Year End Edition
Congressional Overview
On Saturday, Dec. 13, Congress passed the Consolidated and Further Continuing Appropriations Act, 2015
(dubbed the “CRomnibus”), which contains many of the recommendations put forward in Solutions Not Bailouts;
the President signed it into law on Dec. 16. This legislation will provide many troubled multiemployer plans with
the tools they need to remain solvent and protect long-term participant benefits, and will also address several
technical issues and shortcomings of the Pension Protection Act. With the President’s signature now on the $1.1
trillion CRomnibus, a government shutdown over the holidays has been avoided. The Senate also cleared a $41.6
billion package of tax breaks with a 76-16 vote, sending the legislation to the president for signature. The bill
extends four dozen tax breaks for both businesses and individuals, but only for one year. Finally, Congress has
convened for the rest of the year, and the new GOP-majority Congress will reconvene in January.
Multiemployer Pension Reform Passes
The House and Senate passed multiemployer pension reform legislation aimed at allowing deeply troubled plans
to trim benefits for current retirees to avoid running out of money. The legislation was included in the
CRomnibus spending bill (which the President just signed into law). The legislation would raise safety-net
premiums on multiemployer plans to help shore up the PBGC. The House HELP Committee wrote provisions in
the legislation that would give participants the right to vote on proposed benefit cuts, but their vote could be
overridden in cases where a plan’s failure would threaten the entire safety net. Those premiums would increase
to $26.00 per worker from the current $13.00; however, that is down from earlier proposals. Another provision
of the legislation would reduce pension contribution liabilities for the United Parcel Service, Inc. and potentially
others. Finally, “new plan design” provisions offered by the NCCMP were not included in the legislation. Those
provisions will likely be addressed in the next Congress.
A Brief History of the PBGC
Nat Weinberg, for many years the chief economist of the United Automobile Workers (UAW), invented the idea
of government insurance of private pensions in 1961. “If we are going to negotiate for bigger pensions, which
the auto companies may not be able to pay, he reasoned, let’s get the government to guarantee them.” His idea
resulted in the creation of the U.S. government’s Pension Benefit Guaranty Corp. in 1974. How is the PBGC
insurance program doing on its 40th anniversary? Its net worth is negative $62 billion as of the end of
September.
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U.S. Economic Growth
More than five years into the economic expansion, the signs that economists look for to herald the pickup in pay
that has long eluded American workers are starting to emerge. Wages and salaries climbed last quarter by the
most since 2008 as a dwindling number of unemployed per job opening approached a tipping point. Amid rising
profits and sales per employee, some companies have a cushion to boost compensation. Evidence of a rebound
in employee earnings is appearing in certain industries and regions, including Texas and North Dakota that are
riding the energy boom and the strengthening homebuilding market in the U.S. Southeast.
Per a Wall Street Survey of economists, the U.S. economy is poised for stronger growth in 2015 due to falling gas
prices, a tighter job market, and expectations of larger wage gains; however, “similar enthusiasm a year ago,
about 2014, was not matched by reality.” Per the economists, the U.S. economy should grow (an inflation
adjusted 2.9 percent) across the four quarters of 2015. The forecast would make 2015 the second-strongest year
of the economic expansion, which passed its five-year anniversary last summer.
CBO’s Deficit Reduction Report Recommends Eliminating Davis-Bacon
The Congressional Budget Office (CBO) recently released its latest report titled, “Ways to reduce the
Deficit.” One of the areas they highlight is to eliminate the Davis-Bacon Act. Per the CBO, Congress faces an
array of policy choices as it confronts the prospect of large annual budget deficits and further increases in
the already-large government debt that are projected to occur in coming decades under current law. To help
inform lawmakers about the budgetary implications of changing federal policies, the CBO periodically issues
volumes of policy options and their effects on the federal budget. This report provides estimates of the
budgetary savings from 79 options that would decrease federal spending or increase federal revenues over
the next decade. The estimates are updates of many of those presented in the CBO’s 2013 report, “Options
for Reducing the Deficit: 2014 to 2023.”
The options cover a broad range of areas in the federal budget, including defense, energy, Social Security,
healthcare programs, other benefit programs and provisions of the tax code. The budgetary effects
identified for most of the options span the 10 years from 2015 to 2024 (the period covered by the CBO’s
baseline budget projections in 2014), although many of the options would have longer-term effects as well.
This document presents options in the following categories:
 Mandatory spending other than that for health-related programs
 Discretionary spending other than that for health-related programs
 Revenues other than those related to health programs
 Health-related programs and revenue provisions
OSHA Update
OSHA is expected to finish analyzing stakeholder comments on its silica proposal by June 2015. The agency
received vast amounts of public input during an extended process involving written comments and public
hearings. Regulatory analysts have estimated that the agency needs to issue a final rule in spring 2016 to ensure
any congressional review occur during the Obama administration. Additionally, OSHA will publish its proposed
rule for regulating beryllium by January. The agency sent a version of the proposal to the White House Office of
Management and Budget for review on September 4, 2014.
Finally, two closely watched record-keeping rulemakings remain on OSHA's agenda, although target dates were
delayed. Publication of the final rule seeking to allow OSHA to post employers' injury and illness data on its
website and require electronic filing of OSHA 300 Forms is scheduled for August, five months later than the
previously announced March goal. The other rulemaking to clarify employers' “continuing obligation” to make
and maintain accurate injury and illness records is scheduled to have its notice of proposed rulemaking
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published in November, not August as previously scheduled. The proposal was prompted by a 2012 federal
appeals court decision ruling that OSHA could not cite an employer for alleged record-keeping violations that
were more than six months old.
Inspections Involving Temporary Worker Service Agencies Skyrocketed in 2014
Per OSHA, inspections involving temporary worker service agencies increased 322 percent in fiscal year 2014.
OSHA conducted 283 inspections of work sites employing temporary workers, compared with 67 in 2013 and 29
in 2012. There was no change in the number of inspections by state workplace safety agencies. In both 2014 and
2013, state agencies conducted 242 inspections of workplaces staffed by temp worker agencies. In 2012, state
agencies conducted 220 visits. The rapid growth of inspections was the result of OSHA's Temporary Worker
Initiative, which was announced in April 2013, following several incidents of temporary workers being injured or
killed shortly after starting their assignments.
EPA’s 2014 RFS Standards will not be Finalized by the End of the Year
On Nov. 21, the Environmental Protection Agency’s (EPA) Acting Assistant Administrator for the Office of Air and
Radiation, Janet McCabe, announced that the EPA will not be finalizing 2014 applicable percentage standards
under the Renewable Fuel Standard (RFS) program before the end of 2014. In light of this delay in issuing the
2014 RFS standards, the compliance demonstration deadline for the 2013 RFS standards will take place in 2015.
NLRB Rules that Employees can use Company Emails for Union Organizing
The NLRB recently ruled that employees can use their company email accounts for union organizing and other
workplace-related purposes, provided they do it on their own time. Per the NLRB ruling, once an employer gives
an employee access to the company email system, then the business cannot restrict what the employee emails,
so long as it is generally workplace-related and is not during working hours. The three Democrats on the five
member board voted “yes,” while the two Republicans abstained. The ruling reverses a 2007 board decision that
employees do not have a legal right to use their employers’ email for union activity or discussing wages or other
workplace issues.
President Obama Taking Criticism on Immigration Reform
As reported in the Washington Post, “the President has faced criticism on all sides of [the immigration reform]
issue with conservatives accusing him of giving amnesty to law-breakers and immigration advocates decrying
what they see as excessive deportations.” Federal government attorneys have tried to broaden the number of
people who can stay in the United States while shying away from the kind of overreach that could give Congress
grounds to overrule the policy.
On Nov. 19, the Justice Department’s Office of Legal Counsel issued a 33-page memo laying out the action’s legal
reasoning. At the heart of their justification is the idea of prosecutorial discretion in which the memo references
numerous historical and judicial precedents intended to bolster the idea that the president has such discretion.
This is generally not subject to judicial review by neither the Supreme Court nor the lower federal courts.
Ultimately, in their view, the President has the discretion to decide which illegal immigrants should be expelled
from the country and which should be protected from deportation, but his action also acknowledges that the
sustainability of such policy rests in the political arena.
GOP Members Want to Start 2015 off by Challenging President Obama’s Immigration Policies
Republicans have yet to find a clear way to challenge the Administration’s immigration policies. GOP members
say they want leadership to kick off the year with a concrete plan to confront President Obama’s immigration
actions, especially as some conservatives feel they squandered an opportunity this year in omnibus negotiations.
One of their first chances will come when the CR for Homeland Security expires February 27, 2015. However, if
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Republicans severely constrain or temporarily block funding for DHS, it could be a hollow victory, as most the
department’s activities would continue.
When the Obama administration prepared for the shutdown in 2013, it exempted more than 88 percent of the
nearly 60,000 Customs and Border Protection workers employed at that time from furlough. The U.S. Citizenship
and Immigration Services, the agency in charge of processing deportation waivers for those now temporarily
eligible to remain in the country, is funded mostly by fees it collects and was directed to keep on more than 99
percent of its roughly 12,000 employees working. The Administration would seem likely to use those guidelines
again if funding were cut off. Some Republicans say the better strategy may be to pass an authorization bill
altering immigration rules, although they would face the threat of a veto. Others say challenging the executive
orders in court may be the most fruitful option.
Halliburton Lobbies White House on Fracking Rules
Halliburton lobbied White House officials on the Obama administration’s proposed hydraulic fracturing rules.
The Halliburton representatives complained that the Interior Department’s proposed rules for fracking on
federal land do not go far enough in allowing Halliburton to keep secret the chemicals it uses in fracking.
Requiring certain disclosures of the chemicals that fracking companies use was one of the main focuses of
Interior’s rules proposed in 2013.
Per Halliburton, “as currently drafted, the rule would require the holders of most trade secret information, the
service companies and chemical suppliers, to disclose their trade secrets to operators and would allow only the
operators to seek protection for trade secrets.”
The Interior Department proposed the rules last year in an attempt to properly control fracking, which has taken
off in recent years. Environmentalists and public health advocates have pushed for companies involved in
fracking to disclose the chemicals they use, but those companies have held that the substances are trade
secrets. The Interior Department proposed requiring some disclosures of chemicals for federal land frackers, but
the regulations would allow some trade secrets to be kept private. Halliburton complained to the White House
that the trade-secret provisions do not go far enough to protect fracking service providers like Halliburton. The
White House Office of Management and Budget (OMB) started to review the rules in August, the last step
before Interior Department can make them final. During that process, the OMB takes meetings with nearly any
interested stakeholders on the rules it is reviewing.
Oil Bust of 1986
The last time that U.S. oil drillers got caught up in a price war orchestrated by Saudi Arabia, it ended badly for
the Americans. In 1986, the Saudis opened the spigot and sparked a four-month, 67 percent plunge that left oil
just above $10 a barrel. The U.S. industry collapsed, triggering almost a quarter-century of production declines,
and the Saudis regained their leading role in the world’s oil market. So while no one expects the Saudis to ramp
up output now like they did then and U.S. shale oil companies are pledging to keep drilling regardless, the
memory of that bust looms large for American industry executives. The Organization of Petroleum Exporting
Countries (OPEC), responsible for about 40 percent of the world’s output, pumped 31 million barrels a day in
October, exceeding its official target of 30 million. Oil prices have tumbled more than 30 percent from a 2014
peak in June.
Saudi Arabia was not the first to blink in 1986. The kingdom had been the world’s swing producer for years,
boosting output when prices rose and scaling back when they dropped. Per Bloomberg News, as fellow OPEC
members pumped more crude, the kingdom’s production fell to 3.175 million barrels a day in 1985 from more
than 9 million in 1981. In December 1985, Saudi Arabia declared its intention to regain market share and oil
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prices began to decline, sinking to as low as $10.42 a barrel in March 1986 from a November 1985 peak of
$31.72. OPEC reached a new production-sharing agreement in December 1986. By then, the damage to U.S.
producers had been done. The national unemployment average rose to 7 percent (with 8.9 percent
unemployment in Oklahoma and 9.3 percent unemployment in Texas). Per the Energy Information
Administration, production in Oklahoma fell 8.3 percent in 1986; it fell by 7.1 percent in Texas.
Election Results
Senate
On Election night, the Republicans clinched Senate control (52-45). The GOP needed to gain six seats to win the
majority, and had already gained seven seats before polls closed in Alaska. Republicans won open seats held by
Democrats in Montana, West Virginia, Iowa and South Dakota, and knocked off incumbents in North Carolina,
Arkansas and Colorado. With runoff elections post election night, their margin grew to nine seats by the end of
the 2014 cycle for a 54-46 majority. Finally, Sen. McConnell (R-KY) won his reelection fight making him the
Senate majority leader in the next Congress. However, despite this GOP control of the Senate, the Republicans
did not gain the 15 seats needed for a 60-vote supermajority, which is the number of senators needed to
dissolve filibusters; thereby, to get anything done in the Senate the GOP would still have to compromise with
the Democrats.
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Alaska: Republican Dan Sullivan defeated Democratic Sen. Mark Begich.
Arkansas: Republican Rep. Tom Cotton ousted Democratic Sen. Mark Pryor, who had sought to distance
himself from the president.
Colorado: Democratic Sen. Mark Udall fell to Republican Rep. Cory Gardner, who made history with the
state's first defeat of a Senate incumbent in 36 years.
Georgia: Businessman David Perdue captured the state's open Senate seat for the GOP, besting
Democrat Michelle Nunn.
Iowa: Republican state Sen. Joni Ernst bested Democratic Rep. Bruce Braley for the seat of retiring Sen.
Tom Harkin.
Louisiana: Democratic Sen. Mary Landrieu lost to Republican Rep. Bill Cassidy.
New Hampshire: Sen. Jeanne Shaheen, D-N.H., held off former Massachusetts Sen. Scott Brown.
North Carolina: Sen. Kay Hagan, D-N.C., lost her seat despite a strong campaign against state House
Speaker Thom Tillis.
Senate Minority Leader Mitch McConnell: Poised to become majority leader in the next Congress. Sen.
Ted Cruz, R-Texas, said "under no circumstances" would he challenge McConnell for the top post.
Making history: From the first black Republican woman elected to Congress, to the first female veteran
elected to the Senate, the midterms saw several unprecedented results. Pennsylvania's Tom Corbett
became the state's first incumbent governor to lose reelection.
House
(U.S. House All 435 House seats were up for election.)
Current House: Republicans - 233 | Democrats - 199
Seats Gained/Lost: Republicans +14 | Democrats -11
New House: Republicans - 242 | Democrats - 174
Popular Vote: Republicans - 52.6 percent | Democrats - 44.4 percent
House GOP will Feature Expanded Group of Lawmakers from Democratic-Friendly Districts in 2015
When the new Congress takes the oath in January, Republicans could occupy as many as 247 seats, giving them
their most dominant House majority in over 80 years, but it will also usher in an expanded group of Republicans
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from Democratic-friendly districts, a shift that will reorder the politics of the chamber. The new Republican
Conference will include 26 members from districts that President Obama won in 2012, and 47 lawmakers from
districts that Mitt Romney won by less than 10 percentage points. In the previous Congress, just 17 Republican
incumbents were in districts that President Obama won and 44 in seats Romney won by less than 10 points. The
rise of swing-district Republicans could strengthen the hand of Speaker Boehner against hard-line conservatives
and create a new incentive for compromise with Democrats on issues with centrist appeal. The incoming faction
of moderate-minded lawmakers could give Speaker Boehner more room to maneuver, but this could create new
complications for the GOP. Even the most bullish Republicans acknowledge they have maxed out their majority
and now must protect their politically vulnerable lawmakers, who will face pressure to distinguish themselves
from the party’s conservative wing.
Southern Democrats Fall
With the fall of three-term U.S. Sen. Landrieu, Louisiana will not have a Democratic statewide elected official for
the first time since 1876, and the Republican Party will control every Senate seat, governor’s mansion and
legislative chamber from the Carolinas to Texas. House delegations from the same region are divided almost
entirely by race, with white Republicans representing majority-white districts, while majority non-white districts
are represented by black or Hispanic Democrats. The Louisiana Senate race mirrored contests in other states
President Obama lost in 2012, with Sen. Landrieu joining Sens. Begich (AL), Hagan (NC) and Pryor (AK) in defeat.
Democrats ceded seats in Montana, South Dakota and West Virginia after incumbents opted not to run again.
Republicans Sweep Governors’ Races
Republicans swept governor's races across the country, holding on to control of key swing states like Florida,
Michigan and Ohio and scoring upsets in Democratic bastions like Maryland, Massachusetts and Illinois. Among
the victors was Wisconsin Gov. Scott Walker, a conservative darling who won his third election in four years.
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