More than 100 NRCA members will gather in Washington, D.C., early this month for the association's Fall Committee Meetings and Legislative Conference. This comes at a critical time: The roofing industry faces more challenges stemming from government policy than at any time in the recent past.
NRCA has an ambitious agenda to pursue when meeting with senators and representatives on Capitol Hill and will use the opportunity to discuss the variety of legislative and regulatory issues important to the industry. However, as NRCA charts a path forward in pursuit of its government policy goals, it is wary of the challenges posed by the extremely volatile political environment in Washington, D.C.
The political environment
Three primary factors must be considered as the association pursues its government policy goals.
First, Congress' efforts to address increasingly difficult budget issues are completely dominating the legislative agenda and crowding out action on other issues. The appropriations process, during which Congress sets budgets for federal agencies for the upcoming fiscal year, has almost completely broken down because of escalating partisan fights regarding spending priorities. The incredibly divisive debate that led to the Aug. 2 passage of the Budget Control Act, which contained major spending cuts coupled with a debt ceiling increase, was only the first round of what likely will be a multi-year struggle.
Given the sheer magnitude of the government's fiscal problems, budgetary fights will continue to dominate Congress' time and attention in the coming months and years. Congress' agenda this fall likely will be consumed by the actions of a new "super committee" established by the Budget Control Act that is charged with recommending further spending cuts and possibly tax increases by Thanksgiving. The continued budgetary pressures will make it even more difficult to achieve any policy goals that require increased federal spending or tax cuts.
Second, with the House and Senate controlled by different parties with highly divergent ideas for addressing budget and other issues, legislative gridlock has reached virtually unprecedented levels. As the recent debate regarding the debt ceiling demonstrated, only the frightening specter of a government default with potentially catastrophic consequences for the economy was able to force a compromise that could gain approval of both chambers of this hyper-polarized Congress. The prospects for bipartisan cooperation on virtually any major issue are slim for at least the remainder of the 112th Congress.
Third, though legislative challenges remain, many of the major issues of concern to roofing contractors are the result of a tsunami of regulations being issued by an activist executive branch of government. Our industry faces regulatory challenges on a broadening array of issues, including the thousands of pages of regulations needed to implement the 2010 health care law, an extremely aggressive Occupational Safety and Health Administration (OSHA), a Department of Labor (DOL) committed to advancing one-sided regulations for labor and management issues, and much more.
Given these challenges and political realities, NRCA's government relations agenda must address the following legislative and regulatory issues during the next year.
Tax issues will continue to be a major focus for NRCA because pro-growth tax policies are critical to the ability of entrepreneurs to grow their businesses and create jobs. However, given the close connection between tax policy and budget issues, exactly how Congress may proceed with tax legislation is more unsettled than ever.
One major question is whether Congress will pursue comprehensive tax reform that would simplify the tax code by lowering corporate and individual tax rates while eliminating most credits and deductions. There is significant bipartisan support for the concept of comprehensive reform, but partisan differences on specific tax measures and the run-up to the 2012 elections may prevent Congress from tackling tax reform before 2013. NRCA is working with Rep. Reid Ribble (R-Wis.) and others in Congress to ensure that any tax reform legislation is beneficial for small businesses.
Whether Congress pursues comprehensive reform or tax legislation in a more piecemeal manner, as has been the case in recent years, NRCA will continue to lobby in support of lower, pro-growth tax rates, many of which expire at the end of 2012. Additionally, NRCA hopes to make progress on a number of specific tax issues critically important to the roofing industry.
One issue of continued focus is depreciation reform for commercial roofs. Between 1981 and 1993, the depreciation schedule for nonresidential property was increased from 15 to 39 years. It has become apparent that the 39-year depreciation schedule, which is more than twice the average life of a commercial roof, is an incentive for building owners to delay replacement of older, failing roof systems in favor of minor repairs.
NRCA is again urging Congress to rectify this problem by providing a 20-year recovery period for commercial roofs that meet a benchmark energy-efficiency standard. Providing depreciation that is consistent with the asset's life will accelerate demand for energy-efficient roof systems. A study by Ducker Worldwide, "Comprehensive Nonresidential Building Analysis to Estimate the Current Reality of Roofing Longevity," estimates this demand would facilitate the creation of nearly 40,000 jobs among contractors and manufacturers within the roofing industry.
NRCA is working with Sens. Ben Cardin (D-Md.) and Mike Crapo (R-Idaho) to introduce commercial roof depreciation reform legislation in the Senate and is discussing similar legislation with Reps. Tom Reed (R-N.Y.) and Bill Pascrell (D-N.J.).
Although there is bipartisan support for such legislation, it remains to be seen whether action on broader tax issues and a continued focus on the budget will provide an opportunity for depreciation reform to advance.
Another NRCA priority is repeal of the 3 percent withholding tax on government contracts, which was enacted by Congress in 2006 and is scheduled to become effective Jan. 1, 2013. This law requires federal, state and local governments with annual contracts exceeding $100 million to withhold 3 percent of the value of every contract worth more than $10,000 from the contractor. If the tax is not repealed, the resulting cash-flow and administrative disruptions will be a tremendous burden for many roofing contractors, particularly small businesses.
NRCA is working to advance legislation (H.R. 674/S. 164) to permanently repeal the unfair withholding tax. In April, NRCA Government Relations Committee Chairman Bob Kulp testified before the House Small Business Committee and described the tax's adverse consequences for roofing contractors. Additionally, NRCA recently sent an Action Alert urging all members to contact their senators and representatives in support of repeal legislation.
NRCA also supports reform of the Completed Contract Method of accounting for construction contractors; extension of the tax credit for energy-efficiency improvements to residential buildings; and permanent estate tax relief for small businesses. NRCA will continue working with Congress to address these issues in any tax legislation that moves during the coming year.
Following passage of the controversial Patient Protection and Affordable Care Act (PPACA) in 2010, which NRCA opposed, health care issues continue to be of growing importance. One of NRCA's first actions in 2011 was supporting legislation to fully repeal PPACA. Although the repeal bill passed the House in January, it was voted down in the Senate.
NRCA now is focused on building support for the American Job Protection Act (AJPA) (H.R. 1744/S. 20), legislation to repeal the PPACA's employer mandate component. Beginning in 2014, all employers with 50 or more "full-time equivalent" employees must provide government-approved health benefits or pay a penalty to the Internal Revenue Service. Moreover, under PPACA, even some employers who provide health care benefits to employees could face substantial fines. Most NRCA members believe PPACA's employer mandates are counterproductive to expanding access to health coverage and hinder economic growth and job creation.
AJPA would repeal PPACA's employer mandate provisions, a key component of the law. Although AJPA's enactment in the current Congress is unlikely, House passage would bring further attention to this problematic law and help lay the foundation for full repeal of or major modifications to PPACA if Republicans capture a Senate majority and the White House in the 2012 elections.
NRCA also will continue providing official comments on behalf of the roofing industry to federal agencies as they develop regulations to implement the health care reform law. This is necessary to make implementation as practical as possible for employers if the law takes effect in its current form in 2014.
On Dec. 22, 2010, OSHA officials ignored several years of NRCA's efforts to work on a cooperative basis with the agency to ensure the safest possible fall-protection regulations. Instead, OSHA Assistant Secretary David Michaels announced a directive that effectively eliminates the use of slide guards as a fall-protection option in residential roofing. The agency has made little or no effort to address NRCA's serious concerns with this counterproductive policy or provide any helpful guidance to assist contractors with compliance.
Following OSHA's failure to work in good faith with the roofing industry toward a sensible policy, NRCA stepped up efforts to educate Congress about how OSHA's directive will hinder workplace safety rather than improve it. This has involved working with Reps. Tim Walberg (R-Mich.), Denny Rehberg (R-Mont.), Nydia Velázquez (D-N.Y.), Ribble and others to contact Michaels and Secretary of Labor Hilda Solis to request that OSHA reconsider its directive. These congressional efforts contributed to OSHA's decision to implement a three-month phase-in of the policy, which began June 16.
Additionally, information obtained from OSHA with the help of Congress has confirmed that the directive is based on false information and a lack of understanding of industry practices by agency officials.
This fall, NRCA will continue working with Rehberg, who is chairman of the House Appropriations Subcommittee with jurisdiction over OSHA's budget, on a strategy designed to force OSHA to address NRCA's concerns about the misguided directive. This will involve including an amendment in the fiscal year 2012 labor department appropriations bill that would withhold funding, preventing OSHA from enforcing the directive.
Having such an amendment enacted into law will be difficult given the Democratic-controlled Senate and dysfunctional nature of the congressional appropriations process. Moreover, support of OSHA's directive by the National Association of Homebuilders further complicates this and other congressional efforts to influence OSHA on this issue. However, NRCA will continue working with allied members of Congress to put more pressure on agency officials to address the industry's concerns.
In addition to raising industry concerns about fall-protection regulations, NRCA will continue working on other expected OSHA regulations in the months ahead. These are likely to include a new silica exposure regulation, a revised regulation on musculoskeletal disorder recordkeeping and possibly other initiatives.
NRCA expects to see action on immigration enforcement legislation this fall or in 2012. In the House, Judiciary Committee Chairman Lamar Smith (R-Texas) has introduced the Legal Workforce Act (H.R. 2164), which would require all employers to use the E-Verify program to verify new employees' immigration status. NRCA has long supported E-Verify's use on a voluntary basis but has serious concerns with mandating E-Verify without safeguards to prevent numerous administrative problems for employers.
As a steering committee member of the Essential Worker Immigration Coalition, NRCA has worked with Smith to address employer-related concerns with a mandatory E-Verify program. Under H.R. 2164, use of the E-Verify program would be phased in during a two-year period with the largest employers required to comply within six months of the enactment date and smaller businesses given 18 months or two years.
H.R. 2164 addresses several practical concerns raised by roofing contractors regarding E-Verify. It contains safe harbors to protect employers from being hit with monetary penalties as long as they use E-Verify in good faith. State and local laws requiring E-Verify are pre-empted, setting one uniform standard nationally and preventing a proliferation of differing requirements across jurisdictions. A toll-free telephone number is provided so small businesses can use E-Verify without incurring additional costs. And there is no general retroactive reverification requirement for current employees.
In the Senate, Sen. Charles Grassley (R-Iowa) introduced legislation (S. 1196) to require all employers to use E-Verify within one year of enactment. Such a short time to ramp up participation among all businesses is likely to prove unworkable and cause serious disruption for employers. Moreover, the Grassley bill lacks safeguards designed to make E-Verify practical. Enactment of the Grassley bill would be an administrative nightmare for many employers, especially small businesses.
NRCA will continue working proactively with Congress to further improve H.R. 2164 and oppose immigration bills that fail to address employer concerns. Given the recent Supreme Court decision affirming that state and local governments may enact their own laws requiring E-Verify and/or other enforcement mechanisms, enactment of federal legislation that addresses employer concerns may be the best outcome for the roofing industry.
In 2009 and 2010, organized labor pushed for passage of "card check" legislation that effectively would have deprived employees of the right to a secret ballot for union organizing elections. NRCA opposed the card check bill because a vast majority of NRCA members believe secret ballot elections should be retained and that moving to a card check system was not a balanced proposal. This legislation was defeated when it failed to pass the Senate thanks to a strong lobbying campaign orchestrated by NRCA and other organizations in the Coalition for a Democratic Workplace.
With the Republican takeover of the House after the 2010 elections, card check legislation no longer is a threat. However, the Obama administration and its allies in organized labor are attempting to impose card check-like measures by bypassing Congress and using the regulatory process.
In June, the National Labor Relations Board (NLRB) proposed regulations that would reduce the timeframe for union organizing elections to as few as 10 to 21 days. Currently, the median time for an election from the time a union petition is filed is 38 days, and unions have won a majority of elections in recent years. In a dissent to the proposal, NLRB member Brian Hayes said: "The principle purpose of this radical manipulation of our election process is to minimize, or rather, to effectively eviscerate an employer's legitimate opportunity to express its views about collective bargaining."
Also in June, DOL issued a proposed rule that would further curtail employers' ability to communicate with employees during a union organizing campaign. The DOL proposal greatly expands disclosure requirements for employers and their consultants under the 1959 Labor-Management Reporting and Disclosure Act.
The proposal virtually eliminates the "advice exemption," which has been in current regulations since 1962 and allows communications between employers and attorneys and other consultants during union organizing campaigns to be kept confidential. This rule would severely limit the ability of employers, especially small businesses, to use the advice of qualified professionals to comply with federal labor laws during union organizing campaigns.
Both of these proposals are of great concern to NRCA members. They are thinly veiled efforts to give unions an upper hand by minimizing the opportunity for employers and employees to have an informed dialogue regarding the pros and cons of union representation during an organizing campaign.
In August, NRCA filed comments with NLRB and DOL opposing these proposed regulations and asking the agencies to withdraw them immediately. However, the Obama administration is expected to move forward with finalizing the rules despite strong opposition from the business community. NRCA is working with the Coalition for a Democratic Workplace to urge Congress to pass legislation to block implementation of the NLRB regulations.
In addition to working on these and other legislative and regulatory issues, NRCA is gearing up to be extremely active in the upcoming 2012 elections. ROOFPAC, the only political action committee dedicated solely to advancing the interests of the roofing industry, will once again provide crucial financial support to pro-business candidates who share the association's policy goals.
In the previous election cycle, ROOFPAC raised and contributed more than $330,000 to candidates for Congress and compiled an 88 percent winning percentage. NRCA is striving to build on this effort, and members' support for ROOFPAC is critical. A strong ROOFPAC will be absolutely vital to the success of NRCA's government relations agenda in 2012 and beyond.
Duane L. Musser is NRCA's vice president of government relations.