March 13, 2012
WV BUY AMERICAN ACT BILL CONSUMES FINAL DAYS OF LEGISLATIVE SESSION
The second session of the 80th Legislature of West Virginia concluded at midnight on Saturday, March 10. A number of bills followed by the Contractors Association of West Virginia were deliberated in the final hours of the 60-day session while others completed action earlier in the week. A bill that generated a lot of concern among CAWV contractor, subcontractor and supplier members was H.B. 4263, the West Virginia Buy American Act. The bill passed the House of Delegates by an 82-16 vote and was referred to the Senate Finance Committee. The bill would have required each construction contract made by a public agency to contain a provision that the iron, steel, manufactured goods, coal and timber used or supplied as construction materials shall be manufactured or produced in the United States. The bill was patterned after the Buy American Provision that was included with American Recovery and Reinvestment Act (ARRA) projects.
There were exemptions in the bill. The section did not apply to contracts where the head of the public agency finds the cost of the domestic product will increase the contract by more than 20 percent, when the cost of such material exceeds the cost of foreign material by more than 6 percent, when the domestic product is not produced in sufficient quantities or is not of satisfactory quality, or the application of the West Virginia Buy American Act would be inconsistent with the public interest.
Concerns raised by the CAWV to H.B. 4263 included:
· West Virginia Code 5-19 currently requires domestic steel, aluminum and glass be used in all public projects. It has worked well for years;
· The Buy American Provision (BAP) was in stimulus projects funded by the American Recovery and Reinvestment Act (ARRA) of 2009. The provision proved very difficult to implement and resulted in project delays and increased costs;
· There will probably be very few waivers granted because the public agency has discretion but they may not have the time or expertise to properly demonstrate whether a waiver needs to be granted. How will “sufficient” quantities and “satisfactory” quality will be interpreted? By their nature, both terms are subjective and most governmental agencies will not have time prior to the bid to make this determination;
· In West Virginia’s stimulus projects, it was determined that many of products in water and sewer plants included complex electronic control systems, air blowers and liquid pumps, along with miscellaneous piping, conveyors, mixer and chemical feed systems. It would be hard to find one single piece of equipment that was completely void of foreign components;
· Bidding contractors have limited time and resources to decide whether to apply for a waiver. Often, the bidder has to rely on the information of a distributor or sales people who may not be aware of a potential violation; and
· Contractors will have a difficult time bidding since they will have to decide whether to take the low bid or accept a US manufactured product. Then, bidders will have to determine if the cumulative cost of the material will increase the cost of the contract by more than 20 percent.
The legislation was well intended but created many problems for public owners, contractors and subcontractors. After much work and debate on the bill during the final week, the bill was changed to the following: A task force comprised of contractors, architects, engineers, suppliers, labor and public owners will study over the coming year a proposal to require any public project to use products made exclusively in the United States unless a waiver is obtained. Senate Majority Leader John Unger, D-Berkeley, worked with the CAWV and representatives of the United Steel Workers on H.B. 4263 to address the concerns raised by numerous contractor and supplier members on how the requirement would impact the bidding process. After days of negotiations and compromise on a number of areas on both sides, CAWV President Gene Thompson Thursday called an emergency meeting of the association’s Board of Directors. After debate, the board voted unanimously to oppose the bill. As President Thompson related to Senator Unger and Senate President Jeff Kessler, everyone favors buying American but there were too many questions on the practical application of the bill.
President Thompson, after discussions with President Kessler, Senator Unger and representatives of the governor’s office, agreed to pull the bill and replace it with a study of the use of American-made construction materials and manufactured goods in public projects. The state Purchasing Division and the Division of Labor will convene the task force, which will also include one representative each from the Division of Highways, the School Building Authority, the Water Development Authority, General Services Division and the Higher Education Policy Commission.
The study will include, but not be limited to: 1/ The need to maintain a list of materials produced in the U.S; 2/ the percentage of domestically produced materials and manufactured goods to be included in a construction project to qualify it as built with American made construction materials and manufactured goods; and 3/ Possible changes to the bid process including waiver requirements. The task force will present its finding to the West Virginia Legislature by December 31, 2012 on the best methods of promoting the American products, as well as the burdens and benefits of such mandate on the construction industry in West Virginia and the state’s public building and public works projects.
There were a number of high profile bills in this session. Governor Earl Ray Tomblin put forth a number of bills relating to Marcellus shale and the prospect of getting one or more cracker plants, which would cost $2 billion to $3 billion and is estimated to create thousands of jobs. There were bills dealing with the Boy Scouts of America’s $250 million Bechtel Summit Reserve in Fayette County which will host the Jamboree beginning in 2013. In his State of the State address, the governor proposed S.B. 390, which would have dedicated 50 percent of surplus revenues to an infrastructure fund once the Rainy Day Fund reaches 15 percent of the General Revenue Fund. The bill passed the Senate but did not make it through the House.
CAWV PRESIDENT THANKS MEMBERS FOR THEIR PARTICIPATION
“Many members spent much time contacting and working with their legislators on issues that directly affected our industry,” said CAWV President Gene Thompson. “Members were active in the Buy American bill, funding bills and other bills that were important to our association,” he said. “I thank everyone who helped during this session.”
SESSION BEGAN BY SPOTLIGHTING HIGHWAY FUNDING NEEDS
This year’s legislative session began on a transportation theme as over 200 CAWV members and West Virginians for Better Transportation coalition partners flooded the State Capitol and both the House of Delegate and Senate chambers on Thursday, January 12. The group all wore reflective vests making the message of “Roads = Jobs” visible to lawmakers. The group filled both the House of Delegates and Senate balconies for their 11:00 a.m. floor sessions.
“We don’t gather together very often,” said CAWV President Gene Thompson. “But we came out today to show that there is united support within the business community for a long-term solution for funding our roads, bridges and highways … and for a secure transportation funding source not only for maintenance of the existing infrastructure but also for new construction and expansion,” the highway/bridge contractor told legislators.
The group joined together for a press conference featuring WVBT Chairman Bill Hilborn, CAWV President Thompson, AFL-CIO President Kenny Perdue, Senate President Jeff Kessler, House Roads and Transportation Chair Margaret Staggers and Senate Transportation and Infrastructure Chair Bob Beach.
“We were very pleased that Governor Tomblin also took time to meet with WVBT attendees, and to have Senate President Jeff Kessler and the two chairs of the Transportation committees provide remarks at our press conference,” said Chairman Hilborn. “Collectively, we have helped to increase awareness about the needs facing our transportation system, helped to highlight the importance of good roads, bridges and highways to jobs, economic development and commerce, and started the process for the enactment of a long-term transportation plan.”
President Kessler got a round of applause from the group when he said that perhaps the time table for finding a solution for the state’s highway funding problems should be accelerated to this year instead of waiting to next year (not an election year). “We know the importance of a good transportation system and we will work together to find a solution,” Sen. Kessler said. “We have our finances in order and now is the time to move the state to a greater level. I know your goal is to find a solution in 2013, but we may just turn the clock up and solve this issue in 2012.”
A Joint Hearing of the House and Senate transportation committees was held. Members again filled the balcony as committee members heard testimony from WV Division of Highways Secretary Paul Mattox, WVU Bureau of Business and Economic Research Director Dr. Tom Witt, AFL-CIO President Perdue, Business and Industry Council President Jan Vineyard, CAWV President Thompson and WVBT Chairman Hilborn. The hearing was covered by a variety of news outlets.
HOUSE, SENATE PASS RESOLUTION SUPPORTING TRANSPORTATION
The West Virginia Legislature adopted resolutions that support WVBT’s call for a long-term funding plan for transportation and for Congress to enact a fully funded federal highway reauthorization bill. The resolutions were provided by WVBT as part of Transportation Day activities. Bill Hilborn, chairman of WVBT, Jan Vineyard, chair of the WV Business and Industry Council, Kenny Perdue, president of AFL-CIO and Brenda Nichols Harper, vice president of governmental affairs for the WV Chamber of Commerce, joined CAWV members in the presentation by House and Senate leadership. CAWV members participating in the resolution included CAWV President Gene Thompson, Bob Orders, Willie Crane, Doug Canterbury and Joe Deneault.
Copies of the House and Senate resolutions are available by clicking Senate Resolution 3.
BILLS OF INTEREST TO CAWV
The following are bills the CAWV tracked closely during the 60-day session. A bill tracking list, which includes all of the bills that the CAWV watched during the session is available on the legislative section of the association’s website. Click here to view the House bills, or click here to view the Senate bills. For more information on a particular piece of legislation, contact Mike Clowser at (304) 342-1166 or email email@example.com. For a listing of all bills passed this session, visit http://www.legis.state.wv.us/ and click on Completed Legislation under the 2012 Session.
CRACKER PLANT TAX BILL PASSES BOTH HOUSES
The legislature passed H.B. 4086 which Gov. Earl Ray Tomblin says will enhance West Virginia’s chances for landing one or more cracker plants. The bill reduces personal property taxes for a company that builds an ethane steam cracker in West Virginia with a minimum of $2 billion investment. Instead of taxing the property at 5 percent of its original value for 10 years, the bill extends the salvage value tax of 5 percent for 25 years. A company could expect to reduce its tax liability by $20 million. Gov. Tomblin flew to Texas to meet with Shell Company and other potential investors last week to entice them to build the $2 billion plant. “This tax relief, I believe, showcases our state’s commitment to being a great business partner today and long into the future,” the governor said in a press release following the bill’s passage.
The American Chemistry Council estimates that a West Virginia cracker plant would create 12,271 jobs, with 2,484 people employed directly in the chemical industry and 6,262 indirectly through its supply chain. The remaining 3,524 “induced” jobs would be triggered by the subsequent increase in consumer spending according to the trade group. They also believe it will take 8,000 construction jobs to build the plant. The cracker plant utilizes Marcellus natural gas to produce ethylene which can then be used in a variety of products such as plastics, sneakers and tires.
S.B. 76 ESTABLISHES 2009 INTERNATIONAL ENERGY CONSERVATION CODE
S.B. 76, introduced by Sen. John Unger, D-Berkeley, requires new public facilities to be designed and constructed to comply with the International Energy Conservation Code and the ANSI / ASHREA / IESNA Standard 90.1 - 2007. The current IECC version is 2003. The CAWV worked with Senator Unger and his staff on the bill last year, but it died in the final days of the session. CAWV members provided input on what impact the 2009 version will have on construction costs, on contractors preparing bids, and on contractors performing the construction contract. CAWV contractor and architect members stated it appears that contractors would not see much change in bidding a project. The architect and/or engineer would prepare plans and documents based on the 2009 code and contractors would price their bid accordingly. It also appears there would be no additional administrative or hidden costs in constructing the project.
It was anticipated that the 2009 version would increase construction costs in the 5 percent range in the short term while manufacturers upgrade their production processes. Some people noted this is common with previous code revisions and that costs should stabilize once manufacturers implement the new code version. Last year’s bill delayed the implementation date until July 1, 2012. This would have given everyone more time to implement the new version. S.B. 76 keeps the effective date July 1.
TWO-HOUR SUB BID SUBMISSION BILL - NOW ONE-DAY - MODIFIED AND PASSED
S.B.36, as originally drafted, required contractors to submit a list of their subcontractors within two hours of a bid opening to the contracting agency or risk being declared irregular. The bill now requires “the disclosure of subcontractors within one business day of the opening of bids for certain public construction contracts by the apparent low bidder when any subcontractor is providing over $25,000 of services on the project.” An agreement was reached to make the bill a one year pilot project and only cover building projects awarded through the state Purchasing Division. The Purchasing Division will place the requirement in future projects and probably vary the language in order to see what works and what doesn’t as it relates to state projects.
$52 MILLION BOND ISSUE FOR CACAPON AND BEECH FORK STATE PARKS
S.B. 362 provides $52.2 million in bonding authority for improvements to Beech Fork State Park and Cacapon Resort State Park. The bill passed the Senate Natural Resources Committee Wednesday. The bonds would be paid back over 30 years by adding $3 million a year to the State Park Improvement Plan.
Beech Fork would receive $23 million. Coupled with $7.5 million already allocated, the money would be used to construct a 75-room addition, restaurant, recreational center, indoor pool and trails. A conceptual plan has been developed. The remaining $29.2 million would go to Cacapon for an 85-room addition and a new conference center.
S.B. 153 INCREASES APPRENTICESHIP TRAINING TAX CREDITS
S.B. 153 increases the tax credit for apprenticeship training programs from $1 per hour to $2 per hour, beginning on and after January 1, 2012. The tax credit will be in an amount equal to $2 per hour multiplied by the total number of hours worked during the tax year by an apprentice working for a participating taxpayer. The amount of the credit allowed for any tax year with respect to each apprentice may not exceed $2,000, or fifty percent of actual wages paid in that tax year for the apprenticeship, whichever is less.
H.B. 4422 WV CRANE CERTIFICATION STATUTE TO CHANGE TO CONFORM WITH NEW OSHA REGULATION; MODIFIED TO ADDRESS OPERATORS ON MSHA PROJECTS
The new OSHA regulation that goes into effect in November 2014 is necessitating a change to West Virginia’s crane operator statute. When West Virginia’s certification went into effect in 2000, there were two licenses created: Class A and Class B. The Class A license allows operators to pass the NCCCO certification and be certified on a national basis. The Class B license, which has a lower threshold for passage, allows operators to meet West Virginia requirements.
In initial review of the new OSHA rules, it appeared all crane operators must meet national standards and that West Virginia Class B licenses will no longer be applicable after November 2014. H.B. 4422 eliminated the Class B license. However, contractors who work on coal sites and are only governed by Mine Safety and Health Administration (MSHA) rules contacted the CAWV to state that their crane operators currently have a Class B license and the new OSHA rules will not impact their operations. After much discussions with the WV Division of Labor, UMWA officials, CAWV and legislators, the bill was amended on the House floor to reflect that Class B licenses will still be available for operators who are not covered by OSHA rules.
Remaining is the section that changes the need for a license from 10,000 pounds to 2,000 pounds. The OSHA rule applies to cranes more than 2,000 pounds whereas West Virginia’s statute deals with cranes 10,000 pounds and over.
ALTERNATIVE REVENUE IDEAS FOR HIGHWAYS SOUGHT
Senate Concurrent Resolution No. 54 directs the Commissioner of Highways to conduct a study on alternative revenue mechanisms for the development and maintenance of state roads and highways. The bill notes that fuel efficient vehicles will reduce future gasoline tax revenues and states that it is the intent of the Legislature to establish the governance structure and groundwork needed to adopt alternative source of revenue collection for road development and maintenance that will supplement the current system of motor vehicle fuel taxation. To this end, this section provides for a study, conducted by the Joint Committee on Government and Finance to study the need for alternative revenue mechanisms for the development and maintenance of state roads and identify the most promising road usage fee collection implementation options to evaluate in a pilot project. The committee will report to the legislature with drafts of any legislation necessary to effectuate its recommendations.
Senate Concurrent Resolution No. 55 directs the Joint Committee on Government and Finance to study the need to modify the Public-Private Transportation Facilities Act. The act was passed in 2008 and it expires in June 2013. No public-private project has been proposed for West Virginia. One reason, PPP proponents say, is that any public-private project has to be approved by the West Virginia Legislature. Most states require approval by the Secretary of Transportation. The CAWV will be reviewing West Virginia’s PPP statute and will be making recommendations for action in the next legislative session.
CONSTRUCTION CONTRACTS EXCLUDED FROM FINGERPRINTING REQUIREMENTS
S.B. 659, as introduced, would have required all vendors, contractors and subcontractors to have all of their employees working on state property to complete a background check and a fingerprint check. A contractor’s employees’ criminal records would have been shared with the head of the awarding agency who would have the ability to request that certain employees not be permitted to work on the project. After discussions with Senate Majority Leader John Unger, D-Berkeley, and officials with the Division of Protective Services, an amendment was inserted in the bill that removes construction contracts from the bill. The bill now addresses employees of companies who contract with the state to provide employees to work on state property, such as security guards and janitorial services.
Some of the issues CAWV raised at the meeting included: A number of people have criminal records ranging from DUI’s to drug charges. If these people have served their sentence, should that preclude them from getting gainful employment; what constitutes “sensitive or critical information”; if an agency head says they don’t want a particular employee on the project, does the contractor terminate them if there is no other project for them to work on; what’s the cost of for a fingerprint check and how long does it take to get the results; and will a contractor be required to have all his employees fingerprinted or just those working on state property?
S.B. 555 EXTENDS SALES TAX EXRMPTION TO CONTRACTORS ON BOY SCOUT PROJECT
S.B. 555 will allow contractors to assert sales and use tax exemptions when they are doing work for the Boy Scout’s Bechtel Summit project in Fayette County. Contractors who are working on the project had to include the 6 percent sales tax in their bids or have BSA buy the material directly. This bill allows the contractor to use the purchaser’s exemption if the non-profit group is established in an area of at least six thousand acres and serves youths. The bill specifically applies to the BSA project.
H.C.R. 72 NAMES BRIDGE FOR TIM BELT
H.C.R. 72, introduced by Delegate William Hartman, D-Randolph, names the Big T Bridge at Crystal Springs in Elkins, the “Tim Belt Memorial Bridge.” Tim was the vice president of C.L. Belt Construction, Inc., Ivydale, (now ACCAD Corporation) before passing in December at the age of 43 following a courageous battle with cancer. The bridge was the last structure he bid and built.
BILLS THAT DID NOT PASS THIS LEGISLATIVE SESSION
$1.5 BILLION ROAD BOND AMENDMENT INTRODUCED
Senate Joint Resolution 11 would have given voters the opportunity to vote on a $1.5 billion bond amendment for highway construction projects. The resolution was in response to Secretary Paul Mattox’s proposal at Transportation Day at the Capitol to present a $1 billion to $1.5 billion road bond on the ballot for voters’ ratification. He outlined about 17 projects that would be funded by the amendment. If Corridor H is to be completed within eight years, $1.5 billion would be needed. Based on a 5 percent interest rate, the 25-year debt service would be $71 million annually for $1 billion in bonds and $117 million for $1.5 billion. The secretary proposed raising registration fees and the privilege tax on vehicles as the mechanism to provide the $117 million annually needed for debt service. Had the bond been approved and the Legislature increased fees in order to provide the debt service, the issue of how to provide additional revenues to maintain and preserve the state’s existing highway system remains.
H.B. 4592 REQUIRING SEPARATE PRIME BID ON CONTRACTS OVER $500,000 DEAD
H.B. 4592 would have required all public building contracts over $500,000 to have multiple prime contracts. The bill was modeled after a School Building Authority procedure. The CAWV explained that the SBA uses multiple prime contracts on large projects when it is prudent to do so, but it is not mandated. The CAWV also noted the SBA has had much experience in managing multiple prime contracts but many state agencies, counties and cities don’t do many construction projects and don’t have much construction experience. The bill did not progress out of the House Government Organization Committee.
10-HOUR OSHA BILL STOPPED
S.B.37, the bill requiring public works construction employees complete the 10-hour OSHA safety program, did not make it out of the Senate Government Organization Committee. H.B. 2545 suffered a similar fate. The bills would have required every worker on public works projects to complete the OSHA 10-hour safety program prior to starting work, and carry a card showing successful completion of the program. The bills would also have required contractors to submit a copy of each employee’s card with their first certified payroll. The bill allowed the Commissioner of Labor to assess a civil penalty of up to $3,000, and, an employer be assessed a civil penalty of $500 per employee for each day of noncompliance.
WATER SAMPLER REGISTRATION PROPOSED
The WV Department of Environmental Protection considered legislation that would have required technicians taking water samples to be registered and certified. The department states they are concerned that consulting firms that conduct samples for companies, and companies that have their own personnel who take samples, may not be following proper procedures for the collection, handling and recording of water samples. The CAWV, along with other industry representatives, met with WVDEP officials and Senate Government Organization Committee Chairman Herb Snyder to discuss the proposal. Industry was concerned the legislation would add more bureaucracy to a process that seems to be working well. Industry also noted that companies can expect thousands of dollars in fines for violating Clean Water Act requirements. WVDEP stated their goal is to make the process simple without a lot of bureaucracy. Many contractors are required to take water samples to test turbidity and pH levels. Under this proposal, their personnel would have had to be certified to take water samples.
BONDS BILL FOR COURTHOUSE IMPROVEMENTS ON DIES IN HOUSE
S.B. 468 would have given the West Virginia Courthouse Facilities Improvement Authority the ability to issue bonds to raise funds for paying costs of approved modifications or construction of courthouse facilities. Currently, courthouse improvements are funded on a pay-as-you-go basis. S.B.468, and companion bill H. B. 4534, allowed bonds to be issued to pay for improvements.