Water pollution control: State Revolving Fund Program; labor standard provisions; settlement agreement,

[Federal Register: January 25, 2001 (Volume 66, Number 17)]

[Notices]

[Page 7761-7763]

From the Federal Register Online via GPO Access [wais.access.gpo.gov]

[DOCID:fr25ja01-28]

ENVIRONMENTAL PROTECTION AGENCY

[FRL-6937-7]

Settlement Agreement, Application of Labor Standards Provision in the Clean Water Act State Revolving Fund Program

AGENCY: Environmental Protection Agency (EPA).

ACTION: Notice of settlement.

SUMMARY: The Environmental Protection Agency (EPA) is publishing a final settlement agreement between EPA and the Building and Construction Trades Department, AFL/CIO (Building Trades) which will resolve a matter pending before the Department of Labor's (DOL) Wage and Hour Division Administrator. Under the settlement agreement, EPA will prospectively apply the Davis-Bacon Act's prevailing wage rate requirements in the Clean Water State Revolving Fund (CWSRF) program established in title VI of the Federal Water Pollution Control Act, as amended (more commonly known as the Clean Water Act (CWA)), 33 U.S.C. 1381-1387, in the same manner as they applied before October 1, 1994. In exchange for EPA's commitment, Building Trades has agreed not to pursue any further action on this matter before DOL or any other Federal administrative agency, or in litigation.

Title VI of the CWA authorizes EPA to award grants to capitalize state revolving funds from which states, in turn, award loans and other types of assistance for the construction of publicly-owned treatment works and other water quality projects. CWA section 602(b)(6) required publicly-owned treatment works funded with CWSRF assistance ``directly made available by [capitalization grants]'' that were ``constructed in whole or in part before fiscal year 1995'' (emphasis added) to comply with the requirements of a number of other CWA provisions. Among the provisions was CWA section 513, which applies Davis-Bacon Act requirements to treatment works for which grants are made under the CWA.

EPA interpreted the language of CWA section 602(b)(6) as limiting the application of the Davis-Bacon Act and other requirements to CWSRF- funded treatment works projects ``constructed in whole or in part before fiscal year 1995'', and, in an August 8, 1995, memorandum, announced that these requirements would not apply to CWSRF-assisted projects that begin construction on or after October 1, 1994. In 1997, the Building Trades asked the DOL Wage and Hour Division to rule that the requirements of the Davis-Bacon Act continue to apply to treatment works projects funded with CWSRF loans that began construction on or after October 1, 1994. The Building Trades argued that the Davis-Bacon Act requirement applied to CWSRF-funded projects as long as Congress appropriated funds for the program. EPA responded in opposition to the Building Trades request for ruling.

After closely considering the relationship of CWA section 513 and CWA section 602(b)(6) and the arguments of the Building Trades in its request for ruling, EPA became persuaded of the appropriateness of the view that CWA section 513 imposes a continuing, independent obligation on the Agency to ensure that Davis-Bacon Act requirements apply to any grants made under the CWA for treatment works, including capitalization grants made under title VI of the CWA. The language of CWA section 602(b)(6) does not relieve the Agency of this obligation. Furthermore, as a matter of policy, the Agency has determined that prevailing wage rate requirements applicable to federally-assisted construction projects should continue to apply to federally-assisted treatment works construction in the CWSRF program. Consequently, EPA decided to settle the matter with the Building Trades and provided the public an opportunity to comment on a proposed settlement agreement, which was published in the Federal Register

[[Page 7762]]

on June 22, 2000. 65 FR 38828. In addition, EPA held a public meeting on July 13, 2000, to provide the public an additional opportunity to comment.

Public Comments on the Proposed Settlement Agreement

EPA received 25 comments on the proposed settlement agreement. Most commentators stated that the Agency's original position was correct and disputed the legal basis for reimposing the Davis-Bacon Act in the CWSRF program. Although they varied in detail, the arguments of the commentators generally contained these points: CWA section 602(b)(6) clearly sunsetted the Davis-Bacon Act in the CWSRF program; continuing appropriations for the program after FY 1995 did not extend that sunset date; CWA section 513 does not place a continuing obligation on the Agency to impose the Davis-Bacon Act requirements in the program because, by its plain language, CWA section 513 applies only to direct grants for treatment works construction.

The states, in particular, complained that reimposing the Davis- Bacon Act requirement would create hardships for the CWSRF programs, including increased labor costs for assistance recipients and administrative burdens on both the recipients and the states. State commentators also requested a delay in the implementation of the agreement's terms to allow time to notify potential borrowers and to more closely coincide with state planning schedules. Several states with state prevailing wage rate laws said that the Davis-Bacon Act requirements are more burdensome and costly on businesses and state agencies than their similar state requirements without bringing additional benefit for workers. They suggested that in situations in which states had substantially similar prevailing wage rate requirements, that states be given discretion to substitute state procedures for federal procedures.

Response to Comments

As the June 22, 2000, Federal Register notice stated, the Agency's original position on the Davis-Bacon Act and the CWSRF program ``rest(ed) on a reasonable legal interpretation.'' 65 FR at 38828. However, the legal basis for reimposing the Davis-Bacon Act requirements is sound and, as a matter of policy, it is proper for prevailing wage rates to apply to construction projects that are, for all intents and purposes, federally-assisted.

Reimposing the Davis-Bacon Act requirements may increase construction costs for many CWSRF recipients, but the levels of those cost increases vary widely and are often insignificant. Although EPA is interested in streamlining administrative requirements and reducing implementation costs, state prevailing wage rate laws cannot substitute for the requirements of CWA section 513.

EPA has made one change to the settlement agreement in response to state comments. In order to allow states more time to notify borrowers of the requirements, and to more closely match the yearly CWSRF planning schedules in most states (July 1 to June 30), the Agency has changed the date for implementing the Davis-Bacon Act requirement from January 1, 2001, until July 1, 2001. All capitalization grants awarded on or after July 1, 2001 will contain a condition requiring the states to ensure that the Davis-Bacon Act requirements will be applied to publicly owned treatment works receiving CWSRF assistance under those agreements in the same manner as the requirements were applied to projects initiated before October 1, 1994. Building Trades has agreed to this revision, which is reflected in the settlement agreement reprinted below.

DATES: This settlement agreement is effective as of January 17, 2001.

FOR FURTHER INFORMATION CONTACT: Geoffrey Cooper, EPA Office of General Counsel, Mail Code 2377A, 1200 Pennsylvania Avenue, Washington, D.C. 20004; telephone: 202-564-5451; email: cooper.geoffrey@epa.gov.

Dated: January 19, 2001. Gary S. Guzy, General Counsel.

In the matter of: Application of Labor Standard Provisions In the Clean Water Act's State Revolving Fund Program

Settlement Agreement

Whereas, title VI of the Federal Water Pollution Control Act, as amended (more commonly known as the Clean Water Act (CWA)), 33 U.S.C. 1381-1387, authorizes the Environmental Protection Agency (EPA) to make grants to states to capitalize Clean Water State Revolving Funds (CWSRF), from which the states, in turn, make loans and other types of assistance for the construction of publicly owned treatment works and other water quality projects and activities;

Whereas, section 602(b)(6) of the CWA, 33 U.S.C. 1382(b)(6), requires states to ensure that publicly owned treatment works ``constructed in whole or in part before fiscal year 1995 with CWSRF funds directly made available by'' capitalization grants comply with sixteen provisions of the CWA, including section 513 of the CWA, 33 U.S.C. 1372, which applies Davis-Bacon Act requirements to treatment works for which grants are made under the CWA;

Whereas, EPA has not required states to ensure that publicly owned treatment works that began construction on or after October 1, 1994, with CWSRF assistance will comply with the requirements identified in section 602(b)(6) of the CWA, including the requirements of the Davis- Bacon Act;

Whereas, the Building and Construction Trades Department, AFL-CIO, (Building Trades), challenged this position and requested a ruling by John R. Fraser, Acting Administrator of the Department of Labor's (DOL) Wage and Hour Division, that the requirements of the Davis-Bacon Act continued to apply to the construction of publicly owned treatment works receiving CWSRF assistance as long as Congress appropriates funds for grants under title VI of the CWA.

Whereas, Congress has continued to appropriate funds for grants to states for their CWSRF programs under the CWA;

Whereas, EPA replied in opposition to the Building Trades request for ruling;

Whereas, On June 14, 2000, EPA published this settlement agreement in the Federal Register along with a request for the public to comment on whether EPA should again apply section 513 of the CWA to treatment works projects assisted with CWSRF funds directly made available by capitalization grants, and consulted with state and local government officials on the terms of this agreement;

Whereas, EPA has carefully considered the comments received on the Federal Register Notice and the comments provided by state and local governments during the consultation process;

And whereas, EPA and the Building Trades have determined that it is in the public interest to resolve this matter expeditiously;

It is therefore agreed that,

1. EPA will issue a memorandum to its Regional Water Division Directors directing them to include a condition in all capitalization grant agreements entered into between EPA and the states under title VI of the CWA, on or after July 1, 2001, requiring the states to ensure that the requirements of section 513 of the CWA will be applied to publicly owned treatment works receiving CWSRF assistance under those agreements in the same manner as section 513 requirements were applied before October 1, 1994.

2. The grant condition will require states to ensure that the requirements of section 513 of the CWA, and no other requirements identified in section

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   602(b)(6) of the CWA, will apply only to publicly-owned treatment works that are funded with funds ``directly made available by'' grants under title VI of the CWA, as that phrase is defined at 40 CFR Sec. 35.3105(g).

3. The grant condition will be included in all capitalization grant agreements entered into between EPA and the states under title VI of the CWA on or after July 1, 2001;

4. The Building Trades and EPA will submit this agreement to the Administrator of the Wage and Hour Division, DOL, with a joint request to dismiss the administrative proceeding on the Building Trades Department's request for ruling.

5. The Building Trades will not pursue any further action on the matter hereby resolved in this settlement agreement, either before DOL or any other Federal administrative agency, or in litigation.

6. In the event that EPA does not accomplish one or more of the items specified in Paragraphs 1, 2 and 3 above, the Building Trades sole remedy will be to reinstitute its request for ruling before the DOL.

7. Nothing in the terms of this agreement shall be construed to limit or modify the discretion accorded EPA by the CWA or by general principles of administrative law.

8. The undersigned representatives of each party certify that they are fully authorized by the parties they represent to bind the respective parties to the terms of this settlement agreement. This settlement agreement will be deemed to be executed when it has been signed by the representatives of the parties below.

   Agreed:

   Dated: January 11, 2001. Gary S. Guzy, General Counsel, United States Environmental Protection Agency, 1200 Pennsylvania Avenue, Washington, DC 20460.

   Dated: January 17, 2001.

   Edward C. Sullivan, President, Building and Construction Trades Department, AFL-CIO, American Federation of Labor/Congress of Industrial Organizations, 815 16th Street, N.W., 6th Floor, Washington, D.C. 20006-4101.

   [FR Doc. 01-2179Filed1-24-01; 8:45 am]

   BILLING CODE 6560-50-P