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

AGENCY:

Environmental Protection Agency.

ACTION:

Notice of proposed settlement; request for public comment and notice of public meeting.

SUMMARY:

The Environmental Protection Agency (EPA or the Agency) is seeking comment on a proposed settlement agreement between the Agency and the Building and Construction Trades Department, AFL/CIO (Building Trades) which would resolve a matter now pending before the Department of Labor's Wage and Hour Division Administrator. Under the proposed settlement agreement, EPA would 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.

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. Appropriations for the CWSRF program were authorized only through fiscal year 1994, but Congress has continued to appropriate funds for the program each year since.

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 (the beginning of Fiscal Year 1995). Two years later, the Building and Construction Trades Department (“Building Trades”), AFL-CIO, asked the Department of Labor's Wage and Hour Division (“DOL”) to rule that the requirements of the Davis-Bacon Act continue to apply to treatment works projects funded with CWSRF loans under CWA title VI. 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.

EPA has closely considered the relationship of CWA section 513 and CWA section 602(b)(6) and the arguments of the Building Trades in its request for ruling. 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.

Consequently, EPA and the Building Trades are proposing to enter into the settlement agreement published with this notice. Under the agreement, EPA would include a condition in all capitalization grant agreements entered into between the Agency and the states on or after January 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 in the same manner as they were applied before October 1, 1994. 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.

For a period of forty-five (45) days following the date of publication of this notice, the Agency will receive written comments relating to the proposed settlement agreement from any persons. A public meeting to discuss this proposed settlement agreement will also be held on Thursday, July 13, 2000, from 2 to 4 PM, at the Washington Plaza Hotel, 10 Thomas Circle, Washington, DC EPA may withdraw from the proposed settlement agreement, or withhold its agreement, if these comments or consultations taking place with state and local government representatives, disclose considerations that indicate that entering into the settlement agreement would be inappropriate, improper or inconsistent with the requirements of the CWA.

Written comments should be sent to Geoff Cooper, Finance and Operations Law Office, Office of General Counsel (2377A), U.S. Environmental Protection Agency, 12th and Pennsylvania Avenue, NW., Washington, DC 20460 (or they may be e-mailed to cooper.geoffrey@epamail.epa. gov.) Questions about the July 13, 2000, public meeting should be addressed to Angela Cracchiolo, Office of Wastewater Management, Office of Water (4204), U.S. Environmental Protection Agency, 1200 Pennsylvania Avenue, NW., Washington, DC 20460 (or they may be e-mailed to cracchiolo.angela@epamail.epa. gov.)

Proposed 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, 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 January 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 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 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 January 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: