Marcus A. Mollison

Introduction This is the first of several Alerts that will address the two pending infrastructure bills currently being considered by Congress. While there remain several procedural steps for either initiative to become law, we believe there is now significant momentum that warrants close attention due to the potentially broad economic impacts. Accordingly, this series of Alerts will focus on the opportunities and disadvantages created by these twin legislative efforts for our clients’ business plans and on-going operations. While the traditional notion of infrastructure suggests major construction projects across our nation, the possibility of spending approximately $4.5 trillion over the next several years has created the so-called “Christmas Tree” effect for legislators to hang a wide variety of provisions into the legislative initiatives that are hidden in an estimated 5000 pages of statutory language. Moreover, the Biden Administration has expanded the notion of infrastructure to include “human” infrastructure—meaning the creation of expanded social programs that may rival the New Deal programs adopted by the Roosevelt Administration. Finally, many facets of the proposals involve a modernizing of infrastructure to be more responsive to challenges of climate change and demographic shifts, including rural areas. Altogether, the spending could result in significant programmatic changes that businesses will need to prepare for and react to going forward. By agreement on a bi-partisan basis in the Senate, most social programs will be included in a second bill being drafted by the Senate Democrats—which is subject to the Senate’s reconciliation budgetary rules that permit adoption by a majority of Senators and avoiding the filibuster cloture requirement of 60 votes. Accordingly, what follows is: (a) an initial summary of the new construction and related programs included in the first infrastructure bill that was adopted by the Senate on Tuesday, August 10, 2021 (titled the “Infrastructure Investment and Jobs Act,” and referred to herein as “Infrastructure-1”); (b) a description of the arcane procedural steps that are taking place under the reconciliation rules of the Senate; and (c) a discussion of the tasks before the Senate as it drafts the wide-ranging social infrastructure provisions of the second infrastructure bill (“Infrastructure-2”). Discussion Infrastructure-1 As passed by the Senate, Infrastructure-1 is comprised of 10 “Divisions,” each of which are subdivided into numerous “titles” that address (in a somewhat loosely related fashion) topics and authorizations that fall under the divisional headings. The Divisions are as follows: Division A—Surface Transportation Division B—Surface Transportation Investment Division C—Public Transportation Division D—Energy Division E—Water Division F—Broadband and Internet Division G—Miscellaneous Authorizations Division H—Revenue and Taxation Division I—Other Matters Division J—Appropriations Although touted as a $1 trillion spending bill, total new spending by Infrastructure-1 is $550 billion of new appropriations. To pay for the increased spending and avoid increasing the federal deficit, $210 billion of unused COVID-19 funds will be applied. In a compromise between Senate Republicans and Democrats, minimal increased taxes were agreed upon, but some increased revenues were included, such as sales of broadband spectrum sales, increased fees and similar revenue-generating sources.1 In regard to new construction projects, the allocation for projects divided into industry segments is as follows: Roads and Bridges—$110 billion Passenger and Freight Rail—$66 billion Power Infrastructure—$65 billion Broadband—$65 billion Clean Drinking Water—$55 billion Public Transit—$39 billion Airports, Ports and Waterways—$42 Billion Environmental Cleanup—$21 billion Highway and Pedestrian Safety—$11 billion Resilience Western Water Infrastructure—$50 billion Electric Vehicle Infrastructure—$7.5 billion Electric School buses—$7.5 billion Reconnecting Communities—$1 billion2 It should be noted that it will be impossible to commence actual construction for the vast number of projects contemplated by Infrastructure-1 by the end of 2021 (much less 2022). That is because federal and state governmental entities will first be required to create project plans, complete environmental assessments, engage in competitive contracting and similar project management functions. Further, both federal and state regulatory agencies (particularly the Department of Transportation) must commence significant rulemaking to create a wide array of oversight functions. Importantly, many of the programs in Infrastructure-1 will be new programs that are opened to states, communities and non-profit organizations. We expect that the newness of the programs and their extensive reach into states and communities will cause them to be relevant to businesses at all levels. While nothing is ever final in legislation, the sensitivity of the agreement by Republicans to vote in favor of Infrastructure-1 likely means that few modifications will be made to this bill as it moves over to the House for consideration. Infrastructure-2 and the Reconciliation Process In order to appreciate how Infrastructure-2 eventually may be adopted—along with its proposed $3.4 billion price tag—it is useful to understand how the reconciliation process works in the Senate, which permits a budget bill for certain programs to be adopted by a majority of the Senate (because the filibuster rules do not apply to reconciliation legislation). The purpose of the reconciliation process—which was somewhat grudgingly agreed to by then President Nixon3 -- allows Congress to use an expedited procedure when considering legislation that would bring existing spending, revenue, and debt limit laws into compliance with changing fiscal and policy priorities established in the annual Congressional budget. Stated another way, for stated fiscal and policy goals to be achieved, Congress is authorized to alter current revenue, direct spending, or debt limit laws (and to reconcile existing law with its current priorities).4 Budget reconciliation is an optional, expedited legislative process that consists of several different stages, which begins with the adoption of a comprehensive budget resolution, which also must include reconciliation “directives” to affected Senate committees. These directives trigger the second stage of the process by instructing individual committees to develop and report legislation that would change laws within their respective jurisdictions related to modified direct spending, revenue or debt limits. Once a specified committee develops legislation, the reconciliation directive may further direct it to report the legislation for consideration in their respective chamber or submit it to the Budget Committee to be included in an omnibus reconciliation measure.5 On August 11, 2021, the Senate followed these reconciliation rules by adopting a budget resolution (the “Resolution”) drafted by the Senate Budget Committee (chaired by Senator Sanders). The Resolution takes two steps in increasing federal spending and programs: First, it significantly increases federal appropriations; second, instructs specified Senate committees to draft implementing legislation that includes levels of spending included in the Resolution. Two matters should be noted. First, reconciliation limits the inclusion and amendment of laws that are direct obligations of the federal government, such as Social Security, Medicare, Medicaid, unemployment insurance, and military and federal civilian pensions. While the determination whether a specific statute is germane and can be included in reconciliation is the province of the House and Senate Parliamentarians, the desire by Democrats to create and/or increase entitlement (i.e., social welfare) programs would arguably allow many of new programs and entitlements to be included in a reconciliation bill strongly being advocated for by the liberal wing of the Democratic Party. As noted above, the Resolution directs the following Senate committees to draft legislation to address the new spending authorizations: Committee On Agriculture, Nutrition, And Forestry Committee On Banking, Housing, And Urban Affairs Committee On Commerce, Science, And Transportation Committee On Energy And Natural Resources Committee On Environment And Public Works Committee On Finance Committee On Health, Education, Labor, And Pensions Committee On Homeland Security And Governmental Affairs Committee On Indian Affairs Committee On The Judiciary Committee On Small Business And Entrepreneurship Committee On Veterans’ Affairs Second, reconciliation contemplates what is termed in the Senate to be “normal order,” which means that the designated Senate committees referenced above must draft required legislation. In that regard, the scope of $4.3 billion in new benefits, entitlements and programs by the federal government is so remarkably broad, that significant lobbying by all constituencies directed toward the responsible Senate committees has already begun. Whether or not the end product for a draft Infrastructure-2 bill will satisfy the Senate’s 50% plus 1 requirement to adopt a reconciliation bill will not be determined until later this year or early in 2022.7 Though beyond the scope of this Alert, Senator Sanders expanded upon the instructions provided in the Resolution by identifying numerous legislative initiatives and programs to be undertaken by the above-referenced committees, including: Expanded Child Care Tax Credits Universal Pre-Kindergarten Universal Paid Family and Medical Leave Medicare Negotiation Authority for Prescription Drugs Expanded Medicare Coverage Expanded Affordable Housing Climate Change Renewable Energy Immigration Reform Future Infrastructure Alerts Because of the impact that literally hundreds of statutory provisions—currently in Infrastructure-1 and soon to be drafted Infrastructure-2 will have across the entire economy—Dorsey will be closely monitoring each bill and providing analysis to our clients regarding our views regarding both opportunities and possible detrimental effects those bills, if enacted, will have over the next decade in regard to governmental expenditures and expanded social obligations. As the impact of these two bills emerge and are analyzed, Dorsey has organized a team of attorneys available to assist our clients and friends with current analysis and advice for planning and determining appropriate business responses. 1 Despite bi-partisan statements that the deficit will not be increased, the Congressional Budget Office scored Infrastructure-1 as increasing the federal deficit by $256 billion during the 2012-2031 time period. 2 UPDATED FACT SHEET: Bipartisan Infrastructure Investment and Jobs Act | The White House. 3 Section 310 of the Congressional Budget Act of 1974 as amended (P.L. 93-344). 4 Since its first use in 1980, these expedited procedures have been used to pass 25 reconciliation bills. 5 Reported reconciliation legislation may be considered under expedited procedures in both the House and Senate, but the significant factor that affects the Senate is that a reconciliation bill only requires a majority of Senators to adopt the same (the House does not have a comparable super-majority requirement to pass legislation).  If there are differences between a House and Senate version of a reconciliation bill, a conference committee must meet to resolve any differences before the combined bills can be sent for approval by the President. 6 HEN21B67 (senate.gov). 7 MEMORANDUM for Democratic Senators - FY2022 Budget Resolution.pdf (senate.gov).  

Working from home. When it started back in March, it was a novel experience. Dry cleaning bills went to zero, we could reallocate commuting time to catching up on Netflix, and we knew we’d be home for family dinner. Fast-forward to November. The novelty has worn off. Putting on clothes that require dry cleaning is a rare treat. The Netflix queue is long exhausted. And while family meals are indeed important, having breakfast, lunch, and dinner with the whole family every day for eight months might qualify as too much of a good thing. So can you go back to the office yet? And can you bring back to the office your employees who have been working from home? In Minnesota, the short answer is likely “no”, but both questions require a fact-specific analysis. For a longer answer, read on. Current restrictions: Current Minnesota law requires that “Any worker who can work from home must do so.” See Minnesota Emergency Executive Order 20-74, June 5, 2020, paragraph 7(a), as affirmed by Minnesota Emergency Executive Order 20-96, November 10, 2020, paragraph 1 (collectively, the “Order”). The Order’s requirement applies to employees in any industry, regardless of whether the state has designated that industry as “critical.” (For context: critical industries include healthcare and public health, food and agriculture, energy, transportation, critical manufacturing, and financial services, among others.) Regarding the requirement, “Any worker who can work from home must do so,” Minnesota has not defined the word “can” or set forth any written guidance on how to interpret the word “can.” Rather, in the state’s view, if a worker is able to perform his/her job functions at all, even less productively than usual, then the employee “can” work from home and therefore must do so. The following facts have proven relevant to state authorities: (1) whether an employee has a broadband internet connection at home (lack of broadband could support a finding that the employee cannot work from home); (2) whether data security is particularly important for the person’s job (so, a person who has to have Social Security Numbers up on their screen arguably cannot work at home); and (3) whether an employee has been working at home since the state first issued work-from-home orders in March. Regarding that last item: if an employee has been working at home since March, the state concludes the person “can” work from home, and therefore is skeptical of any effort to return to work now. In contrast, the following facts are not relevant to the state’s determination of whether an employer has violated the Order: (1) whether employees have a strong preference for returning to work; (2) whether executive leadership thinks the Order is warranted; and (3) whether the employer can keep employees socially distanced once they’re in the workplace. (COVID safety in the workplace becomes relevant only if an employee cannot perform job functions from home and therefore may return to the office.) Stiff penalties for non-compliance: The Order sets out stiff penalties for non-compliance. An individual who willfully violates the Order is guilty of a misdemeanor and faces a fine of up to $1,000 and jail time of up to 90 days. See Order 20-96, paragraph 8. The penalties are even more strict for the leaders of a business: “Any business owner, manager, or supervisor who requires or encourages any of their employees, contractors, vendors, volunteers, or interns to violate this Executive Order” is guilty of a gross misdemeanor and faces a fine of up to $3,000 and jail time of up to 1 year. Id. The Minnesota Attorney General, city attorneys, and county attorneys may seek civil relief, including injunctions of actual or threatened violations of the Order, costs of investigation, and penalties of “up to $25,000 per occurrence.” Id. Governor Walz’s November 10 Executive Order added the ability to recoup the costs of investigations to the existing powers provided under previous orders. Real risk of enforcement: The practical risk of enforcement is real. Employees and their significant others have been contacting the State of Minnesota to note perceived violations of the applicable Executive Orders, often out of concern that an employer’s actions may be exposing them to COVID-19. Specifically, Minnesotans have been lodging complaints with the state’s “Work From Home Violation Helpline” and the Dept. of Labor & Industry (which includes Minnesota OSHA), among other entities. The state—via the entity that received the complaint in the first place or via the Minnesota Bureau of Criminal Apprehension—then inquires with the employer and demands an accounting for why employees are back in the office. Looking to the future: We are in uncharted waters, but it doesn’t appear that Minnesota authorities will relax restrictions any time soon. The legal basis for the work-from-home requirement is Minnesota Gov. Tim Walz’s underlying declaration of a state of emergency. Gov. Walz has been renewing that declaration of state of emergency every month. Despite pressure from Minnesota Senate Republicans to cease renewing the state of emergency, all indications are that Gov. Walz will continue to renew it until COVID stops spreading on its own (an unlikely scenario) or because the health care system develops and deploys a vaccine (more likely). The Walz Administration has said that it will modify the work-from-home and related COVID restrictions based upon various public-health indicators in Minnesota, primarily the following: (1) the percentage of COVID-19 tests that come back positive; (2) daily new cases per 100,000 residents; (3) weekly COVID-19 tests per 10,000 residents; (4) weekly new hospital admissions per 100,000 residents; and (5) percentage of cases contracted due to community spread as opposed to a known source of exposure. Unfortunately, as of November 11, almost every one of those indicators is pointed in the wrong direction, as you can see at the Minnesota Department of Health dashboard available at this link. Therefore, all evidence suggests that the state government will be maintaining the current restrictions for the foreseeable future. The state has not specified what changes in those indicators would correspond to additional or fewer restrictions on office work. What should I do? To manage risk of non-compliance with the Order, you should take four steps: (1) Ensure that no one at your company is requiring or encouraging any worker to work in the office if that worker could perform his/her job functions remotely.  (2) Ensure that workers who can perform their job functions remotely are doing so.  (3) If you have any employees present in any facility for any reason, ensure your business has developed and implemented a COVID-19 Preparedness Plan, as required by Minnesota law for employers in both critical and non-critical industries.  (4) If you receive an inquiry from any enforcement authority, consult counsel before responding. Dorsey & Whitney attorneys have been guiding companies through the full range of COVID-19-related regulations since the pandemic began—including addressing inquiries from authorities and drafting Preparedness Plans—and stand ready to assist you.