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NancyLeppink (5 pages) Department of Energy

Washington, DC 20585

June 11, 2010

Ms. Nancy Leppink Deputy Administrator

U.S. Department of Labor, Wage and Hour Division 200 Constitution Ave NW Washington, DC 20210 Dear Ms. Leppink: The Department of Energy (DOE) expects to issue loan guarantees pursuant to Title XVII of the Energy Policy Act of 2005 (EPAct) in connection with the construction of two nuclear reactors known as Project Vogtle. Project Vogtle began prior to enactment of the Energy and Water Development and Related Agencies Appropriations Act, 2010, Public Law 111-85 (FY 2010 EWD Act), which made Davis-Bacon Act (DBA) requirements applicable to projects benefitting from a loan guarantee under Title XVII'. Project Vogtle is a b4 project to construct the first nuclear power plant to be built in this country in three decades. It will contribute materially to the reduction of emissions, the development of next generation nuclear energy generating facilities, and the creation of new industrial sector jobs.

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Background

In April 2008, Georgia Power Company (GPC) 2 entered into an Engineering, Procurement and Construction Agreement (EPC Agreement) for the construction of the project with Stone & Webster Construction, Inc. (Stone & Webster).b4 b4 b4

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Project Vogtle satisfies the requirements of Section 1703 of Title XVII but not the requirements of Section 1705 of Title XVII. Prior to the enactment of FY 2010 EWD Act, only projects that satisfied the requirements of Section 1705 of Title XVII were required to satisfy the DBA requirements. GPC is one of four co-owners of Project Vogtle. DOE may issue separate loan guarantees in support of the financing by such co-owners of their interests in the project. However, we understand that GPC is responsible for the construction of the project as agent for the other co-owners. Accordingly, we focus on GPC for purposes of this discussion.

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n August 2009, GPC issued a notice to proceed and construction b4 activities on Project Vogtle commenced.

On October 28, 2009, section 310 of the FY 2010 EWD Act amended Title XVII to make DBA wage requirements applicable to projects benefitting from a loan guarantee under Title XVII. The FY 2010 EWD Act requires payment of DBA wages to individuals employed by contractors and subcontractors in the performance of construction on projects benefitting from a loan guarantee under Title XVII, and grants the Secretary of Labor all the powers to enforce this requirement that the Secretary has under the DBA.3 In December 2009, officials from DOE and DOL discussed the retroactivity of DBA obligations under 29 CFR 1.6(g). DOL advised that if a DOE loan guarantee is issued after a construction contract for the applicable project has been awarded, upon issuance of the loan guarantee, DBA requirements will become applicable to the project retroactive to the date of award of the construction contract unless DOL waives retroactivity. On February 13, 2010, DOE offered GPC a "Term Sheet" setting forth the proposed terms and b4 b4 b4 b4 conditions for a loan guarantee b4

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On April 13, 2010, Stone & Webster, the North American Contractors Association, and the Building Trades entered into a Project Labor Agreement (PLA) for Project Vogtle. b4

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GPC must accept the Term Sheet by June 18, 2010, or the Term Sheet lapses. Upon GPC's acceptance, the Term Sheet will become a Conditional Commitment pursuant to which DOE anticipates issuing a loan guarantee to support the funding of the project. The Conditional Commitment will contain numerous conditions precedent necessary for the issuance of the loan b4 b4 b4 b4 b4 b4 guarantee, including b4 The reason for the twob4 b4 b4 b4 b4 year gap between the date of the Conditional Commitment and the issuance of the loan guarantee is that numerous conditions precedent will need to be satisfied, including issuance of a
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Section 310 of the FY 2010 EWD Act is codified at 42 U.S.C. section 16512(k) and provides, "All laborers and mechanics employed by contractors and subcontractors in the performance of construction work financed in whole or in part by a loan guaranteed under this title shall be paid wages at rates not less than those prevailing on projects of a character similar in the locality as determined by the Secretary of Labor in accordance with subchapter IV of chapter 31 of Title 40. With respect to the labor standards in this subsection, the Secretary of Labor shall have the authority and functions set forth in Reorganization Plan Numbered 14 of 1950 (64 Stat. 1267; 5 U.S.C. App.) and section 3145 of Title 40."

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construction and operating license for the project by the Nuclear Regulatory Commission (NRC).

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Discussion As noted, in order to obtain the loan guarantee, GPC will have to certify tha b4

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As a threshold matter, we believe that the DBA requirements imposed by the FY 2010 EWD Act are not legally applicable to the construction activities prior to enactment of the FY 2010 EWD Act. The provisions of 29 CFR 1.6(g) on retroactivity cannot create an obligation to apply the DBA where there is no statutory obligation to do so. Prior to October 28, 2009 in this case, however, there was no statutory basis for anticipating that the DBA would apply to the project. The law is pretty clear that retroactive application of a statute is disfavored and that a statute should not be given retroactive effect unless such construction is required by explicit language or by necessary implication.4 There is no evidence of such explicit language or necessary implication here. Thus, as a matter of law, we do not believe a waiver of application of the DBA to be necessary for the period prior to enactment of the FY 2010 EWD Act. Moreover, even if DBA requirements are retroactive prior to enactment of the FY 2010 EWD Act, retroactive application of DBA would be unjust and create undue hardship here.

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4 See Landgraf v. USI Film Products, 511 U.S. 244, 280 (1994); United States v. St. Louis, S.F. & T.R. Co., 270 U.S. 1, 3 (1926).

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Assuming the necessary regulatory approvals are received, construction of Project Vogtle will result in the first nuclear power plant to be built in this country in over 30 years. It is a very expensive project with significant financing challenges. b4 b4 b4 b4

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Accordingly, DOE respectively requests that b4

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Conclusion

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The Department of Energy looks forward to working with you on this matter. If you need further information on this matter , please contact Jean Seibert Stucky , Acting Assistant General Counsel for Labor and Pension Law, at 202/586 -7532 or Jean . Stuckyg hq.doe. gov. Sincerely, O 0s7on om Scott Blake Harris General Counsel

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cc. Richard M. Resnick, Esq. Terry R. Yellig, Esq.

5 See Executive Order 13502 (February 6, 2009).