[Federal Register Volume 66, Number 17 (Thursday, January 25, 2001)]
[Notices]
[Pages 7761-7763]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 01-2179]


-----------------------------------------------------------------------

ENVIRONMENTAL PROTECTION AGENCY

[FRL-6937-7]


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

AGENCY: Environmental Protection Agency (EPA).

ACTION: Notice of settlement.

-----------------------------------------------------------------------

SUMMARY: The Environmental Protection Agency (EPA) is publishing a 
final settlement agreement between EPA and the Building and 
Construction Trades Department, AFL/CIO (Building Trades) which will 
resolve a matter pending before the Department of Labor's (DOL) Wage 
and Hour Division Administrator. Under the settlement agreement, EPA 
will prospectively apply the Davis-Bacon Act's prevailing wage rate 
requirements in the Clean Water State Revolving Fund (CWSRF) program 
established in title VI of the Federal Water Pollution Control Act, as 
amended (more commonly known as the Clean Water Act (CWA)), 33 U.S.C. 
1381-1387, in the same manner as they applied before October 1, 1994. 
In exchange for EPA's commitment, Building Trades has agreed not to 
pursue any further action on this matter before DOL or any other 
Federal administrative agency, or in litigation.
    Title VI of the CWA authorizes EPA to award grants to capitalize 
state revolving funds from which states, in turn, award loans and other 
types of assistance for the construction of publicly-owned treatment 
works and other water quality projects. CWA section 602(b)(6) required 
publicly-owned treatment works funded with CWSRF assistance ``directly 
made available by [capitalization grants]'' that were ``constructed in 
whole or in part before fiscal year 1995'' (emphasis added) to comply 
with the requirements of a number of other CWA provisions. Among the 
provisions was CWA section 513, which applies Davis-Bacon Act 
requirements to treatment works for which grants are made under the 
CWA.
    EPA interpreted the language of CWA section 602(b)(6) as limiting 
the application of the Davis-Bacon Act and other requirements to CWSRF-
funded treatment works projects ``constructed in whole or in part 
before fiscal year 1995'', and, in an August 8, 1995, memorandum, 
announced that these requirements would not apply to CWSRF-assisted 
projects that begin construction on or after October 1, 1994. In 1997, 
the Building Trades asked the DOL Wage and Hour Division to rule that 
the requirements of the Davis-Bacon Act continue to apply to treatment 
works projects funded with CWSRF loans that began construction on or 
after October 1, 1994. The Building Trades argued that the Davis-Bacon 
Act requirement applied to CWSRF-funded projects as long as Congress 
appropriated funds for the program. EPA responded in opposition to the 
Building Trades request for ruling.
    After closely considering the relationship of CWA section 513 and 
CWA section 602(b)(6) and the arguments of the Building Trades in its 
request for ruling, EPA became persuaded of the appropriateness of the 
view that CWA section 513 imposes a continuing, independent obligation 
on the Agency to ensure that Davis-Bacon Act requirements apply to any 
grants made under the CWA for treatment works, including capitalization 
grants made under title VI of the CWA. The language of CWA section 
602(b)(6) does not relieve the Agency of this obligation. Furthermore, 
as a matter of policy, the Agency has determined that prevailing wage 
rate requirements applicable to federally-assisted construction 
projects should continue to apply to federally-assisted treatment works 
construction in the CWSRF program. Consequently, EPA decided to settle 
the matter with the Building Trades and provided the public an 
opportunity to comment on a proposed settlement agreement, which was 
published in the Federal Register

[[Page 7762]]

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

Public Comments on the Proposed Settlement Agreement

    EPA received 25 comments on the proposed settlement agreement. Most 
commentators stated that the Agency's original position was correct and 
disputed the legal basis for reimposing the Davis-Bacon Act in the 
CWSRF program. Although they varied in detail, the arguments of the 
commentators generally contained these points: CWA section 602(b)(6) 
clearly sunsetted the Davis-Bacon Act in the CWSRF program; continuing 
appropriations for the program after FY 1995 did not extend that sunset 
date; CWA section 513 does not place a continuing obligation on the 
Agency to impose the Davis-Bacon Act requirements in the program 
because, by its plain language, CWA section 513 applies only to direct 
grants for treatment works construction.
    The states, in particular, complained that reimposing the Davis-
Bacon Act requirement would create hardships for the CWSRF programs, 
including increased labor costs for assistance recipients and 
administrative burdens on both the recipients and the states. State 
commentators also requested a delay in the implementation of the 
agreement's terms to allow time to notify potential borrowers and to 
more closely coincide with state planning schedules. Several states 
with state prevailing wage rate laws said that the Davis-Bacon Act 
requirements are more burdensome and costly on businesses and state 
agencies than their similar state requirements without bringing 
additional benefit for workers. They suggested that in situations in 
which states had substantially similar prevailing wage rate 
requirements, that states be given discretion to substitute state 
procedures for federal procedures.

Response to Comments

    As the June 22, 2000, Federal Register notice stated, the Agency's 
original position on the Davis-Bacon Act and the CWSRF program 
``rest(ed) on a reasonable legal interpretation.'' 65 FR at 38828. 
However, the legal basis for reimposing the Davis-Bacon Act 
requirements is sound and, as a matter of policy, it is proper for 
prevailing wage rates to apply to construction projects that are, for 
all intents and purposes, federally-assisted.
    Reimposing the Davis-Bacon Act requirements may increase 
construction costs for many CWSRF recipients, but the levels of those 
cost increases vary widely and are often insignificant. Although EPA is 
interested in streamlining administrative requirements and reducing 
implementation costs, state prevailing wage rate laws cannot substitute 
for the requirements of CWA section 513.
    EPA has made one change to the settlement agreement in response to 
state comments. In order to allow states more time to notify borrowers 
of the requirements, and to more closely match the yearly CWSRF 
planning schedules in most states (July 1 to June 30), the Agency has 
changed the date for implementing the Davis-Bacon Act requirement from 
January 1, 2001, until July 1, 2001. All capitalization grants awarded 
on or after July 1, 2001 will contain a condition requiring the states 
to ensure that the Davis-Bacon Act requirements will be applied to 
publicly owned treatment works receiving CWSRF assistance under those 
agreements in the same manner as the requirements were applied to 
projects initiated before October 1, 1994. Building Trades has agreed 
to this revision, which is reflected in the settlement agreement 
reprinted below.

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

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

    Dated: January 19, 2001.
Gary S. Guzy,
General Counsel.
    In the matter of: Application of Labor Standard Provisions In the 
Clean Water Act's State Revolving Fund Program

Settlement Agreement

    Whereas, title VI of the Federal Water Pollution Control Act, as 
amended (more commonly known as the Clean Water Act (CWA)), 33 U.S.C. 
1381-1387, authorizes the Environmental Protection Agency (EPA) to make 
grants to states to capitalize Clean Water State Revolving Funds 
(CWSRF), from which the states, in turn, make loans and other types of 
assistance for the construction of publicly owned treatment works and 
other water quality projects and activities;
    Whereas, section 602(b)(6) of the CWA, 33 U.S.C. 1382(b)(6), 
requires states to ensure that publicly owned treatment works 
``constructed in whole or in part before fiscal year 1995 with CWSRF 
funds directly made available by'' capitalization grants comply with 
sixteen provisions of the CWA, including section 513 of the CWA, 33 
U.S.C. 1372, which applies Davis-Bacon Act requirements to treatment 
works for which grants are made under the CWA;
    Whereas, EPA has not required states to ensure that publicly owned 
treatment works that began construction on or after October 1, 1994, 
with CWSRF assistance will comply with the requirements identified in 
section 602(b)(6) of the CWA, including the requirements of the Davis-
Bacon Act;
    Whereas, the Building and Construction Trades Department, AFL-CIO, 
(Building Trades), challenged this position and requested a ruling by 
John R. Fraser, Acting Administrator of the Department of Labor's (DOL) 
Wage and Hour Division, that the requirements of the Davis-Bacon Act 
continued to apply to the construction of publicly owned treatment 
works receiving CWSRF assistance as long as Congress appropriates funds 
for grants under title VI of the CWA.
    Whereas, Congress has continued to appropriate funds for grants to 
states for their CWSRF programs under the CWA;
    Whereas, EPA replied in opposition to the Building Trades request 
for ruling;
    Whereas, On June 14, 2000, EPA published this settlement agreement 
in the Federal Register along with a request for the public to comment 
on whether EPA should again apply section 513 of the CWA to treatment 
works projects assisted with CWSRF funds directly made available by 
capitalization grants, and consulted with state and local government 
officials on the terms of this agreement;
    Whereas, EPA has carefully considered the comments received on the 
Federal Register Notice and the comments provided by state and local 
governments during the consultation process;
    And whereas, EPA and the Building Trades have determined that it is 
in the public interest to resolve this matter expeditiously;
    It is therefore agreed that,
    1. EPA will issue a memorandum to its Regional Water Division 
Directors directing them to include a condition in all capitalization 
grant agreements entered into between EPA and the states under title VI 
of the CWA, on or after July 1, 2001, requiring the states to ensure 
that the requirements of section 513 of the CWA will be applied to 
publicly owned treatment works receiving CWSRF assistance under those 
agreements in the same manner as section 513 requirements were applied 
before October 1, 1994.
    2. The grant condition will require states to ensure that the 
requirements of section 513 of the CWA, and no other requirements 
identified in section

[[Page 7763]]

602(b)(6) of the CWA, will apply only to publicly-owned treatment works 
that are funded with funds ``directly made available by'' grants under 
title VI of the CWA, as that phrase is defined at 40 CFR 
Sec. 35.3105(g).
    3. The grant condition will be included in all capitalization grant 
agreements entered into between EPA and the states under title VI of 
the CWA on or after July 1, 2001;
    4. The Building Trades and EPA will submit this agreement to the 
Administrator of the Wage and Hour Division, DOL, with a joint request 
to dismiss the administrative proceeding on the Building Trades 
Department's request for ruling.
    5. The Building Trades will not pursue any further action on the 
matter hereby resolved in this settlement agreement, either before DOL 
or any other Federal administrative agency, or in litigation.
    6. In the event that EPA does not accomplish one or more of the 
items specified in Paragraphs 1, 2 and 3 above, the Building Trades 
sole remedy will be to reinstitute its request for ruling before the 
DOL.
    7. Nothing in the terms of this agreement shall be construed to 
limit or modify the discretion accorded EPA by the CWA or by general 
principles of administrative law.
    8. The undersigned representatives of each party certify that they 
are fully authorized by the parties they represent to bind the 
respective parties to the terms of this settlement agreement. This 
settlement agreement will be deemed to be executed when it has been 
signed by the representatives of the parties below.
    Agreed:

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

    Dated: January 17, 2001.

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

[FR Doc. 01-2179 Filed 1-24-01; 8:45 am]
BILLING CODE 6560-50-P