Top 9 Regulatory Challenges Facing Construction Companies in 2018

The Trump administration’s regulatory reform agenda has received much attention, yet the construction industry continues to face numerous regulatory challenges.

Despite the Trump administration’s efforts to slash unnecessary and burdensome regulations, many continue to persist. Experts from the American Road & Transportation Builders Association (ARTBA) talk about those that are most concerning to the construction industry.

Waters of the United States (WOTUS)

WOTUS, also known as the Clean Water Act, was put into effect in 2015 under the Obama administration. The current administration would like to relax this regulation and is in the process of finalizing its own version. Nick Goldstein, vice president of regulatory and legal issues for the ARTBA, says it’s likely going to take some time.

“When rules are put in place by federal agencies, it often takes just as long to withdraw them as it took to put them in place,” Goldstein says. The WOTUS rule is a regulation published by the EPA and United States Army Corps of Engineers (USACE). It took more than a year for the proposed rule to actually be signed into effect.

“I do think we could see a proposed rule by the end of summer or early fall, though,” Goldstein speculates. “The current administration certainly doesn’t want to leave this to any future administration.”

In the meantime, the 2015 rule has been suspended. The EPA and USACE are accepting public comments through August 13. See comments.

WOTUS creates a host of challenges for the construction industry. For example, every road project has ditches. If those ditches fill with water, they technically become “waters of the United States” and are subject to the regulation.

“You might have to get the Army Corps of Engineers out to a jobsite to confirm that it’s just a ditch and not in need of a permit to clean it,” Goldstein says. “Would they do that? Maybe not. But because the regulation is in place, it also opens the door to potential lawsuits from anyone who might like to delay the project. It’s a very costly process for construction companies.”

Endangered Species Act

Another environmental issue affecting the construction industry is the Endangered Species Act. Goldstein says the administration recently issued proposed alterations to the regulation that the ARTBA will likely comment on.

“Initially we think it’s pretty favorable,” Goldstein says. The proposal better defines the process by which land set aside as critical habitat for endangered species can be changed once the species is no longer classified as endangered. “The existing law can be a little heavy-handed by granting entirely too much land, even where the species has never appeared before,” Goldstein adds. “Progress has definitely been made here.”

MAP-21 (Moving Ahead for Progress in the 21st Century)

ARTBA worked with the Obama administration in implementing MAP-21, a funding and authorization bill to govern U.S. federal surface transportation spending. A provision was inserted into one of the performance measures that related to freight movement and CMAQ (congestion mitigation and air quality) improvement. That meant new transportation projects would be evaluated, at least in part, based on greenhouse gas emissions.

“Some were trying to use MAP-21 to get something completely unrelated: the regulation of greenhouse gas emissions,” Goldstein says. “MAP-21 was a good bipartisan bill that included a lot of items, but greenhouse gas was not one of them. We advised the past administration to just stick to what the statute told them to do. The Federal Highway Administration (FHWA) dropped the requirement this spring. It may come up again, and we’ll comment appropriately if it does.”

Corporate Average Fuel Economy (CAFE) Standards

“Our main issue is that improved fuel economy results in less revenue from the federal gas tax,” Goldstein points out. “The federal gas tax funds our country’s transportation system. That needs to be addressed in future discussions of these standards. We must ensure that the necessary revenues are going into the Highway Trust Fund.”

Hours of Service

The Federal Motor Carrier Safety Administration’s Hours of Service is a contentious regulatory issue for industries such as construction. The industry employs many drivers of commercial vehicles. However, those drivers are not “truckers” in the general sense of the term, yet many are subject to the HOS rules designed to prevent fatigue in long-haul drivers.

“We’ve long believed that the construction and transportation industry should have an exemption from most or all of the HOS regulations,” says Rich Juliano, senior vice president of policy for the ARTBA. “We’ve seen exemptions for parts of the industry (i.e. concrete and asphalt) from certain aspects of the rule. We’ve supported those efforts. But we’d really like to see a wider-ranging exemption and are working toward that.”

It’s interesting to note that some industries have received sweeping exemptions. One example is commercial trucks transporting fireworks around the 4th of July. “The American Pyrotechnic Association seems to get an exemption every year,” Goldstein says. “We think the construction industry is equally deserving of the same treatment.”

Buy America

In addition to its regulatory reform agenda, the Trump administration has received much attention for its America-first philosophy. This has been felt throughout the construction industry. It is often required that the steel and iron being incorporated into federal highway and transit projects be domestically produced and fabricated. Juliano says his main concern is an extreme interpretation of “Buy America.”

“We’ve seen it in the past where they’re scrutinizing nuts and bolts: things that literally cost pennies,” Juliano relates. “If you wanted to take an extreme interpretation of the law, you could require the contractor to provide certification for all of those little pieces of steel. This gets beyond the point of absurdity with potential project delays and increased costs.”

The Obama administration was working on a rule to address this but failed to finish it. The Trump administration is not taking it up. “Thus, the division offices for the FHWA and state DOTs are somewhat on their own,” Juliano says. “We’re just hopeful that they continue with a reasonable interpretation of this law.”

Construction companies can apply for waivers from the Buy America provision. However, as Juliano points out, the current administration hasn’t been granting any.

Silica Exposure

In March 2016, OSHA proposed a significant tightening of the standard for allowable exposure to crystalline silica dust. Roughly a year and a half later, OSHA began enforcing that standard. A flurry of lawsuits ensued, but a federal appeals court upheld OSHA’s new standard just a couple of months later.

“We and many other industries felt that the standard was based on outdated data, while failing to take into account the economic impact of the rule,” Goldstein says. “Now we’re talking to OSHA about how to implement it.”

Forcing construction workers to wear respirators in areas where they don’t really need them can be counterproductive. If the jobsite is in a high-heat area, having to unnecessarily wear a respirator can actually increase the possibility of heat exhaustion.

Additionally, it’s hard to effectively guard against potentially dangerous levels of silica dust. By the time the results come back from a work area that has been tested, the workers have likely moved to another area. “There’s a shortage of labs doing the testing so you often can’t get the results in time,” Goldstein says. “But this is the law now so our members have to remain compliant. We’ve developed training materials that can help.”

Proprietary Products Rule

This 102-year-old regulation prohibits the use of patented or proprietary products on federal-aid highway and bridge projects unless they qualify for a waiver. While this rule may have seemed sensible when it originated back in 1916, at a time when competitive bidding was of utmost concern, Juliano says the law is no longer practical. It is now proving to be a barrier to innovation on the jobsite at a time when productivity and safety are of utmost concern.

After pursuing some legislative and administrative solutions over the past several years, the ARTBA has asked the DOT and FHWA to reverse the rule in its entirety. “We’ve submitted our petition to the FHWA and they are looking at it,” Goldstein says. “We hope to have an answer in the coming months.”

In its petition, ARTBA cited several examples of jobsite innovation that is being stifled by this regulation:

  •     A mobile, self-contained semi-trailer that protects workers while reducing public disruption and lane closures
  •     Patented disc bearings for bridges
  •     A composite beam system that provides a cost-competitive and resilient bridge system benefiting from extended service life inherent in composite materials
  •     A unique sign post breakaway system
  •     A moveable barrier product that helps expand and contract work areas in construction zones and add/drop lanes for directional traffic in permanent applications.

“These products could make projects safer and more efficient, but they can’t be used,” Goldstein points out. “Many times the DOT will say a product sounds really interesting, but that it would be best to use the process to get an exemption. Going after those waivers is such a hassle that many construction companies just stay away from it.”

Disadvantaged Business Enterprise (DBE) program

Juliano says there hasn’t been much positive development on this issue, but it continues to be a major compliance issue for construction contractors. It’s also a potential source of increased cost.

“We want our members to know that we’re continuing to talk to the current administration and DOT officials about our concerns with this program,” Juliano says. “This is one of those regulations that our members often mention first.”

Regulatory matters are very fluid and often work themselves out over the course of several months, if not years. You can keep up to date on key issues affecting the construction industry by visiting artba.org/government-affairs/regulatory.




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