[Federal Register Volume 65, Number 184 (Thursday, September 21, 2000)]
[Proposed Rules]
[Pages 57270-57276]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 00-24257]



[[Page 57269]]

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Part IV





Department of Labor





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Office of the Secretary



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29 CFR Part 5



Labor Standards Provisions Applicable to Contracts Covering Federally 
Financed and Assisted Construction; Proposed Rule

  Federal Register / Vol. 65, No. 184 / Thursday, September 21, 2000 / 
Proposed Rules  

[[Page 57270]]


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DEPARTMENT OF LABOR

Office of the Secretary

29 CFR Part 5

RIN 1215-AB21


Labor Standards Provisions Applicable to Contracts Covering 
Federally Financed and Assisted Construction (Also Labor Standards 
Provisions Applicable to Nonconstruction Contracts Subject to the 
Contract Work Hours and Safety Standards Act)

AGENCY: Wage and Hour Division, Employment Standards Administration, 
Labor.

ACTION: Notice of proposed rulemaking.

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SUMMARY: The Department of Labor proposes to amend two related 
definitions in the regulations issued under the Davis-Bacon and related 
Acts that set forth rules for administration and enforcement of the 
Davis-Bacon prevailing wage requirements that apply to federal and 
federally-assisted construction projects. These regulations define the 
Davis-Bacon Act language construction, prosecution, completion, repair 
and site of the work. The Department believes that revisions to these 
definitions are needed to clarify the regulatory requirements in view 
of three appellate court decisions, which concluded that the 
Department's application of these regulatory definitions was at odds 
with the language of the Davis-Bacon Act that limits coverage to 
workers employed ``directly upon the site of the work,'' and to address 
situations that were not contemplated when the current regulations were 
promulgated. The Department, therefore, seeks public comment on 
proposed revisions to the regulatory definitions of construction and 
site of the work.

DATES: Comments are due on or before October 23, 2000.

ADDRESSES: Submit written comments to T. Michael Kerr, Administrator, 
Wage and Hour Division (Attention: Goverment Contracts Team), 
Employment Standards Administration, U.S. Department of Labor, Room S-
3018, 200 Constitution Avenue, NW, Washington, D.C. 20210. Commenters 
who wish to receive notification of receipt of comments are requested 
to include a self-addressed, stamped post card.
    As a convenience to commenters, comments may be transmitted by 
facsimile (``FAX'') machine to (202) 693-1432. This is not a toll-free 
number.

FOR FURTHER INFORMATION CONTACT: Timothy Helm, Office of Enforcement 
Policy, Government Contracts Team, Wage and Hour Division, Employment 
Standards Administration, U.S. Department of Labor, Room S-3018, 200 
Constitution Avenue, NW, Washington, D.C. 20210. Telephone (202) 693-
0574. This is not a toll-free number.

SUPPLEMENTARY INFORMATION:

I. Paperwork Reduction Act

    This regulation does not contain any new information collection 
requirements and does not modify any existing requirements. Thus, this 
regulation is not subject to the Paperwork Reduction Act.

II. Background

A. Statutory and Regulatory Framework

    Section 1 of the Davis-Bacon Act (``DBA'' or ``Act'') requires that 
``the advertised specifications for contracts * * * for construction, 
alteration and/or repair, including painting and decorating, of public 
buildings or public works * * * shall contain a provision stating the 
minimum wages to be paid to various classes of laborers and mechanics * 
* * and every contract based upon these specifications shall contain a 
stipulation that the contractor or his subcontractor shall pay all 
mechanics and laborers employed directly upon the site of the work * * 
* the full amounts accrued at time of payment, computed at wage rates 
not less than those stated in the advertised specifications, * * * and 
that the scale of wages to be paid shall be posted by the contractor in 
a prominent and easily accessible place at the site of the work. * * * 
'' 40 U.S.C. 276a (emphasis added).
    Section 2 of the Act requires that every covered contract provide 
that in the event the contracting officer finds that ``any laborer or 
mechanic employed by the contractor or any subcontractor directly on 
the site of the work covered by the contract has been or is being paid 
less than required wages, the government ``may terminate the 
contractor's right to proceed with the work or such part of the work as 
to which there has been a failure to pay the required wages'' and to 
hold the contractor liable for the costs for completion of the work. 40 
U.S.C. 276a-1 (emphasis added).
    The Congress directed the Department of Labor, through 
Reorganization Plan No. 14 of 1950 (5 U.S.C. App., effective May 24, 
1950, 15 FR 3176, 64 Stat. 1267), to ``prescribe appropriate standards, 
regulations and procedures'' to be observed by federal agencies 
responsible for the administration of the Davis-Bacon and related Acts 
``[i]n order to assure coordination of the administration and 
consistency of enforcement.'' 64 Stat. 1267.
    On April 29, 1983, the Department promulgated a regulation (29 CFR 
5.2(l)) defining the term site of the work within the meaning of the 
Davis-Bacon Act (see 48 FR 19540). This regulation reflected the 
Department's longstanding, consistent interpretation of the Act's site 
of the work requirement. See, e.g., United Construction Company, Wage 
Appeals Board (WAB) Case No. 82-10 (January 14, 1983); Sweet Home 
Stone, WAB Case Nos. 75-1 & 75-2 (August 14, 1975); Big Six, Inc., WAB 
Case No. 75-3 (July 21, 1975); T.L. James & Co., WAB Case No. 69-2 
(August 13, 1969); CCH Wage-Hour Rulings para. 26,901.382, Solicitor of 
Labor letter (July 29, 1942).
    The Department's regulations provide a three-part definition of 
site of the work. The first part at 29 CFR 5.2(l)(1) provides that 
``the site of the work is the physical place or places where the 
construction called for in the contract will remain when work on it has 
been completed and, as discussed in paragraph (l)(2) of this section, 
other adjacent or nearby property used by the contractor or 
subcontractor in such construction which can reasonably be said to be 
included in the site.''
    The second part at 29 CFR 5.2(l)(2) provides that ``fabrication 
plants, mobile factories, batch plants, borrow pits, job headquarters, 
tool yards, etc.'' are part of the site of the work provided they meet 
two tests--a geographic test of being ``so located in proximity to the 
actual construction location that it would be reasonable to include 
them,'' and a functional test of being ``dedicated exclusively, or 
nearly so, to performance of the contract or project.''
    The third part at 29 CFR 5.2(l)(3) states that fabrication plants, 
batch plants, borrow pits, tool yards, job headquarters, etc., ``of a 
commercial supplier or materialman which are established by a supplier 
of materials for the project before the opening of bids and not on the 
project site, are not included in the site of the work.'' In other 
words, facilities such as batch plants and borrow pits are not covered 
if they are ongoing businesses apart from the federal contract work.
    The regulatory definition of the statutory terms construction, 
prosecution, completion, or repair in section 5.2(j)(1) applies the 
site of the work concept. It defines these statutory terms as including 
the following:

    [a]ll types of work done on a particular building or work at the 
site thereof, including work at a facility which is dedicated to and 
deemed a part of the site of the work within the meaning of 
Sec. 5.2(l)--including without

[[Page 57271]]

limitation (i) [a]lteration, remodeling, installation (where 
appropriate) on the site of the work of items fabricated off-site; 
(ii) [p]ainting and decorating; (iii) [m]anufacturing or furnishing 
of materials, articles, supplies or equipment on the site of the 
building or work * * *; and (iv) [t]ransportation between the actual 
construction location and a facility which is dedicated to such 
construction and deemed a part of the site of the work within the 
meaning of Sec. 5.2(l).

(Emphasis added.)

B. The Department of Labor's Longstanding Interpretation of the 
Regulatory Site of the Work Definition

    Prior to the recent appellate court rulings, the Department's 
longstanding, consistent application of the regulatory definition of 
site of the work--the area where laborers and mechanics are to be paid 
at least the prevailing wage rates, as determined by the Secretary of 
Labor--included both the location where a public building or work would 
remain after work on it had been completed, and nearby locations used 
for activities directly related to the covered construction project, 
provided such locations were dedicated exclusively (or nearly so) to 
meeting the needs of the covered project.
    The Wage Appeals Board, which acted with full and final authority 
for the Secretary of Labor on matters concerning the labor standards 
provisions of the Davis-Bacon and related Acts (see 29 CFR 5.1 and 7.1 
(c)),\1\ consistently interpreted 29 CFR 5.2(l) to include as part of 
the site of the work, for purposes of Davis-Bacon coverage, support 
facilities dedicated exclusively to the covered project and located 
within a reasonable distance from the actual construction site. 
Consistent with the regulations, the Board also treated the 
transportation of materials and supplies between the covered locations 
and transportation of materials or supplies to or from a covered 
location by employees of the construction contractor or subcontractor 
as covered Davis-Bacon work. See, e.g., Patton-Tully Transportation 
Co., WAB No. 90-27 (March 12, 1993) (5.4 to 14 miles, and 16 to 60 
miles); Winzler Excavating Co., WAB No. 88-10 (October 30 1992) (12\1/
2\ miles); ABC Paving Co., WAB Case No. 85-14 (September 27, 1985) (3 
miles).
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    \1\ On April 17, 1996, the Secretary redelegated jurisdiction to 
issue final agency decisions under, inter alia, the Davis-Bacon and 
related Acts and their implementing regulations, to the newly 
created Administrative Review Board (ARB or the Board).
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C. Federal Appellate Decisions and Subsequent Decision of the 
Administrative Review Board (ARB)

    The D.C. Circuit first discussed the Department's site of the work 
definition in Building and Construction Trades Department, AFL-CIO v. 
United States Department of Labor Wage Appeals Board, 932 F.2d 985 
(D.C. Cir. 1991) (Midway). That case involved truck driver employees of 
the prime contractor's wholly owned subsidiary, who were delivering 
materials from a commercial supplier to the construction site. The 
material delivery truck drivers spent ninety percent of their workday 
on the highway driving to and from the commercial supply sources, 
ranging up to 50 miles round trip and stayed on the site of the work 
only long enough to drop off their loads, usually for not more than ten 
minutes at a time.
    At issue before the D.C. Circuit was whether the ``material 
delivery truckdrivers'' were within the scope of construction as 
defined by the regulatory provision then in effect at section 5.2(j), 
which defined the statutory terms construction, prosecution, 
completion, or repair to include, among other things, ``the 
transporting of materials and supplies to or from the building or work 
by the employees of the construction contractor or construction 
subcontractor.'' The court held that ``the phrase `mechanics and 
laborers employed directly upon the site of the work' restricts 
coverage of the Act to employees who are working directly on the 
physical site of the public building or public work being 
constructed.'' 932 F.2d at 992. The court further stated that 
``[m]aterial delivery truckdrivers who come onto the site of the work 
merely to drop off construction materials are not covered by the Act 
even if they are employed by the government contractor,'' and 
consequently held that ``29 C.F.R. Sec. 5.2(j), insofar as it includes 
off-site material delivery truck drivers in the Act's coverage, is 
invalid.'' Id.
    The court expressly declined to rule on the validity of the 
regulation defining the site of the work at 29 CFR 5.2(l). 932 F.2d at 
989 n.6, 991 n.12. However, it expressed the view that Congress 
intended to limit Davis-Bacon coverage to ``employees working directly 
on the physical site of the public building or public work under 
construction.'' 932 F.2d at 990 n.9, 991.
    On May 4, 1992, the Department promulgated a revised section 5.2(j) 
to accommodate the holding in Midway. 57 FR 19204. The revised 
regulation limits coverage of offsite transportation to 
``[t]ransportation between the actual construction location and a 
facility which is dedicated to such construction and deemed a part of 
the site of the work within the meaning of Sec. 5.2(l).'' 29 CFR 
5.2(j)(1)(iv) (1993).
    In the two more recent rulings, Ball, Ball and Brosamer v. Reich, 
24 F. 3d 1447 (D.C. Cir. 1994) (Ball) and L.P. Cavett Company v. U.S. 
Department of Labor, 101 F.3d 1111 (6th Cir. 1996) (Cavett), the D.C. 
Circuit and Sixth Circuit, respectively, focused on the proper 
geographic scope of the statutory phrase site of the work in relation 
to borrow pits and batch plants established specifically to serve the 
needs of covered construction projects. In Ball, the D.C. Circuit ruled 
that the Department's application of section 5.2(l)(2) was inconsistent 
with the Act to the extent it covers sites that are at a distance from 
the actual construction location. The case involved workers at the 
borrow pit and batch plant of a subcontractor who obtained raw 
materials from a local sand and gravel pit and set up a portable batch 
plant for mixing concrete. The pit and batch plant were dedicated 
exclusively to supplying material for the completion of the 13-mile 
stretch of aqueduct that the prime contractor had contracted to 
construct. As described by the court, ``the borrow pit and batch plant 
were located about two miles from the construction site at its nearest 
point.'' 24 F.3d at 1449.
    In holding that the Davis-Bacon prevailing wage requirements do not 
apply to the borrow pit and batch plant workers, the court cited 
Midway, in which it had found ``no ambiguity in the text [of the Davis-
Bacon Act]'' and thought it clear that ``the ordinary meaning of the 
statutory language is that the Act applies only to employees working 
directly on the physical site of the public building or public work 
under construction.'' 24 F.3d at 1452. The court added that ``the 
reasoning in Midway obviously bears on the validity of Sec. 5.2(l)(2) 
to the extent that the regulation purports to extend the coverage of 
the Davis-Bacon Act beyond the actual physical site of the public 
building or public work under construction,'' (id.), and accordingly 
ruled that ``the Secretary's regulations under which Ball was held 
liable are inconsistent with the Davis-Bacon Act. See 29 CFR 
Sec. 5.2(l)(1).'' 24 F.3d at 1453. The court nevertheless indicated 
that the regulations at section 5.2(l)(2) might satisfy the geographic 
limiting principle of the Davis-Bacon Act and Midway if the regulatory 
phrase in section 5.2(l)(2) ``so located in proximity to the actual 
construction location that it would be reasonable to include them'' 
were

[[Page 57272]]

applied ``only to cover batch plants and gravel pits located in actual 
or virtual adjacency to the construction site.'' 24 F.3d at 1452.
    In Cavett (arising under the Federal-Aid Highway Act, a Davis-Bacon 
related Act), the Sixth Circuit held that truck drivers hauling asphalt 
from a temporary batch plant to the highway under construction three 
miles away were not due prevailing wages. The contract involved 
resurfacing of an Indiana state road, and as characterized by the 
court, ``the Department of Labor included in the site of the work both 
a batch plant located at a quarry more than three miles away from the 
highway construction project and the Indiana highway system that was 
used to transport materials from the batch plant to the construction 
project.'' 101 F.3d at 1113-1114.
    Relying on the D.C. Circuit's reasoning in Midway and Ball, the 
Sixth Circuit disagreed with the views of the lower court that the 
statutory language was ambiguous and that the Ball decision recognized 
ambiguity in the statutory text when it declined to decide whether 
coverage could extend to batch plants adjacent to or virtually adjacent 
to the boundaries of the completed project. The Sixth Circuit reasoned 
that it was not inconsistent for the Ball court to ``conclude that 
while a facility in virtual adjacency to a public work site might be 
considered part of that site, a facility located two (or in this case 
three) miles away from the site would not.'' 101 F.3d at 1115. Thus, 
agreeing with Ball, the Sixth Circuit concluded that the statutory 
language means that ``only employees working directly on the physical 
site of the work of the public work under construction have to be paid 
prevailing wage rates.'' Id.
    Subsequent to the rulings in Midway, Ball, and Cavett, the 
Department's Administrative Review Board (ARB) addressed the Davis-
Bacon Act's site of the work provision in Bechtel Contractors 
Corporation (Prime Contractor), Rogers Construction Company (Prime 
Contractor), Ball, Ball and Brosamer, Inc., (Prime Contractor), and the 
Tanner Companies, Subcontractor, ARB Case No. 97-149, March 25, 1998, 
reaffirming ARB Case No. 95-045A, July 15, 1996.
    This case involved a dispute over whether the Davis-Bacon 
provisions applied to work performed at three batch plants established 
and operated in connection with construction work on the Central 
Arizona Project (CAP), a massive Bureau of Reclamation construction 
project consisting of 330 miles of aqueduct and pumping plants. The 
batch plants were located less than one-half mile from various pumping 
stations that were being constructed as part of the project. The Board 
initially ruled on the case on July 15, 1996 (Bechtel I) and later 
reaffirmed that decision on March 25, 1998 (Bechtel II).
    The Board observed that the D.C. Circuit's recent decision in Ball 
had ``created a good deal of confusion with respect to the coverage of 
the DBA.'' Bechtel I, slip op. at 6. The Board declined to read Ball or 
Cavett to mean that the statutory phrase ``directly upon the site of 
the work'' limits the wage standards of the DBA to ``the physical space 
defined by contours of the permanent structures that will remain at the 
close of work.'' Id. Rather, the Board read Ball and Cavett as only 
precluding the Secretary from enforcing section 5.2(l)(2) of the 
regulations in a manner that did not respect the geographic limiting 
principle of the statute, while reserving ruling on section 5.2(l)(1), 
since that provision was not at issue in those cases. Bechtel II, slip 
op. at 5; Bechtel I, slip op. at 6. The Board stated that 
interpretation of section 5.2(l)(1) requires examination of the 
question of whether the temporary facilities are so ``located in 
virtual adjacency'' to the site of the work that it would be reasonable 
to include them. Id.
    The Board found that the work performed at the plants satisfied the 
test set out in section 5.2(l)(1), since aerial photographs of the 
construction sites showed the temporary batch plants to be located on 
land integrated into the work area adjacent to the pumping stations. 
The Board believed there was no principled basis for excluding the 
batch plant workers since they were employed on sites of the work to 
the same extent as the workers who cleared the land and the workers who 
inventoried, assembled, transported or operated tools, equipment or 
materials on nearby or adjacent property. The Board also observed that

it is the nature of such construction, e.g., highway, airport and 
aqueduct construction, that the work may be long, narrow and stretch 
over many miles. Where to locate a storage area or a batch plant 
along such a project is a matter of the contractor's convenience and 
is not a basis for excluding the work from the DBA. The map of the 
project introduced at hearing * * * abundantly illustrates that the 
project consisted of miles of narrow aqueduct connected by pumping 
stations. The only feasible way to meet the needs of the aqueduct 
construction was to have the concrete prepared at a convenient site 
and transported to the precise area of need. This equally holds true 
for the storage and distribution of other materials and equipment. 
Faced with such a project, the Board finds that work performed in 
actual or virtual adjacency to one portion of the long continuous 
project is to be considered adjacent to the entire project.

Bechtel I, slip op. at 6.

III. Discussion of the Proposed Rule

    Issuance of this NPRM is needed to clarify the effects of Midway, 
Ball, and Cavett, particularly in view of confusion they may have 
generated (as suggested by the ARB in Bechtel I), and also to address 
situations not contemplated by the current regulations.
    The Department has also reviewed the NPRM published in 1992 (57 FR 
19208 (May 4, 1992)) in conjunction with the rule promulgated to 
conform with the Midway decision; the NPRM would have further defined 
and limited the circumstances in which on-site work by laborers and 
mechanics primarily engaged in offsite transportation would be subject 
to Davis-Bacon requirements. After a review of the comments and the 
subsequent developments in the court cases, the Department has 
concluded that no further rulemaking on this issue is necessary or 
appropriate. As stated in the preamble to the companion rule: ``Those 
truck drivers who transport materials to or from the `site of the work' 
would not be covered for any time spent off-site, but would remain 
covered for any time spent directly on the `site of the work.' '' 57 FR 
19205. It remains the Department's view that truck drivers employed by 
construction contractors and subcontractors must be paid at least the 
rate required by the Davis-Bacon Act for any time spent on-site which 
is more than de minimis. In this connection, the Department notes that 
in the Midway case, the drivers stayed on-site only long enough to drop 
off their loads, which was usually not more than ten minutes at a time. 
932 F.2d at 987.

1. Site of the Work--Section 5.2(l)

    While neither Ball nor Cavett enjoined the Department from 
enforcing the regulatory site of the work definition as set forth at 29 
CFR 5.2(l)(2), these courts found the Department's application of the 
regulation to be contrary to the plain meaning of the language of the 
Davis-Bacon Act. In view of the appeals courts' rulings, the Department 
no longer believes that it can assert Davis-Bacon prevailing wage 
coverage with respect to material or supply sources, tool yards, job 
headquarters, etc., which are dedicated to the covered construction 
project unless they are adjacent or virtually adjacent to a location 
where the

[[Page 57273]]

building or work, or a significant portion thereof, is being 
constructed.
    Therefore, a revision to section 5.2(l)(2) is proposed to so limit 
coverage. The Department does not believe it would be appropriate to 
propose to define the terminology ``adjacent or virtually adjacent'' 
because the actual distance may vary depending upon the size and nature 
of the project. See Bechtel II, slip op. at 6 (``The question of 
whether a temporary facility is virtually adjacent to the `site of the 
work' is one to be examined on a case-by-case basis.'') However, the 
Department invites comments on whether this terminology should be 
defined, and if so, in what manner.
    In addition, the current site of the work definition at section 
5.2(l) does not adequately address certain situations which the 
Department believes warrant coverage. For example, new construction 
technologies have been developed that make it practical and 
economically advantageous to build major segments of complex public 
works, such as lock and dam projects and bridges, at locations some 
distance up-river from the locations where the permanent structures 
will remain when their construction is completed.
    Innovative construction methods exist which take advantage of 
recently developed underwater concrete construction technologies, 
making it feasible for whole sections of such structures to be 
constructed up-river and floated down-river to be put in place to form 
the structure being built. In such situations, much of the construction 
of the public work is performed at a secondary site other than where it 
will remain after construction is completed.
    The regulatory definition in section 5.2(l)(1) states that coverage 
``is limited to the physical place or places where construction called 
for in the contract will remain * * * and other adjacent or nearby 
property.'' Literal application of the regulatory language would appear 
to exclude from coverage, construction at a location some distance from 
the final resting place of a project, even if a significant portion of 
the project is actually constructed at that location. At its most 
extreme, it is possible that a project may be built in its entirety at 
one location and then moved to its final resting place. The Department 
does not believe such a result is consistent with either the language 
or intent of the Davis-Bacon Act. Rather, it is the Department's view 
that a location established specifically for the purpose of 
constructing a significant portion of a ``public building or public 
work'' is reasonably viewed as construction performed directly upon the 
site of the public building or public work within the meaning of the 
Davis-Bacon Act. The Department notes that to the best of its 
information, projects which are built in such a manner are currently 
rare, although they may become more common with advances in technology. 
It is not our intention that the proposed amendment to the definition 
of site of the work would create a major exception to the normal rule 
limiting the site of the work to the place where the building or work 
will remain when the construction is completed.
    The Department considers that the previously discussed court 
decisions, which involved material supply locations and the 
transportation between such locations and the construction site of the 
project, do not preclude Davis-Bacon coverage where significant 
portions of projects, such as bridges and dams, are actually being 
constructed at secondary locations.
    Just as we believe this situation was not contemplated when the 
Department's regulations were drafted, we believe that it was not 
contemplated by the various court decisions. See Ball, 24 F.3d at 1452 
(``the reasoning of Midway obviously bears on the validity of 
Sec. 5.2(l)(2) to the extent that the regulation purports to extend the 
coverage of the Davis-Bacon Act beyond the actual physical site of the 
building or public work under construction''). As pointed out by the 
Board in Bechtel, the courts' statements limiting coverage to work ``on 
the physical site of the public building or public work under 
construction,'' should not be interpreted as restricting coverage ``to 
the physical space defined by contours of the permanent structures that 
will remain at the close of work.''
    The Department, therefore, proposes a revision to section 5.2(l)(1) 
to include within the site of the work, secondary sites, other than the 
project's final resting place, which have been established specifically 
for the performance of the Davis-Bacon covered contract and at which a 
significant portion of the public building or work called for by the 
contract is constructed.

2. Coverage of Transportation--Section 5.2(j)

    Concerning transportation, section 5.2(j)(1)(iv) currently covers 
all transportation between the actual construction location and other 
locations dedicated to the project and considered a part of the site of 
the work within the meaning of section 5.2(l). The Department is 
proposing to amend section 5.2(j)(l) in two respects:
    First, the Department is proposing to amend section 5.2(j)(1)(iv) 
to conform to the appellate decisions, which held as a general matter 
that transportation of materials occurring off the actual construction 
site was not ``directly upon the site of the work,'' and thus not 
covered by Davis-Bacon provisions. Therefore, under this proposal, off-
site transportation of materials, supplies, tools, etc., ordinarily 
would not be covered. Such transportation would be covered only if the 
transportation is between the construction work site and a site located 
``adjacent or virtually adjacent'' to the construction site.
    In addition, in conjunction with the proposed amendment to section 
5.2(l)(1), discussed above, a new section 5.2(j)(1)(iv)(B) would 
provide that transportation of portion(s) of the building or work 
between a secondary covered construction site and the site where the 
building or work will remain when it is completed is subject to Davis-
Bacon requirements. It is the Department's view that under these 
circumstances the site of the work is literally moving between the two 
work sites, and therefore the laborers or mechanics who transport these 
portions or segments of the project are reasonably viewed as ``employed 
directly upon the site of the work.''
    The Department seek comments on these proposed regulatory changes 
to section 5.2(l) and section 5.2(j)(1), as set forth below.

IV. Executive Order 12866; Small Business Regulatory Enforcement 
Fairness Act; Unfunded Mandates Reform Act

    This proposed rule is not a ``significant regulatory action'' 
within the meaning of section 3(f) of Executive Order 12866. The rule 
is not expected to (1) have an annual effect on the economy of $100 
million or more or adversely affect in a material way the economy, a 
section of the economy, productivity, competition, jobs, the 
environment, public health or safety, or State, local, or tribal 
governments or communities; (2) create a serious inconsistency or 
otherwise interfere with an action taken or planned by another agency;
    (3) materially alter the budgetary impact of entitlements, grants, 
user fees, or loan programs or the rights and obligations of recipients 
thereof; or (4) raise novel legal or policy issues arising out of legal 
mandates, the President's priorities, or the principles set forth in 
the executive order. The modifications to regulatory language as 
proposed in this NPRM would limit coverage of off-site material and 
supply work from

[[Page 57274]]

Davis-Bacon prevailing wage requirements as a result of appellate court 
rulings. In addition, the proposed regulation would make a limited 
amendment to the site of the work definition to address an issue not 
contemplated under the current regulatory language--those instances 
where significant portions of buildings or works may be constructed at 
secondary sites which are not in the vicinity of the project's final 
resting place. It is believed that such instances will be rare, and 
that any increased costs which may arise on such projects would be 
offset by the savings due to the proposed limitations on coverage.
    The Department has similarly concluded that this proposed rule is 
not a ``major rule'' requiring approval by the Congress under the Small 
Business Regulatory Enforcement Fairness Act of 1996 (5 U.S.C. 801 et 
seq.). It will not likely result in (1) an annual effect on the economy 
of $100 million or more; (2) a major increase in costs or prices for 
consumers, individual industries, Federal, State or local government 
agencies, or geographic regions; or (3) significant adverse effects on 
competition, employment, investment, productivity, innovation, or on 
the ability of U.S.-based enterprises to compete with foreign-based 
enterprises in domestic or export markets.
    For purposes of the Unfunded Mandates Reform Act of 1995, this rule 
does not include any federal mandate that may result in excess of $100 
million in expenditures by state, local and tribal governments in the 
aggregate, or by the private sector. Furthermore, the requirements of 
the Unfunded Mandates Reform Act, 2 U.S.C. 1532, do not apply here 
because the proposed rule does not include a Federal mandate. The term 
Federal mandate is defined to include either a Federal 
intergovernmental mandate or a Federal private sector mandate. 2 U.S.C. 
658(6). Except in limited circumstances not applicable here, those 
terms do not include an enforceable duty which is a duty arising from 
participation in a voluntary program. 2 U.S.C. 658(7)(A). A decision by 
a contractor to bid on Federal and federally assisted construction 
contracts is purely voluntary in nature, and the contractor's duty to 
meet Davis-Bacon Act requirements arises from participation in a 
voluntary Federal program.

V. Executive Order 13132 (Federalism)

    The Department has reviewed this rule in accordance with Executive 
Order 13132 regarding federalism, and has determined that it does not 
have federalism implications. The rule does not have substantial direct 
effects on the States, on the relationship between the national 
government and the States, or on the distribution of power and 
responsibilities among the various levels of government.

VI. Regulatory Flexibility Analysis

    The Department has determined that the proposed regulation will not 
have a significant economic impact on a substantial number of small 
entities within the meaning of the Regulatory Flexibility Act. The 
proposal would implement modifications resulting from court decisions 
interpreting statutory language, which would reduce the coverage of 
Davis-Bacon prevailing wage requirements as applied to construction 
contractors and subcontractors, both large and small, on DBRA covered 
contracts. In addition, the proposed regulation would make a limited 
amendment to the site of the work definition to address an issue not 
contemplated under the current regulatory language--those instances 
where significant portions of buildings or works may be constructed at 
secondary sites which are not in the vicinity of the project's final 
resting place. It is believed that such instances will be rare, and 
that any increased costs which may arise on such projects would be 
offset by the savings due to the proposed limitations on coverage. The 
Department of Labor has certified to this effect to the Chief Counsel 
for Advocacy of the Small Business Administration. Notwithstanding the 
above, the Department has prepared the following Regulatory Flexibility 
Analysis:

(1) Reasons Why Action Is Being Considered

    The Department is issuing this NPRM to clarify the regulatory 
requirements concerning the Davis-Bacon Act's site of the work language 
in view of three appellate court decisions. These decisions concluded 
that the Department's application of its regulations to cover certain 
activities related to off-site facilities dedicated to the project was 
at odds with the Davis-Bacon Act language that limits coverage to 
workers employed ``directly upon the site of the work.'' This NPRM is 
therefore necessary to bring the Department's regulatory definitions of 
the statutory terms construction, prosecution, completion, and repair 
at 29 CFR 5.2(j), and site of the work at 29 CFR 5.2(l) into conformity 
with these court decisions.
    The Department is also issuing this NPRM in order to address 
situations that were not contemplated when the current regulations 
concerning site of the work were promulgated. This NPRM proposes to 
make clear under the Department's regulations that the Davis-Bacon 
Act's scope of coverage includes work performed at locations 
established specifically for the purpose of constructing a significant 
portion of a building or work, as well as transportation of portions of 
the building or work to and from the project's final resting place. 
These regulatory changes are necessitated by the development of new 
construction technologies, whereby major segments of a project can be 
constructed at locations some distance from where the permanent 
structure(s) will remain after construction is completed.

(2) Objectives of and Legal Basis for Rule

    These regulations are issued under the authority of the Davis-Bacon 
Act, 40 U.S.C. 276a, et seq., Reorganization Plan No. 14 of 1950, 5 
U.S.C. Appendix, and the Copeland Act, 40 U.S.C. 276c. The objectives 
of these regulations are to clarify the effects of three appellate 
court decisions (Midway, Ball, and Cavett) and eliminate any confusion 
they may have engendered in the Federal construction community, and to 
address a coverage issue not contemplated by the current regulations.

(3) Number of Small Entities Covered Under the Rule

    Size standards for the construction industry are established by the 
Small Business Administration (SBA), and are expressed in millions of 
dollars of annual receipts for affected entities, i.e., Major Group 15, 
Building Construction--General Contractors and Operative Builders, $17 
million; Major Group 16, Heavy Construction (non-building), $17 
million; and Major Group 17, Special Trade Contractors, $7 million. The 
overwhelming majority of construction establishments would have annual 
receipts under these levels. According to the Census, 98.7 percent of 
these establishments have annual receipts under $10 million. Therefore, 
for the purpose of this analysis, it is assumed that virtually all 
establishments potentially affected by this rule would meet the 
applicable criteria used by the SBA to define small businesses in the 
construction industry.

(4) Reporting, Recordkeeping, and Other Compliance Requirements of the 
Rule

    There are no additional reporting or recording requirements for 
contractors under the proposed rule. There may be rare instances where, 
pursuant to the NPRM, contractors, including small

[[Page 57275]]

entities, engaged in the construction of a major portion of a Davis-
Bacon project at a secondary site specifically established for such 
purpose would be required to comply with Davis-Bacon wage and 
recordkeeping requirements with respect to certain laborers and 
mechanics in circumstances where they currently are not covered by 
regulations issued under the Act.

(5) Relevant Federal Rules Duplicating, Overlapping, or Conflicting 
With the Rule

    There are currently no Federal rules that duplicate, overlap, or 
conflict with this proposed rule.

(6) Differing Compliance or Reporting Requirements for Small Entities

    The proposed rule contains no reporting, recordkeeping, or other 
compliance requirements specifically applicable to small businesses or 
that differ from such requirements applicable to the Davis-Bacon 
contracting industry as a whole. Such different treatment would not 
seem feasible since virtually all employers in the industry are small 
businesses.

(7) Clarification, Consolidation, and Simplification of Compliance and 
Reporting Requirements

    The primary purpose of the proposed rule is to clarify the 
application of Davis-Bacon requirements as a result of various 
appellate court decisions.

(8) Use of Other Standards

    The proposed regulation addresses only statutory coverage. It does 
not prescribe performance or design standards.

(9) Exemption From Coverage for Small Entities

    Exemption from coverage under this rule for small entities would 
not be appropriate given the statutory mandate of the Davis-Bacon Act 
that all contractors (large and small) performing on DBRA-covered 
contracts pay their workers prevailing wages and fringe benefits as 
determined by the Secretary of Labor.

VII. Document Preparation

    This document was prepared under the direction of John R. Fraser, 
Deputy Administrator, Wage and Hour Division, Employment Standards 
Administration, U.S. Department of Labor.

List of Subjects in 29 CFR Part 5

    Administrative practice and procedure, Government contracts, 
Investigations, Labor, Minimum wages, Penalties, Recordkeeping 
requirements, Reporting requirements, Wages.
    For the reasons set out in the preamble, Title 29, Part 5, is 
proposed to be amended as follows:

PART 5--LABOR STANDARDS PROVISIONS APPLICABLE TO CONTRACTS COVERING 
FEDERALLY FINANCED AND ASSISTED CONSTRUCTION (ALSO LABOR STANDARDS 
PROVISIONS APPLICABLE TO NONCONSTRUCTION CONTRACTS SUBJECT TO THE 
CONTRACT WORK HOURS AND SAFETY STANDARDS ACT)

    1. The authority citation for part 5 is revised to read as follows:

    Authority: 40 U.S.C. 276a-276a-7; 40 U.S.C. 276c; 40 U.S.C. 327-
332; Reorganization Plan No. 14 of 1950, 5 U.S.C.
    Appendix; 5 U.S.C. 301; 29 U.S.C. 259; and the statutes listed in 
Sec. 5.1(a) of this part.

    2. Section 5.2 is amended by revising paragraphs (j) and (l) to 
read as follows:


Sec. 5.2  Definitions.

* * * * *
    (j) The terms construction, prosecution, completion, or repair mean 
the following:
    (1) All types of work done on a particular building or work at the 
site thereof, including work at a facility which is deemed a part of 
the site of the work within the meaning of Sec. 5.2(l) by laborers and 
mechanics employed by a construction contractor or construction 
subcontractor (or, under the United States Housing Act of 1937; the 
Housing Act of 1949; and the Native American Housing Assistance and 
Self-Determination Act of 1996, all work done in the construction or 
development of the project), including without limitation--
    (i) Altering, remodeling, installation (where appropriate) on the 
site of the work of items fabricated off-site;
    (ii) Painting and decorating;
    (iii) Manufacturing or furnishing of materials, articles, supplies 
or equipment on the site of the building or work (or, under the United 
States Housing Act of 1937; the Housing Act of 1949; and the Native 
American Housing Assistance and Self-Determination Act of 1996, in the 
construction or development of the project);
    (iv)(A) Transportation between the site of the work within the 
meaning of Sec. 5.2(l)(1) and a facility which is dedicated to the 
construction of the building or work and deemed a part of the site of 
the work within the meaning of paragraph (l)(2) of this section; and
    (B) Transportation of portion(s) of the building or work between a 
site where a significant portion of such building or work is 
constructed, which is a part of the site of the work within the meaning 
of paragraph (l)(1) of this section, and the physical place or places 
where the building or work will remain.
    (2) Except for laborers and mechanics employed in the construction 
or development of the project under the United States Housing Act of 
1937; the Housing Act of 1949; and the Native American Housing 
Assistance and Self-Determination Act of 1996, and except as provided 
in paragraph (j)(1)(iv)(A) of this section, the transportation of 
materials or supplies to or from the site of the work by employees of 
the construction contractor or a construction subcontractor is not 
``construction'' (etc.) (see Building and Construction Trades 
Department, AFL-CIO v. United States Department of Labor Wage Appeals 
Board (Midway Excavators, Inc.), 932 F.2d 985 (D.C. Cir. 1991)).
* * * * *

[[Page 57276]]

    (l) The term site of the work is defined as follows:
    (1) The site of the work is the physical place or places where the 
building or work called for in the contract will remain; and any other 
site where a significant portion of the building or work is 
constructed, provided that such site is established specifically for 
the performance of the contract or project;
    (2) Except as provided in paragraph (l)(3) of this section, job 
headquarters, tool yards, batch plants, borrow pits, etc., are part of 
the site of the work, provided they are dedicated exclusively, or 
nearly so, to performance of the contract or project, and provided they 
are adjacent or virtually adjacent to the site of the work as defined 
in paragraph (l)(1) of this section;
    (3) Not included in the site of the work are permanent home 
offices, branch plant establishments, fabrication plants, tool yards, 
etc., of a contractor or subcontractor whose location and continuance 
in operation are determined wholly without regard to a particular 
Federal or federally assisted contract or project. In addition, 
fabrication plants, batch plants, borrow pits, job headquarters, tool 
yards, etc., of a commercial or material supplier, which are 
established by a supplier of materials for the project before opening 
of bids and not on the site of the work as stated in paragraph (l)(1) 
of this section, are not included in the site of the work. Such 
permanent, previously established facilities are not part of the site 
of the work, even where the operations for a period of time may be 
dedicated exclusively, or nearly so, to the performance of a contract.
* * * * *

    Signed in Washington, D.C., on this 18th day of September, 2000.
T. Michael Kerr,
Administrator.
[FR Doc. 00-24257 Filed 9-20-00; 8:45 am]
BILLING CODE 4510-27-P