Regulatory and Legal Reform

Washington, D.C. – Following the release of the Environmental Protection Agency’s rulemaking surrounding the monitoring for per- and poly-fluoroalkyl substances (PFAS) in municipal water systems, National Association of Manufacturers Managing Vice President of Policy Chris Netram released the following statement:

“Manufacturers support efforts to remove potentially harmful chemicals from our water systems, but again the EPA has set standards that are not feasible and will directly threaten manufacturers’ ability to invest, innovate and create jobs in America. In many instances, there is no viable alternative for these chemicals, and companies may be forced to change plans dramatically to grow facilities and hire new workers.

“The severity of the proposed regulations will mean higher prices for everything—community water and waste systems, medical treatments and electronics. More alarming, the regulations will make it more difficult to produce the equipment our military needs to defend our nation. The final rule requires water systems to monitor, sample and treat at near zero levels, which will increase costs throughout the supply chain. We are looking at all options to reverse this harmful decision and to slow the regulatory onslaught that directly undermines the president’s efforts to grow manufacturing in the United States.”

-NAM-

The National Association of Manufacturers is the largest manufacturing association in the United States, representing small and large manufacturers in every industrial sector and in all 50 states. Manufacturing employs nearly 13 million men and women, contributes $2.89 trillion to the U.S. economy annually and accounts for 53% of private-sector research and development. The NAM is the powerful voice of the manufacturing community and the leading advocate for a policy agenda that helps manufacturers compete in the global economy and create jobs across the United States. For more information about the NAM or to follow us on Twitter and Facebook, please visit www.nam.org.

The Environmental Protection Agency’s new heavy-duty tailpipe emissions rule is unrealistic and unfeasible, the NAM said Friday.

What’s going on: “The rule—proposed in April 2023—is part of the ‘Clean Trucks Plan’ unveiled in 2023, which includes light-duty tailpipe and nitrogen oxide rules,” Bloomberg Law (subscription) reports.

• “The[se] ‘Phase 3’ standards build on previous phases of a broader regulatory program to stem greenhouse gas emissions from vehicles such as delivery trucks, long-haulers, and buses.”
• The Phase 1 rule was finalized in 2011, and the Phase 2 rule in 2016.

Why it’s problematic: While the new regulation grants automakers more time for implementation than previous versions did—thanks to input from manufacturers and their advocates, including the NAM—it still “fails to reconcile with the realities of current U.S. infrastructure,” according to an NAM social post.

• “Critical permitting reforms to strengthen transmission systems and a technology-neutral approach for manufacturers are essential to reaching U.S. climate goals,” the NAM wrote.

What should be done: Congress must reform the broken U.S. permitting system so we can build the electric vehicle charging station infrastructure required to implement a rule of this magnitude, the NAM said earlier this month.

The U.S. Occupational Safety and Health Administration’s newly finalized “walkaround rule” is unlawful and will not further the agency’s mission of ensuring safe working conditions, the NAM said after the rule’s release.

What’s going on: The long-awaited final rule, which goes into effect May 31, states that “workers may authorize another employee to serve as their representative or select a non-employee,” according to the Department of Labor.

• The policy broadens the basis upon which a non-employee representative may be deemed “reasonably necessary to the conduct of an effective and thorough inspection.”

Why it’s problematic: In addition to having little to do with making workplaces safer, the new policy violates OSHA’s own mandate—and, quite possibly, manufacturers’ constitutional rights, the NAM said.

• The “rule does nothing to advance OSHA’s mission of ensuring safe working conditions,” said NAM Chief Legal Officer Linda Kelly. “Forcing businesses to accommodate third parties with no safety expertise in their facilities infringes on employers’ property rights, invites new liabilities and introduces elements of chaos and disruption to safety inspections. … [It also] clearly violates OSHA’s statutory mandate to conduct inspections within ‘reasonable limits and in a reasonable manner’ with ‘minimum burden’ on employers, and potentially violates manufacturers’ constitutional rights.”

Next steps: The NAM is weighing legal action to reverse the final rule.​​​​​

Washington, D.C.: Following the release of the Occupational Safety and Health Administration’s recent rulemaking on the Worker Walkaround Representative Designation Process, National Association of Manufacturers Chief Legal Officer Linda Kelly released the following statement:

“Today’s rule does nothing to advance OSHA’s mission of ensuring safe working conditions. Forcing businesses to accommodate third parties with no safety expertise in their facilities infringes on employers’ property rights, invites new liabilities and introduces elements of chaos and disruption to safety inspections.

“By unlawfully expanding third-party access to manufacturers’ worksites, this proposal clearly violates OSHA’s statutory mandate to conduct inspections within ‘reasonable limits and in a reasonable manner’ with ‘minimum burden’ on employers, and potentially violates manufacturers’ constitutional rights. And, for the first time, OSHA would determine who qualifies as an ‘authorized representative’ of employees, which until now has been exclusively recognized as the jurisdiction of the National Labor Relations Board.

“This is another clear example of the federal regulatory onslaught—a proposal that upends settled precedent and ignores the reasoned decision-making required by the Administrative Procedure Act. For these reasons, the NAM will be considering legal action to reverse this incredibly destabilizing decision.”

-NAM-

The National Association of Manufacturers is the largest manufacturing association in the United States, representing small and large manufacturers in every industrial sector and in all 50 states. Manufacturing employs nearly 13 million men and women, contributes $2.85 trillion to the U.S. economy annually and accounts for 53% of private-sector research and development. The NAM is the powerful voice of the manufacturing community and the leading advocate for a policy agenda that helps manufacturers compete in the global economy and create jobs across the United States. For more information about the NAM or to follow us on Twitter and Facebook, please visit www.nam.org.

If manufacturing is a team sport, the rules of the game are the U.S. tax code—and to ensure a level playing field for everyone, that code must remain constant, Ketchie President and Owner and NAM Small and Medium Manufacturers Group Chair Courtney Silver told the Senate Finance Committee Tuesday.

The main way to do it, she said, is by restoring three key tax policies: immediate expensing for domestic R&D, enhanced interest deductibility and full expensing.

What’s going on: Thanks to the 2017 Tax Cuts and Jobs Act, Silver’s family-owned, North Carolina–based precision machining company and many other manufacturers were able to grow their companies, invest in workers and give back to their communities, Silver said in testimony during the “American Made: Growing U.S. Manufacturing Through the Tax Code” hearing.

• But two years ago, “the rules of the game began to change, making it more difficult for manufacturers to thrive in America,” she went on. “Crucial policies began to expire.”

Why it’s important: If Congress does not act soon, additional pro-growth tax cuts will expire, further harming manufacturing in the U.S.

• And “more tax increases are on the way,” Silver told committee members, referring to the additional TCJA provisions scheduled to expire next year. “Other critical provisions expire at the end of 2025, which will have a direct impact on the manufacturing sector. Ketchie will be directly harmed by the loss of the pass-through deduction, the increases in our tax rates and the reduced protection from the estate tax.” 

Unstoppable combination: The 2017 tax reforms, “paired with pro-growth policies like immediate expensing of capital investments, drove historic growth in the manufacturing sector,” Senate Finance Committee Ranking Member Mike Crapo (R-ID) said during the hearing, citing NAM data on the significant, positive impact of the cuts.

• Indeed, “Ketchie might not be here today if we did not have the economic boom caused by tax reform in the years prior to the pandemic,” said Silver, who called immediate expensing for domestic R&D expensing, enhanced interest deductibility and full expensing “a game-changer for the manufacturing industry.” 

Team players: Congress must restore these three provisions and other critical provisions that are set to expire next year.

• “Manufacturing truly is a team sport, and you are all on that team,” Silver told the committee. “Small companies like mine are counting on you to play with us rather than against us, and to ensure that our tax code does the same.”
• The NAM has called on the Senate to advance the House-passed Tax Relief for American Families and Workers Act, which would restore the three key tax policies.

The NAM was host to multiple representatives and dignitaries from Germany and Mexico last week for a series of meetings aimed at strengthening the ties between the two countries and the U.S.

What’s going on: On different days last week, the NAM met with German Ambassador to the U.S. Andreas Michaelis; the leadership of the Mexican Business Coordinating Council; the presidents of the Federation of German Industries and the Germany-based Mechanical Engineering Industry Association; and a delegation from the Germany-based Transatlantic Business Initiative.

• A discussion common to all the gatherings: improving international cooperation to support closer economic partnerships between our countries.

The U.S.–Europe relationship: In a meeting with Michaelis, Germany’s ambassador to the U.S. since August 2023, the NAM expressed the importance of a continued, positive economic relationship between the U.S. and Europe—especially now, given Russia’s continued war against Ukraine.

• “Great to meet with German Ambassador to the U.S. Andreas Michaelis to discuss the importance of strengthening our economic ties and our shared democratic values,” NAM President and CEO Jay Timmons wrote in a social post.
• Germany, the fourth-largest economy in the world, is a vital U.S. trade and investment partner. In 2022, it contributed $196 billion of manufacturing trade and $218 billion of manufacturing investment.

Challenges remain: However, some proposed and expected European Union regulations present a hurdle to future collaboration, a matter the NAM raised in its meetings.

A key partner: In their discussion with Mexican Business Coordinating Council President Francisco Cervantes—with whom Timmons met last summer ahead of the third United States–Mexico–Canada Agreement “Free Trade Commission” in Cancun, Mexico—NAM leaders underscored the significance of the increasingly close trade ties between the U.S. and Mexico.

• In 2023, for the first time in two decades, Mexico became the leading source of goods imported into the U.S., and in 2022, the value of the U.S. products and services trade with Mexico was $855 billion.
• The CCE is Mexico’s broadest business federation.

Concerning disruptions: Last year, in a move that worried both the NAM and the CCE, the U.S. twice suspended the processing of commercial imports from Mexico so it could redirect U.S. Customs and Border Protection personnel to handle an influx of migrants at the U.S.–Mexico border.

• These temporary closures cost manufacturers in the U.S. hundreds of millions of dollars each day. 

USMCA: The groups also discussed the USMCA, underscoring the importance of maintaining this critical agreement while also continuing to spotlight commercial challenges in Mexico:

• Its energy policies, which favor Mexican energy firms and have denied and revoked permits to major U.S. energy investors
• Its de facto ban on genetically modified corn, as well as some of its telecommunications-sector policies and its treatment of state-owned enterprises

As lawmakers consider proposals to scale back the de minimis treatment of low-value goods entering the U.S., the NAM and several of its partners are reminding stakeholders of the importance of having a streamlined, tariff-free customs entry process for such imports.

• These shipments are still subject to all U.S. laws and information requirements that enable enforcement at the border.

Last week, a group consisting of labor unions, select business associations and other stakeholders formed a coalition against certain de minimis imports, according to CNBC.  

A critical provision: The NAM and six allied groups pushed back, urging the White House to maintain the so-called “de minimis” import entry type, which permits goods valued at less than $800 to enter the U.S. in a streamlined manner and tax-free.

• “De minimis has benefitted thousands of American small businesses across all sectors,” said the groups. “For example, de minimis allows businesses to obtain inputs for domestically manufactured products into the United States more efficiently and with fewer unnecessary administrative requirements.”

• “It has also made purchasing goods online more affordable and accessible for consumers at a time of inflation and supply chain challenges. … The average value of a de minimis package is roughly $50. If de minimis were to be eliminated or significantly degraded … a $50 delivery could become a more than $100 delivery.” 

Combating disinformation: Proponents of eliminating or significantly degrading de minimis cite several concerns with the entry type that are unfounded, the NAM and its allies said.

• “There is no evidence that illegal products are more prevalent in de minimis shipments,” they went on, citing a CBP executive who refuted the false claim that de minimis shipments aren’t screened.
• When it comes to fentanyl, “[a]s government enforcement statistics make clear, the overwhelming majority of fentanyl enters the United States in large shipments from Mexico … smuggled in passenger vehicles, by pedestrians, and concealed in truck shipments. De minimis packages, on the other hand, arrive in the United States overwhelmingly by air transportation throughout the country.”
• Finally, eliminating the de minimis entry type would strain border control. “[D]egrading de minimis and routing one billion shipments into more resource intensive processing streams would require tens of thousands of CBP personnel to process information that is not related to enforcement and collect duty, rather than spending that time on activities that would actually interdict illicit items.”

Other solutions: The letter urges the administration to consider “practical, innovative ways to improve de minimis without increasing costs for consumers and small businesses.”

• Customs and Border Protection should use the authority it already has to build on existing enforcement of U.S. trade laws at the border by separating the vast universe of compliant shipments from illicit packages.
• This can be done through a rulemaking to formalize ongoing tests that require additional information on low-value shipments, closing information sharing gaps and employing a more “future proof” approach to include the use of technology.

In his State of the Union address Thursday, President Biden rightly celebrated manufacturing’s accomplishments—but he “missed the mark in several key areas,” according to NAM President and CEO Jay Timmons.

What happened: President Biden has reason to be proud when it comes to certain manufacturing-critical pieces of legislation, Timmons said, and the president touched on these in his speech.

• “On my watch, federal projects like helping to build American roads, bridges and highways will be made … creating good-paying American jobs,” President Biden told the audience, referring to the NAM-supported Bipartisan Infrastructure Law. And “[t]hanks to my CHIPS and Science Act, the United States is investing more in research and development than ever before.”
• The NAM has been a vocal supporter of CHIPS, which has supported large and small businesses all along the supply chain through an infusion of funds to boost much-needed domestic semiconductor production.
• And the president stood strong with the people of Ukraine and in defense of democracy, two areas in which the NAM has been consistent and unwavering in its own support. “Overseas, Putin of Russia is on the march, invading Ukraine and sowing chaos throughout Europe and beyond. … But Ukraine can stop Putin if we stand with Ukraine and provide the weapons it needs to defend itself. That is all Ukraine is asking.”

No new taxes: But the president also laid out some wrongheaded plans for America, manufacturers and the economy, the NAM said, such as his push to raise taxes on manufacturers.

• “If the cost of manufacturing in America is driven up by his agencies’ continued regulatory onslaught and a successful push to raise taxes, investment will be driven overseas and Americans will be driven out of work,” said Timmons, who appeared on Bloomberg’s “Balance of Power” ahead of the speech to discuss manufacturing priorities.

Protect U.S. innovation, competitiveness: In addition, the Biden administration’s push to invoke so-called “march-in” rights—which would allow it to seize the patents of any innovations it deems too highly priced in the event those patents had been developed in any part with federal money—would “rob Americans and the world of future cures and chill research into new breakthroughs across the manufacturing industry,” Timmons continued.

• “And if President Biden continues to heap blame on pharmaceutical manufacturers, rather than reining in pharmacy benefit managers with cost-saving reforms, Americans and their employers will continue to endure rising health care costs.”

What should happen: The president and manufacturers in America “share a profound commitment to democracy and to the values that have made America exceptional,” Timmons went on.

• A surefire way to restore faith in the democratic system is for Democrats and Republicans to prove it still works—“by delivering smart policies for the American people and by bolstering the industry that is the backbone of our economy and improves lives for all.”

Washington, D.C. – Following President Biden’s State of the Union address, National Association of Manufacturers President and CEO Jay Timmons released the following statement:

“Tonight, President Biden celebrated manufacturing’s accomplishments during his presidency, and rightly so. He signed into law some of the most consequential pro-manufacturing legislation in recent years—the Bipartisan Infrastructure Law, the CHIPS and Science Act and even key provisions of the Inflation Reduction Act. What’s more, manufacturers have stood proudly with him in his efforts to champion democracy abroad, most notably in Ukraine, and to reach solutions to address our broken immigration system. These are urgent priorities on which Congress should heed his call and act swiftly.

“But President Biden missed the mark tonight in several key areas when he laid out his plans going forward. If the cost of manufacturing in America is driven up by his agencies’ continued regulatory onslaught and a successful push to raise taxes, investment will be driven overseas and Americans will be driven out of work. If his campaign to ‘march-in’ to manufacturers and seize their intellectual property advances, it will rob Americans and the world of future cures and chill research into new breakthroughs across the manufacturing industry. And if President Biden continues to heap blame on pharmaceutical manufacturers, rather than reining in pharmacy benefit managers with cost-saving reforms, Americans and their employers will continue to endure rising health care costs.

“President Biden and Congress have a choice to make: they can take bipartisan action on the priorities manufacturers have outlined in our ‘Competing to Win’ agenda, an agenda that will unquestionably lift the quality of life for all Americans, or they can retreat to partisan corners and put our future in jeopardy.

“The president spoke passionately tonight about protecting democracy and our way of life at home and around the world. Manufacturers share a profound commitment to democracy and to the values that have made America exceptional and keep manufacturing strong—free enterprise, competitiveness, individual liberty and equal opportunity. And one of the surest ways to restore faith in democracy is for both parties to work together and prove that this experiment still works—by delivering smart policies for the American people and by bolstering the industry that is the backbone of our economy and improves lives for all.”

-NAM-

The National Association of Manufacturers is the largest manufacturing association in the United States, representing small and large manufacturers in every industrial sector and in all 50 states. Manufacturing employs nearly 13 million men and women, contributes $2.85 trillion to the U.S. economy annually and accounts for 53% of private-sector research and development. The NAM is the powerful voice of the manufacturing community and the leading advocate for a policy agenda that helps manufacturers compete in the global economy and create jobs across the United States. For more information about the NAM or to follow us on Twitter and Facebook, please visit www.nam.org.

The Securities and Exchange Commission has approved new climate disclosure requirements that have been in the works for the past two years. Changes made to the rule represent progress for manufacturers—though the industry will still face new cost burdens, the NAM said Wednesday night.

What’s going on: The SEC voted Wednesday in favor of requiring public companies to disclose greenhouse gas emissions and other climate-related information. Thanks in part to ongoing NAM advocacy—which Law360 (subscription) covered this week—the agency dropped its onerous, unworkable Scope 3 emissions mandate.

• That provision would have forced public companies to divulge information about emissions coming from anywhere in their supply chains—including from small and family-owned businesses.

Heeding the NAM: “The NAM demonstrated for the SEC the practical realities of such a sweeping proposed rule, encouraging the SEC to make significant changes to remove inflexible and infeasible mandates, require disclosure only of material information and protect small manufacturers from the impact of these requirements,” NAM President and CEO Jay Timmons said following the vote.

Key changes: In addition to the Scope 3 change, the SEC exempted smaller public companies from Scope 1 and Scope 2 emissions reporting and delayed the rule’s effective dates. The final rule also is more narrowly focused on so-called “material” information (data investors need to make informed decisions) than what had been proposed previously.

Keeping a close watch: The final rule “remains imperfect,” Timmons continued. “[A]nd it remains to be seen whether the rule in its entirety is workable for manufacturers.”

• “The NAM remains committed to ensuring the SEC acts within its statutory authority, prioritizes flexibility and provides much-needed guidance—just as we are committed to providing leadership in addressing environmental challenges. This is why the NAM is keeping all options on the table as we evaluate the rule’s potential impacts on the manufacturing sector.”