ESA Proposed Rule ESA Proposed Rule
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Part IV
Department of Labor
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Office of the Secretary
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29 CFR Part 5
Labor Standards Provisions Applicable to Contracts Covering Federally
Financed and Assisted Construction; Proposed Rule
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DEPARTMENT OF LABOR
Office of the Secretary
29 CFR Part 5
RIN 1215-AB21
Labor Standards Provisions Applicable to Contracts Covering
Federally Financed and Assisted Construction (Also Labor Standards
Provisions Applicable to Nonconstruction Contracts Subject to the
Contract Work Hours and Safety Standards Act)
AGENCY: Wage and Hour Division, Employment Standards Administration,
Labor.
ACTION: Notice of proposed rulemaking.
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SUMMARY: The Department of Labor proposes to amend two related
definitions in the regulations issued under the Davis-Bacon and related
Acts that set forth rules for administration and enforcement of the
Davis-Bacon prevailing wage requirements that apply to federal and
federally-assisted construction projects. These regulations define the
Davis-Bacon Act language construction, prosecution, completion, repair
and site of the work. The Department believes that revisions to these
definitions are needed to clarify the regulatory requirements in view
of three appellate court decisions, which concluded that the
Department's application of these regulatory definitions was at odds
with the language of the Davis-Bacon Act that limits coverage to
workers employed ``directly upon the site of the work,'' and to address
situations that were not contemplated when the current regulations were
promulgated. The Department, therefore, seeks public comment on
proposed revisions to the regulatory definitions of construction and
site of the work.
DATES: Comments are due on or before October 23, 2000.
ADDRESSES: Submit written comments to T. Michael Kerr, Administrator,
Wage and Hour Division (Attention: Goverment Contracts Team),
Employment Standards Administration, U.S. Department of Labor, Room S-
3018, 200 Constitution Avenue, NW, Washington, D.C. 20210. Commenters
who wish to receive notification of receipt of comments are requested
to include a self-addressed, stamped post card.
As a convenience to commenters, comments may be transmitted by
facsimile (``FAX'') machine to (202) 693-1432. This is not a toll-free
number.
FOR FURTHER INFORMATION CONTACT: Timothy Helm, Office of Enforcement
Policy, Government Contracts Team, Wage and Hour Division, Employment
Standards Administration, U.S. Department of Labor, Room S-3018, 200
Constitution Avenue, NW, Washington, D.C. 20210. Telephone (202) 693-
0574. This is not a toll-free number.
SUPPLEMENTARY INFORMATION:
I. Paperwork Reduction Act
This regulation does not contain any new information collection
requirements and does not modify any existing requirements. Thus, this
regulation is not subject to the Paperwork Reduction Act.
II. Background
A. Statutory and Regulatory Framework
Section 1 of the Davis-Bacon Act (``DBA'' or ``Act'') requires that
``the advertised specifications for contracts * * * for construction,
alteration and/or repair, including painting and decorating, of public
buildings or public works * * * shall contain a provision stating the
minimum wages to be paid to various classes of laborers and mechanics *
* * and every contract based upon these specifications shall contain a
stipulation that the contractor or his subcontractor shall pay all
mechanics and laborers employed directly upon the site of the work * *
* the full amounts accrued at time of payment, computed at wage rates
not less than those stated in the advertised specifications, * * * and
that the scale of wages to be paid shall be posted by the contractor in
a prominent and easily accessible place at the site of the work. * * *
'' 40 U.S.C. 276a (emphasis added).
Section 2 of the Act requires that every covered contract provide
that in the event the contracting officer finds that ``any laborer or
mechanic employed by the contractor or any subcontractor directly on
the site of the work covered by the contract has been or is being paid
less than required wages, the government ``may terminate the
contractor's right to proceed with the work or such part of the work as
to which there has been a failure to pay the required wages'' and to
hold the contractor liable for the costs for completion of the work. 40
U.S.C. 276a-1 (emphasis added).
The Congress directed the Department of Labor, through
Reorganization Plan No. 14 of 1950 (5 U.S.C. App., effective May 24,
1950, 15 FR 3176, 64 Stat. 1267), to ``prescribe appropriate standards,
regulations and procedures'' to be observed by federal agencies
responsible for the administration of the Davis-Bacon and related Acts
``[i]n order to assure coordination of the administration and
consistency of enforcement.'' 64 Stat. 1267.
On April 29, 1983, the Department promulgated a regulation (29 CFR
5.2(l)) defining the term site of the work within the meaning of the
Davis-Bacon Act (see 48 FR 19540). This regulation reflected the
Department's longstanding, consistent interpretation of the Act's site
of the work requirement. See, e.g., United Construction Company, Wage
Appeals Board (WAB) Case No. 82-10 (January 14, 1983); Sweet Home
Stone, WAB Case Nos. 75-1 & 75-2 (August 14, 1975); Big Six, Inc., WAB
Case No. 75-3 (July 21, 1975); T.L. James & Co., WAB Case No. 69-2
(August 13, 1969); CCH Wage-Hour Rulings para. 26,901.382, Solicitor of
Labor letter (July 29, 1942).
The Department's regulations provide a three-part definition of
site of the work. The first part at 29 CFR 5.2(l)(1) provides that
``the site of the work is the physical place or places where the
construction called for in the contract will remain when work on it has
been completed and, as discussed in paragraph (l)(2) of this section,
other adjacent or nearby property used by the contractor or
subcontractor in such construction which can reasonably be said to be
included in the site.''
The second part at 29 CFR 5.2(l)(2) provides that ``fabrication
plants, mobile factories, batch plants, borrow pits, job headquarters,
tool yards, etc.'' are part of the site of the work provided they meet
two tests--a geographic test of being ``so located in proximity to the
actual construction location that it would be reasonable to include
them,'' and a functional test of being ``dedicated exclusively, or
nearly so, to performance of the contract or project.''
The third part at 29 CFR 5.2(l)(3) states that fabrication plants,
batch plants, borrow pits, tool yards, job headquarters, etc., ``of a
commercial supplier or materialman which are established by a supplier
of materials for the project before the opening of bids and not on the
project site, are not included in the site of the work.'' In other
words, facilities such as batch plants and borrow pits are not covered
if they are ongoing businesses apart from the federal contract work.
The regulatory definition of the statutory terms construction,
prosecution, completion, or repair in section 5.2(j)(1) applies the
site of the work concept. It defines these statutory terms as including
the following:
[a]ll types of work done on a particular building or work at the
site thereof, including work at a facility which is dedicated to and
deemed a part of the site of the work within the meaning of
Sec. 5.2(l)--including without
[[Page 57271]]
limitation (i) [a]lteration, remodeling, installation (where
appropriate) on the site of the work of items fabricated off-site;
(ii) [p]ainting and decorating; (iii) [m]anufacturing or furnishing
of materials, articles, supplies or equipment on the site of the
building or work * * *; and (iv) [t]ransportation between the actual
construction location and a facility which is dedicated to such
construction and deemed a part of the site of the work within the
meaning of Sec. 5.2(l).
(Emphasis added.)
B. The Department of Labor's Longstanding Interpretation of the
Regulatory Site of the Work Definition
Prior to the recent appellate court rulings, the Department's
longstanding, consistent application of the regulatory definition of
site of the work--the area where laborers and mechanics are to be paid
at least the prevailing wage rates, as determined by the Secretary of
Labor--included both the location where a public building or work would
remain after work on it had been completed, and nearby locations used
for activities directly related to the covered construction project,
provided such locations were dedicated exclusively (or nearly so) to
meeting the needs of the covered project.
The Wage Appeals Board, which acted with full and final authority
for the Secretary of Labor on matters concerning the labor standards
provisions of the Davis-Bacon and related Acts (see 29 CFR 5.1 and 7.1
(c)),\1\ consistently interpreted 29 CFR 5.2(l) to include as part of
the site of the work, for purposes of Davis-Bacon coverage, support
facilities dedicated exclusively to the covered project and located
within a reasonable distance from the actual construction site.
Consistent with the regulations, the Board also treated the
transportation of materials and supplies between the covered locations
and transportation of materials or supplies to or from a covered
location by employees of the construction contractor or subcontractor
as covered Davis-Bacon work. See, e.g., Patton-Tully Transportation
Co., WAB No. 90-27 (March 12, 1993) (5.4 to 14 miles, and 16 to 60
miles); Winzler Excavating Co., WAB No. 88-10 (October 30 1992) (12\1/
2\ miles); ABC Paving Co., WAB Case No. 85-14 (September 27, 1985) (3
miles).
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\1\ On April 17, 1996, the Secretary redelegated jurisdiction to
issue final agency decisions under, inter alia, the Davis-Bacon and
related Acts and their implementing regulations, to the newly
created Administrative Review Board (ARB or the Board).
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C. Federal Appellate Decisions and Subsequent Decision of the
Administrative Review Board (ARB)
The D.C. Circuit first discussed the Department's site of the work
definition in Building and Construction Trades Department, AFL-CIO v.
United States Department of Labor Wage Appeals Board, 932 F.2d 985
(D.C. Cir. 1991) (Midway). That case involved truck driver employees of
the prime contractor's wholly owned subsidiary, who were delivering
materials from a commercial supplier to the construction site. The
material delivery truck drivers spent ninety percent of their workday
on the highway driving to and from the commercial supply sources,
ranging up to 50 miles round trip and stayed on the site of the work
only long enough to drop off their loads, usually for not more than ten
minutes at a time.
At issue before the D.C. Circuit was whether the ``material
delivery truckdrivers'' were within the scope of construction as
defined by the regulatory provision then in effect at section 5.2(j),
which defined the statutory terms construction, prosecution,
completion, or repair to include, among other things, ``the
transporting of materials and supplies to or from the building or work
by the employees of the construction contractor or construction
subcontractor.'' The court held that ``the phrase `mechanics and
laborers employed directly upon the site of the work' restricts
coverage of the Act to employees who are working directly on the
physical site of the public building or public work being
constructed.'' 932 F.2d at 992. The court further stated that
``[m]aterial delivery truckdrivers who come onto the site of the work
merely to drop off construction materials are not covered by the Act
even if they are employed by the government contractor,'' and
consequently held that ``29 C.F.R. Sec. 5.2(j), insofar as it includes
off-site material delivery truck drivers in the Act's coverage, is
invalid.'' Id.
The court expressly declined to rule on the validity of the
regulation defining the site of the work at 29 CFR 5.2(l). 932 F.2d at
989 n.6, 991 n.12. However, it expressed the view that Congress
intended to limit Davis-Bacon coverage to ``employees working directly
on the physical site of the public building or public work under
construction.'' 932 F.2d at 990 n.9, 991.
On May 4, 1992, the Department promulgated a revised section 5.2(j)
to accommodate the holding in Midway. 57 FR 19204. The revised
regulation limits coverage of offsite transportation to
``[t]ransportation between the actual construction location and a
facility which is dedicated to such construction and deemed a part of
the site of the work within the meaning of Sec. 5.2(l).'' 29 CFR
5.2(j)(1)(iv) (1993).
In the two more recent rulings, Ball, Ball and Brosamer v. Reich,
24 F. 3d 1447 (D.C. Cir. 1994) (Ball) and L.P. Cavett Company v. U.S.
Department of Labor, 101 F.3d 1111 (6th Cir. 1996) (Cavett), the D.C.
Circuit and Sixth Circuit, respectively, focused on the proper
geographic scope of the statutory phrase site of the work in relation
to borrow pits and batch plants established specifically to serve the
needs of covered construction projects. In Ball, the D.C. Circuit ruled
that the Department's application of section 5.2(l)(2) was inconsistent
with the Act to the extent it covers sites that are at a distance from
the actual construction location. The case involved workers at the
borrow pit and batch plant of a subcontractor who obtained raw
materials from a local sand and gravel pit and set up a portable batch
plant for mixing concrete. The pit and batch plant were dedicated
exclusively to supplying material for the completion of the 13-mile
stretch of aqueduct that the prime contractor had contracted to
construct. As described by the court, ``the borrow pit and batch plant
were located about two miles from the construction site at its nearest
point.'' 24 F.3d at 1449.
In holding that the Davis-Bacon prevailing wage requirements do not
apply to the borrow pit and batch plant workers, the court cited
Midway, in which it had found ``no ambiguity in the text [of the Davis-
Bacon Act]'' and thought it clear that ``the ordinary meaning of the
statutory language is that the Act applies only to employees working
directly on the physical site of the public building or public work
under construction.'' 24 F.3d at 1452. The court added that ``the
reasoning in Midway obviously bears on the validity of Sec. 5.2(l)(2)
to the extent that the regulation purports to extend the coverage of
the Davis-Bacon Act beyond the actual physical site of the public
building or public work under construction,'' (id.), and accordingly
ruled that ``the Secretary's regulations under which Ball was held
liable are inconsistent with the Davis-Bacon Act. See 29 CFR
Sec. 5.2(l)(1).'' 24 F.3d at 1453. The court nevertheless indicated
that the regulations at section 5.2(l)(2) might satisfy the geographic
limiting principle of the Davis-Bacon Act and Midway if the regulatory
phrase in section 5.2(l)(2) ``so located in proximity to the actual
construction location that it would be reasonable to include them''
were
[[Page 57272]]
applied ``only to cover batch plants and gravel pits located in actual
or virtual adjacency to the construction site.'' 24 F.3d at 1452.
In Cavett (arising under the Federal-Aid Highway Act, a Davis-Bacon
related Act), the Sixth Circuit held that truck drivers hauling asphalt
from a temporary batch plant to the highway under construction three
miles away were not due prevailing wages. The contract involved
resurfacing of an Indiana state road, and as characterized by the
court, ``the Department of Labor included in the site of the work both
a batch plant located at a quarry more than three miles away from the
highway construction project and the Indiana highway system that was
used to transport materials from the batch plant to the construction
project.'' 101 F.3d at 1113-1114.
Relying on the D.C. Circuit's reasoning in Midway and Ball, the
Sixth Circuit disagreed with the views of the lower court that the
statutory language was ambiguous and that the Ball decision recognized
ambiguity in the statutory text when it declined to decide whether
coverage could extend to batch plants adjacent to or virtually adjacent
to the boundaries of the completed project. The Sixth Circuit reasoned
that it was not inconsistent for the Ball court to ``conclude that
while a facility in virtual adjacency to a public work site might be
considered part of that site, a facility located two (or in this case
three) miles away from the site would not.'' 101 F.3d at 1115. Thus,
agreeing with Ball, the Sixth Circuit concluded that the statutory
language means that ``only employees working directly on the physical
site of the work of the public work under construction have to be paid
prevailing wage rates.'' Id.
Subsequent to the rulings in Midway, Ball, and Cavett, the
Department's Administrative Review Board (ARB) addressed the Davis-
Bacon Act's site of the work provision in Bechtel Contractors
Corporation (Prime Contractor), Rogers Construction Company (Prime
Contractor), Ball, Ball and Brosamer, Inc., (Prime Contractor), and the
Tanner Companies, Subcontractor, ARB Case No. 97-149, March 25, 1998,
reaffirming ARB Case No. 95-045A, July 15, 1996.
This case involved a dispute over whether the Davis-Bacon
provisions applied to work performed at three batch plants established
and operated in connection with construction work on the Central
Arizona Project (CAP), a massive Bureau of Reclamation construction
project consisting of 330 miles of aqueduct and pumping plants. The
batch plants were located less than one-half mile from various pumping
stations that were being constructed as part of the project. The Board
initially ruled on the case on July 15, 1996 (Bechtel I) and later
reaffirmed that decision on March 25, 1998 (Bechtel II).
The Board observed that the D.C. Circuit's recent decision in Ball
had ``created a good deal of confusion with respect to the coverage of
the DBA.'' Bechtel I, slip op. at 6. The Board declined to read Ball or
Cavett to mean that the statutory phrase ``directly upon the site of
the work'' limits the wage standards of the DBA to ``the physical space
defined by contours of the permanent structures that will remain at the
close of work.'' Id. Rather, the Board read Ball and Cavett as only
precluding the Secretary from enforcing section 5.2(l)(2) of the
regulations in a manner that did not respect the geographic limiting
principle of the statute, while reserving ruling on section 5.2(l)(1),
since that provision was not at issue in those cases. Bechtel II, slip
op. at 5; Bechtel I, slip op. at 6. The Board stated that
interpretation of section 5.2(l)(1) requires examination of the
question of whether the temporary facilities are so ``located in
virtual adjacency'' to the site of the work that it would be reasonable
to include them. Id.
The Board found that the work performed at the plants satisfied the
test set out in section 5.2(l)(1), since aerial photographs of the
construction sites showed the temporary batch plants to be located on
land integrated into the work area adjacent to the pumping stations.
The Board believed there was no principled basis for excluding the
batch plant workers since they were employed on sites of the work to
the same extent as the workers who cleared the land and the workers who
inventoried, assembled, transported or operated tools, equipment or
materials on nearby or adjacent property. The Board also observed that
it is the nature of such construction, e.g., highway, airport and
aqueduct construction, that the work may be long, narrow and stretch
over many miles. Where to locate a storage area or a batch plant
along such a project is a matter of the contractor's convenience and
is not a basis for excluding the work from the DBA. The map of the
project introduced at hearing * * * abundantly illustrates that the
project consisted of miles of narrow aqueduct connected by pumping
stations. The only feasible way to meet the needs of the aqueduct
construction was to have the concrete prepared at a convenient site
and transported to the precise area of need. This equally holds true
for the storage and distribution of other materials and equipment.
Faced with such a project, the Board finds that work performed in
actual or virtual adjacency to one portion of the long continuous
project is to be considered adjacent to the entire project.
Bechtel I, slip op. at 6.
III. Discussion of the Proposed Rule
Issuance of this NPRM is needed to clarify the effects of Midway,
Ball, and Cavett, particularly in view of confusion they may have
generated (as suggested by the ARB in Bechtel I), and also to address
situations not contemplated by the current regulations.
The Department has also reviewed the NPRM published in 1992 (57 FR
19208 (May 4, 1992)) in conjunction with the rule promulgated to
conform with the Midway decision; the NPRM would have further defined
and limited the circumstances in which on-site work by laborers and
mechanics primarily engaged in offsite transportation would be subject
to Davis-Bacon requirements. After a review of the comments and the
subsequent developments in the court cases, the Department has
concluded that no further rulemaking on this issue is necessary or
appropriate. As stated in the preamble to the companion rule: ``Those
truck drivers who transport materials to or from the `site of the work'
would not be covered for any time spent off-site, but would remain
covered for any time spent directly on the `site of the work.' '' 57 FR
19205. It remains the Department's view that truck drivers employed by
construction contractors and subcontractors must be paid at least the
rate required by the Davis-Bacon Act for any time spent on-site which
is more than de minimis. In this connection, the Department notes that
in the Midway case, the drivers stayed on-site only long enough to drop
off their loads, which was usually not more than ten minutes at a time.
932 F.2d at 987.
1. Site of the Work--Section 5.2(l)
While neither Ball nor Cavett enjoined the Department from
enforcing the regulatory site of the work definition as set forth at 29
CFR 5.2(l)(2), these courts found the Department's application of the
regulation to be contrary to the plain meaning of the language of the
Davis-Bacon Act. In view of the appeals courts' rulings, the Department
no longer believes that it can assert Davis-Bacon prevailing wage
coverage with respect to material or supply sources, tool yards, job
headquarters, etc., which are dedicated to the covered construction
project unless they are adjacent or virtually adjacent to a location
where the
[[Page 57273]]
building or work, or a significant portion thereof, is being
constructed.
Therefore, a revision to section 5.2(l)(2) is proposed to so limit
coverage. The Department does not believe it would be appropriate to
propose to define the terminology ``adjacent or virtually adjacent''
because the actual distance may vary depending upon the size and nature
of the project. See Bechtel II, slip op. at 6 (``The question of
whether a temporary facility is virtually adjacent to the `site of the
work' is one to be examined on a case-by-case basis.'') However, the
Department invites comments on whether this terminology should be
defined, and if so, in what manner.
In addition, the current site of the work definition at section
5.2(l) does not adequately address certain situations which the
Department believes warrant coverage. For example, new construction
technologies have been developed that make it practical and
economically advantageous to build major segments of complex public
works, such as lock and dam projects and bridges, at locations some
distance up-river from the locations where the permanent structures
will remain when their construction is completed.
Innovative construction methods exist which take advantage of
recently developed underwater concrete construction technologies,
making it feasible for whole sections of such structures to be
constructed up-river and floated down-river to be put in place to form
the structure being built. In such situations, much of the construction
of the public work is performed at a secondary site other than where it
will remain after construction is completed.
The regulatory definition in section 5.2(l)(1) states that coverage
``is limited to the physical place or places where construction called
for in the contract will remain * * * and other adjacent or nearby
property.'' Literal application of the regulatory language would appear
to exclude from coverage, construction at a location some distance from
the final resting place of a project, even if a significant portion of
the project is actually constructed at that location. At its most
extreme, it is possible that a project may be built in its entirety at
one location and then moved to its final resting place. The Department
does not believe such a result is consistent with either the language
or intent of the Davis-Bacon Act. Rather, it is the Department's view
that a location established specifically for the purpose of
constructing a significant portion of a ``public building or public
work'' is reasonably viewed as construction performed directly upon the
site of the public building or public work within the meaning of the
Davis-Bacon Act. The Department notes that to the best of its
information, projects which are built in such a manner are currently
rare, although they may become more common with advances in technology.
It is not our intention that the proposed amendment to the definition
of site of the work would create a major exception to the normal rule
limiting the site of the work to the place where the building or work
will remain when the construction is completed.
The Department considers that the previously discussed court
decisions, which involved material supply locations and the
transportation between such locations and the construction site of the
project, do not preclude Davis-Bacon coverage where significant
portions of projects, such as bridges and dams, are actually being
constructed at secondary locations.
Just as we believe this situation was not contemplated when the
Department's regulations were drafted, we believe that it was not
contemplated by the various court decisions. See Ball, 24 F.3d at 1452
(``the reasoning of Midway obviously bears on the validity of
Sec. 5.2(l)(2) to the extent that the regulation purports to extend the
coverage of the Davis-Bacon Act beyond the actual physical site of the
building or public work under construction''). As pointed out by the
Board in Bechtel, the courts' statements limiting coverage to work ``on
the physical site of the public building or public work under
construction,'' should not be interpreted as restricting coverage ``to
the physical space defined by contours of the permanent structures that
will remain at the close of work.''
The Department, therefore, proposes a revision to section 5.2(l)(1)
to include within the site of the work, secondary sites, other than the
project's final resting place, which have been established specifically
for the performance of the Davis-Bacon covered contract and at which a
significant portion of the public building or work called for by the
contract is constructed.
2. Coverage of Transportation--Section 5.2(j)
Concerning transportation, section 5.2(j)(1)(iv) currently covers
all transportation between the actual construction location and other
locations dedicated to the project and considered a part of the site of
the work within the meaning of section 5.2(l). The Department is
proposing to amend section 5.2(j)(l) in two respects:
First, the Department is proposing to amend section 5.2(j)(1)(iv)
to conform to the appellate decisions, which held as a general matter
that transportation of materials occurring off the actual construction
site was not ``directly upon the site of the work,'' and thus not
covered by Davis-Bacon provisions. Therefore, under this proposal, off-
site transportation of materials, supplies, tools, etc., ordinarily
would not be covered. Such transportation would be covered only if the
transportation is between the construction work site and a site located
``adjacent or virtually adjacent'' to the construction site.
In addition, in conjunction with the proposed amendment to section
5.2(l)(1), discussed above, a new section 5.2(j)(1)(iv)(B) would
provide that transportation of portion(s) of the building or work
between a secondary covered construction site and the site where the
building or work will remain when it is completed is subject to Davis-
Bacon requirements. It is the Department's view that under these
circumstances the site of the work is literally moving between the two
work sites, and therefore the laborers or mechanics who transport these
portions or segments of the project are reasonably viewed as ``employed
directly upon the site of the work.''
The Department seek comments on these proposed regulatory changes
to section 5.2(l) and section 5.2(j)(1), as set forth below.
IV. Executive Order 12866; Small Business Regulatory Enforcement
Fairness Act; Unfunded Mandates Reform Act
This proposed rule is not a ``significant regulatory action''
within the meaning of section 3(f) of Executive Order 12866. The rule
is not expected to (1) have an annual effect on the economy of $100
million or more or adversely affect in a material way the economy, a
section of the economy, productivity, competition, jobs, the
environment, public health or safety, or State, local, or tribal
governments or communities; (2) create a serious inconsistency or
otherwise interfere with an action taken or planned by another agency;
(3) materially alter the budgetary impact of entitlements, grants,
user fees, or loan programs or the rights and obligations of recipients
thereof; or (4) raise novel legal or policy issues arising out of legal
mandates, the President's priorities, or the principles set forth in
the executive order. The modifications to regulatory language as
proposed in this NPRM would limit coverage of off-site material and
supply work from
[[Page 57274]]
Davis-Bacon prevailing wage requirements as a result of appellate court
rulings. In addition, the proposed regulation would make a limited
amendment to the site of the work definition to address an issue not
contemplated under the current regulatory language--those instances
where significant portions of buildings or works may be constructed at
secondary sites which are not in the vicinity of the project's final
resting place. It is believed that such instances will be rare, and
that any increased costs which may arise on such projects would be
offset by the savings due to the proposed limitations on coverage.
The Department has similarly concluded that this proposed rule is
not a ``major rule'' requiring approval by the Congress under the Small
Business Regulatory Enforcement Fairness Act of 1996 (5 U.S.C. 801 et
seq.). It will not likely result in (1) an annual effect on the economy
of $100 million or more; (2) a major increase in costs or prices for
consumers, individual industries, Federal, State or local government
agencies, or geographic regions; or (3) significant adverse effects on
competition, employment, investment, productivity, innovation, or on
the ability of U.S.-based enterprises to compete with foreign-based
enterprises in domestic or export markets.
For purposes of the Unfunded Mandates Reform Act of 1995, this rule
does not include any federal mandate that may result in excess of $100
million in expenditures by state, local and tribal governments in the
aggregate, or by the private sector. Furthermore, the requirements of
the Unfunded Mandates Reform Act, 2 U.S.C. 1532, do not apply here
because the proposed rule does not include a Federal mandate. The term
Federal mandate is defined to include either a Federal
intergovernmental mandate or a Federal private sector mandate. 2 U.S.C.
658(6). Except in limited circumstances not applicable here, those
terms do not include an enforceable duty which is a duty arising from
participation in a voluntary program. 2 U.S.C. 658(7)(A). A decision by
a contractor to bid on Federal and federally assisted construction
contracts is purely voluntary in nature, and the contractor's duty to
meet Davis-Bacon Act requirements arises from participation in a
voluntary Federal program.
V. Executive Order 13132 (Federalism)
The Department has reviewed this rule in accordance with Executive
Order 13132 regarding federalism, and has determined that it does not
have federalism implications. The rule does not have substantial direct
effects on the States, on the relationship between the national
government and the States, or on the distribution of power and
responsibilities among the various levels of government.
VI. Regulatory Flexibility Analysis
The Department has determined that the proposed regulation will not
have a significant economic impact on a substantial number of small
entities within the meaning of the Regulatory Flexibility Act. The
proposal would implement modifications resulting from court decisions
interpreting statutory language, which would reduce the coverage of
Davis-Bacon prevailing wage requirements as applied to construction
contractors and subcontractors, both large and small, on DBRA covered
contracts. In addition, the proposed regulation would make a limited
amendment to the site of the work definition to address an issue not
contemplated under the current regulatory language--those instances
where significant portions of buildings or works may be constructed at
secondary sites which are not in the vicinity of the project's final
resting place. It is believed that such instances will be rare, and
that any increased costs which may arise on such projects would be
offset by the savings due to the proposed limitations on coverage. The
Department of Labor has certified to this effect to the Chief Counsel
for Advocacy of the Small Business Administration. Notwithstanding the
above, the Department has prepared the following Regulatory Flexibility
Analysis:
(1) Reasons Why Action Is Being Considered
The Department is issuing this NPRM to clarify the regulatory
requirements concerning the Davis-Bacon Act's site of the work language
in view of three appellate court decisions. These decisions concluded
that the Department's application of its regulations to cover certain
activities related to off-site facilities dedicated to the project was
at odds with the Davis-Bacon Act language that limits coverage to
workers employed ``directly upon the site of the work.'' This NPRM is
therefore necessary to bring the Department's regulatory definitions of
the statutory terms construction, prosecution, completion, and repair
at 29 CFR 5.2(j), and site of the work at 29 CFR 5.2(l) into conformity
with these court decisions.
The Department is also issuing this NPRM in order to address
situations that were not contemplated when the current regulations
concerning site of the work were promulgated. This NPRM proposes to
make clear under the Department's regulations that the Davis-Bacon
Act's scope of coverage includes work performed at locations
established specifically for the purpose of constructing a significant
portion of a building or work, as well as transportation of portions of
the building or work to and from the project's final resting place.
These regulatory changes are necessitated by the development of new
construction technologies, whereby major segments of a project can be
constructed at locations some distance from where the permanent
structure(s) will remain after construction is completed.
(2) Objectives of and Legal Basis for Rule
These regulations are issued under the authority of the Davis-Bacon
Act, 40 U.S.C. 276a, et seq., Reorganization Plan No. 14 of 1950, 5
U.S.C. Appendix, and the Copeland Act, 40 U.S.C. 276c. The objectives
of these regulations are to clarify the effects of three appellate
court decisions (Midway, Ball, and Cavett) and eliminate any confusion
they may have engendered in the Federal construction community, and to
address a coverage issue not contemplated by the current regulations.
(3) Number of Small Entities Covered Under the Rule
Size standards for the construction industry are established by the
Small Business Administration (SBA), and are expressed in millions of
dollars of annual receipts for affected entities, i.e., Major Group 15,
Building Construction--General Contractors and Operative Builders, $17
million; Major Group 16, Heavy Construction (non-building), $17
million; and Major Group 17, Special Trade Contractors, $7 million. The
overwhelming majority of construction establishments would have annual
receipts under these levels. According to the Census, 98.7 percent of
these establishments have annual receipts under $10 million. Therefore,
for the purpose of this analysis, it is assumed that virtually all
establishments potentially affected by this rule would meet the
applicable criteria used by the SBA to define small businesses in the
construction industry.
(4) Reporting, Recordkeeping, and Other Compliance Requirements of the
Rule
There are no additional reporting or recording requirements for
contractors under the proposed rule. There may be rare instances where,
pursuant to the NPRM, contractors, including small
[[Page 57275]]
entities, engaged in the construction of a major portion of a Davis-
Bacon project at a secondary site specifically established for such
purpose would be required to comply with Davis-Bacon wage and
recordkeeping requirements with respect to certain laborers and
mechanics in circumstances where they currently are not covered by
regulations issued under the Act.
(5) Relevant Federal Rules Duplicating, Overlapping, or Conflicting
With the Rule
There are currently no Federal rules that duplicate, overlap, or
conflict with this proposed rule.
(6) Differing Compliance or Reporting Requirements for Small Entities
The proposed rule contains no reporting, recordkeeping, or other
compliance requirements specifically applicable to small businesses or
that differ from such requirements applicable to the Davis-Bacon
contracting industry as a whole. Such different treatment would not
seem feasible since virtually all employers in the industry are small
businesses.
(7) Clarification, Consolidation, and Simplification of Compliance and
Reporting Requirements
The primary purpose of the proposed rule is to clarify the
application of Davis-Bacon requirements as a result of various
appellate court decisions.
(8) Use of Other Standards
The proposed regulation addresses only statutory coverage. It does
not prescribe performance or design standards.
(9) Exemption From Coverage for Small Entities
Exemption from coverage under this rule for small entities would
not be appropriate given the statutory mandate of the Davis-Bacon Act
that all contractors (large and small) performing on DBRA-covered
contracts pay their workers prevailing wages and fringe benefits as
determined by the Secretary of Labor.
VII. Document Preparation
This document was prepared under the direction of John R. Fraser,
Deputy Administrator, Wage and Hour Division, Employment Standards
Administration, U.S. Department of Labor.
List of Subjects in 29 CFR Part 5
Administrative practice and procedure, Government contracts,
Investigations, Labor, Minimum wages, Penalties, Recordkeeping
requirements, Reporting requirements, Wages.
For the reasons set out in the preamble, Title 29, Part 5, is
proposed to be amended as follows:
PART 5--LABOR STANDARDS PROVISIONS APPLICABLE TO CONTRACTS COVERING
FEDERALLY FINANCED AND ASSISTED CONSTRUCTION (ALSO LABOR STANDARDS
PROVISIONS APPLICABLE TO NONCONSTRUCTION CONTRACTS SUBJECT TO THE
CONTRACT WORK HOURS AND SAFETY STANDARDS ACT)
1. The authority citation for part 5 is revised to read as follows:
Authority: 40 U.S.C. 276a-276a-7; 40 U.S.C. 276c; 40 U.S.C. 327-
332; Reorganization Plan No. 14 of 1950, 5 U.S.C.
Appendix; 5 U.S.C. 301; 29 U.S.C. 259; and the statutes listed in
Sec. 5.1(a) of this part.
2. Section 5.2 is amended by revising paragraphs (j) and (l) to
read as follows:
Sec. 5.2 Definitions.
* * * * *
(j) The terms construction, prosecution, completion, or repair mean
the following:
(1) All types of work done on a particular building or work at the
site thereof, including work at a facility which is deemed a part of
the site of the work within the meaning of Sec. 5.2(l) by laborers and
mechanics employed by a construction contractor or construction
subcontractor (or, under the United States Housing Act of 1937; the
Housing Act of 1949; and the Native American Housing Assistance and
Self-Determination Act of 1996, all work done in the construction or
development of the project), including without limitation--
(i) Altering, remodeling, installation (where appropriate) on the
site of the work of items fabricated off-site;
(ii) Painting and decorating;
(iii) Manufacturing or furnishing of materials, articles, supplies
or equipment on the site of the building or work (or, under the United
States Housing Act of 1937; the Housing Act of 1949; and the Native
American Housing Assistance and Self-Determination Act of 1996, in the
construction or development of the project);
(iv)(A) Transportation between the site of the work within the
meaning of Sec. 5.2(l)(1) and a facility which is dedicated to the
construction of the building or work and deemed a part of the site of
the work within the meaning of paragraph (l)(2) of this section; and
(B) Transportation of portion(s) of the building or work between a
site where a significant portion of such building or work is
constructed, which is a part of the site of the work within the meaning
of paragraph (l)(1) of this section, and the physical place or places
where the building or work will remain.
(2) Except for laborers and mechanics employed in the construction
or development of the project under the United States Housing Act of
1937; the Housing Act of 1949; and the Native American Housing
Assistance and Self-Determination Act of 1996, and except as provided
in paragraph (j)(1)(iv)(A) of this section, the transportation of
materials or supplies to or from the site of the work by employees of
the construction contractor or a construction subcontractor is not
``construction'' (etc.) (see Building and Construction Trades
Department, AFL-CIO v. United States Department of Labor Wage Appeals
Board (Midway Excavators, Inc.), 932 F.2d 985 (D.C. Cir. 1991)).
* * * * *
[[Page 57276]]
(l) The term site of the work is defined as follows:
(1) The site of the work is the physical place or places where the
building or work called for in the contract will remain; and any other
site where a significant portion of the building or work is
constructed, provided that such site is established specifically for
the performance of the contract or project;
(2) Except as provided in paragraph (l)(3) of this section, job
headquarters, tool yards, batch plants, borrow pits, etc., are part of
the site of the work, provided they are dedicated exclusively, or
nearly so, to performance of the contract or project, and provided they
are adjacent or virtually adjacent to the site of the work as defined
in paragraph (l)(1) of this section;
(3) Not included in the site of the work are permanent home
offices, branch plant establishments, fabrication plants, tool yards,
etc., of a contractor or subcontractor whose location and continuance
in operation are determined wholly without regard to a particular
Federal or federally assisted contract or project. In addition,
fabrication plants, batch plants, borrow pits, job headquarters, tool
yards, etc., of a commercial or material supplier, which are
established by a supplier of materials for the project before opening
of bids and not on the site of the work as stated in paragraph (l)(1)
of this section, are not included in the site of the work. Such
permanent, previously established facilities are not part of the site
of the work, even where the operations for a period of time may be
dedicated exclusively, or nearly so, to the performance of a contract.
* * * * *
Signed in Washington, D.C., on this 18th day of September, 2000.
T. Michael Kerr,
Administrator.
[FR Doc. 00-24257 Filed 9-20-00; 8:45 am]
BILLING CODE 4510-27-P
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