billion would go to the Highway Trust Fund - with a mandate to set aside funding for projects that decrease greenhouse gas emissions - while the rest of the money will be equally divided between the competitive federal TIGER grants and local land-use planning, as laid-out in the CLEAN-TEA bill.

AGC was quoted in a number of publications, including thePittsburgh Post-Gazette and Engineering News-Record.

Last week, AGC issued this statement in response to the bill.

The U.S. Senate is expected to vote on a resolution next week that would block the U.S. Environmental Protection Agency (EPA) from regulating greenhouse gases under the Clean Air Act.  AGC is concerned that Clean Air Act regulation of greenhouse gases would delay or stop construction projects nationwide.

S. J. Res. 26 was introduced by Senator Lisa Murkowski (R-Alaska) in response to EPA's effort to regulate greenhouse gases from motor vehicles that then trigger requirements for emission controls from all other sources, including commercial buildings, industrial facilities, and more.   

EPA regulation under the Clean Air Act means more pre-construction permits, operating permits, and costly technology control installation requirements for building projects, and puts approval and federal funding for highway and bridge projects at risk.  It also means higher energy costs for businesses and consumers that will affect demand for construction services nationwide, especially in a down economy. 

AGC urges all members to contact their Senators in support of Senator Murkowski's resolution.  To send a message to your Senators, you can use AGC's Legislative Action Center by clicking here.

The Internal Revenue Service (IRS) has posted on its website the newly-revised payroll tax form that most eligible employers can use to claim the special payroll tax exemption that applies to many new workers hired during 2010.  The payroll tax exemption and the related new hire retention credit were created by the Hiring Incentives to Restore Employment (HIRE) Act signed into law on March 18.

Employers who hire unemployed workers after February 3, 2010 and before January 1, 2011 may qualify for a 6.2 percent payroll tax incentive, in effect exempting them from the employer's share of Social Security tax on wages paid to these workers after March 18.  The employee's 6.2 percent share of Social Security tax and the employer and employee's shares of Medicare taxes still apply to all wages.  Form 941, Employer's Quarterly Federal Tax Return, revised for use beginning with the second calendar quarter of 2010, will be filed by most employers claiming the payroll tax exemption for wages paid to qualified workers.  The instructions for the new Form 941 are also available. 

The HIRE Act requires that employers get a signed statement from each eligible new hire, certifying that he or she was not employed for more than 40 hours during the 60 days before beginning employment with that employer.  Employers can use new Form W-11 released last month to meet this requirement.

In addition, for each qualified employee retained for a least a year whose wages did not significantly decrease in the second half of the year, businesses may claim a new hire retention credit of $1,000 per worker on their income tax return. 

Further details on both the tax credit and the payroll tax exemption can be found in a list of answers to frequently asked questions about the new law posted on IRS.gov.

The House postponed a vote this week on a bill that would extend various expired tax provisions, unemployment and health care programs, and infrastructure initiatives as part of the Democratic Congress' jobs agenda. 

The American Jobs and Closing Tax Loopholes Act, H.R. 4213, would include a number of provisions of benefit to the construction industry, including extension of the Build America Bonds program, lifting of the cap for water infrastructure projects financed through private activity bonds, and multi-employer pension plan funding relief.  However, the bill comes at a cost to the industry as well.  To offset the cost of the tax provisions, the bill would change the way carried interest profits are taxed, by taxing them at the higher ordinary income rates rather than at the lower capital gains rate, a move that would further hurt the struggling real estate development community.  The bill would also impose employment taxes on all income earned by service professionals who are also shareholders of an S corporation. 

AGC is evaluating the legislation and its impact on the construction industry and working with Congress to find ways to be able to fully support the bill.

An Advance Notice of Proposed Rulemaking (ANPR) was issued May 13 seeking input on how the government can best implement a policy of posting government contracts online. FAR Case 2009-004, Enhancing Contract Transparency, notes that while no policy mandating the online posting of contracts exists yet, the Councils anticipate that one could be coming soon.

They point to the general tone of several of President Obama's memoranda (including the Freedom of Information Act Memorandum and the Transparency and Open Government Memorandum) and other points of executive branch policy and conclude that given the shift to more open government, a requirement to post government contracts online is coming. The ANPR asks for suggestions for how best to revise the FAR to facilitate such posting without violating statutory and regulatory prohibitions against disclosing protected information that belongs to the government or to contractors.

AGC will closely monitor the development of this ANPR and will soon solicit ideas from contractors on how to proceed.

The House Transportation and Infrastructure Subcommittee on Railroads, Pipelines, and Hazardous Materials held a hearing on Implementation of the Pipeline Inspection, Protection, Enforcement and Safety Act of 2006 and Reauthorization of the Pipeline Safety Program.

Witnesses included Cynthia Quarterman, Administrator of the Department of Transportation's Pipeline and Hazardous Materials Safety Administration (PHMSA).  In her testimony, Quarterman noted the significant role the AGC-supported Common Ground Alliance (CGA) and its "811 Call Before You Dig" campaign played in the reduction in incidents resulting in damages to underground facilities.

Quarterman noted that PHMSA was working with states to encourage them to adopt damage prevention laws and conduct outreach to damage prevention stakeholders.  Quarterman also referenced the rulemaking currently underway at PHMSA, which solicited comments in December 2009 to assess the adequacy of individual state's damage prevention enforcement regimes for oil, gas and other hazardous material pipelines.  PHMSA is currently in the process of reviewing comments and will develop criteria for federal enforcement of damage prevention laws in states that are deemed to have inadequate enforcement.

 AGC submitted comments to PHMSA  on the need for consensus and shared responsibility in damage prevention, the need for effective and balanced enforcement, and the statutory limitations defining the appropriate role of the federal government in state damage prevention under the Pipes Act of 2006. AGC will continue to monitor and weigh in on PHMSA reauthorization and will submit comments on the next phase of rulemaking.

To access a recording of the hearing, associated documents and written testimony, click here.

This past Tuesday, some of the most competitive primaries took place in Arkansas, Kentucky and Pennsylvania. The outcomes of those races forecast competitive elections in November.

In Arkansas, the heated Democratic primary race between sitting Senator Blanche Lincoln and Lt. Governor Bill Halter has been forced into a run-off because each candidate received only 46 percent of the vote (in Arkansas, one must receive at least 50 percent of the vote in order to be declared winner).  Unions announced multimillion dollar commitments for Halter in the run-off because of Blanche Lincoln's principled stance against "card check" legislation in the Senate. The Arkansas run-off election will take place in two weeks on one of the largest primary days this season - June 8, when California, Iowa, Maine, Montana, Nevada, New Jersey, North Dakota, South Carolina, South Dakota, and Virginia head to the polls.

Meanwhile in Kentucky, the election shows either that the Republican candidate was not up to task or that there is power in the Kentucky Tea Party movement. Either way, the clear win by activist Rand Paul, son of Libertarian Congressman Ron Paul, was a blow to the Kentucky GOP establishment and its hand-picked candidate, Trey Grayson, Kentucky's current Secretary of State.

Pennsylvania's primary may have been the most talked about primary of the day.  Rep. Joe Sestak defeated Sen. Arlen Specter, who recently switched to the Democratic Party last year in what is now a failed attempt to save his political career.  Sestak will face Republican Pat Toomey in the general election this November.

Democrat Mark Critz declared victory Tuesday night over Republican candidate Tim Burns in Pennsylvania's 12^th District.  The special election took place after February's passing of Rep. John Murtha (D).  Critz served as a staff member to Murtha for nearly a decade. This was a Democratic seat won by a Democratic candidate who ran a pro-life, pro-gun, anti-Obamacare campaign for office.

Senators John Kerry (D-Mass.) and Joe Lieberman (I-Conn.) Wednesday unveiled a new approach to climate change legislation they say can achieve the 60 votes necessary to pass the Senate.  However, no Republicans have expressed support for the package and today all six west coast Democrats came out in opposition to provisions they feel did not restrict off shore drilling enough.  The 987-page American Power Act promises to cut U.S. emissions of greenhouse gases by 17 percent from 2005 levels by 2020 and 80 percent by 2050, consistent with President Obama's pledge to the international community in December 2009.  It would still allow the EPA to regulate stationary sources under the Clean Air Act.

The Kerry-Lieberman bill will lead to higher costs for energy produced by fuels that produce carbon emissions (as displayed in the chart below, nearly 70 percent of U.S. electricity comes from coal, petroleum and natural gas). It has yet to be formally introduced, but to mitigate higher energy costs for all users, the bill would provide more generous distribution of free greenhouse gas emissions allowances to electric utilities and U.S. industries than in previous climate change bills. These allowances are designed to soften the impact of higher energy prices on consumers and U.S. manufacturing, and would preempt states and the U.S. Environmental Protection Agency (EPA) from using some of their existing authority to regulate stationary sources of greenhouse gases. However, it does not provide a blanket preemption that could still bring in stationary sources of all sizes regardless of whether they are a covered entity under federal regulation under the Clean Air Act or other environmental statutes, including the Clean Water Act, Endangered Species Act, or National Environmental Policy Act, or, further, nuisance or citizen suit threats.  In addition, the bill includes new transportation planning requirements that would require states and metropolitan areas to develop strategies with EPA approval to reduce greenhouse gas emissions through the transportation sector, including from reductions in vehicle miles travelled. 

Kerry-Lieberman would also require federal contracting agencies and other agencies receiving federal funding for construction of projects authorized by the bill to comply with President Obama's Executive Order and subsequent rulemaking on PLAs, which was finalized in April 2010 and "encourages" federal agencies procuring construction projects greater than $25 million to "consider" the use of a PLA on the project.

2009 Electricity Generation by Energy Source

(Thousand Megawatthours)

The bill would impose emissions limits on approximately 7,500 U.S. factories and power plants and would cover only those operations that emit more than 25,000 tons of greenhouse gases each year.  The bill would cover electric utilities starting in 2013 and delay caps for U.S. manufacturing and industry until 2016.  Companies would be required to hold or purchase emissions allowances for each ton of greenhouse gas they emit.  Transportation sector emissions would be covered by requiring oil companies to purchase emissions allowances at a set price (the impact on the transportation sector is examined in greater detail below).

Approximately two-thirds of the revenues raised from the sale of allowances would be returned to consumers, while one-quarter of the revenues would go towards funding other programs created in the legislation.  After 2035, all of the revenue would go toward consumer benefits.  The bill includes a price floor for carbon set at $12 per ton that would increase at a rate of 3 percent above inflation each year, as well as a price ceiling of $25 per ton rising at an annual rate of 5 percent above inflation.  Natural gas and home heating oil and propane providers would also receive free emissions allowances.

Key to securing moderate Democrat and Republican support, the bill includes a nuclear title that would include tax incentives, expanded regulatory risk insurance, a $54 billion loan guarantee fund, and an expedited licensing process.  At the same time the bill contains mixed messages over offshore oil and gas drilling, also seen as vital to votes, by returning 37.5 percent of revenues from federal waters to adjacent states, while allowing states to enact a law prohibiting offshore drilling within 75 miles of the state's coastline. 

The bill provides less incentives for renewable energy and energy efficiency initiatives than previous climate change bills.  The Kerry-Lieberman bill would only provide $8.8 billion in the first year compared to roughly $67.8 billion in the House-passed bill, H.R. 2454, and $51.3 billion in version approved by the Senate Environment and Public Works Committee, S. 1733.  This funding would support initiatives such as energy efficiency retrofits to buildings and manufacturing facilities.

The Senate Majority Leader Harry Reid (D-Nev.) is expected to meet with committee chairs to discuss reconciling provisions in the Kerry-Lieberman bill with other bills, including an energy bill approved by the Senate Energy and Natural Resources Committee, S. 1462, which includes a renewable energy standard (RES).  No further details for Senate consideration have been announced. AGC issued a statement Wednesday expressing concern with the American Power Act. 

AGC continues to urge Senators to support a resolution, S.J.Res. 26, which would block the EPA from regulating greenhouse gases under the Clean Air Act.  The resolution may be voted on in the Senate as early as next week.  AGC encourages members to use AGC's Legislative Action Center to contact your Senators in support of the resolution.

The American Power Act (explained above in detail) places new pollution fees on the gasoline and diesel fuels used by cars and trucks without returning most of the revenue generated from that fee to improving our transportation system. 

AGC estimates these fees would generate at least $19.5 billion in revenue and divert at least 77 percent of the funds from on-road fuel consumption away from transportation investment.  The bill will allocate $6.25 billion annually for transportation.  Of that  $6.25 billion, $2.5 billion would go to the Highway Trust Fund - with a mandate to set aside funding for projects that decrease greenhouse gas emissions - while the rest of the money will be equally divided between the competitive federal TIGER grants and local land-use planning, as laid-out in the CLEAN-TEA bill.

AGC and its transportation stakeholders will send a letter and request meetings with Senators Kerry and Lieberman with the clear message that the amount of funding that they are providing to the Highway Trust Fund will not only fail to keep the trust fund solvent but will make it impossible to find the revenue necessary to pay for a multi-year surface transportation reauthorization bill.  AGC issued this statement in response to the bill.

For more information and to write your Senator, click here.

The Kansas Contractors Association and Heavy Constructors Association of Greater Kansas City celebrated a major victory Tuesday when the Kansas House of Representatives passed an $8.2 billion transportation improvement program, giving the state Department of Transportation responsibility for managing a ten-year program to upgrade highways, transit, short-line rail and airports.

The bill allocates $2.7 billion in new financing and $5.5 billion in existing state and federal appropriations to projects. The new financing is supported by a one cent sales tax increase, with .4 cents going to highways, $1.7 billion in new bond debt and an increase on registration fees for trucks greater than 16,000 pounds.