ICI Successful in Preserving Critical Sales Tax Exemption

Construction safety equipment and materials purchase transactions remain tax exempt with the passage of the 2021 Senate Enrolled Act (SEA) 383 which became effective on July 1. ICI worked with Indiana Department of Revenue (DOR) leadership during 2020 which laid the ground work for an opportunity to propose an amendment to Indiana Code during the 2021 Indiana legislative session. SEA 383 created a statutory exemption (IN Code 6-2.5-5-55) for Indiana state sales tax for purchases of safety related equipment and materials purchased for public works construction contracts.

Previously, exemption language was solely published in the DOR’s Information Bulletin #60 up until 2017. The DOR published a revised IB #60 on July 28, 2021. The exemption applies to purchases of equipment such as barrels, barricades, temporary signs, temporary erosion control and drainage materials, but does not apply to purchases of personal protective equipment such as gloves, face masks and high visibility clothing.

Please contact Dan Osborn with general questions about this topic. Consult with a ICI member tax or legal professional for technical assistance and advice.

USDOT Requests Comments About DBE Good Faith Efforts

The USDOT recently published a request for comments concerning the costs of documenting and submitting Disadvantaged Business Enterprise (DBE) Program Requirements.

Comments are requested about 17 DBE requirements, most of which are isolated to efforts of federal fund recipients. Recipients of federal funds examples include Departments of Transportation, transit entities and airports. Item number nine (9), Submitting Evidence of Having Made ‘‘Good Faith Efforts’’ To Secure DBE Participation in DOT-Assisted Contracts, requests comments from contractors in addition to recipients. Comments should include information and data concerning time and cost committed to documenting and submitting good faith effort documentation when requested.

Written comments should be submitted by August 16, 2021.

You may submit comments [identified by Docket No. DOT–OST– 2021–0072] through one of the following methods: • Federal eRulemaking Portal: http:// www.regulations.gov. Follow the online instructions for submitting comments. • Fax: (202) 493–2251. • Mail or Hand Delivery: Docket Management Facility, U.S. Department of Transportation, 1200 New Jersey Avenue SE, West Building, Room W12– 140, Washington, DC 20590, between 9 a.m. and 5 p.m., Monday through Friday, except on Federal holidays.

FOR FURTHER INFORMATION CONTACT: Marc D. Pentino, (202) 366–6968, marc.pentino@dot.gov or Aarathi Haig, (202) 366–5990, aarathi.haig@dot.gov/ Departmental Office of Civil Rights, Office of the Secretary, U.S. Department of Transportation.

The American Rescue Plan Act of 2021 (COVID Relief)

On March 6 the U.S. Senate approved multiemployer pension plan relief as part of the American Rescue Plan Act of 2021 (ARPA 2021). U.S. House is set to vote on the legislation on March 10, and it will likely be signed into law by President Biden shortly thereafter.

The bill contains multiemployer pension plan provisions of interest to union construction contractors.

  1. For failing plans, the legislation includes significant multiemployer pension relief through a Special Financial Assistance Program by providing a one-time lump sum payment to eligible plans to pay all benefits through 2051 (30 years) with no expectation of repayment.
    • This Special Financial Assistance Program concept differs greatly from previously debated relief programs like an expansion of partitioning or loan programs.
      • This new approach by Congress is meant to clear procedural rules to avoid a filibuster and improves the likelihood the relief is enacted into law.
    • Under the Special Financial Assistance Program plans using 2020 assumptions that are “Critical and Declining” plans, and some “critical” plans and a few “endangered” plans would receive a onetime lump sum payment that is equal to the amount needed to pay benefits through 2051 (30 years). There is no concept of repayment for this assistance.
    • The package would also include provisions similar to those in response to the 2008 stock market event:
      • 2-year zone freezes;
      • 5-year extension of funding improvement and rehabilitation plans;
      • investment loss smoothing; and,
      • man hour smoothing.
    • It is estimated there are about 100 “critical and declining” plans, some “critical” plans and a few “endangered” plans in the construction industry that could be eligible for some relief.
      • Teamsters Central States Pension Fund (among many other Critical and Declining Plans) is expected to among the multiemployer plans that will receive relief. 
  2. Starting in 2031 PBGC premiums would be increased to $52/year and indexed for inflation every year after for all plans and participants.
    • Premiums are currently scheduled to be about $43 in 2031 because of indexing.
  3. None of the harmful public policy changes, that have been proposed in various bills over the last several years, are included the ARPA 2021. For example – the following are NOT included in the ARPA 2021:
    • massive PBGC premium increases,
    • employer assessments,
    • participant benefit reductions,
    • increased withdrawal liability and
    • mandating lower assumption rates.
    • However, at the same time a long AGC advocated policy change, authorization of Composite Plan design, which incorporates the best features of DB and DC plans by offering voluntary options to share risks, funding stability, lifetime income to participants, and limiting employer obligations to negotiated contributions only, without cost to the taxpayer was not included.
      • AGC will make authorization of new plan design a priority and will ensure the implementation of the American Rescue Plan Act considers the impact on construction employers.
  4. Some other policy changes of note in the American Rescue Plan Act:
    • New, 100% temporary subsidy of COBRA health benefits for unemployed workers through September 30, 2021.
    • Voluntary tax credits under FFCRA for paid sick time and paid family leave credits through September 30, 2021. (there is no federal paid leave mandate)
    • Extends the Employee Retention Tax Credit (ERTC) through December 31, 2021. Previously it was available through June 31, 2021.
    • Extends federal pandemic unemployment benefits at $300 per week through September 6, 2021 along with tax treatment advantages. (a late change)
    • Unfortunately, none of the $350 billion for state and local governments are dedicated to capital construction investment projects.

The actual legislative text for the pension language can be found beginning on page 477, COBRA on page 315 and the voluntary paid leave tax credits on page 407.

The situation has been very fluid over the last several weeks and AGC will be providing more information and resources soon.

More details on the pension provisions can be found in this Fact Sheet.

Multiemployer Pension Update

Source: James Young, Senior Director, Congressional Relations, HR, Labor and Safety, AGC of America

Among the flurry of week one Biden Administration executive actions and legislative maneuvering, House Democrats have released legislation to shore up the multiemployer pension system. The Emergency Pension Plan Relief Act of 2021 includes previously considered multiemployer pension reform elements that includes the concept of a special partition program for eligible “critical and declining” plans. While the proposal avoids draconian funding rule changes or premium increases that have been debated in recent years, the bill DOES NOT include authorization of Composite Plans.

The legislation, in its current form, is highly unlikely to become law unless the US Senate makes significant changes to their filibuster rules due to its estimated $52 billion cost to the US Treasury. However, elements of the funding relief could be considered alongside a future COVID relief package without Republican support. To further confuse everybody, two versions of the Emergency Pension Plan Relief Act of 2021 were introduced with the only difference being how long plans would be eligible for partition relief:

Emergency Pension Plan Relief Act of 2021, HR 423Emergency Pension Plan Relief Act of 2021, HR 409
Press ReleasePress Release
Fact SheetSummary

AGC is pleased to see one of the first legislative proposals introduced in the new Congress addresses the multiemployer pension funding crisis and will continue to work with our labor partners and advocate for adoption of the Composite Plan design.

Buy American vs. Buy America

President Joseph R. Biden Jr. signed an executive order intended to strengthen Buy American provisions. Congress passed the Buy American Act in 1933. This program covers specified products and requires the U.S. government to purchase domestic construction materials. The Buy American Act created a national preference for the government to procure only domestic materials used for public construction unless a waiver had been granted. The 1933 Act applies to direct purchases by the federal government, but not third parties, such as private contractors given procurement funding through government endowments.

In summary, the executive order intends to strengthen oversite and leadership and increase waiver scrutiny and inter-agency communication about domestic preferences with respect to Buy American Act provisions.

The Executive Order does not apply to the Buy America Act. The Buy America Act is familiar those operating primarily in the transportation industry performing on projects utilizing funds administered by Federal Highway Administration (FHWA) for state and local public works entities. The Buy America Act was established within Section 165 of the Surface Transportation Assistance Act of 1982, which was a transportation funding and policy act created under the Reagan administration. This provision addresses concerns over the surface transportation of highways and bridges. The Buy America Act was intended to give preference for the use of domestically produced materials on any procurements funded at least in part by the federal government.

Public Hearing Notice – NPDES General Permit Changes

The Environmental Rules Board (ERB) will hold a public hearing through Zoom on amendments to 327 IAC 5 and 327 IAC 15 concerning National Pollutant Discharge Elimination System general permits. The meeting is scheduled for September 9, 2020, at 1:30 p.m.

Link to notice of Public Hearing.

The purpose and subject matter of this rulemaking are to change the method of issuance of general permits from the current permit by rule process to administratively issued permits.

The purpose of the meeting is to provide for public comment prior to the final adoption of the revisions to 327 IAC 5 and 327 IAC 15. Article 5 is Industrial Wastewater Pretreatment Programs and NPDES. Article 5 NPDES General Permit Rule Program.

Link to the proposed draft.

ICI has participated in IDEM meetings concerning the proposed revisions. Please contact Dan Osborn with questions.