Davis-Bacon Act Coverage and the State Revolving Fund Program Under the Clean Water Act

Congressional research reportMar 26, 2008

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Davis-Bacon Act Coverage and the State

Revolving Fund Program Under the Clean

Water Act

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March 26, 2008

Congressional Research Service

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www.crs.gov

RL31491

CRS Report for Congress

Prepared for Members and Committees of Congress

Davis-Bacon Act Coverage and the State Revolving Fund Program

Summary

The Davis-Bacon Act (DBA) requires, among other things, that not less than the locally

prevailing wage be paid to workers employed, under contract, on federal construction work “to

which the United States or the District of Columbia is a party.” Congress has added DBA

prevailing wage provisions to more than 50 separate program statutes.

In 1961, a DBA prevailing wage requirement was added to the Federal Water Pollution Control

Act (P.L. 87-88), now known as the Clean Water Act (CWA), which assists in construction of

municipal wastewater treatment works. In 1987, Congress moved from a program of federal

grants for municipal pollution abatement facilities to a state revolving loan fund (SRF)

arrangement in which states would be expected to contribute an amount equal to at least 20% of

SRF capitalization funding. The SRFs were expected to remain as a continuing and stable source

of funds for construction of treatment facilities. And, Congress specified that certain

administrative and policy requirements (including Davis-Bacon) were to be annexed from the

core statute and would apply to treatment works “constructed in whole or in part before fiscal

year 1995” with SRF assistance. By October 1994, under the 1987 amendments, it was expected

that federal appropriations for SRFs would end.

After 1987, Congress variously reconsidered the CWA and the SRF program but made no further

authorizations. It did, however, contrary to expectation when the 1987 legislation was adopted,

continue to appropriate funds for SRF pollution abatement projects. Thus, a conflict arose. Did

the administrative and policy requirements associated with federal funding (inter alia, the

prevailing wage requirement) continue to apply? If so (or if not), upon what legal foundation? In

1995, the Environmental Protection Agency (EPA) ruled that prevailing wage rates (DavisBacon) would no longer be required on SRF projects. The Building and Construction Trades

Department (BCTD), AFL-CIO, protested.

What happened after 1994 is not entirely clear: that is, whether prevailing rates were actually

paid. In the spring of 2000, EPA reversed its position and came to conclude that Davis-Bacon did

indeed apply. Following notice in the Federal Register (and review of submissions from

interested parties), EPA entered into a “settlement agreement” with the BCTD. It would enforce

DBA rates on CWA projects effective July 1, 2001. But then EPA moved the effective date back,

to late summer—and, then, to October. Thereafter, it seems, EPA was silent.

During recent years, Congress has increasingly considered funding mechanisms other than direct

appropriations for public construction: e.g., joint federal and state revolving funds, loan

guarantees, tax credits, etc. This report is a case study of the application of DBA requirements to

one such mechanism, the CWA/SRFs. The question of DBA application to the SRFs continues in

the 110th Congress.

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Davis-Bacon Act Coverage and the State Revolving Fund Program

Contents

Introduction ................................................................................................................................1

Background ................................................................................................................................2

Linking Davis-Bacon to the Clean Water Act...............................................................................2

The 1961 Amendments and Their Aftermath .........................................................................2

Emergence of the State Revolving Fund Concept ..................................................................4

Restructuring the CWA Program .....................................................................................4

Questions of Interpretation and Intent..............................................................................6

Charting a New Federal Role, 1987-1995....................................................................................7

The End Draws Near? ...........................................................................................................9

Interim Assessment .........................................................................................................9

New Legislative Proposals ............................................................................................ 10

The Committee Reports ................................................................................................ 10

Stalemate ...................................................................................................................... 11

Consideration in the House, 1995........................................................................................ 12

Moving On: 1995 and Beyond .................................................................................................. 13

The Davis-Bacon/CWA Issue Begins to Form ..................................................................... 14

A Gradual Change of Policy at EPA .................................................................................... 16

Tentative Compromise Is Reached ................................................................................ 16

A Call for Public Comment ........................................................................................... 17

A New EPA Policy Enunciated ............................................................................................ 20

Another Reversal at EPA? ................................................................................................... 21

Some Considerations of Policy.................................................................................................. 22

Review of the Davis-Bacon Statute ..................................................................................... 22

Davis-Bacon and the Clean Water Act ................................................................................. 22

Federal Funding and Administrative Requirements? ...................................................... 23

The Concept: “to which the United States ... is a party” ................................................. 23

The Complexities of Regulatory Enforcement ............................................................... 24

Davis-Bacon Act and the CWA/SRFs in the 110th Congress ....................................................... 25

Preliminaries and an Early Hearing ..................................................................................... 25

A New Bill Introduced (H.R. 720)....................................................................................... 26

Subcommittee and Committee Action............................................................................ 26

Report from the Subcommittee: H.Rept. 110-30 ............................................................ 26

The Bill Considered in the House.................................................................................. 27

Consideration of H.R. 720 by the Senate ............................................................................. 29

Contacts

Author Contact Information ...................................................................................................... 29

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Davis-Bacon Act Coverage and the State Revolving Fund Program

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. 1

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.

The Davis-Bacon Act has been codified at 40 U.S.C. 276a to 276a-7; it has now been recodified at 40 U.S.C. 31413148.

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Davis-Bacon Act Coverage and the State Revolving Fund Program

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.2

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.”3 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.4

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. 5 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.”6

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.”7 When new CWA legislation was reported in the House in April 1961, it provided,

Concerning water quality issues, see CRS Report RL33800, Water Quality Issues in the 110th Congress: Oversight

and Implementation, by (name redacted).

P.L. 74-403.

For an historical sketch of the Davis-Bacon Act, see CRS Report 94-408, The Davis-Bacon Act: Institutional

Evolution and Public Policy, by (name redacted).

Congressional Quarterly Almanac, 1960. Washington, Congressional Quarterly Inc., 1960, pp. 250-251. (Hereafter

cited as CQ Almanac).

Veto of Bill To Amend the Federal Water Pollution Control Act. February 23, 1960. Public Papers of the Presidents

of the United States: Dwight D. Eisenhower, 1960-1961. Washington, U.S. Govt. Print. Off., 1961. pp. 208-209.

President Kennedy’s Special Message on Natural Resources, February 23, 1961, reprinted in CQ Almanac, 1961, p.

(continued...)

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Davis-Bacon Act Coverage and the State Revolving Fund Program

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....”8

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.”9 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.”10 Though other aspects of

the legislation were subject to extended debate, no one seemed seriously to dispute the

requirement for DBA coverage.11

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.12 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.13

With the House and Senate in agreement, Davis-Bacon was not an issue in the conference

report.14 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.15 During Senate hearings on

(...continued)

877.

U.S. Congress. House. Committee on Public Works. Federal Water Pollution Control Act Amendments of 1961.

Report to Accompany H.R. 6441. H.Rept. 87-306, 87th Cong., 1st Sess. Washington, U.S. Govt. Print. Off., l961. pp. 8,

15, and 37.

Congressional Record, May 3, 1961, p. 7144.

Ibid., p. 7161-7162.

Ibid., p. 7196.

Letter from Secretary Goldberg to Chairman Chavez, May 8, 1961, reprinted in U.S. Congress. Senate. Committee

on Public Works. Water Pollution Control. Hearings before a Subcommittee of the Committee on Public Works, 87th

Cong., 1st Sess., May 8 and 9, 1961. Washington, Govt. Print. Off., 1961. Pp. 67-68, 186. (Hereafter cited as Senate

Public Works, Water Pollution Control).

Ibid., p. 105.

U.S. Congress. House. Federal Water Pollution Control Act Amendments of 1961. Conference Report to Accompany

H.R. 6441. H.Rept. 87-675, 87th Congress, 1st Sess. Washington, Govt. Print. Off., July 6, 1961. See also

Congressional Record, July 13, 1961, pp. 12471-12496, and July 14, 1961, pp. 12565-12567.

P.L. 89-234, Section 4(g). The Copeland Act requires employers to file payroll records to show that the appropriate

(continued...)

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Davis-Bacon Act Coverage and the State Revolving Fund Program

the program in 1971, Davis-Bacon was mentioned only in passing;16 and when, the following

year, Congress restructured the act with passage of P.L. 92-500, the Davis-Bacon and “antikickback” provisions remained in place. Notwithstanding authorization of substantial

expenditures for construction of state and local wastewater treatment facilities under the 1972

legislation,17 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. 18

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.19

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. 20 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....”21 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

(...continued)

wages, without unauthorized deductions, have been paid.

U.S. Congress. Senate. Committee on Public Works, Subcommittee on Air and Water Pollution. Water Pollution

Control Legislation. Hearings on S. 75 (and other bills), 92nd Cong., 1st Sess., March 18, 19, 22, 23, and 24, 1971. p.

662.

See CQ Almanac, 1972. p. 708.

U.S. Congress. House. Committee on Public Works and Transportation, Subcommittee on Water Resources. Possible

Amendments to the Federal Water Pollution Control Act. Hearings. 99th Cong., 1st Sess., April 25 and 30, 1985, p. 311.

U.S. Congress. Senate. Committee on Environment and Public Works, Subcommittee on Environmental Pollution.

Amending the Clean Water Act. Hearings on S. 53 and S. 652, 99th Cong., 1st Sess., March 26, 1985, p. 5. (Hereafter

cited as Senate Environmental Pollution Subcommittee, Amending the Clean Water Act).

U.S. Congress. House. Committee on Public Works and Transportation, Subcommittee on Water Resources. Possible

Amendments To the Federal Water Pollution Control Act. Hearings. 99th Cong., 1st Sess., April 25 and 30, 1985, p. 312.

(Hereafter cited as House Water Resources Subcommittee, Possible Amendments to the Federal WPCA.)

Senate Environmental Pollution Subcommittee, Amending the Clean Water Act, pp. 24-25.

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Davis-Bacon Act Coverage and the State Revolving Fund Program

revenues,” he urged. “Remove the requirement that they be treated as Federal funds ad

infinitum.”22

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.23 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.24

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. 25

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.26

Early in the 100th 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.27 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.”28

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....

House Water Resources Subcommittee, Possible Amendments to the Federal WPCA, p. 312.

Congressional Record, June 12, 1985, p. 15301-15326; June 13, l985, p. 15616-15678; July 22, 1985, p. l9846l9865; and July 23, 1985, p. l9993-20112. See also: CQ Almanac, l985, pp. 204-208; and CQ Almanac, l986, pp. 136137.

Congressional Record, October 15, 1986, p. 31582. H.Rept. 99-1004, Conference Report on S. 1128, Water Quality

Act of l986, is reprinted here in full, pp. 31577-31630.

Congressional Record, October 15, 1986, pp. 31954-31975. See also Congressional Record, October 15, 1986, pp.

31608-31609; and October 16, 1986, pp. 32390 and 32407.

CQ Almanac, 1986, pp. 136-137.

Congressional Record, January 8, l987, pp. 976, 985 and 990.

Ibid., pp. 991, 994, and 1005.

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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.29 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. 30

On February 3 and 4, 1987, the House and Senate voted to override the President’s veto. H.R. 1

became P.L. 100-4.31 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 99th 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 99th 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.”32 Senator George Mitchell (D-ME) explained the measure in the Senate in

almost identical language. 33 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 99th 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

Ibid., p. 991, and January 14, 1987, p. 1269.

Public Papers of the President of the United States. Ronald Reagan, 1987. Washington, Govt. Print. Off., 1989. Pp.

95-96.

Congressional Record, February 3, 1987, pp. 2505-2516; and February 4, 1987, pp. 2795-282. See also CQ Almanac,

1987, pp. 291-296.

Congressional Record, October 15, 1986, pp. 31608.

Congressional Record, October 16, 1986, pp. 32390.

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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 99th Congress nor early in the 100th 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?34

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. 35

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.

The 100th Congress may, arguably, have seen no need to reaffirm prevailing wage coverage, taking coverage for

granted. Or, conversely, it might have added specific language stating that, after 1994, the DBA would not apply to

SRF-funded construction; but it did not do so. The target date was, after all, nearly seven years off—and, surely, there

would be time to revisit the act. How much weight should be given the absence of language overturning longestablished public policy?

An issue at least since the later 1950s, a major controversy erupted with the 1979 GAO report, The Davis-Bacon Act

Should Be Repealed. (U.S. Government Accounting Office, HDR-79-18. Washington, U.S. Govt. Print. Off., April 27,

1979.) The report led to hearings by three separate committees of Congress. Projected administrative reform (and

litigation) then continued, in some degree, into the Clinton Administration.

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Davis-Bacon Act Coverage and the State Revolving Fund Program

After that there is a revolving loan fund to sustain the program.”36 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).37

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.”38 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.”39 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.40

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.”41 (Italics added.)

Congressional Record, July 12, 1988, pp. 17658.

Congressional Record, May 15, 1991, pp. 11034 and 11032. See Section 28 of S. 1081.

U.S. Congress. Senate. Committee on Environment and Public Works. Subcommittee on Environmental Protection.

Water Pollution Prevention and Control Act of 1991. Hearings, 102nd Cong., 1st Sess., May 21, June 13, July 9, 17, and

18, 1991. Pp. 31 and 62.

Ibid., pp. 267, 275, and 336. Italics added.

Ibid., pp. 917-918.

Congressional Record, February 7, 1992, pp. 2129-2130.

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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.”42

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.43

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 CWArelated 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.44 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 DavisBacon 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.”45

Ibid.

CQ Almanac, 1991, pp. 212-213.

U.S. General Accounting Office. Water Pollution: States’ Progress in Developing State Revolving Loan Fund

Programs. GAO/RCED-91-87. Washington, U.S. Govt. Print. Off., March 1991. Pp. 3 and 8; and U.S. General

Accounting Office. Water Pollution: State Revolving Funds Insufficient to Meet Wastewater Treatment Needs.

GAO/RCED-92-35. Washington, U.S. Govt. Print. Off., January 1992. Pp. 12, 15, and 20.

U.S. Environmental Protection Agency. State Revolving Fund (SRF): Final Report To Congress. Washington, Govt.

Print. Off., October 1991. pp. 1-7 and 11-12. See also: Fraundorf, Martha Norby, John P. Farrell, and Robert Mason,

Effect of the Davis-Bacon Act on Construction Costs in Non-Metropolitan Areas of the United States. Corvallis:

Department of Economics, Oregon State University, January 1982. 41 p.

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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.”46 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.47

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.”48

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. 49 Several witnesses appeared to reflect GAO assertions: namely, that small

communities might benefit through exemption from specific requirements “including the DavisBacon Act.” Generally, through the 1700 pages of testimony, labor standards were not at issue.50

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

Congressional Record, June 15, 1993, p. 12754.

In introductory remarks, neither Senators Chafee nor Baucus made reference to Davis-Bacon. See Congressional

Record, June 15, 1993, pp. 12726-12757.

U.S. Congress. Senate. Committee on Environment and Public Works, Subcommittee on Clean Water, Fisheries, and

Wildlife. Reauthorization of the Clean Water Act. Hearings, 103rd Cong., 1st Sess., June 16, 23; July 1, 14, 27; August

4, 5; and September 15, 1993. p. 312.

Ibid., p. 348. Marino, here, was presenting options.

Ibid., pp. 332, 344, 348-349, 360, 407, 412, and 415-417. One witness suggested that dispensing with the

administrative regulations (presumably, including the DBA), would allow communities to get “more bang for the

bucks.” The inference was clear: paying lower wages would stretch tax dollars a bit further. The stated purpose of the

Davis-Bacon Act, however, was to maintain at least the locally prevailing wage structure.

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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.51

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.52 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 3.53

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.54

Stalemate

Numerous contentious issues were associated with the proposed environmental legislation during

the 103rd 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

U.S. Congress. Senate. Committee on Environment and Public Works. Water Pollution Prevention and Control Act

of 1994. Report to accompany S. 2093. S.Rept. 103-257, 103rd Cong., 2nd Sess. Washington, U.S. Govt. Print. Off.,

May 10, 1994. p. 11.

Ibid., pp. 13-20.

Ibid., pp. 164-165. Senators Smith, Dirk Kempthorne (R-ID), and Lauch Faircloth (R-NC) voted in opposition.

Ibid., p. 453. During the spring of 1994, the Senate had under consideration amendments to the Safe Drinking Water

Act (S. 2019, 103rd Congress) which included a provision for Davis-Bacon coverage of loans from state revolving

funds. When confronted with floor amendments to strike DBA coverage from that program, the Senate three times

rejected that option, leaving DBA coverage in the legislation. See Congressional Record, May 17, 1994, pp. S5806S5811; May 18, 1994, pp. S5897-S5899, S5900-S5901, and S5909-S5910; and U.S. Congress. Senate. Committee on

Environment and Public Works. Safe Drinking Water Act Amendments of 1994. Report to accompany S. 2019. S.Rept.

103-250, 103rd Cong., 2nd Sess., Washington, U.S. Govt. Print. Off., April 14, 1994. pp. 11 and 71-72. Although

approved by the Senate, S. 2019 died at the close of the 103rd Congress.

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the remainder of the 20th century an into the 21th century, no further reauthorization for the Clean

Water Act would be adopted.55

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....”56 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.57

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.”58 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. 59 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

CQ Almanac, 1994, pp. 241-243.

U.S. Congress. House. Committee on Transportation and Infrastructure. Subcommittee on Water Resources and

Environment. Reauthorization of the Federal Water Pollution Control Act. Hearings. 104th Cong., 2nd Sess. [sic.],

February 9, 16, 21, and 25, 1995, March 7, 9, and 11, 1995. Pp. 62. (Hereafter cited House Transportation and

Infrastructure Subcommittee, Reauthorization of Federal Water Pollution Control Act).

Ibid., p. 152. Marchetti provided no documentation for his claim nor did he attempt to disaggregate impacts: i.e., to

separate any Davis-Bacon costs from those associated with other administrative requirements.

House Transportation and Infrastructure Subcommittee. Reauthorization of Federal Water Pollution Control Act, p.

256. In a statement for the record, p. 316, McElwee affirmed:

The Davis-Bacon Act unnecessarily raises the cost of federal construction by an average of 5-15%

with cost in rural areas being inflated by as much as 25-38%. ... even worse, these figures do not

take into account the burden that Davis-Bacon requirements impose on states and localities.”

(Italics added.)

McElwee seems to mean total project costs, not just labor costs. No source was offered for this assertion nor were

supporting data provided.

House Transportation and Infrastructure Subcommittee. Reauthorization of Federal Water Pollution Control Act, pp.

259-261.

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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).”60

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.”61 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.”62 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. 63 It died in the Senate at the close of the 104th

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.

Ibid., pp. 267, and 343-344. Prime also endorsed legislation (H.R. 500 of the 104th Congress) that would have

repealed the Davis-Bacon and Copeland Acts.

U.S. Congress. House. Committee on Transportation and Infrastructure. Clean Water Amendments of 1995. Report

on H.R. 961. H.Rept. 104-112, 104th Cong., 1st Sess. Washington, U.S. Govt. Print. Off., May 3, 1995. Pp. 164.

The implications of the changes proposed in H.R. 961 may not be entirely clear. In a letter to EPA Administrator

Carol Browner, August 3, 2000, Representative Shuster would recall: “... H.R. 961—which I was the lead sponsor of

and which passed the House in 1995—included specific provisions which had the effect of reapplying Davis-Bacon to

the Clean Water SRF.” He added: “No one—including the Administration—commented that EPA already had

sufficient legal authority to effectuate this policy change thereby making these provisions unnecessary.” It is possible

others thought there was no need for comment if the amended statute merely extended the Davis-Bacon requirement, as

it stood, while deleting certain other administrative requirements—and deleting a consideration of time (“before fiscal

year 1995”) that was no longer relevant.

Congressional Record, May 16, 1995, p. 13094.

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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). 64 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).”65 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.”66

The Section 602(b)(6) requirements, including the Davis-Bacon provision, are variously referred to in the literature

as the “specific requirements” or the “equivalency requirements.”

Memorandum from Michael B. Cook, Director, Office of Wastewater Management, U.S. Environmental Protection

Agency, to Water Management Division Directors, August 8, 1995.

Denise Harris, Assistant Counsel, EPA Region 3, to Susan Jordan, Staff Attorney, U.S. Department of Labor,

January 28, 1997 (with enclosure). The Region III (EPA) directive, quoted here, was simple draft language but,

(continued...)

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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 DavisBacon 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.67

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.”68

(...continued)

presumably, represented the perspective of the regional office at that juncture.

Robert A. Georgine to John R. Fraser, Administrator, Wage and Hour Division, U.S. Department of Labor, April 30,

1997.

Michael B. Cook, Director, Office of Wastewater Management, EPA, to Ethel P. Miller, Office of Enforcement

Policy, Government Contracts Team, DOL, October 29, 1998. While Title VI affirms that DBA does apply prior to

FY1995, it does not state that it will not apply to subsequent work. Arguably, it awaits further action by Congress.

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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.”69

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-

Geoff Cooper, Finance & Operations Law Office, U.S. EPA, to Yellig, May 22, 2000. Where an interested party

believes that the DBA has been mis-applied, a formal appeals procedure exists within the Department of Labor: a

process that has, on occasion, led to judicial redress.

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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 ....”70

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). 71 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.

Federal Register, June 22, 2000, p. 38828-38830.

Cook’s argument is lengthy, but he observes in part: “...the application of section 513 is limited. It applies the DavisBacon Act only to treatment works receiving grants from the Agency. Section 602(b)(6) merely extends this otherwise

limited application to certain SRF-funded projects for a certain period of time. EPA’s construction of the clear direction

in section 602(b)(6) did nothing to disturb the application of section 513. It continues to apply to ‘treatment works for

which grants are made under (the CWA)’ but not to grants for capitalizing State funds.” See Cook to Miller, October

29, 1998, cited above.

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Others argued for or against the Davis-Bacon Act per se—which, though interesting, added little

insight with respect to the actual settlement. 72

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.”73

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.”74

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).75 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.”76

Reaction was not so one-sided as the numbers might suggest. The BCTD presented a single statement on behalf of

“the fifteen national and international labor organizations” affiliated with it. The Association of State and Interstate

Water Pollution Control Administrators presented testimony in its own behalf—but a number of individual state

agencies presented testimony independently.

Honorable Bud Shuster to Carol Browner, Administrator, U.S. EPA, August 3, 2000.

Honorable William Goodling, et al., to Carol Browner, July 31, 2000.

The Heavy Highway Contractors Association supported the EPA/AFL-CIO settlement and the “independent

obligation” under Section 513 “to apply DBA to SRF funded wastewater projects.” James Piazza, Jr., Legislative

Liaison, Heavy Highway Contractors Association, to Geoff Cooper, Office of General Counsel, U.S. EPA, August 4,

2000.

William Isokait, Counsel, Labor & Employment Law, AGC, to Cooper, August 4, 2000.

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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.”77

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.78 That view was echoed by a number of witnesses for the states.79 Some questioned why

EPA would act at all. “It has been known to Congress since the deadline passed that the DavisBacon Act was not being applied” and Congress had taken “no action ... to reinstate” the

requirement. 80 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.”81

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.82

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.”83

Charles Maresca, Jr., Director, Legal and Regulatory Affairs, ABC, to Cooper, August 7, 2000. Albert Miller,

President, National Society of Professional Engineers, August 15, 2000, to Cooper, mused: “... NSPE can only

conclude that the decision is not a matter of policy but politics, this being an election year.”

Robbi Savage, Association of State and Interstate Water Pollution Control Administrators, to Cooper, August 8,

2000.

Mike Linder, Director, State of Nebraska Department of Environmental Quality, to Cooper, undated; Russell

Harding, Director, State of Michigan Department of Environmental Quality, to Cooper, July 14, 2000; and Daniel Law,

Executive Director, Colorado Water Resources & Power Development Authority, to Cooper, July 21, 2000.

Chris Matthews, Chris Matthews Construction, Inc., to Cooper, July 20, 2000.

S. W. Daignault, P.E., City Manager, City of Cape Coral, Florida, to Cooper, August 4, 2000. Chris Matthews, op.

cit., observed in the same spirit: “Since most of the wage determinations used [for Davis-Bacon purposes] are several

years old, and the construction skilled labor market has been tightening, ma[n]y of the wage determinations prescribe

wages which are lower than those current to the market.”

Don Ostler, Director Division of Water Quality, Utah Department of Environmental Quality, to Cooper, July 12,

2000; and J. Dale Givens, Secretary State of Louisiana Department of Environmental Quality, to Cooper, July 31,

2000.

Douglas Benevento, Director, Environmental Programs, Colorado Department of Public Health and Environment, to

Cooper, July 18, 2000.

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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....”84 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.85

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.”86 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....”87

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.’”88

A New EPA Policy Enunciated

EPA’s “final settlement agreement” with the BCTD appeared in the Federal Register of January

25, 2001.89 First. EPA explained that, under the settlement, it would “prospectively apply the

Edward C. Sullivan, President, Building and Construction Trades Department, AFL-CIO, to Cooper, August 4, 2000,

transmitting the BCTD statement. Cite is to p. 1 of the BCTD statement. The phrases, “assisted by,” “made directly

available by,” and “capitalization grants under Title VI,” may benefit from amplification.

Ibid., p. 7. Bolding in the original.

Ibid., p. 9. Bolding in the original.

Ibid., p. 10.

Ibid., p. 10-11.

The settlement agreement was signed by Gary S. Guzy, General Counsel, EPA, on January 11, 2001, and by Edward

(continued...)

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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.”90

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.”91 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

(...continued)

C. Sullivan of the BCTD on January 17, 2001.

Federal Register, January 25, 2001, p. 7761-7763. The settlement does not contain a definition section. Both the

settlement and EPA explanation of it contain phrasing that may need more careful legal analysis than given to it here.

Given the long history of litigation with respect to the Davis-Bacon Act, one might be excused for questioning the

meaning of even the most simple and direct language and the intent of its authors.

Statement, Davis-Bacon and the EPA, website of the Associated Builders and Contractors http://www.abc.org,

October 26, 2001.

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Davis-Bacon Act Coverage and the State Revolving Fund Program

funds” was a top legislative priority for the 107th Congress.92 For EPA, “wastewater

infrastructure” was reportedly a top budget concern. 93

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.94 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, 2001.95 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.

Associated General Contractors. News & Views, October 19, 2001, p. 2. See also: The Growing Water Crisis in

America. Constructor, August 2001, pp. 42-46.

Engineering New Record, May 21, 2001. p. 13.

Bureau of National Affairs, Daily Labor Report, January 25, 2001, p. A4.

Bureau of National Affairs, Daily Labor Report, September 14, 2001, p. A14.

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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.96 Here, the SRFs were designed to be

For example, the states, presumably, having accepted federal grants to capitalize the SRFs, are not free to convert

(continued...)

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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. 97

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.”98 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?99 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?

(...continued)

these funds to an unrelated purpose of their own choice—e.g., highway construction, public welfare, or support for the

arts. These restraints upon how the funds might be used flow, arguably, from the original character of the funding

mechanism.

Here, one might consider the concept of first use. Some have argued that federal funds, loaned out and then repaid,

lose their federal character and take on the character of the administrator of the program. In this manner, it is argued,

the federal government ceases to be “a party” to programs it has initiated and funded, and which would not exist in the

absence of a federal role or presence.

In its January 2001 “settlement agreement,” EPA stated: “[t]he 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.” (Italics added.) Federal Register, January 25, 2001, p. 7762.

Legislation introduced by Senator Mark Hatfield (R-OR) and Representative Curt Weldon (R-PA) in the 104th

Congress (S. 1183 and H.R. 2472) attempted to address these issues. This legislation (not adopted) would have added

language to the DBA specifying:

“(3) FEDERALLY ASSISTED.—The requirements of this Act ... shall apply to any project for the

construction, rehabilitation, reconstruction, alteration or repair, including painting and decorating,

of buildings or works that are financed in whole or in part by loans, grants, revolving funds, or

other assistance from the United States pursuant to a statute that—

“(A) is enacted after the effective date of this Act unless exempt or otherwise limited by

Federal law; or

“(B) contains a provision requiring the payment of prevailing wages as determined by the

Secretary of Labor pursuant to this Act.”

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•

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. 100

In the 110th 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. 101

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 110th Congress, Ward affirmed that there are “a

number of specific program changes that we would want to see included in CWSRF

reauthorization....”102

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

100

For general background on the recent period, see CRS Report RL33800, Water Quality Issues in the 110th Congress:

Oversight and Implementation, by (name redacted).

101

Bureau of National Affairs, Daily Labor Report, January 10, 2007, p. A8.

102

Testimony of J. Kevin Ward, on behalf of the Council of Infrastructure Financing Authorities, before the House

Subcommittee on Water Resources and the Environment, January 19, 2007, pp. 2 and 7.

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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.”103

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.”104 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. 105

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. 106

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

103

Testimony of Jim Stutler, President, National Utility Contractors Association, before the Subcommittee on Water

Resources and Environment, January 19, 2007, p. 5.

104

Congressional Record, January 30, 2007, p. E220.

105

Terry Kivlan, Subpanel, OKs $20 Billion Waste Water Construction, see http://www.nationaljournal.com/members/

markups/2007/01/mr_20070131_3.htm, February 28, 2007. See also Bureau of National Affairs, Daily Labor Report,

February 2, 2007, p. A3.

106

Bureau of National Affairs, Daily Labor Report, February 9, 2007, p. A2.

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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 Federallyfunded 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.”107

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.” DavisBacon, 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 minorityowned 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....”108

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:

107

U.S. Congress. House. Committee on Transportation and Infrastructure. H.Rept. 110-30, Water Quality Financing

Act of 2007: Report to Accompany H.R. 720, “Section 302, Capitalization Grant Agreements, (b) Additional

Requirements,” last paragraph; p. 24 of written version.

108

H.Rept. 110-30, “Minority Views” section at end of report, paragraph 5; pp. 56-57 of written version.

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“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.”109

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.”110

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.111 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.”112 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.”113

On a roll-call vote, the Baker/King amendment was defeated: 140 ayes to 280 noes. 114 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.

109

Congressional Record, March 9, 2007, p. H2346.

Congressional Record, March 9, 2007, pp. H2346-H2347.

111

Congressional Record, March 9, 2007, pp. H2345-H2368.

112

Congressional Record, March 9, 2007, p. H2369.

113

Congressional Record, March 9, 2007, p. H2370.

114

Congressional Record, March 9, 2007, pp. H2373-H2374.

110

Congressional Research Service

Davis-Bacon Act Coverage and the State Revolving Fund Program

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.

Author Contact Information

(name redacted)

Congressional Research Service

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