Davis-Bacon Act Coverage and the State Revolving Fund Program Under the Clean Water Act
Released: 2008-03-26T00:00:00

Introduction

In 1987, Congress amended the Clean Water Act (CWA) to provide for establishment of a program of state revolving loan funds (SRFs) through which to finance local water pollution abatement projects ( P.L. 100-4 ). The SRFs were to be jointly funded by the federal government and the states with loans to be made (and repaid) in cyclical fashion. The legislation included a provision mandating that construction work performed with SRF assistance would be covered by the prevailing wage requirements of the Davis-Bacon Act (DBA): a 1931 statute requiring payment of not less than the locally prevailing wage on certain federal (and, later, federally assisted) construction work.

By the mid-1990s, this system was expected to have changed. Once the SRFs were in place, federal funding for these waste water treatment facilities would pass through the SRFs on a revolving basis. It was assumed that by the mid-1990s, the transition would be complete and that no further federal appropriations would be needed. However, a federal presence would continue through the SRFs as funds were recycled through loans and repayment.

In practice, matters evolved somewhat differently. Although no additional authorizing legislation was adopted after 1987, Clean Water Act appropriations, contrary to stated expectations , continued. Given continuing federal funding, some have argued, federal requirements governing administration of the program (including labor standards) should remain in place. Others have sought to set aside the various federal requirements, including the CWA Davis-Bacon provision.

Debate over Davis-Bacon coverage under the CWA/SRF program is ongoing, and has been the subject of several policy shifts on the part of the Environmental Protection Agency (EPA). First. In 1995, EPA ruled that Davis-Bacon no longer applied to CWA/SRF projects. Second. In the spring of 2000, EPA reversed itself and, entering into a settlement agreement with the Building and Construction Trades Department, AFL-CIO, affirmed that the act would be applied to such projects effective July 1, 2001. Third. EPA then set back the effective date for Davis-Bacon coverage to the fall of 2001, perhaps reversing itself once more. Thereafter, EPA seems to have remained silent on the issue.

This report deals neither with environmental/water quality issues nor with the Davis-Bacon Act, per se, but, rather, with the intersection of two statutes and the regulatory complexities that have resulted. It suggests the evolution of the Davis-Bacon provision of the Clean Water Act and traces the conflict (1994-2008) as to whether DBA wage standards should/do still apply to CWA/SRF projects. Finally, it poses questions of policy: How did the dispute develop, how has it been resolved (if, indeed, it has been), and how might similar conflicts be avoided? With more than 50 program statutes now covered by Davis-Bacon prevailing wage provisions (and with Congress exploring a variety of innovative funding mechanisms for public works), how this issue is ultimately resolved could have wider implications.

Background

In 1948, Congress enacted the Federal Water Pollution Control Act setting in motion a continuing initiative for restoring the health of America's water resources. The act, which would evolve into the Clean Water Act, started modestly, mandating a series of studies and limited projects. Gradually, on an ad hoc basis, the pollution abatement program became more ambitious with federal aid to states and local governments. In 1972, the various initiatives and requirements were drawn together in a more coherent manner. Other amendments followed. In 1987, the most recent amendments, Congress made changes both with respect to policy and funding.

The Davis-Bacon Act (1931) had a two-fold thrust: to promote stability within the construction industry and to protect construction workers from a downward spiral in wages and working conditions. In 1935, Congress broadly restructured the Davis-Bacon Act, reducing the coverage threshold from $5,000 to $2,000 and extending the scope of the act to "construction, alteration, and/or repair, including painting and decorating, of public buildings or public works" to which "the United States or the District of Columbia is a party." Gradually (and with increasing frequency after the mid-1950s), Davis-Bacon provisions were added to statutes in which the work was made possible through federal grants, loans, and other financial arrangements.

Linking Davis-Bacon to the Clean Water Act

Conflict developed early on between federal and state responsibilities. In 1956, Congress adopted legislation (P.L. 84-660) to provide for grants of "up to $50 million a year" through a 10-year period to be used for "matching grants to states and localities for construction of community sewage-treatment plants." President Eisenhower reluctantly signed the legislation but, later, urged that the grant program be abolished. When Congress, instead, nearly doubled the size of the program, the President vetoed the legislation and his veto was sustained. Observing that "water pollution is a uniquely local blight," the President stated that "primary responsibility for solving the problem lies not with the Federal Government but rather must be assumed and exercised, as it has been, by State and local governments."

The 1961 Amendments and Their Aftermath

In early 1961, President Kennedy reversed the Eisenhower policy on water pollution abatement and called for increased "Federal assistance "to municipalities for construction of waste treatment facilities." When new CWA legislation was reported in the House in April 1961, it provided, inter alia , that "all laborers and mechanics employed by contractors or subcontractors on projects" for which construction grants were to be made were to be paid wages "as determined by the Secretary of Labor, in accordance with the Act of March 3, 1931, as amended, known as the Davis-Bacon Act...."

The Davis-Bacon provision was explained to Members of the House. Representative John Blatnik (D-MN), chair of the Subcommittee on Rivers and Harbors, stated that this was not an unusual practice since similar provisions already applied "to contracts for school, hospital, housing and airport projects constructed with Federal-aid funds." The municipal wastewater pollution abatement program, it was explained, would be a partnership between the federal government and state or local entities. Davis-Bacon coverage does not appear to have been contentious. Representative James Wright (D-TX) observed: "If we were to oppose the payment of prevailing standard wages, then would this not mean that we favored the payment of substandard wages? Surely," he added, "the Congress does not wish to take that position." Though other aspects of the legislation were subject to extended debate, no one seemed seriously to dispute the requirement for DBA coverage.

Senate consideration of the 1961 legislation appears to have been no more controversial where Davis-Bacon coverage was concerned. The concept was endorsed by Labor Secretary Arthur Goldberg and by organized labor. Although it was opposed by the Chamber of Commerce, the provision seemed uncontentious, as debate shifted largely to technical and fiscal aspects of pollution control.

With the House and Senate in agreement, Davis-Bacon was not an issue in the conference report. Congress appeared to accept the premise that federal funding for pollution abatement projects, even when made available through assistance to states and local entities on a matching basis, should include, as a corollary, Davis-Bacon coverage. (See P.L. 87-88.)

Through the next few years, Congress variously modified the Federal Water Pollution Control Act (FWPCA). Though Davis-Bacon had high visibility during the 1960s, it does not appear to have been an issue in the context of pollution abatement legislation. FWPCA amendments in 1965 retained the DBA requirement and added "anti-kickback" provisions. During Senate hearings on the program in 1971, Davis-Bacon was mentioned only in passing; and when, the following year, Congress restructured the act with passage of P.L. 92-500, the Davis-Bacon and "anti-kickback" provisions remained in place. Notwithstanding authorization of substantial expenditures for construction of state and local wastewater treatment facilities under the 1972 legislation, stable and adequate funding would continue to be an issue through the next decade. Davis-Bacon, however, does not appear to have been a serious issue for any of the parties at this juncture.

Emergence of the State Revolving Fund Concept

Through the 1980s and beyond, Congress would continue to wrestle with issues of policy raised under the early statutes. In 1981, the federal contribution to assist states and local governments with pollution abatement was reduced. Thus, the burden could be expected to fall more heavily on non-federal entities. Program and policy, here, reflected sharply differing approaches to governance.

Restructuring the CWA Program

During hearings in March 1985, Jack Ravan, Assistant EPA Administrator in the Reagan Administration, called for a total phasing-out of the federal construction grants program by the end of FY1989. Ravan argued that "Federal funding has simply substituted for, not supplemented, State and local financing." Devolution, he suggested, would be a wiser course.

In the context of a projected shift from federal to state (or non-federal) funding of treatment facilities, creation of state revolving funds (SRFs) surfaced as one option. However, questions arose concerning management of such a program: how much (or how little) local control ought to be allowed. Ravan suggested a gradual phasing out of existing requirements. He opined that " the first use of the money out of the revolving fund might very well carry with it the requirements" of the existing program. (Italics added.) He continued, "I believe there also must come a day, hopefully, as quickly as possible, when the States would be given absolute flexibility for utilization of these funds...." Robert Perry of the Water Pollution Control Federation was more expansive. "Treat moneys that have been used and then paid back to a fund as State revenues," he urged. "Remove the requirement that they be treated as Federal funds ad infinitum."

Different versions of the CWA amendments were passed by the House and Senate during the summer of 1985, but in neither body did labor standards appear to be an issue. For nearly a year, the legislation laid dormant until, during the spring of 1986, conferees met and began what became a protracted process of negotiation. The thrust of the pending proposals ( S. 1128 , H.R. 8 ) seemed clear: that is, that at some point in the near future, federal appropriations (and authorizations) would cease and construction of treatment facilities would rest on the SRFs.

The conference report, filed in October 1986, included (as part of the legislation) a 10-paragraph section titled "SPECIFIC REQUIREMENTS" that laid out the continuing administrative practices that would apply to "treatment works ... which will be constructed in whole or in part before fiscal year 1995 with funds directly made available by capitalization grants." Among those requirements, it was specified that Section 513 of the CWA (the Davis-Bacon provision) would continue to be applied "in the same manner as [it had been applied to] treatment works constructed with assistance under title II"—namely, the former direct federal grants program. The House approved the report (408 yeas to 0 nays), as did the Senate (yeas 96 to 0). There appears to have been no other discussion of the Davis-Bacon prevailing wage language. However, despite strong support for the legislation, it was subjected to a pocket veto (Congress having adjourned) by President Reagan—for reasons other than Davis-Bacon.

Early in the 100 th Congress, consideration of the issue resumed with new (essentially identical) legislation being introduced. Members spoke of a "transition from Federal to State funding" and of "phasing out the Federal program ... without abandoning the needs of States and municipalities." It is not clear whether Members viewed devolution as absolute. What requirements, if any, would remain in place?

In fact, the federal phase-out would not be total for the SRFs rested upon federal "seed money." Had there been no federal funding (no seed money), there would have been no state revolving funds. But, there were ambiguities. Representative Arlan Stangeland (R-MN), for example, observed:

Federal moneys made available for these funds would be subject to certain restrictions on their use, as are moneys provided through the Construction Grant Program. As these moneys are repaid into the fund, the restriction on how the funds can be used would be eliminated, thereby allowing the States greater flexibility and freedom....

Mr. Stangeland did not specify the "restrictions" he had in mind. Was this flexibility with respect to the types of projects and the priorities to be assigned? Or, did it imply that the states would be free to utilize the SRFs without restraint? It was clear that the SRFs would serve federally specified purposes and in a federally specified manner. Congress quickly approved the legislation.

In late January 1987, consistent in his opposition, President Reagan vetoed the measure. While endorsing pollution abatement, he focused upon "the Federal deficit—and the pork-barrel and spending boondoggles that increase it." Local sewage treatment facilities, he affirmed, were "historically and properly ... the responsibility of State and local governments." He raised no objection to Davis-Bacon, per se.

On February 3 and 4, 1987, the House and Senate voted to override the President's veto. H.R. 1 became P.L. 100-4 . The old Title II direct federal grants program would be phased-out and replaced with the Title VI SRF loan program.

Questions of Interpretation and Intent

In P.L. 100-4 , Congress appeared to assume (from debate and public documentation, did assume) that no federal appropriations for SRFs would be made after 1994. However, even were that assumption to have held true (in fact, it would not), the federal presence would not have ended. The SRFs were a direct federal creation, largely capitalized by the federal government.

Under P.L. 100-4 , at least two elements need to be considered. First , there is the language of S. 1128 of the 99 th Congress (the vetoed bill) and of the conference report that accompanied it. Second , there is the actual language of the new statute ( P.L. 100-4 ). With respect to DBA coverage, they differ in critical aspects.

When reporting S. 1128 in the House in the 99 th Congress, the conference report explained that the 16 administrative requirements of Section 602(b)(6)—including the Davis-Bacon requirement (Section 513 of the CWA)—were not to apply "to funds contributed by the State" or to "monies repaid to the fund." Senator George Mitchell (D-ME) explained the measure in the Senate in almost identical language. But, that language was not incorporated within the proposed legislation—which, in any event, did not become law.

P.L. 100-4 (like S. 1128 of the 99 th Congress) states that "treatment works" to be "constructed in whole or in part before fiscal year 1995 with funds directly made available by capitalization grants under this title" must "meet the requirements" set forth in Section 602(b)(6): the 16 "Specific Requirements" which included the Section 513 Davis-Bacon provision. The statute did not say that Davis-Bacon coverage would cease after 1995 (when authorization would have terminated) nor did it specify that Section 513 (Davis-Bacon) and the other enumerated requirements would not apply to recycled (repaid) funds. It carried the program up to FY1995 and then was silent, making no reference to the first use concept where the Davis-Bacon Act was concerned.

The issue of continuing DBA coverage for the SRF program appears to have sparked concern neither during the closing days of the 99 th Congress nor early in the 100 th Congress. But, there may have been continuing ambiguities.

The legislation projected a direct federal role in the SRFs (continuing appropriations) until FY1995. Thereafter, the program was still expected to continue on a foundation of federal funding. Did Congress intend to drop the Davis-Bacon requirement (with others) once the SRFs were in place—resting as they were on federal funding? And was Congress willing to acquiesce in the payment of wages lower than those prevailing in a locality after FY1994?

There may also have been the matter of disaggregation of SFR funding. An abatement project, commenced prior to 1995 with an SRF loan, would clearly be DBA-covered. What if work were to continue beyond 1995 through supplemental SRF loans? The entire project could be grandfathered-in and wholly subject to Davis-Bacon; or, once 1994 had been reached, coverage could cease. Or coverage might be associated with each contract or sub-contract, depending upon the date on which a contract was entered into or on which the work commenced. Could a worksite be fragmented, part covered and part exempt?

How were the various agencies to distinguish between covered and non-covered funding? Construction grants under Title II had always required DBA coverage; but with federal funds now going first to SRFs (capitalization grants) and then being loaned out to local entities, would DBA still apply in the absence of a specific policy from the Congress. And what about the first use doctrine?

Given the very high visibility of Davis-Bacon during this period, some may wonder that the act was not a major subject of debate where the CWA was concerned. Documents to this point (1987) are remarkable silent.

Charting a New Federal Role, 1987-1995

Through the late 1980s, Members of Congress continued to speak in terms of a terminating program and shifting responsibility. P.L. 100-4 "brings the [Title II federal grant] program to an end," observed Senator Daniel Moynihan (D-NY). The program "... will end in 1994. The end. After that there is a revolving loan fund to sustain the program." But, federal financial involvement didn't end.

By 1991, the beginnings of a policy shift were evident. Senators Max Baucus (D-MT) and John Chafee (R-RI) introduced legislation ( S. 1081 ) that became, in effect, a vehicle for oversight. Senator Chafee asserted that the "States have actually lost ground as the construction grants program is [being] phased out," and affirmed that "the States are starved for resources to carry out the act." Among other things, the Baucus/Chafee proposal would have set back the target date for termination of the federal role in the SRFs from 1995 to 1998 and, it appears, would have extended through that period applicability of the existing specific requirements under Section 602(b)(6)—including Davis-Bacon coverage (Section 513).

Hearings commenced on the Baucus/Chafee legislation in the spring of 1991. But, by that point, a number of things had changed. Concern with wetlands and combined sewer overflows (CSOs) and non-point source pollution had become the key issues, especially the former. The Reagan Administration had given way to the Bush Administration and EPA Administrator William Reilly now acknowledged a municipal pollution abatement need "into the indefinite future." He stated that the costs of abatement were rising and that the states and municipalities "are very often not in a position to meet the many federal requirements we are imposing." These problems may have overshadowed concern about prevailing wage standards except, perhaps, from the standpoint of keeping costs down.

Though specific proposals were avoided for the moment, it became increasingly clear that the federal government would not be able to make a clean break from federal funding and to independent and self-sustaining SRFs. Interest groups, associated with pollution abatement, began to call for more federal funding. Such calls for federal dollars were accompanied with appeals for enhanced flexibility: fewer strings, less federal control. States, it was argued, "should be allowed to maintain the flexibility to establish priorities ... and to deploy available funds for the most pressing problem on a timely basis." Continued capitalization by the federal government "through FY1994 and beyond ," it was asserted, "is essential." Appeals for "increased Federal funding" were coupled with pleas for relief from the "administrative burdens and regulatory roadblocks" of the l987 legislation, including the Section 602(b)(6) specific requirements .

In early 1992, Senator Chafee reminded his colleagues that "[u]nder current law, there is to be no Federal role, no additional Federal dollars, after 1994." "That date is now in sight," he pointed out, and "... it is time to reconsider that decision. I have come to the floor of the Senate today to urge that Federal support for the State revolving loan funds be continued at current levels for the foreseeable future ." (Italics added.)

The nature of a continuing federal presence was now at issue. The Baucus/Chafee bill would not have terminated the federal role in construction of treatment plants. Rather, it would have created a series of new categorical grant programs to be placed under the SRF umbrella. But this, it seems, was opposed by certain state authorities hostile to the idea of "a proliferation of new Federal categorical grants." Instead, they wanted "the flexibility already available to them" in the SRFs "to effectively address their highest priorities as they see them."

Since the Bush Administration had not yet announced a firm policy with respect to SRF funding, EPA Administrator Reilly was not then able to address the issue definitively. The Baucus/Chafee bill was not marked-up. Reauthorization to provide for sustained and comprehensive CWA/SRF funding did not move forward.

The End Draws Near?

Until FY1995, the SRF structure would remain in place. What would or what ought to happen thereafter remained in question. Meanwhile, Congress continued to review a variety of CWA-related proposals.

Interim Assessment

In March 1991 and in January 1992, GAO released assessments of the initial operation of the CWA/SRF program, stating that the wage requirement was the "most controversial" of the old Title II (now Title VI) administrative requirements. But, it also found opinion mixed: some arguing that DBA "could increase project costs significantly" while others suggested that, "except for small or disadvantaged communities, the increased costs associated with the Title II ... requirements may not be as substantial" as critics aver. In short, its findings seem to have been ambiguous with little hard evidence upon which to rest.

In October 1991, EPA had presented its own evaluation. Like GAO, it noted that some found the specific requirements onerous: that the "most frequently mentioned" of these was the Davis-Bacon provision. The states, it said, "would prefer ... to be exempted entirely" from the strings Congress had imposed, arguing that they "reduce the program's attractiveness to communities" to whom SRF loans would be made. The EPA study paralleled the March GAO report, suggesting that payment of the locally prevailing wage could increase the cost of public construction. But, EPA also pointed out that the DBA requirement "varies considerably based on local socioeconomic and market conditions and State prevailing wage rate laws."

In each of these reports, DBA was merely touched upon. Assessments of the prevailing wage statute were more reportorial than analytical, and rendered as the views of persons interviewed. No new evidence or impact analysis was presented.

New Legislative Proposals

With the 1987 authorization set to expire in October 1994, reauthorization of the CWA/SRF program assumed a "high priority." On June 15, 1993, Senators Chafee and Baucus introduced S. 1114 , which proposed to extend the SRF program, to increase federal funding, and to permit the states greater flexibility. The DBA requirement would have remained in effect.

Hearings before the Senate Clean Water Subcommittee commenced the following day, continuing intermittently through three months. A general consensus became apparent concerning the SRF program. Senator Bob Graham (D-Fla.), chair of the subcommittee, explained: "The justification for this change in policy [extending the program through 2000] seems to be grounded in the continued need for federal support."

Witnesses offered mixed responses. In an exchange with Senator Chafee, Ronald Marino of the investment firm of Smith Barney raised the issue of first use and recycled funding, suggesting that "when the loan is recycled and repaid," mandates such as Davis-Bacon might be eliminated. Several witnesses appeared to reflect GAO assertions: namely, that small communities might benefit through exemption from specific requirements "including the Davis-Bacon Act." Generally, through the 1700 pages of testimony, labor standards were not at issue.

The Committee Reports

In May 1994, Senator Baucus introduced a clean bill ( S. 2093 ) which was soon reported from the Committee on Environment and Public Works.

In S. 2093 , transfer from federal to state responsibility for full financing of municipal pollution abatement was deferred. The committee noted that early policy had "contemplated a transition to full State and local financing by fiscal year 1995, when the capitalization grants were to end and the funds were to be sustained by repayments of loans made from the fund." However, confronted with a 20-year agenda of treatment projects (estimated to cost $130 billion), past assumptions seemed no longer appropriate. The new bill would authorize "continued funding for the successful SRF program through the year 2000." The committee's position was made clear. Were the legislation to be adopted, the federal role in the SRF program would not end; rather, it would be extended at least until 2000—and possibly into the indefinite future.

But, what about the various administrative requirements of the 1987 legislation? Existing law would be modified "to increase State flexibility in managing loan funds;" but, for the most part, these changes would affect utilization and financial management of the SRFs. During mark-up, Senator Robert Smith (R-NH) proposed repeal of the existing Davis-Bacon requirement under the CWA. The Smith amendment was defeated by a vote of 6-11. Thereupon, Senator Harris Wofford (D-PA) offered an amendment confirming that the Davis-Bacon Act would apply "to all State loans" under the SRF. The Wofford amendment was approved by a vote of 11 to 6. The committee voted to report the bill by a vote of 14 to 3.

With respect to Davis-Bacon and its applicability under the SRFs, the bill as reported was clear. The relevant part of the new Section 513 was to have read:

The Administrator shall take such action as may be necessary to ensure that each laborer or mechanic employed by a contractor or subcontractor of a project that is financed in whole or in part by a grant, loan, loan guarantee, refinancing, or any other form of financial assistance provided under this Act ( including assistance provided by a State from a water pollution revolving loan fund established by a State pursuant to Title VI) shall be paid wages at rates that are not less than the prevailing rates for projects of a similar character in the locality of the project that is financed under this Act, as determined by the Secretary of Labor in accordance with the Act of March 3, 1931 (commonly known as the "Davis-Bacon Act") (40 U.S.C. 276a et seq .). (Italics added.)

No exception was made for small, financially strapped, jurisdictions. The concept of first use (with repaid funds exempt from federal wage requirements) was not raised as an issue—but was implicitly rejected. Clearly, the committee's majority intended that CWA projects funded through SRFs should be Davis-Bacon covered.

Stalemate

Numerous contentious issues were associated with the proposed environmental legislation during the 103 rd Congress, but wetlands preservation may well have been the most difficult to resolve. With time running out, reauthorization legislation stalled both in the House and Senate. Through the remainder of the 20 th century an into the 21 th century, no further reauthorization for the Clean Water Act would be adopted.

The SRFs and mandated water quality objectives remained in place. Congress continued to appropriate funds for CWA projects and for SRFs. Construction of abatement facilities continued, the absence of reauthorization notwithstanding. Under the circumstances, it may have seemed reasonable that normal administrative requirements of the CWA would similarly remain in place; but, not all agreed with that conclusion.

Consideration in the House, 1995

In 1995, party control shifted in the House. Bud Shuster (R-PA) became chair of the Committee on Transportation and Infrastructure; Sherwood Boehlert (R-NY), chair of the Subcommittee on Water Resources and Environment. Quickly, extended hearings (February 9 to March 11, 1995) commenced on CWA reauthorization and new legislation was introduced ( H.R. 961 ) by Shuster in mid-February 1995.

The DBA requirement was, here, more openly in dispute. Paul Marchetti (Council of Infrastructure Financing Authorities, CIFA) urged "some elimination of the costly Title II requirements that have been held over from the construction grant programs ... that increase the cost of projects...." He argued that requirements, "like Davis-Bacon ... significantly increase the construction costs in many areas." In short, CIFA pressed for support of federal funding but elimination of federally-imposed administrative requirements.

Scott McElwee of the Associated Builders and Contractors (ABC) expressed similar concerns. "We believe," he stated, "that with full funding and repeal of the Davis-Bacon Act, our water infrastructure needs will begin to diminish and our Nation's water quality will dramatically improve." Questioned by Representative Stephen Horn (R-Calif.), William Rogers of the Associated General Contractors (AGC) affirmed general support for repeal of Davis-Bacon. The discussion, however, was brief and focused on DBA generally—not on the Davis-Bacon/CWA connection. Further, Kermit Prime, speaking for the National Society of Professional Engineers (NSPE), urged Congress to eliminate Section 602(b)(6) of the CWA: the administrative requirements. "We are particularly interested," he concluded, "in repealing the applicability of the Davis-Bacon Act to SRF-financed projects, also required under Section 602(b)(6)."

Section 602 of H.R. 961 would have deleted the phrase "before fiscal year 1995" and would have removed "administrative requirements previously imposed on Title II grant recipients and currently extended to applicants who receive SRF capitalization grant loans." Specifically, H.R. 961 amended the statute by striking from CWA Section 602(b)(6) "'201(b)' and all that follows through '218' and inserting '21l.'" Thus, the reference to Section 513 (Davis-Bacon) was retained but without the limitation of "before fiscal year 1995." Davis-Bacon does not appear to have been mentioned, specifically, in the committee's report.

As reported and on the floor, the legislation proved contentious, but concern was with environmental issues—not with Davis-Bacon. On May 16, 1995, H.R. 961 was passed by the House: yeas 240, nays 185—9 not voting. It died in the Senate at the close of the 104 th Congress.

Moving On: 1995 and Beyond

After 1994, there appears to have been some ambiguity with respect to CWA's Davis-Bacon provision. Each side sought to have their interpretation prevail.

Davis-Bacon is not self-enforcing. If an agency determines not to apply the statute, someone must take exception, move through the appeals process—and, potentially, through the courts. It's not a simple procedure, nor is it quick. Few individuals would be in a position to take such action—nor might they be inclined to do so where wages and conditions of employment are reasonably good.

Organized labor (the Building and Construction Trades Department, AFL-CIO—the BCTD) will normally support a prevailing wage requirement. Conversely, some employers (often open shop firms) may be hostile to Davis-Bacon and seek to avoid its applicability or enforcement. Federal agencies, contracting for various types of construction (and operating on tight budgets), may find themselves the natural allies of the contractor/employer as they seek to reduce wages (labor costs). Even within an Administration, there may be different perspectives among agencies on a prevailing wage requirement.

In the case of DBA and SRF projects, various factors come into play. Congress might have spoken with greater clarity if stalemate had not occurred with non-DBA issues blocking further authorizing legislative. But stalemate did occur: Congress made no immediate CWA authorizations beyond 1994. Similarly, changes within the Congress and at the White House may have brought a shift of philosophies. This could (and, likely, would) result in new policies both at DOL and in EPA.

The Davis-Bacon/CWA Issue Begins to Form

In a memorandum of August 8, 1995, Michael Cook of EPA called the attention of his staff to confusion about applicability to the SRFs of the "equivalency requirements" (including the DBA provision). Noting the language of the statute and making no allowance for the altered circumstance, Cook stated:

Section 602(b)(6) of the Clean Water Act requires section 212 publicly-owned treatment works projects to comply with these statutory requirements if they are constructed in whole or in part before October 1, 1994, with funds "directly made available by" capitalization grants. Consequently, projects that began construction on or after that date do not have to comply with the requirements. (Underscoring in the original.)

Cook explained various complexities. For example, with "a binding commitment for the project" made prior to October 1, 1994, or an ongoing project being "incrementally funded," the "equivalency requirements" could be expected to apply. But, where a commitment or initiation of construction "occurred on or after October 1, 1994, the equivalency requirements do not attach to the project." This would be true "even though the project was funded with funds 'directly made available by' capitalization grants (equivalency funds)." There would be no DBA coverage.

The Cook memorandum did not resolve all confusion about DBA applicability. From public documents, it is not clear how widely it was circulated nor how it was treated by CWA/SRF managers. What advice was given to potential contractors in this respect? Did DBA provisions continue to be written into CWA/SRF contracts? If not, was there objection from the workers or from the several unions involved?

In January 1997, EPA's Region III (Philadelphia) sought advice from DOL in Philadelphia concerning DBA coverage for CWA projects. On the assumption that Davis-Bacon no longer applied, EPA's regional office was ready to remind the states within its jurisdiction that coverage had ceased and that DOL would no longer enforce compliance. It sent DOL a copy of its proposed policy statement, asking: "Please let us know if we are misstating the Department of Labor's role in this particular situation." The EPA draft commenced: "It has come to our attention that some states are continuing to apply the Davis-Bacon Act" to CWA/SRF projects. And, later, the draft advised: "... since the DBA is a federal statute, it is inappropriate to use the threat of federal enforcement in cases where compliance is not federally mandated in the first place."

The exchange between EPA and DOL sparked renewed interest in Davis-Bacon and CWA/SRF projects. Word of EPA's position filtered back to Washington and in April 1997 Robert Georgine, president of the Building and Construction Trades Department, AFL-CIO, laid the matter before John Fraser, Acting Administrator, Wage and Hour Division, DOL. Georgine reviewed the history of the labor standards provisions of the CWA, pointing to two separate sections of that statute: Section 513 which, he stated, applies Davis-Bacon wage standards, generally, to CWA-funded projects and, Section 602(b)(6), the segment of the 1987 CWA amendments that requires Davis-Bacon coverage through FY1994 under the SRF program.

... even if Congress intended to repeal application of the Davis-Bacon requirements in the Clean Water Act to construction of treatment works began [sic.] after the beginning of fiscal year 1995, Section 602(b)(6) simply failed to give effect to that intention. Congress left in place and did not qualify the scope of the applicability of Section 513 to all construction of treatment works for which grants are made under the Act. When construing legislation of this type, the plain statutory language should control and that [sic.] EPA cannot perform linguistic gymnastics in order to upset the plain language of the Clean Water Act as it exists today.

A copy of Georgine's letter was dispatched to EPA Administrator Carol Browner as well as to the member unions of the BCTD.

DOL referred the Georgine letter to EPA for review. In October 1998, EPA's Michael Cook responded with a six-page analysis. He began with the assertion that "Title VI limits application of the CWA Davis-Bacon Act provision to SRF-funded projects 'constructed in whole or in part before fiscal year 1995.'" He stated:

Contracts to which the United States is not a party , but which are awarded under a Federal assistance program, must also comply with Davis-Bacon Act requirements if the statute authorizing the assistance so requires . (Italics added.)

Cook stated further: "Federal grant-making agencies recognize that the Davis-Bacon Act applies to federally assisted construction projects only if it is required by the legislation authorizing the assistance."

He again pointed to the time limitation: to "projects 'constructed in whole or in part before fiscal year 1995 ." (Italics in the original.) Having taken that initial stand, Cook then reviewed each of the arguments made (or implied) in the Georgine letter and concluded that the interim period of Davis-Bacon coverage had "ended by fiscal year 1995." He added: "For these reasons, we are confident that the position reflected in the EPA memorandum [Cook's own earlier memorandum] is the proper one, and we urge the Department [of Labor] to respond to the [Building and Construction Trades] Council accordingly."

A Gradual Change of Policy at EPA

From the perspective of EPA, the matter was closed: Davis-Bacon should not apply (did not apply, as EPA interpreted the 1987 statute) to CWA/SRF projects begun after October 1994. But, the issue was not entirely resolved.

Tentative Compromise Is Reached

During the late 1990s, the BCTD variously conferred both with DOL and with EPA seeking a ruling that would affirm DBA coverage for CWA/SRF projects. By early 2000, there seems to have been some shift of policy on the part of the latter agency.

On May 22, 2000, EPA wrote to BCTD Counsel Terry Yellig (with copies to various EPA, DOL and AFL-CIO officials) noting an "interest in settling the Labor Department proceeding between EPA and the Building Trades." EPA stated:

Under the proposed settlement agreement we have drafted, the Agency would again require states to ensure that treatment works projects receiving CWSRF assistance directly made available by capitalization grants comply with the Clean Water Act's Davis-Bacon provisions for as long as grants are awarded to the states under this program. In exchange for the Agency's agreement, the Building Trades would withdraw its pending Labor Department challenge and refrain from challenging the Agency on this issue in the future.

Once BCTD had agreed to the settlement, EPA would commence the administrative process to give it effect. Depending upon the results of "consultations with state and local officials" and public comment through Federal Register notice, EPA reserved the right to "withdraw from or withhold agreeing to the proposed settlement." Assuming the settlement were to proceed, then EPA would direct that a provision be added to grant agreements "entered into with the states on or after January 1, 2001" requiring them to "comply with section 513" of the CWA with respect to projects "receiving CWSRF assistance directly made available by capitalization grants."

EPA published the notice in the Federal Register (June 22, 2000), outlining the projected agreement and calling for comment. It was explained that EPA would "prospectively apply the Davis-Bacon Act's prevailing wage rate requirements in the Clean Water State Revolving Fund ... in the same manner as they applied before October 1, 1994." The notice reviewed the dispute and concluded:

EPA has closely considered the relationship of CWA section 513 and CWA section 602(b)(6) .... While the Agency's position to date rests on a reasonable legal interpretation, EPA is now 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.

In the "Proposed Settlement Agreement," per se, it was added that, while the requirements of Section 513 (DBA) would hereafter apply to SRF projects, "no other requirements identified in section 602(b)(6) of the CWA, will apply ...."

The proposed settlement raised a number of questions. How did the parties distinguish between the initial Section 513 requirement, standing on its own, and Section 602(b)(6) into which Section 513 had been incorporated? If Section 513 continued to have independent applicability, then why was it necessary to include it within Section 602(b)(6) at all? What was the intent, as used in the agreement, of such phrasing as capitalization grants and directly made available —which, given the history of the statute, could become a focus of litigation even were the settlement affirmed? Why had EPA acquiesced to enforcement of the Davis-Bacon requirements while specifically rejecting enforcement of the other provisions of Section 602(b)(6)? And, were EPA's actions, here, in compliance with the Administrative Procedure Act?

More broadly, a provision allowed EPA to opt out of the agreement should testimony and comment warrant. In that event, the BCTD's "sole remedy will be to reinstitute its request for ruling before the DOL." EPA also stated: "In exchange for EPA's commitment, Building Trades would agree not to pursue any further action on this matter before DOL or any other Federal administrative agency, or in litigation."

Cook's conclusions and the settlement seem at odds. Cook had held that DBA did not apply to SRF programs after October 1, 1994—neither through Section 513 nor Section 602(b)(6). But EPA, having "closely considered the relationship" of the two sections, had now come to conclude that DBA does apply and, further, that "[t]he language of CWA section 602(b)(6) does not relieve the Agency of this obligation." What was the true meaning of the law—and what was the intent of the Congress? Was Cook right—or were the authors of the settlement right?

Finally, EPA's Federal Register explanation noted: "... 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." (Italics added.) One may query: Did the proposed settlement rest on law or upon policy as enunciated by the spokesman for an administrative agency?

A Call for Public Comment

During the summer of 2000, EPA took public comment on its proposed notice of settlement . Two statements supported the settlement; 23 opposed it. Testimony fell into three general categories: the BCTD, contractor associations, and state agencies responsible for dealing with the CWA. Several Members of Congress presented their views. A few statements focused on legal issues. Others argued for or against the Davis-Bacon Act per se—which, though interesting, added little insight with respect to the actual settlement.

Views from Members of Congress

Representative Shuster raised legal concerns. He questioned "whether an Executive Branch agency can make the decision to reapply a statutory requirement that expired after September 30, 1994." The act, "as currently written," he suggested, "does not allow EPA to take such action." New legislation, he stated, would be needed to reinstate the DBA. He said that EPA had "failed to provide ... a credible legal analysis of the Agency's purported authority to implement this proposal."

William Goodling, Education and the Workforce chair (with 10 other Republican committee members), called upon EPA to "reverse its plan to apply the Davis-Bacon Act to clean water infrastructure projects funded" through the SRFs. They stated that the proposed settlement "violates the clear intent of Congress." The Members suggested that, procedure aside, applying DBA to such work would be bad public policy that "needlessly adds to the cost of clean water projects, thus harming taxpayers, consumers and communities in need of affordable clean water solutions."

Industry and Local Government Comment

Industry and state agencies assumed that the DBA requirement had expired—(which both EPA and the BCTD would now dispute). Their subsequent comments were based on that premise.

The Associated General Contractors (AGC) urged EPA "to withdraw" the settlement. William Isokait, for AGC, argued that the settlement "is a policy judgment beyond the authority of the agency" for which "EPA offers no explanation." Desire for a settlement, he chided, "does not grant it the authority to originate prevailing wage policy or to administer its programs in ways that contradict the laws that establish and fund those programs." He termed the EPA proposal "inappropriate, improper and inconsistent." As a technical matter, Isokait stated that Section 602(b)(6) had contained 16 administrative requirements inherited from the Title II program. Although the other 15 requirements had been allowed to expire in 1994, EPA had selected one (dealing with DBA) to retain. "Why this obligation does not exist with respect to these [other] conditions is not explained."

Charles Maresca, Jr., for the Associated Builders and Contractors (ABC), also accused EPA of acting "beyond its statutory authority" in "attempting to legislate via executive fiat." The "plain language of Section 513," he stated, "... authorizes the application of Davis-Bacon to projects funded by grants under the Act. It does not authorize Davis-Bacon application to projects funded by revolving funds to which EPA has made a grant." In any case, it would have been nullified by "the sunset provision" of Section 602(b)(6). Like several others, he charged that EPA had proposed "no legal argument to support its new position," adding: "The agency merely announces that it 'is now persuaded of the appropriateness' of imposing Davis-Bacon, and that 'as a matter of policy' the application of Davis-Bacon requirements to treatment works begun after FY1994 should resume." The Administration, he concluded, "is overstepping its bounds."

The Association of State and Interstate Water Pollution Control Administrators expressed dismay that the settlement had been "developed without input from this Association" or the various state agencies. That view was echoed by a number of witnesses for the states. Some questioned why EPA would act at all. "It has been known to Congress since the deadline passed that the Davis-Bacon Act was not being applied" and Congress had taken "no action ... to reinstate" the requirement. Besides, several commenters argued, there would be little purpose in imposing DBA requirements since local "construction tradespeople are receiving wages that often exceed those published as Davis-Bacon Prevailing Rates."

Several submissions focused upon a procedural issue. Were federal funds being made (1) to fund construction of treatment works or (2) to provide capital for the SRFs—which would then make loans for specific projects? The importance of the distinction ( direct and indirect funding), however, was not spelled out with total clarity in the submissions. Nor was it developed clearly in the legislative history—or, for that matter, in the comments of EPA associated with the agreement.

Were the settlement to be approved, several commenters urged, the effective date should be set back to allow time "to notify future loan recipients ... and to re-train personnel for implementation."

Perspectives of the BCTD, AFL-CIO

As a potential party to the settlement, the BCTD was presumably privy to the reasoning upon which the compromise was based. Thus, its testimony, transmitted to EPA by BCTD President Edward Sullivan, could be regarded as an inside assessment.

The BCTD stated its understanding that "EPA would prospectively apply Davis-Bacon prevailing wage requirements to construction of treatment works projects assisted by State Water Pollution Control Revolving Funds with funds made directly available by capitalization grants under Title VI of the Clean Water Act...." The BCTD explained: "... in order to receive a capitalization grant" for its SRF, the states had been required to "enter into a capitalization grant agreement with the EPA that imposes an assortment of conditions"—one of which was the Section 602(b)(6) DBA requirement. Included in Section 602(b)(6), by reference, Section 513 provided that "all laborers and mechanics employed by contractors or subcontractors on treatment works for which grants are made under this Act shall be paid wages" at least equal to DBA rates.

The effect and standing of Section 513 (originally applicable to Title II) and of Section 602(b)(6) of the new Title VI remained in dispute, raising the question as to whether the federal funding in question came from EPA or from the CWA/SRFs. Section 513, the BCTD stated, "applies to 'all laborers and mechanics employed by contractors or subcontractors on treatment works for which grants are made under this Act,' not 'all laborers and mechanics employed by contractors or subcontractors on treatment work by which grants are made by EPA under this Act.' That is," it concluded, "the plain language of Section 513 is not as limited as EPA claimed." The BCTD then turned to congressional intent: "... there is no question that in 1987, Congress intended to discontinue providing capitalization grants" to the SRFs after FY1994. However, "... federal funding of capitalization grants to the States has continued unabated since FY1995...."

Why would EPA, having taken a very public stand that the DBA did not apply to SRF work, suddenly reverse itself? If the BCTD interpretation of the law is correct, the statement speculated, "there is a potentially substantial amount of back pay liability arising from failure to pay prevailing wages and benefits" on CWA projects. "EPA has wisely decided" that, although its prior position "'rests on a reasonable legal interpretation,'" it "'is now persuaded of the appropriateness of the view that CWA section 513 imposes a continuing, independent obligation on [EPA] to insure that Davis-Bacon Act requirements apply to any grants made under the [Clean Water Act] for treatment works, including capitalization grants under title VI of the CWA.'"

A New EPA Policy Enunciated

EPA's "final settlement agreement" with the BCTD appeared in the Federal Register of January 25, 2001. First. EPA explained that, under the settlement, it would "prospectively apply the Davis-Bacon Act's prevailing wage rate requirements in the Clean Water State Revolving Fund ... program established in title VI ... in the same manner as they applied before October 1, 1994." Second. "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." Third. The settlement would become effective on July 1, 2001 (delayed from the original target date of January 1, 2001 to accommodate the states). Thereafter, Davis-Bacon requirements were to be in effect.

The Federal Register notice reviewed the controversy, summarized the submissions, and explained the position of the agency. Among other things:

... the legal basis for reimposing the Davis-Bacon Act requirement 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 . (Italics added.)

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.

The settlement, however, still contained the provision that were EPA, after the signing and publication of the settlement, to fail to meet its obligations under the settlement's terms, the "sole remedy" of the Building and Construction Trades Department would be "to reinstitute its request for ruling before the DOL."

Another Reversal at EPA?

Interest groups had aligned on each side of the EPA/BCTD settlement. If the trade union movement could applaud the decision as simply consistent with statute (and with sound policy), industry would dissent. The Associated Builders and Contractors (ABC) protested that the settlement "essentially repeals a statutorily mandated sunset date of October 1, 1994" and charged that it was "a violation of the Clean Water Act." Nevertheless, both sides agreed to work for reauthorization of the CWA: in the case of the ABC, without Davis-Bacon coverage. For Associated General Contractors, "expansion of federal drinking water and wastewater revolving funds" was a top legislative priority for the 107 th Congress. For EPA, "wastewater infrastructure" was reportedly a top budget concern.

As noted above, the final settlement had been modified in one area: moving the effective date back to July 1, 2001, in order to accommodate the needs of the states. At that point, it was agreed, EPA would begin mandating Davis-Bacon coverage on all SRF-assisted projects. But, EPA subsequently moved the effective date back to September 1, 2001. Then, "[w]ith no elaboration," EPA moved it back again, this time to October 1, 2001. Thereafter, there was silence.

Some Considerations of Policy

Conceived prior to the Depression, the Davis-Bacon Act (1931) was passed at the urging of the Hoover Administration. The intent was to bring stability to the construction industry and, at the same time, to prevent construction wages from spiraling downward as part of the Depression-era decline. After the act was refined and expanded in 1935, subsequent amendment has been largely technical—though the Davis-Bacon principle has been extended to more than 50 program statutes.

Review of the Davis-Bacon Statute

Almost from the beginning, there was debate about the statute that quickly became symbolic. Organized labor supported the act (as did many in industry.) For others from industry and elsewhere, the Davis-Bacon became a target, with support for (or opposition to) the act viewed as a political litmus test. Arguments, pro and con, have, through the years, been pursued with vigor. The act (with the related program provisions) has been litigated extensively, with individual words, phrases, and concepts becoming grist for the contending parties on each side.

Congressional debate over Davis-Bacon has been intermittent at least since the 1950s, but it was more or less ongoing through the 1970s, 1980s, and into the 1990s. Not infrequently, DBA has surfaced as a subject of consideration several times during a single session of the Congress, and given what some perceive as the ambiguity of the statute and the difficulty of its implementation, one may reasonably expect that it will continue as part of the agenda of the Congress and the courts.

Davis-Bacon and the Clean Water Act

Davis-Bacon prevailing wage coverage was added to what would become the Clean Water Act in 1961. When Congress created the CWA/SRF loan program in 1987, DBA (with other administrative requirements) was made part of that program. What happened after 1994 when SRF authorizations expired remains in question.

Federal Funding and Administrative Requirements?

In 1987, Congress decided to end new authorization for SRFs after FY1994. Almost immediately, however, there was recognition that further federal funding for SRFs would be needed "for the foreseeable future." Several proposals to that effect were considered. Possibly, because of more contentious issues (wetlands, for example), they were not enacted. But absent further authorizations, Congress continued to fund the SRF program through the appropriations process. The program is ongoing.

So long as the SRF program received federal funding (with authorizations through FY1994), Congress provided that DBA coverage continue. Given a literal interpretation of the 1987 authorization (that is, that DBA and other administrative requirements would apply only to treatment works "constructed in whole or in part before 1995"), one could argue that any project constructed after that time would not be DBA-covered.

However, one might also argue that Congress intended to continue the initial SRF program through the appropriations process. And since appropriations continued to be made, it might also be argued that the various administrative provisions (including Davis-Bacon), in place in 1994, would continue until such time as Congress intervened. From this perspective, there would have been no change in the long-standing policy of DBA coverage of CWA and CWA/SRF projects—and no need for a new statement of intent by the Congress.

The Concept: "to which the United States ... is a party"

Speaking generally, Davis-Bacon coverage has taken two forms. The act itself requires an agreement to pay not less than the locally prevailing wage rate be included in every construction contract "in excess of $2,000, to which the United States or the District of Columbia is a party ...." (Italics added.) In the case of the Clean Water Act, a DBA prevailing wage requirement has been added to the statute with Section 513 (of the core act) and with Section 602(b)(6) with respect to the SRF program. Determination of what constitutes a locally prevailing wage is left to the Secretary of Labor, while the EPA Administrator is directed to insure that all laborers and mechanics employed on covered work are "paid wages at rates not less than those" found by the Secretary to be prevailing.

In a narrow legal sense, the concept of "is a party" may be interpreted as requiring that the United States, through its authorized agent, be an actual signatory to a construction contract. More broadly, in the case of federally assisted programs, some may argue that the recipient of federal funds (a loan, grant, tax incentive), by virtue of the receipt of such assistance, becomes the de facto agent of the federal government and, thereby takes on a variety of federally imposed responsibilities.

The CWA/SRF is, by and large, a federal program, even where the federal government is not, immediately, a signatory to a specific contract under its egis. SRFs were established at the initiative of the federal government, and have been funded largely by the federal government. If there are administrative (or social) requirements inherent in federal funding (fiduciary practice, non-discrimination, etc.), some might argue that they should continue in place while the program continues or until specifically stricken from the statute. Here, the SRFs were designed to be ongoing. One might argue that the concept of being "a party" to an ongoing program (with the responsibilities that may entail) does not end simply because no new federal funding is forthcoming and while the program continues to operate by virtue of the old funding.

The program (even without new authorizations) is ongoing, and it might be argued that the federal government continues to be "a party" to it. That would seem, on the surface, to be implicit in the EPA agreement to enforce the DBA requirements "prospectively" and "in the same manner as they applied before October 1, 1994." Such assumptions, of course, lay at the heart of the continuing dispute.

Establishment of SRFs, in effect, creates an intermediary between the source of the funding (largely federal) and the loan recipient. To what extent is the continuing federal presence modified by the mechanism through which funding is made available for local abatement projects? Does the existence of the SRFs render the federal government other than "a party" to the construction? The issue is legal, philosophical—and disputable.

The Complexities of Regulatory Enforcement

Both Davis-Bacon and the CWA/SRF initiative have enjoyed high visibility. Conflict about prevailing wage treatment of SRF-funded projects has been an issue through more than a decade, and suggests various policy dilemmas:

Was EPA correct, beginning in 1995, in asserting that the Davis-Bacon requirements did not apply to SRF projects? Or was it correct in its new position, in 2000-2001, that Davis-Bacon did apply? If the EPA were correct (in either stance), upon what legal foundation does its judgment rest? What was the role of the Department of Labor through this period? Assuming that it had required application of DBA standards prior to 1994, did it stop doing so in 1995? If so, on what ground? Since the CWA/SRF initiative has (and will) involve multiple billions of dollars, it is a major undertaking. Are there now in place procedural restraints through which to handle conflicts of this sort?

Davis-Bacon Act and the CWA/SRFs in the 110th Congress

Through more than a decade, authorization for funding of the CWA/SRFs has been a matter of contention with the authorizing committees of both the House and the Senate. Each time a bill has been brought up for consideration, various other factors were raised—among them, coverage under the Davis-Bacon Act—and ultimately, the several bills died.

In the 110 th Congress, there has once again been consideration of clean water bills. Almost immediately after the Congress convened, the process commenced in the House. As with prior Congresses, the issue of Davis-Bacon remained an essential ingredient in the proceedings.

Preliminaries and an Early Hearing

On January 19, 2007, the House Subcommittee on Water Resources conducted an oversight hearing on investment in clean water infrastructures.

J. Kevin Ward, speaking for the Council of Infrastructure Financing Authorities (CIFA), did not refer to the Davis-Bacon Act in his prepared testimony but he did urge that "more operating flexibility" be allowed for the states (a concept sometimes associated with an anti-Davis-Bacon stance). Ward continued:

"Certainly States must be fully accountable for their use of federal dollars but an excessive overlay of mandates and set asides and operational requirements will only serve to stifle innovation and interfere with the ability of States to best respond to local needs. The success of this program derives from the flexibility of the SRF model...."

With a view to prospective legislation of the 110 th Congress, Ward affirmed that there are "a number of specific program changes that we would want to see included in CWSRF reauthorization...."

Jim Stutler, representing the National Utility Contractors Association (NUCA), noted that there "are several policy issues that will no doubt be debated during the legislative process" but urged the committee "to focus on the big picture." Stutler continued: "...the impasse over prevailing wage requirements under the Davis-Bacon Act has stymied this legislation for too long." He continued: "...NUCA represents both union and non-union contractors" and "Davis-Bacon is not an issue of contention for our members."

A New Bill Introduced (H.R. 720)

On January 30, Representative James Oberstar (D-MN) introduced H.R. 720 , the "Water Quality Financing Act of 2007." The bill was referred to the Subcommittee on Water Resources and Environment, marked-up and promptly forwarded to the full Committee on Transportation and Infrastructure.

Subcommittee and Committee Action

In the subcommittee (January 31, 2007), Davis-Bacon again became an issue. Representative Richard Baker (R-LA), in an amendment proposed by Representative Thelma Drake (R-VA), urged that the Davis-Bacon language be stricken. On a voice vote, the Baker/Drake amendment was rejected and the Davis-Bacon provision was retained.

On February 7, the House Committee on Transportation and Infrastructure took up the sewage and wastewater measure. In each case (in the subcommittee and in the committee), there had been controversy, but it had been overcome. The bill was approved in the full committee by a vote of 55 yeas to 13 nays. With the Davis-Bacon provision intact, the bill was ordered reported.

Report from the Subcommittee: H.Rept. 110-30

As reported, two provisions deal with Davis-Bacon. Section 513 , which had applied the act broadly to treatment construction, was retained. It required that "all laborers and mechanics employed by contractors or subcontractors on treatment works for which grants are made under this Act shall be paid wages at rates not less than those prevailing for the same type of work on similar construction in the immediate locality."

That authority (Section 513) had long been in place. However, a new provision was added: Section 602(b)(17) . The committee report explained:

"New Section 602(b)(17) requires the application of the Davis-Bacon requirements for the construction of treatment works carried out in whole or in part with assistance made available from state revolving loan funds under Title VI, funds from section 205(m) of the Act, or both. This amendment authorizes the application of the prevailing wage requirements to construction projects carried out with any financial assistance from the state revolving fund, whether the source of assistance originates from Federal capitalization grant funds, state matching funds, repayments to the fund, interest payments, or other sources of income to the state revolving fund, and whether the character of the assistance is through loans, loan guarantees, or other types of assistance authorized by section 603(d)."

The report continued. "By establishing the Davis-Bacon prevailing wage requirement for the construction of treatment works, the Committee continues its long-standing practice of ensuring the application of Davis-Bacon where Federal funds are provided for construction...." It added: "For the Clean Water SRFs, the most significant source of revenue in the state revolving funds is the Federal capitalization grant. As Congress has done in 63 separate instances for Federally-funded construction, the Davis-Bacon Act should apply to the reauthorization of the Clean Water SRFs."

The committee went on to discuss the varied rationale for support of the Davis-Bacon Act: to "attract more experienced and better trained workers," workers who "are often more productive than workers with less training and experience," that Davis-Bacon work results often "in the completion of construction projects ahead of schedule," "reducing the overall cost of the project," and "offsetting any increased costs due to higher hourly wage rates."

Conversely, Representative John Mica (R-FL), together with several others, suggested a strong opposition. Mr. Mica stated that the bill "represents an important step forward for clean water" but "it also takes a significant step backwards by mandating and expanding upon the past application of Davis-Bacon Act prevailing wage requirements in the SRF program." Davis-Bacon, he stated, would add "to the cost of public construction" and have a disproportionate impact on "small, rural, and disadvantaged communities, which can least afford to pay the higher cost of projects." He stated that the act was "discriminatory" in that "[f]ew small and minority-owned firms can afford to pay the higher wages that the Davis-Bacon Act requires. As a result," he observed, "they are rarely awarded Davis-Bacon contracts, and many of them stop applying for those contracts." He concluded: "There is no precedent here for applying the Davis-Bacon Act to state funds...."

The Bill Considered in the House

On March 9, the "Water Quality Financing Act of 2007" was called up for debate in the House. Davis-Bacon was a significant part of the discussion that followed.

In discussing the rule, Representative Pete Sessions (R-TX) brought up Davis-Bacon coverage, stating: "... the Democrat leadership is bringing legislation to the House floor that benefits big labor bosses at someone else's expense." Sessions continued: "... in order to help big labor bosses pad their dwindling ranks, they would apply these same provisions [Davis-Bacon regulations] to all non-Federal funds, such as loan repayments, State bond revenues, interest and State-matching funds." Sessions objected to "this Depression Era wage subsidy law" and "its associated inflation" which means that local budgets cannot build "schools, hospitals, prisons, roads and other vital projects." He continued:

"If you support fiscal responsibility, small business, States' rights, rural communities, women- and minority-owned businesses, and the environment, you will join with me in opposing this rule.

"If, however, instead, you support environmental harm, market distortion, wasteful Federal spending, and stacking the deck in favor of labor bosses, I wholeheartedly encourage you to vote for this legislation."

Representative Kathy Castor (D-FL) responded that some were "...unable to criticize the heart of this legislation" (that is, authorization for "an important part of the Clean Water Act"). Thus, she suggested that the Member from Texas "instead reverts to attacking a portion of this legislation that is vital to workers across America, the Davis-Bacon Provisions." Castor noted that "it has become all too familiar from the other side of the aisle to attack workers across America." She then affirmed that

"[i]t is our policy, in fact, it is Congress's long-standing continuing tradition of applying prevailing wage requirements to federally funded construction projects. Studies have shown that by attracting more experienced, better-trained workers, that wage requirements lead to higher productivity and they reduce overall costs, which offset any higher wages."

Castor argued that Davis-Bacon "protects communities by ensuring that wage determination" is based "solely on the local workforce costs"—the locally prevailing wage rate. Further, she argued, with Davis-Bacon in place, oftentimes "projects come in under budget and on time."

Throughout floor consideration of H.R. 720 , Davis-Bacon was of continuing interest with Members, some taking strong positions either for or against the statute. As discussion moved on to amendments, Representatives Baker and Steve King (R-IA) proposed an amendment. King explained: "... really all this amendment does is it just stops the expansion of the Davis-Bacon, and it says we are not going to move this Davis-Bacon into a revolving fund." Baker added with respect to Davis-Bacon: "It will make the compliance of the rules for rural and lower income communities much more difficult to achieve. Compliance with the Davis-Bacon provisions," he stated, "is a difficult and cumbersome task." Speaking against the Baker/King amendment was the chairman of the Committee on Transportation and Infrastructure, Mr. Oberstar, who noted the difference between a union wage and a prevailing wage. "This Davis-Bacon provision is [a] prevailing [wage], not [a] union wage." Oberstar added: "It is the prevailing local wage."

On a roll-call vote, the Baker/King amendment was defeated: 140 ayes to 280 noes. Thus, the Davis-Bacon Act would apply to the SRFs under the House-passed version of the Water Quality Financing Act of 2007—whether on a first use basis or, repeatedly, throughout the program. Following discussion of other issues, the bill was adopted and was dispatched to the Senate.

Consideration of H.R. 720 by the Senate

In the Senate, on March 12, 2007, H.R. 720 was read and referred to the Committee on Environment and Public Works. The bill remains in committee, no further action having been reported.