ICPI Government Affairs Update

Sunday, February 15, 2015 Randall G. Pence, Esq. Capitol Hill Advocates, Inc. -----

Update/status on successor bill to MAP-21, status of ICPI authorizations language The most important result of the 2014 elections is that the Senate has switched to Republican control. For the purposes of the successor bill to MAP-21, we may expect some greater cooperation between the House Transportation and Infrastructure Committee (T&I) and the Senate Environment and Public Works Committee (EPW) in terms of developing a proposal, or possibly series of proposals, to pass a new authorization bill.

Of course, President Obama and his Administration remain relevant. The Senate Republicans won a great victory, but the margin of their majority is not great enough to overcome filibusters by the Democrats (which would require a 60-vote supermajority) or to override a Presidential veto, which required a 67-vote supermajority. Politically, this means that some Democratic support will be necessary to pass a Transportation Authorization bill, which is ICPI’s natural subject matter target for the next tranche of ICPI PICP language.

The principal hurdle for such a bill remains a funding mechanism, the tax aspects of which are a concern for conservative Members of both parties and on both sides of Capitol Hill.

There is much debate about the duration of a successor bill. The duration issue is irrelevant for ICPI’s purposes. Any Authorization Bill that is signed into law by the President will suit ICPI’s purposes.

Senator James Inhofe (R-OK) is Chair of the Senate Environment and Public Works Committee. ICPI has amended its 2015 lobbying strategy to reflect Sen. Inhofe’s leadership.

On the House side, Chairman Bill Shuster (R-PA) retained his gavel, and Cong. Peter DeFazio (D-OR) is Ranking Member. ICPI has good relations with both Members and their staff.

In November 2014, ICPI, represented by David Pitre and Randy Pence, met with Sen. Vitter in his offices near New Orleans to seek his direct support to have PICP research conducted at the Louisiana Transportation Research Center (LTRC). Sen. Vitter agreed to assist with ICPI’s requests: 1) to send a letter to the Louisiana Department of Transportation, with a copy to FHWA, to give all fair consideration to the ICPI PICP proposal, and 2) to task his Capitol Hill staff to interface with FHWA to locate any unexpended FHWA funds that could help fund this effort. ICPI is pleased to thank Sen. Vitter for his kind assistance. Sen. Vitter has invested the time and effort to learn about the public policy benefits of PICP, and he believes that PICP research can provide substantial benefits to the taxpayers of the U.S. Since the meeting, Senator Vitter has made good on his commitment to send a positive letter to the appropriate office overseeing LTRC. We thank Senator Vitter for his kind assistance, and we also thank David Pitre for his kind assistance with this key in-state meeting.

MAP-21 funding extension status, political impacts, effect on successor bill ICPI bill language offered for successor bill to MAP-21 Background: immediately prior to the commencement of the 2014 August recess on Capitol Hill, the House and Senate agreed on a funding extension of MAP-21. MAP-21 was scheduled to expire on September 30; however, the Office of Management and Budget (OMB) warned that funding for MAP-21 projects could run out at the beginning of August. The Hill decided to extend the funding to the end of May, 2015. ICPI regarded the extension as necessary to avoid disruption of funding on transportation construction projects, some of which benefit ICPI members as suppliers.

Again, discussions for a longer-term bill continue. There is general agreement that Congress needs some funding mechanism that does not rely solely, or perhaps even in part, on an increase in the federal gasoline tax. Leaders in Congress are continuing discussions behind the scenes to arrive at an acceptable funding formula. ICPI encourages such discussions. The nation needs a new Transportation bill, sooner than later, and one will pass eventually – most likely with the ICPI legislative proposal included.

After the 2014 elections, there has been a concerted effort among GOP leaders to demonstrate that passage of a new Transportation Bill is a top priority for the GOP to show that they can govern, that a Transportation Bill is an area of commonality among both parties such that it might gain the bipartisan support to pass.

The most frequently mentioned options to fund the successor to MAP-21 remain some manner of increase in the federal gas tax, some change in tax of foreign profits known as “repatriation”, and perhaps a procedural mechanism known as Budget Reconciliation. All of the proposals carry significant controversy. At this writing, there is no consensus funding mechanism. The search for political consensus continues.

Increasingly, it appears that the Hill will be forced to pass at least one short-term extension of MAP-21 at the end of May.

EPA regulatory proposal to expand Waters of the United States (WOTUS), ICPI involvement, negative pressure from GOP EPA and the U.S. Army Corps of Engineers (USACE) have jointly proposed a regulation that would substantially expand the legal definition of waters that constitute Waters of the U.S.

(WOTUS = Waters of the U.S., a critical legal determination in establishing the geographic jurisdiction of EPA authority to enforce the Clean Water Act.)

The proposal is highly controversial in the construction and development industries. It would substantially expand the authority of the federal government to regulate development in and around bodies of water of many sizes. The impacts are numerous. But the impacts of greatest direct importance to markets for ICP is that it could vastly expand the reach of EPA in requiring stormwater runoff mitigation – and thus the use of ICP – to meet federal clean water goals.

In July 2014, EPA and USACE held a public forum on the issue.

As would be expected, the business community, in the form of a 30+ membership coalition, criticized the proposed rule for lack of specificity, unintended consequences, the need for a SBREFA panel to consider small business impacts downstream of the rule, and more.

EPA defended its position strenuously. The most interesting comment is that EPA feels the proposed rule will actually restrict WOTUS determinations. Virtually no one else believes this assertion.

Probably the most likely areas for expansion of EPA authority if the rule should it become final is that it would expand waters around tributaries, impoundments and wetlands that would send water (and pollutants contained therein) into those waters that are more traditionally considered jurisdictional under CWA. This would seem to fit well with the notion that the proposed rule will have an important downstream impact on construction, stormwater runoff, etc., which brings in mitigation technologies like ICP.

An important point raised in the forum: there has been some confusion that, because USACE is so prominently involved in this rulemaking, that the rule is targeted to the Section 404 dredge and fill program. But that is a narrow interpretation. The rule will have much broader impact.

ICPI did file public comments in November of 2014 on this proposed rule. In brief, ICPI made that argument that it is not technically or economically infeasible to implement any stormwater consequences of this rule – PICP makes it technically and economically feasible, using well-known, off-the-shelf, commercially available PICP products to comply with any manner of stormwater regulation that the WOTUS rule would impact and expand. In many respects, ICPI’s comments were a marketing piece for PICP to be distributed in the government forum and seen by developers, and state and local procurement officers.

The 2014 elections have materially changed the Hill dynamics on this issue. At this writing hearings have already been scheduled and will continue to occur to generate opposition to the proposed rule. Because the GOP controls both sides of the House, it becomes numerically possible for the Hill to defeat WOTUS in either or both of two ways: 1) pass appropriations bills that would deny EPA and USACE the funding needed to finalize or implement the rule, or 2) invoke the Congressional Review Act, a law passed under the Gingrich Contract With America, that can allow Congress to completely overturn an unpopular act. The CRA seems unlikely or impossible to achieve final success due to an anticipated Presidential veto that the GOP would not have the votes to override. But there has been speculation that the President might not veto an appropriations bill that would contain fencing language to functionally stop movement forward on WOTUS. This will be an active issue going forward on the Hill and the outcome is altogether uncertain.

EPA work on expanded stormwater regulatory schemes, impact on ICP use EPA announced in 2014 that, rather than promulgate a new stormwater regulation for both new construction and existing facilities, it would work with state and local entities to promote best practices and encourage state and local efforts to implement stormwater reduction actions at that level.

EPA continues to list ICP as a mainstream means to reduce stormwater reduction and enhance water infiltration in situ.

We continue to assess and monitor whether and how EPA will be able to implement its strategy. EPA has been under court order to issue a federal regulation; it remains to be seen whether the original plaintiffs will seek further court action to force EPA’s hand with regard to a regulation.

Nonetheless, ICPI is in a position to continue to provide technical assistance to EPA staff to be channeled to state and local entities, specifically how ICP may be integrated into new designs in a way that is functional from a stormwater drainage standpoint. We advise on ongoing positive relationship with EPA staff, including using EPA to all possible extent to highlight and distribute ICP information generated by ICPI. We will continue to monitor “green” activist group efforts to force EPA to issue a formal regulation.

Possible new opportunity on resilient construction, Hill hearings/testimony, possible invitation to participate in congressional roundtable discussions on paver contribution against flooding disasters The House Subcommittee on Economic Development, Public Buildings, and Emergency Management held a hearing titled “Rebuilding After the Storm: Lessening Impacts and Speeding Recovery”. The hearing was held January 27, 2015.

The hearing appears to set the stage for a significant debate in the 114th Congress on a new federal policy toward construction designed to mitigate the hugely negative, disruptive and destructive economic impacts of natural disasters. The hearing seems driven by the aftermath of Hurricane Sandy in the Northeast, but memories of Hurricanes Katrina and Rita linger for their budget-busting impact as emergency appropriations are required to help rebuild.

We have spoken with House Counsel for the Subcommittee regarding the specific flooding aspects that lead to economic disruption. Counsel are intrigued by the ICP story and potential benefit in reducing flooding impacts while allowing economic development to move forward. As a result of that lobbying conversation, the Subcommittee has invited ICPI to submit testimony to introduce the Subcommittee to the prospective benefits of ICP in mitigating flood impacts. ICPI is preparing written testimony for submission at this writing.

Further, we expect the Subcommittee Chairman to invite ICPI to participate in subsequent industry roundtables to represent ICP and the permeable pavers’ contribution to modern flooding mitigation. ICPI will be pleased to accept the invitation and participate.

Silica regulation update, likely future action 2014 saw enormous action on the proposed silica rule, as detailed in the background materials below. We expect most of 2015 to be dominated by OSHA considering all of its comments. We will see a major spike in activity in 2016 as the Obama Administration races to finalize this regulation before the President leaves office.

In 2015, we will likely see the business opponents of the silica regulation joining with Hill Republicans to convene congressional hearings on this issue, and possible appropriations efforts to deny funding to OSHA to proceed. In that sense, 2015 could be an active year on legislative and political elements to slow or stop this rule. We do expect a request for a new SBREFA review which, if successful, could prevent the rule from becoming finalized prior to President Obama leaving office.

In addition, the Construction Industry Safety Coalition (CISC) of which ICPI is a member, has completed and submitted to OSHA an updated cost estimate that indicates a much higher cost for the regulation.

From the CISC report: “CISC estimates that OSHA’s proposed silica standard will now cost industry more than $4.9 billion per year, increasing the original estimate by approximately 20 percent since the post-hearing economic analysis was submitted. This new analysis shows an additional $1.05 billion per year of indirect costs will be placed on the construction industry in the form of increased prices paid for construction materials and building products (i.e., block, stone, tile, concrete, paint, countertops, etc.) when manufacturers of those materials pass on some of their costs of complying with the “General Industry” portion of OSHA’s proposed silica standard, while $3.9 billion per year will be direct compliance expenditures by the construction industry for additional equipment, labor, monitoring, medical surveillance, record-keeping, etc. In addition to the proposed rule being more costly than originally estimated, the report translates the costs into significant job losses for the construction industry and the broader economy. The CISC estimates that the proposed regulation would reduce the number of jobs in the U.S. economy by more than 52,700 yearly.”

We will recommend that ICPI continue its efforts on this issue, focusing on the two coalitions that ICPI joined to file joint comments opposing the regulation. These coalitions may be ICPI’s best mechanisms to move the fight to the legislative and political arenas.

Background on the proposed rule and why it is so controversial, and ICPI’s action in response: OSHA did indeed propose to reduce the Personal Exposure Limit (PEL) to a more restrictive level than is required today, and would require engineering changes for employers to adopt to comply with the rule. These are the broad parameters that would entail significant cost, liability and alterations in how ICPI members conduct business – and which trigger ICPI’s quite intense interest.

The proposed regulation on silica would indeed have a major impact on all ICPI members. The structure of the proposal separates construction from general industry and maritime, which affected ICPI’s response.

ICPI requested added comment time, SBREFA panel As part of its strategy to allow as much time to analyze the silica proposal and prepare an ICPI-specific response, ICPI petitioned OSHA on October 18, 2013, for an extension of the filing deadline to March 11, 2014. Further, ICPI requested a new SBREFA panel hearing to assess economic impacts on small businesses that may have changed since the first SBREFA panel was convened in the early 2000s.

OSHA provided a limited extension of the filing deadline, not what ICPI and other business groups sought. OSHA extended to January 27, 2014, and refused to empanel a new SBREFA panel.

On November 20, ICPI took the unusual step of making a second request for an extension, and a new SBREFA panel. Other business groups made similar second requests, owing to the complexity and impact of the proposal regulation. OSHA refused. However, OSHA experienced problems with its filing website in late January, which prompted OSHA to grant a very short-term extension of 15 days to February 11. ICPI filed its comments a day in advance of the deadline, through multiple means including hand-delivery at the OSHA HQ.

ICPI coalitions Following the ICPI Pittsburgh meetings in 2013, ICPI contacted multiple business coalitions and coalition participants to survey the coalition landscape and make a recommendation as to the best coalitions for ICPI to respond to the proposed rulemaking on silica.

In particular, ICPI interviewed both the Construction Industry Safety Coalition (CISC), and the ACC Silica Panel (ACC).

We recommended that ICPI could acquit its responsibilities to its membership well by joining either group. However, there are some subtle differences between the two coalitions, particularly with respect to their respective focus. The regulation will have broad and durable impacts on paver manufacture and paver use in construction.

ICPI is unique in having interests in both construction and manufacturing, which are handled differently in the silica regulation.

CISC has a clear focus on construction issues, rather than manufacturing. ICPI is able to acquit its responsibilities to its members who are more sensitive to the construction section of the proposed regulation. CISC is unable to address the manufacturing side of the regulation as much as ICPI would like.

ACC addresses both construction and manufacturing, but the clear emphasis is on manufacturing.

In the end, ICPI covered all of its bases by working with both groups, on a hybrid basis under the ACC umbrella by participating in a CAMRA group approach to ACC.

ICPI had been in discussions with NCMA, NPCA, NRMCA and PCA to discuss a possible joint “sector” membership for these organizations and all willing members of CAMRA. ICPI attended a half-day meeting on November 6 at PCA offices in Washington DC to move these discussions forward.

Procedural matters: ICPI NOI filing for testimony, post-hearings comments On December 8, 2013, ICPI filed a Notice of Intent (NOI) to appear at the OSHA hearings to testify on behalf of its members regarding the proposed silica regulation. This was done not only to provide ICPI this opportunity, but also to perfect ICPI’s right to participate in a subsequent post-hearing comment period. ICPI is slated to testify on the afternoon of April 4, 2014, at the USDOL HQ in Washington DC, in sequence with other cement and concrete-related organizations. Randy Pence and Charlie McGrath will testify on ICPI’s behalf.

ICPI filed comments ICPI filed its comments a day in advance of the deadline, through multiple means including hand-delivery at the OSHA HQ.

ICPI and pavers were covered in submitting comments as part of contractors groups under the CISC comment filing, under the manufacturing umbrella of the ACC comments, and individually under ICPI’s own comments. All such comments are now filed in the document and on the record for OSHA to review and address.

ICPI testified in personam before OSHA On April 4, 2014, Charlie McGrath, David Smith and Randy Pence appeared before an administrative law judge presiding over the OSHA public hearings on the proposed silica regulation.

ICPI explained its position and took questions from both OSHA staff and interested members of the public – primarily labor union representatives – to discuss the relevance of silica to both manufacturing and construction contractor members of the association.

At this stage, ICPI made the tactical decision to not propose a counter suggestion as to an acceptable PEL or acceptable ancillary provisions, nor to volunteer any sampling data from the industry and members. ICPI’s view is that at this stage, OSHA has the burden of going forward and validating any data offered to support its proposed requirements. We believe that most industry stakeholders took a similar approach. ICPI’s testimony focused on practical issues that exist on typical jobsites that would indicate that OSHA has either over- estimated the impact of silica on modern jobsites and under-estimated the costs and technical impracticality of the proposed ancillary requirements. In addition, ICPI continues to challenge whether it is technically feasible to measure PELs at the low levels sought by OSHA.

The CISC and ACC testimony, which also included input from ICPI and was offered in part for ICPI, made similar allegations from a broader construction and manufacturing perspective.

ICPI submitted post-hearing comments ICPI had taken steps to perfect its right to submit post-hearing comments by testifying at the public hearings. The ICPI post-hearing comments continued the themes set forth in the subchapter immediately above.

CISC and ACC Silica Panel filed final post-hearing comments In mid- August 2014, both CISC and the ACC Silica Panel filed, separately, their coalition-based post-hearing comments to OSHA. ICPI information and interests were represented in these submissions. In general terms, the purpose of the submissions is to make the case that compliance with the proposed regulation will cost much more than estimated by OSHA. In addition, the submissions bolster the industry argument that several elements of the proposal (for example, reliance on respirators on hot days and on wetting-cutting on cold days, etc.) are technically infeasible. Under regulatory law, economic and technical infeasibility is a key factor in forcing agencies to revise regulatory mandates. ICPI supports the arguments contending the economic and technical infeasibility of the proposal.

It is important to note that the proposed regulation on silica remains only that – a proposal. The Obama Administration continues to drive the issue forward at as rapid a pace as possible. It seems clear that this issue is a priority for the labor interests within the Obama Administration to finalize prior to the end of this Presidency. It remains to be seen whether this goal is achievable on the political timeline that OSHA envisions. As we have suggested throughout, this issue and the battle over the same will likely be fought in not only the regulatory arena but also the judicial and legislative arenas as well. We may make new recommendations to the association with respect to next steps with CISC and ACC to maintain full pressure to moderate the OSHA proposal and its ultimate impact on ICPI members.

Administration labor agenda, Hill response under GOP Hill majorities The labor union agenda remains one of the key areas in which the Obama Administration is showing unbridled support for a key Democratic constituency. We expect the Administration, DOL, OSHA and the NLRB to continue their aggressive pro-labor agenda throughout the remainder of the Obama Administration. This will affect policy on possible immigration reform (and in sympathy, the ongoing attack to make the H-2B worker visa program as problematic and expensive as possible for businesses that use it).

Recently, the Administration finalized an Ambush Election rule that is profoundly controversial and negative within the employer community. We are aware that several ICPI labor allies such as NAM and the Chamber of Commerce have either filed legal challenges, or are preparing to do so, to stop the Ambush Election rule in court. Further, the Coalition for a Democratic Workplace, of which ICPI is a member, is also seeking named party and financial support for a legal challenge.

We recommend that ICPI continue to show support for the multiple business community challenges to the NLRB Ambush Election rule and similar pro-union efforts – but we do not recommend volunteering either support as a named party or financial support for court action.

In the first quarter of 2015, both the House and Senate passed legislation that would overturn the Ambush Election rule. At press time, we have learned that President Obama has issued a pocket veto on the bill. This move was expected. It is likely that neither the House nor Senate have the necessary votes to override the veto.

Successful outcome on EPA effort to re-designate fly ash as hazardous waste During the holidays in late December 2014 EPA announced a final rule on Coal Combustion Residuals (CCRs) – principally fly ash for the interests of ICPI – such that EPA will not regulate fly ash as a hazardous material.

This is the result desired by ICPI. ICPI’s comments on this matter were among 450,000 comments submitted on the EPA proposal that might have changed the fly ash designation to hazardous waste, with disastrous impacts on the beneficial use of fly ash as a component material in concrete product manufacture.

This outcome will not interfere with beneficial use for ICPI member purposes.

ICPI applauds the final position taken by EPA with regard to the non-designation of fly ash as a hazardous waste. The result is roundly applauded by nearly all entities in the stakeholder industries.

Thank you for this opportunity to report.

Randall G. Pence, Esq. Capitol Hill Advocates, Inc.