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    American Clean Power Association Issues Public Comment to Wage & Hour Division


    May 27, 2022 - Targeted News Service

     

      TARGETED NEWS SERVICE (founded 2004) features non-partisan 'edited journalism' news briefs and information for news organizations, public policy groups and individuals; as well as 'gathered' public policy information, including news releases, reports, speeches. For more information contact MYRON STRUCK, editor, editor@targetednews.com, Springfield, Virginia; 703/304-1897; https://targetednews.com

      WASHINGTON, May 26 -- The American Clean Power Association has issued a public comment to the U.S. Department of Labor Wage and Hour Division. The comment was written on May 17, 2022, and posted on May 24, 2022:

      * * *

      To: Division of Regulations, Legislation, and Interpretation, Wage and Hour Division, U.S. Department of Labor, Room S-3502, 200 Constitution Avenue NW, Washington, DC 20210

      Re: RIN 1235-AA40, Notice of Proposed Rulemaking to Update Davis-Bacon Labor Standards

      The American Clean Power Association/1 (ACP) appreciates the opportunity to provide comments regarding the Department of Labor's Wage and Hour Division (DOL) March 18, 2022, Federal Register notice of proposed rulemaking (NPRM)/2 to update Davis-Bacon (DBA) labor standards that apply to federally assisted construction projects.

      I. Background

      ACP and its members generally support DOL's efforts to modernize DBA standards. The renewable energy industry has always championed the construction workforce, employing more workers at good paying wages than many other industries in the country. At present, there are more than 415,000 Americans across all 50 states that make up the wind, solar, and energy storage workforce.

      1 ACP is the national trade association representing the renewable energy industry in the United States, bringing together over 1,000 member companies and a national workforce located across all 50 states with a common interest in encouraging the deployment and expansion of renewable energy resources in the United States. By uniting the power of wind (both land-based and offshore), solar, storage, and transmission companies and their allied industries, we are enabling the transformation of the U.S. power grid to a low-cost, reliable, and renewable power system. Additional information is available at http://www.cleanpower.org.

      2 87 Fed. Reg. 15,698 (Mar. 18, 2022), available at https://www.federalregister.gov/documents/2022/03/18/2022-05346/updating-the-davis-bacon-and-related-acts-regulations.

      * * *

      President Biden has set a goal of net-zero carbon emissions by 2050 and developing 30 gigawatts of offshore wind by 2030. Increasing renewable generation and battery storage capacity to meet these requirements over the next decade would create five to six million job-years/3 across multiple industry sectors and occupational groups. Not surprisingly, to meet both the product and labor demand for this infrastructure buildout, many of the jobs created would be in the construction industries. In fact, we predict that 24 percent of all such jobs will be in construction--and in some sectors, even more. In the solar sector, roughly 16 percent of jobs created will be in construction. The majority of wind industry jobs created--roughly 80 to 90 percent--will be found in construction or manufacturing. For battery storage, roughly 17 percent of the jobs will in construction.

      Certain aspects of construction will be in high demand to produce and install the renewable energy and storage capacities required to reach a 50 or 70 percent standard. On average, roughly 70,200 construction jobs created for the next 10 years will be across these occupations./4

      Assuming baseline economic activity, and not including decarbonization policies, the Bureau of Labor Statistics projects that these construction jobs will grow by an additional 161,700 jobs through 2029.

      Many of these jobs are spread across the country and support above-average wages compared to the national average. In fact, clean energy workers make 30 percent more than the national median wage, and nearly 10 percent of the clean energy workforce is unionized. Given all this, our industry is not concerned about creating good-paying jobs for workers--we do that already. Rather, we are concerned that meeting novel logistical compliance requirements--such as the definition of the "site of work"--will cause uncertainty in the industry and inhibit...

      3 A job-year represents one year of work for one person. In other words, a construction job that lasts five years would be considered five job-years.

      4 See 2021 Clean Energy Labor Supply.

      ...industry growth, thereby slowing these industry jobs. Our reasons are articulated in more detail below.

      II. Comments: "Site of Work" Definition

      ACP disagrees with DOL's proposal to amend the "site of work" definition. DOL's current definition for the term--the "physical place or places where the building or work called for in the contract will remain; and any other site where a significant portion of the building or work is constructed, provided that such site is established specifically for the performance of the contract or project"/5 --correctly encompasses what a site of work should be. Our reasoning is discussed in more detail below.

      A. Legal Precedent

      We respectfully disagree with DOL that the current proposal to define "site of work" aligns with congressional intent. In the preamble, DOL notes that "workers who construct significant portions of a Federal or federally assisted project at a location other than where the project will finally remain, . . . [would] receive prevailing wages as Congress intended when it enacted the Davis-Bacon and related Acts."/6

      This statement appears to conflate Congressional intent, the plain language of the statute, and agency precedent.

      Congress directed that Davis-Bacon prevailing wages be paid to "mechanics and laborers employed directly upon the site of the work." 40 U.S.C. Sec. 276a(a). Both the D.C. Circuit and the Sixth Circuit have found that this term "clearly connotes . . . a geographic limitation" and "the Act applies only to employees working directly on the physical site of the public building or public work under construction." Bldg. & Const. Trades Dep't AFL-CIO v. U.S. Dep't of Lab. Wage Appeals Bd., 932 F.2d 985, 990...

      5 2 CFR 5.2(l)(1).

      6 (quoting 2000 Final Rule on Labor Standards Provisions Applicable to Contracts Covering Federally Financed and Assisted Construction, 65 Fed. Reg. 80,268, 80,275 (Dec. 20, 2000) (2000 Final Rule)).

      * * *

      ...(D.C. Cir. 1991) (Midway) ("Congress intended the employment status of the worker, rather than the location of his job, to be determinative of the Act's coverage"); see also Ball, Ball & Brosamer, Inc. v. Reich, 24 F.3d 1447, 1452 (D.C. Cir. 1994) ("The limitation in the statute making it applicable to " 'mechanics and laborers employed directly upon the site of the work' restricts coverage of the Act to employees who are working directly on the physical site of the public building or public work being constructed."). Such limitations are well-reasoned: if the geographic proximity of the Davis-Bacon Act were expanded, it would "create the difficult problem of determining which off-site workers were indeed closely enough 'related' to the public work site to justify inclusion under the Act." L.P. Cavett Co. v. U.S. Dep't of Lab., 101 F.3d 1111, 1115 (6th Cir. 1996).

      This definition was given plenty of thought when originally adopted. In the Federal Register notice establishing the current definition, DOL noted that it considered many different options, considering a range of adjacent sites outside the construction site that would qualify as a site, or whether transportation should be involved, but in the end, declined to include those activities./7

      DOL stated that this limit was necessary to exclude "[o]rdinary commercial fabrication plants, such as plants that manufacture prefabricated housing components."/8

      Nothing has changed since then that would demand expansion of this requirement.

      The 2000 Federal Register final rule discussion that DOL cites as justification for further expanding the geographic scope of the "site of the work" is misplaced. As DOL noted in the 2000 Federal Register notice, the "Department is constrained by these courts' decisions . . . to limit prevailing wage coverage of off-site, dedicated support facilities to those that are either adjacent or virtually adjacent to the...

      7 65 FR at 80274.

      8 Id. The 2000 rule made clear the only narrow exception was when "such a large amount of construction is taking place that it is fair and reasonable to view such location as a site where the public building or work is being constructed." 65 FR at 80274. We do not dispute this notion.

      * * *

      ...construction location."/9

      The 2000 rulemaking was meant to apply to "those rare situations where [significant portions of] projects are constructed,"--"anomaly" situations./10

      The current preamble and proposed rule expands the rule far beyond "anomaly" situations. In the current proposed rule, DOL notes that this "exclusion can be more effectively accomplished with language that expands on the term 'significant portion'"--but an expansion is inconsistent with the above precedent. Instead, this expansion appears to move in the direction that Congress feared: the requirement, as is currently drafted, could impact "everything else that is manufactured" beyond the construction site. Midway, 932 at 991 N12 (quoting Congressional testimony that reflects Congressional intent to exclude offsite workers).

      DOL's proposed rule expands this requirement to encapsulate "significant portions" of a building or work that are offsite. It defines "significant portion" to mean "one or more entire portion(s) or module(s) of the building or work, as opposed to smaller prefabricated components, with minimal construction work remaining other than the installation and/or assembly of the portions or modules at the place where the building or work will remain." The proposal notes that when significant portions or modules are constructed specifically for particular work and not as part of the contractor's regular manufacturing operations, the company is not a material supplier but a contractor or subcontractor."/11

      This is a fundamental change from the previous definition--one that has been in effect for decades and which IIJA recipients are currently relying upon to seek federal funding. As there is no further guidance to rely upon on this issue, IIJA recipients and their contractors seeking to comply with the well-established current DBA regulations and...

      9 65 FR at 80275.

      10 Id.

      11 87 Fed. Reg. at 15732.

      * * *

      ...interpretive guidance will face considerable uncertainty. The proposal will have unintended consequences that go beyond the intent of Congress, while also imposing unnecessary administrative and regulatory costs on contractors and other developers.

      B. Definition of "Significant Portion"

      At a minimum, we urge DOL to clarify that the "significant portion" clause does not apply to components constructed offsite, keeping the following principles in mind:

      * Size: The language to distinguish fabricated components from modules refers to relative size of the component in reference to total project and not absolute size of the component. This language does not accurately reflect the market realities--size should not be a factor. For example, the preset, cement foundation of a compact building is smaller than many steel beams, yet the former is an example of a significant portion of the construction, while the latter are clearly components used for a larger construction.

      * Modularity: All construction has a degree of modularity. The types of construction meant to be captured by this rule are largely buildings and other forms of construction that traditionally have a lower degree of modularity. Thus, attempting to categorize construction as being fundamentally "modular" is not a useful test for applying this rule. The permanence, independence, and distance of the material fabricators is much more in line with the intended scope of the original authorization and of the amended rule.

      C. Application

      Finally, as a practical matter, DOL's current language will have unintended consequences, including those that it appears DOL seeks to avoid. For instance, in the proposed rule preamble, DOL distinguishes "portion or modules that are constructed for specific use" from products "made available to the general public." But in site-specific projects, like most renewable projects, it is highly unusual to procure components that are "available to the general public"-- developers contract with manufacturers many years in advance, sharing detailed design and engineering data, to ensure that the component parts that are procured will maximize the energy production potential at that specific site. Although it appears that DOL does not seek to include such manufacturing sites, the current preamble language and proposed regulatory definitions could potentially implicate them. If that is the case, such requirements could interfere with collectively-bargained wages and benefits with signatory employers and other well-established practices that could have deleterious effects on the supply chain and, in turn, the ability of project developers to hire construction crews at all.

      In addition, these requirements may place liability on parties who have no control over the process. The site of work is far-ranging in renewable development--manufacturing takes place across the country, and many modes of transportation are involved with development. As in other construction-heavy industries, a developer or a general contractor has no control over manufacturing processes or methods of transportation to reach the site--those costs and oversight are independent of the construction process. In addition, these activities are often conducted years in advance of project development and installation, before a project developer may make the decision to apply for IIJA funding. Yet, under the current proposal, it is easy to see how a component manufacturer could be subject to such requirements and consequently pass the DBA compliance liability on to the wind project developer years after procurement occurs--where the developer would not have been able to control the manufacturing process or the wages paid to workers.

      III. Conclusion

      We agree with the DOL's intention to ensure that IIJA funds go to industries that will create good-paying jobs. However, for the reasons stated above, the proposal to expand the definition of the "site of work" could have many unintended consequences--which could severely impact the Administration's clean energy goals and other initiatives. Therefore, we strongly urge DOL to maintain its current definition of "site of work" in the final rule, in line with congressional intent and in the spirit of meeting the Administration's clean energy goals at a time when the construction industry faces unprecedented challenges.

      We appreciate the opportunity to comment on this important matter, and we are available to answer any questions at your convenience.

      Sincerely,

      Gene Grace, General Counsel, 202-657-7434, ggrace@cleanpower.org

      Johanna Jochum, Counsel, 202-425-2065, jjochum@cleanpower.org

      Peter Jones, Associate Counsel, 978-201-2239, pjones@cleanpower.org

      TARGETED NEWS SERVICE (founded 2004) features non-partisan 'edited journalism' news briefs and information for news organizations, public policy groups and individuals; as well as 'gathered' public policy information, including news releases, reports, speeches. For more information contact MYRON STRUCK, editor, editor@targetednews.com, Springfield, Virginia; 703/304-1897; https://targetednews.com

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