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Regulations

House Moves to Fix Joint-Employer Standard

By | Human Resources, Regulations, Shopfloor Policy | No Comments

Today, we applaud the House Education and Workforce Subcommittee Chairman Bradley Byrne (R-AL), along with Chairwoman Virginia Foxx (R-NC) and Congressmen Henry Cuellar (D-TX) and Luis Correa (D-CA) for introducing the Save Local Business Act, which undoes the National Labor Relations Board’s (NLRB) 2015 unfavorable case decision in Browning-Ferris Industries (BFI). The Board, in BFI, overturned decades of case precedent on what constitutes a joint employer and significantly expanded the joint-employer standard to employers who exercise “indirect, potential or unexercised control” over another entity, overturning the old standard of “direct control.” The repercussion of this new standard has resulted in nearly two years of uncertainty among manufacturers as to whether or not their business relationships were at risk to new liabilities. The Save Local Business Act restores the 1984 standard and codifies it into the National Labor Relations Act and the Fair Labor Standards Act to prevent any future reversals.

The BFI case is just another example of uncertainty, which is unfortunately commonplace within today’s labor policy. Not only have stable and well-established policies been upset by new regulations, but the NLRB has also taken it upon itself to overturn decades of labor law precedent without any provocation or change that would necessitate it. Manufacturers are left, once again, in a state of the unknown, and rather than running their businesses and creating more jobs, employers are left with having to shift resources to deciphering the impact of these new policies.

As evidenced by the bipartisan bill introduced today, this is not a Republican or Democrat issue, but rather an employer issue that spans across the country to all industry sectors and impacts companies of all sizes. We thank Chairman Byrne and Chairwoman Foxx for their leadership on this and other labor issues and for their continued commitment to U.S. business owners to fix the problems created by misguided labor policies of the past eight years.

Treasury Opts to Revisit Tax Regulations Causing Problems for Manufacturers

By | Regulations, Shopfloor Policy, Taxation | No Comments

The Treasury Department in a notice issued today said it plans to propose reforms, including possible repeal, of eight sets of regulations issued in 2016 by the Obama administration. Included on the list are four regulation projects of specific concern to manufacturers: Section 385 debt-equity rules, proposed rules on valuing minority interests in family-owned businesses, rules for calculating gains and losses on currency exchanges and regulations allowing contractors hired by the IRS to participate fully in summons interviews and receive summoned documents.

Notice 2017-38 was issued under an executive order issued by President Donald Trump in April that asked Treasury to identify tax regulations issued in 2016 that impose an undue financial burden on taxpayers, add unnecessary complexity to the tax code or exceed the statutory authority of the IRS. Under the executive order, Treasury has until September 18, 2017, to recommend specific changes to regulations to address these issues.

The Section 385 debt/equity regulations were proposed in April 2016 and finalized six months later. As originally proposed, the rules, which would treat intercompany debt as equity, would have imposed new taxes on manufacturers and threatened legitimate and well-established business practices. While the National Association of Manufacturers’ (NAM) aggressive, large-scale advocacy effort was successful in obtaining some favorable changes to the proposed rules, the final regulations still impose a significant and unnecessary administrative and cost burden on manufacturers. We continue to advocate total repeal of these rules.

Also on the list are proposed regulations under Section 2704 on valuing minority interests in family-owned businesses, which were issued in the fall of 2016. NAM members believe that the proposed regulations, which incorporate some of the most sweeping changes to estate tax policies in the past 25 years, would unnecessarily increase estate and gift taxes on family-owned manufacturing companies by an estimated 30 percent or more, severely impacting the ability of owners of these family businesses to transfer their companies to the next generations. If finalized in their current form, these regulations would harm their ability to invest and grow their businesses and reduce their competitiveness versus non-family-owned firms. Consequently, we have urged both the Trump and Obama administrations to withdraw this proposal.

Treasury also included the final and temporary Section 987 regulations on the review list. These regulations, which would change the way companies calculate certain currency exchange gains and losses, would require businesses to change their tax and accounting systems and dedicate significant time and resources to comply with regulations. Moreover, in many cases, companies would not be able to get new technology systems developed and installed by the January 1, 2018, effective date for the final regulations, forcing these companies to spend additional resources on temporary systems.

The Section 987 regulations represent a significant change from the longstanding proposed regulations and impose new and additional compliance burdens on companies. Given the negative impact on jobs, investment and economic growth, we support withdrawal of these regulations.

Finally, Treasury indicated that it will revisit final regulations under Section 7602 that allow contractors hired by the IRS (i.e., outside economists, engineers, consultants or attorneys) access to books, papers, records or other data summoned by the IRS. In addition, under the regulations, contractors may, in the presence of an IRS officer or employee, participate fully in the interview of a person the IRS has summoned as a witness to provide testimony under oath.

The NAM believes that these regulations also should be repealed. The final regulations fall short on both policy and procedural grounds. Moreover, by allowing contractors to participate fully in summons interviews and receive summoned documents, the regulations will lead to longer and less efficient examinations.

Manufacturers applaud Treasury for acting decisively to begin to address the onerous, costly and unnecessary burden these tax regulations impose on manufacturers. We strongly urge Treasury recommend the withdrawal or repeal of these regulations in its final recommendations in September.

Manufacturers Applaud Move to Clarify Water Protections

By | Energy, Regulations, Shopfloor Policy | No Comments

The Earth is often called the “blue planet” because water covers nearly three-quarters of its surface area. And even more water resources are stored beneath the crust. Consequently, it is easy to take water for granted, but manufacturers understand the importance of responsibly managing water resources and have been working to protect clean water for decades. That’s why we have been asking for a clear rule from the Environmental Protection Agency (EPA) that empowers everyone to join in protecting our waters. Today’s proposal is a critical step toward fixing our nation’s water policy.

Manufacturers have demonstrated leadership by not only minimizing the environmental impacts to water supplies but also helping to ensure adequate water supplies through conservation efforts. But at the same time, the management of water resources has been fraught with conflict. U.S. federal government regulators have abused their power to regulate navigable waters and usurped the role of local communities and individual property owners. While these abusive policies have often been stopped by federal courts, the lack of fair rules creates even more uncertainty for manufacturers. Although Congress intended the Clean Water Act to protect “the primary responsibilities and rights of states to prevent, reduce and eliminate pollution,” the federal government has disrupted this local-first approach and exceeded constitutional limits.

Since manufacturers rely on water for everything from growing agricultural inputs to engineering green chemistry and providing renewable power—smart water policy is critical. Conflicts over the allocation of water resources leaves manufacturers caught between contentious federal versus state or state versus state battles. This makes it difficult and at times impossible for manufacturers to plan for day-to-day activities and make long-term investment decisions.

Furthermore, regulatory uncertainty and prolonged conflicts undermine access to justice, weaken individual property rights and fail to protect critical water resources. Given the importance of water resources, manufacturers need local, state and federal water policies of cooperation rather than conflict to achieve greater transparency, adaptation and continued ecological restoration. Policies that respect individual property rights take a multisectoral approach and drive technology solutions and innovation work to strengthen our stewardship of water resources.

Manufacturers have asked the EPA for a clear rule protecting our nation’s waterways for decades. Our country can’t protect its waters without a clear rule that gives everyone a fair chance. So today’s action is welcome news. It is an important step in process of creating commonsense policy, but there’s more work to do. Manufacturers will continue to advocate a new rule that conforms to the Clean Water Act, protects our nation’s waters and provides clarity for manufacturers and landowners around the country. This will take time and cooperation, but our blue planet deserves nothing less.

Manufacturers on Infrastructure: Get It Done

By | Infrastructure, Presidents Blog, Regulations, Shopfloor Main | No Comments

If you are going to get cut off during an interview, it might as well be for the president of the United States.

Just before President Donald Trump discussed his vision to modernize America’s infrastructure and continue to support manufacturers in the United States, I joined Stuart Varney on “Fox Business” to offer the perspective of our nation’s 12 million manufacturers on the urgent need to advance infrastructure investment and remove job-crushing regulations.

As I told Stu, the bottom line is that the American people want to get things done. Manufacturers are encouraged that the president is getting things done, incorporating elements of the National Association of Manufacturers’ (NAM) “Building to Win” strategy, and we hope Washington comes together to get a big, jobs-first, trillion-dollar infrastructure plan done.

There’s a reason 93 percent of the NAM’s members recently surveyed are optimistic about their outlook on their economy—a 20-year record high. It’s because President Trump is not just delivering speeches like he did today. He’s listening to manufacturers and putting actions behind his words—to create jobs and lift standards of living for everyone.

Manufacturers Support Revisiting Dodd-Frank

By | Regulations, Shopfloor Policy | No Comments

The House this week will vote on the Financial CHOICE Act (H.R. 10), a bill that would roll back a number of job-killing, anti-investment provisions in the Dodd-Frank Act. During the legislative consideration of the Dodd-Frank Act in 2009 and 2010, the National Association of Manufacturers (NAM) repeatedly urged Congress to focus its efforts on strengthening the U.S. financial system. Unfortunately, this didn’t happen, and we are pleased that the House is revisiting a number of these ill-conceived provisions.

The bill would repeal the so-called “pay ratio” rule, which requires companies to regularly disclose the ratio of employees’ median pay to the compensation of the company’s chief executive. Despite the absence of a clear benefit, this rule would require thousands of manufacturers in the United States to incur significant financial cost, dedicate substantial man-hour resources and overcome numerous administrative challenges to comply with the rule.

The CHOICE Act also raises the threshold so that only shareholders who hold at least 1 percent of the company’s stock for three years can submit a proposal on a company’s ballot and excludes a shareholder proposal if a similar proposal appeared on the ballot and was defeated within the past five years.

It also brings transparency to proxy advisory firms by requiring them to register with the Securities and Exchange Commission (SEC) and adopt conflict-of-interest policies. Proxy advisory firms are third-party groups that provide proxy voting advice for investors. Two firms—Institutional Shareholder Services, Inc. and Glass, Lewis & Co.—control 97 percent of the proxy advisory market and wield tremendous power in shaping corporate governance, yet they are virtually unregulated entities.

Finally, H.R. 10 would repeal a Dodd-Frank provision that requires companies publicly traded in the United States to disclose annually to the SEC any use of conflict minerals in their supply chains, including minerals originating in the Democratic Republic of the Congo (DRC) and its adjoining countries.

While the NAM supports addressing the atrocities occurring in the DRC, it has underscored that the conflict minerals disclosure requirements pose costly, burdensome and impracticable financial and reporting burdens, and potentially a substantial auditing burden, on NAM members of all sizes—and in all sectors of the manufacturing economy. The NAM strongly supports the repeal of the conflict minerals disclosure requirement in the CHOICE Act.

Manufacturers struggle under an enormous regulatory burden. Indeed, an NAM report released earlier this year found that manufacturers in the United States face 297,696 federal regulations. The NAM supports efforts to reduce this regulatory burden and make businesses in the United States more competitive in the global marketplace and free up additional resources for investment and job creation. Passing the CHOICE Act will help bring us closer to our goal.

FCC Takes Another Step Toward Restoring Internet Freedom

By | Regulations, Shopfloor Policy | No Comments

The members of the Federal Communications Commission (FCC) voted today to continue their efforts to free the internet from regulation by moving forward on their “Restoring Internet Freedom” order (proceeding 17-108). The agency is now officially accepting public feedback on the decision. The National Association of Manufacturers (NAM) intends to file comments in support of ending the regulation of the internet. All of you who agree that overregulation stifles private-sector investment and innovation are encouraged to join us in sending that message. The deadline to make your voice heard is July 17.

When the FCC announced the decision a few weeks ago to consider this issue at their meeting today, we made the point then that internet-driven technology is now ubiquitous across all manufacturing sectors. We argued that our industry needs to see continued investment in our telecommunications infrastructure so we can maintain our global innovation leadership position that connectivity to the internet enables. The best way to ensure investment continues to flow is for Congress to act and create clear rules of the road. But the FCC’s decision to begin the process to roll back a 1930s-era regulation will help facilitate that investment and support innovation in our sector.

It’s a timely coincidence that this FCC decision occurred during Infrastructure Week. Industries and individuals from across the country and political spectrum have rallied together and are calling on Washington to work together to address our infrastructure challenges. Broadband is part of manufacturing’s critical infrastructure, and the biggest challenge it faces is government policies and regulations slowing its deployment. We encourage you to join the NAM and tell the FCC the time is now to free the internet from regulation and ensure our broadband infrastructure remains the best in the world.

 

New Study: Manufacturers Face 297,696 Regulatory Restrictions

By | Communications, Media Relations, Regulations, Shopfloor Main | No Comments

As the incoming Trump administration prepares to reform and roll back many misguided federal regulations, the National Association of Manufacturers (NAM) has released a new study revealing the sheer number of business and operational hurdles that manufacturers face on a daily basis as a result of the nation’s current regulatory structure. Read More

IRS Hearing Day on Family-Owned Business Estate Tax Regs

By | Regulations, Shopfloor Main, Shopfloor Policy, Taxation | No Comments

Family-owned businesses and their advocates are watching closely the hearing happening today at the IRS on the so-called “minority valuation proposed regulations.” These proposed regulations, released in August, would alter how families are able to value minority interests in a family-owned company, in some cases resulting in a tax increase of more than 30 percent.

In comments submitted by the NAM and the Family Business Estate Tax Coalition of which the NAM is a co-director and co-founder, we highlighted the numerous concerns manufacturers and family-owned businesses across the economy have about this proposal. Shortly after the release of the proposal, when the potential impact begun to be understood by the business community and as concerns were beginning to be raised, Treasury’s policy team began to assert that the proposal is not meant to reduce the use of minority valuation discounts for lack of marketability and lack of control that are used in determining the value of shares sold to family members in a closely held business. Instead, they were just seeking to target abuses in the valuation discounts utilized by some simply to avoid taxes. However, as the IRS and Treasury teams will hear from the grand majority of the 30 people testifying at today’s hearing, the impact as understood by the tax- and estate-planning community is very different.

Manufacturers appreciate that Treasury is listening and that today’s hearing affords the public another opportunity to weigh in on this rule. However, the negative impact of these proposed regulations on NAM family-owned businesses cannot be overstated. In a recent letter, the third-generation owner of an active manufacturing enterprise explained the potential impact of the regulations:

“Our board has been working an ownership succession plan for years. Stock valuation and financing stock transfer are an ongoing challenge. Stock is transferred through the sales, gifts and redemptions of shares, and the value of the stock is the fair market value at time of transfer. We are within a couple of years of completing the transfer of ownership from the third to the fourth and fifth generations. Our advisers have informed us the proposed regulations will eliminate discounts that have traditionally been applied. If this happens, the cost of transferring the stock will increase by 43 percent. This will put an additional strain on our capital and would lead us to underinvest the capital required to grow or even sustain our company. It means diminished ability to invest in job creating, value creating and value-retaining projects.”

The last line of our member’s letter says it all, and today’s hearing should reinforce what they’ve already heard in the voluminous comments to Treasury, that they should withdraw these proposed regulations and not harm family-owned businesses.

Obama’s Regulations in a Trump Presidency

By | Manufacturers’ Center for Legal Action, Regulations, Shopfloor Legal, Shopfloor Main | No Comments

President Barack Obama has relied on, and expanded, the power of the administrative state by making substantial use of both executive orders and presidential memoranda to achieve policy objectives. Executive orders are appealing to any president because they can be quietly and quickly implemented without hearings, votes or substantive public feedback. President Obama has been direct in favoring this approach, stating, “We’re not just going to be waiting for legislation in order to make sure that we’re providing Americans the kind of help they need. I’ve got a pen, and I’ve got a phone.”

The National Association of Manufacturers (NAM) ramped up its litigation in response to the tsunami of regulations coming out of the White House. In this final year of the president’s term, the regulatory spigot has only been turned up. The NAM is currently suing the federal government in 16 cases for overregulation.

The Manufacturers’ Center for Legal Action has argued in the courts that the president overstepped his constitutional power in issuing many memoranda and executive orders affecting labor and environmental law. However, a presidential legacy implemented by the pen can be destroyed by the pen. First, an executive order can be revoked by another executive order, and it is common for presidents to revoke some of their predecessors’ executive orders. Second, Congress can revoke an executive order through legislation. Third, an executive order can be revoked by a federal appeals court or the Supreme Court.

This year’s election will have a profound impact on future NAM litigation efforts to limit executive overregulation through the courts. President-elect Donald Trump will fill the Supreme Court vacancy created by Justice Antonin Scalia’s death and potentially two or more additional seats as justices retire. If multiple vacancies occur, the Supreme Court will shift from its previous makeup of five conservative and four liberal justices that shaped some of the nation’s most significant issues on social norms, individual rights, the balance of government powers and business and workplace matters. Several, if not all, of the cases in which the NAM is suing the government for executive overreach may end up in a newly configured Supreme Court, and the outcome of President Obama’s regulatory legacy will largely rest on the Supreme Court nominees of President-elect Trump.

The Supreme Court has not had a liberal majority since the retirement of Chief Justice Earl Warren in 1969, and during the past 48-year period, the Supreme Court has made a modest shift to curtail executive overreach. Without a majority conservative Supreme Court, many pro-business decisions on labor and environmental issues would likely not have been rendered. It is generally thought that President-elect Trump will support Supreme Court nominees who believe the Founders’ words in the Constitution mean what they say, not that the Constitution should be seen as a living document. Justices in this mold will likely not support broad deference to executive authority and agency actions. The issues at stake range from the ability of citizens to challenge regulations by administrative fiat to the ability of workers to unionize.

The morning after the election brought with it discussion of whether Democrats will filibuster the Trump administration’s Supreme Court nominees. The Senate confirmation process will offer a critical view into the Supreme Court’s future and the legacy of President Obama’s executive orders.

Manufacturers Applaud Signing of GMO Labeling Law

By | Regulations, Shopfloor Policy | No Comments

Today, President Obama signed into law bipartisan legislation (S. 764) that will establish a mandatory federal standard for the labeling of food and beverage products that contain ingredients derived from genetically modified organisms (GMO). The bill was sent to the president for his signature after the House passed the bill on July 14. The Senate passed the bill on July 7.

The National Association of Manufacturers (NAM) supported S. 764 as amended and praises the leadership of Senate Agriculture Committee Chairman Pat Roberts (R-KS) and Ranking Member Debbie Stabenow (D-MI) in crafting the compromise bill. Before votes in the Senate and House, the NAM sent a key-vote letter in support of the measure and issued action alerts that enable individuals to contact lawmakers directly.

Importantly, the law preempts state or local laws on GMO labeling for human and animal food and for seeds. The food and beverage supply chain is highly complex, and without a national standard, manufacturers and their suppliers were facing myriad conflicting state standards that would harm the ability of manufacturers, suppliers, distributors and farmers to produce and transport agricultural and food products efficiently. In addition to preemption, the new law accomplishes the following:

  • Directs the U.S. Department of Agriculture to establish a mandatory national standard for GMO labeling within two years and provides the agency the authority to establish a minimal amount of GMO substance within a product for disclosure to be required;
  • Prohibits any requirement that animal products be labeled GMO solely because the animal consumed GMO feed;
  • Allows food and beverage manufacturers flexibility in disclosing GMO ingredients on a label through one of the following methods: text or symbol indicating the presence of a GMO ingredient; or an electronic/digital link (e.g., QR codes), which must include explanatory text and a telephone number;
  • Provides small food manufacturers one additional year to comply after the national standard takes effect, along with additional labeling disclosure options;
  • Exempts “very small food manufacturers” from disclosure requirements; and
  • Prohibits a company from making a “non-GMO” claim solely because the food is not GMO but preserves the ability for organic foods to be labeled “non-GMO” or similarly.

Food and beverage manufacturing accounts for 1.704 million jobs in the United States and is critical to the success of the federal government’s domestic and global feeding programs, including SNAP, school nutrition, WIC and direct U.S. foreign food aid. The food and beverage industry does more to combat hunger and malnutrition in the United States than anyone else does, contributing billions of dollars every year in food and cash to fight hunger and malnutrition.

Biotechnology has fostered a revolution in American agriculture that has benefitted consumers in the United States and around the world. GMOs enable America’s food producers to more efficiently use resources and allow farmers to withstand crippling droughts and ward off disease or pestilence while reducing their use of pesticides and chemicals.