EPA Issues Directive Protecting Against “Sue and Settle”

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This morning, Environmental Protection Agency (EPA) Administrator Scott Pruitt issued a directive designed to end the practice known as “sue and settle.” The agency-wide directive requires the EPA to:

  • Publish any notices of intent to sue the agency within 15 days of receiving the notice;
  • Publish any complaints or petitions for review in regard to an environmental law, regulation or rule in which the agency is a defendant or respondent in federal court within 15 days of receipt;
  • Reach out to and including any states and/or regulated entities affected by potential settlements or consent decrees;
  • Publish a list of consent decrees and settlement agreements that govern agency actions within 30 days, along with any attorney fees paid, and update it within 15 days of any new consent decree or settlement agreement;
  • Expressly forbid the practice of entering into any consent decrees that exceed the authority of the courts;
  • Exclude attorney fees and litigation costs when settling with those suing the agency;
  • Provide sufficient time to issue or modify proposed and final rules and take and consider public comment; and
  • Publish any proposed or modified consent decrees and settlements for 30-day public comment and provide a public hearing on a proposed consent decree or settlement when requested.

Manufacturers have long sought greater transparency and public participation in the settlement process. In fact, we requested a great deal of this relief four and a half years ago in an April 2013 letter to then-EPA Administrator Gina McCarthy. As the entities primarily regulated by these settlement agreements and consent decrees, it is simply not fair that manufacturers are regularly left in the dark as the EPA and other non-regulated entities work out the terms of our regulation behind closed doors. Allowing an open, transparent settlement process that abides by the law is the right policy, and we’re grateful to Administrator Pruitt for today’s action.

NAM Leadership Goes on Tax Reform Roadshow in Key States

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The National Association of Manufacturers (NAM) is all in on tax reform. The legislative framework unveiled by the “Big Six” presents a tremendous opportunity for America’s manufacturers to grow, hire new workers and increase wages and benefits. Following robust engagement at the national level, capped by hosting President Donald Trump for a major address on tax reform at our board meeting and joining the president for an Oval Office proclamation signing on National Manufacturing Day, the NAM’s leadership hit the road this week to make the case for tax reform in key manufacturing states. As NAM President and CEO Jay Timmons told National Journal for its Q&A feature this week, “We’re going to make sure manufacturing workers know how important [tax reform] is to their own livelihood back in their districts.”

That effort began in earnest on Tuesday with a forum at the City Club of Chicago, where Timmons and Illinois Manufacturers’ Association President and CEO Greg Baise discussed the importance of passing tax reform with local business leaders. Timmons also traveled to Milwaukee, where he led a panel focused on tax reform with local business leaders and gave an interview to the Milwaukee Journal Sentinel:

“… [T]he tax code desperately needs an overhaul, Timmons said in an interview. ‘I am really optimistic about getting tax reform yet this year. There’s a focus in Washington like I have not seen on any issue for many, many years,’ he said. It’s been more than 30 years since the last major tax code overhaul, according to Timmons … Reforms of taxes and regulations, and infrastructure investments, are the trade group’s top priorities, Timmons said. ‘Those all add to the cost of doing business in this country,’ he said. Should Trump’s plans succeed: ‘What I can tell you is what my manufacturers are actually saying and how they are planning,’ Timmons said. ‘They are planning for growth of their own facilities, and they’re planning to hire new workers.’”

Manufacturing leaders, including Timmons and Pennsylvania Manufacturers’ Association President David Taylor, also rallied around the president’s tax reform address in Harrisburg. As the Allentown Morning Call reported:

“Standing in a Harrisburg airplane hangar before big-rig Volvo trucks and American flags, President Donald Trump touted the Republican plan to overhaul the federal tax code as a proposal that will benefit Pennsylvania truckers and an American economy he sees as strengthening …‘If he can deliver on all or even most of what he’s offering, it is going to be a real shot in the arm for American competitiveness,’ said David Taylor, president of the Pennsylvania Manufacturers’ Association.”

The NAM finished off the week strong with an address by Emerson Chairman and CEO and NAM Board Chair David Farr at the Economic Club of Minnesota, where he put opponents of tax reform on notice. As the Washington Examiner reported:

“Critics such as Farr counter that the current tax rate has resulted in the offshoring of jobs because it is often cheaper for companies to move operations overseas. ‘If you’re an opponent of tax reform, I want you to come to Minnesota or Ohio or Wisconsin and look a manufacturing worker in the eye. Tell her she doesn’t deserve a bigger paycheck. Tell her that her family doesn’t deserve to save for school and retirement. Then, tell an unemployed dad that a worker overseas deserves a job more than he does,’ he said.”

As the effort to reform our outdated tax system moves forward, the NAM and manufacturers across America will continue drive the discussion both at the grassroots level and with leaders in Washington.

NAM Testifies at House Hearing on Infrastructure

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On Wednesday, October 11, Associated Industries of Missouri President and CEO Ray McCarty testified on behalf of the National Association of Manufacturers (NAM) at a Transportation and Infrastructure Committee hearing, titled “Building a 21st Century Infrastructure for America: Highways and Transit Stakeholders’ Perspectives.” Other participants in the hearing included Missouri Department of Transportation Director Patrick McKenna, Granite Construction President and CEO James Roberts, North America’s Building Trades Unions Secretary-General Brent Booker and Sound Transit CEO Peter Rogoff. Read More

Treasury Kills Estate Tax Proposal

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In a big win for family-owned businesses this week, the Treasury Department announced its intent to withdraw proposed estate tax regulations that would have increased estate and gift taxes on family-owned manufacturing companies by an estimated 30 percent or more, making it more complex and costly to transfer a business to the next generation of leaders.

The National Association of Manufacturers (NAM) vigorously opposed these regulations, which were issued in 2016. Last year, the NAM led a group of more than 3,800 businesses in a letter to the treasury secretary that pointed to regulations’ effect on small business owners.

One company, transitioning from the third generation of owners to the fourth and fifth generations, noted that the regulations would increase the cost of transferring stock by 43 percent. This would have led the family to “underinvest the capital required to grow or even sustain our company . . . diminish[ing] the ability to invest in job creating, value creating and value-retaining projects.”

The regulations represented some of the most sweeping changes to estate tax policy in the past 25 years. They would have upended a feature of current law that allows for a valuation discount to reflect restrictions on the ability to transfer the interest in a company. In its announcement this week, the Treasury Department described this aspect of the proposed regulations as “based on the fanciful assumption of a world where no legal authority exists.”

The regulations would also have curtailed the ability to take minority discounts into account, which are used to reflect the fact that an individual received less than a controlling interest in a company. As one NAM member noted, this change would have had profound effects on family-owned businesses.

The ability to use minority valuations to discount the value of transferred interests within a family-owned business is crucial for family-owned operating companies. These shares cannot be sold on the market, and since they are a minority, they have no control over the company. These regulations would divert capital from business investment, cost jobs and threaten the ability of families to pass businesses on to the next generation. This will have the unintended consequence of benefiting private equity firms and large companies that like to buy out family businesses at the death of a family owner.

Yes, Manufacturers Met with Scott Pruitt; Here’s Why That’s a Good Thing

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Yesterday’s New York Times shined a light on Environmental Protection Agency (EPA) Administrator Scott‎ Pruitt’s 2017 calendar and the meetings he has been taking with the business community and nonprofit groups. On the list: a visit in March to the National Association of Manufacturers’ (NAM) spring board of directors meeting in Scottsdale, Arizona.

Administrator Pruitt met with our board members on ‎March 6. Because manufacturers are heavily regulated entities, particularly on the environmental side, we regularly invite the head of the EPA to address our board. We invited Gina McCarthy, the EPA administrator during President Barack Obama’s second term, to address our board members three times: September 2014, December 2014 and September 2015. She declined every time. Had she joined us, she would have been able to receive direct input from the CEOs and senior executives of the manufacturers her agency’s rules directly impact. It certainly would have been helpful as the EPA put the finishing touches on the ozone standard (final rule, October 2015), the “Waters of the U.S.” regulation (final rule, June 2015) and the Clean Power Plan (final rule, August 2015), the latter two of which were held up by federal courts and are receiving thorough reexaminations.

This year, we extended a speaking invitation to Administrator Pruitt, and we are glad he said yes. And by the way, Administrator Pruitt didn’t just hear about the regulations we want to see fixed under his leadership. He heard about the areas where the EPA is doing great work that we support. We asked him to put resources into the Office of Chemical Safety and Pollution Prevention, so it can properly implement the Lautenberg Chemical Safety Act, the overwhelmingly bipartisan chemical safety law put into place in 2016. The room included the men and women running the operations of hundreds of manufacturers the EPA regulates. They represent all points of view on the political spectrum, and, most importantly, can actually tell the administrator what it’s like to implement the regulations the EPA puts out.

That’s what we should want: good government based on the best data. A steady flow of information between manufacturers and the agencies that regulate them. The EPA would have been well served to talk to our board, for instance, when it issued the “Boiler MACT” regulation in 2012, a rule governing the type of boilers manufacturers operate and how they use them. It didn’t, and manufacturers are still feeling the after-effects.

We’ll continue to invite EPA leadership to address our board, no matter who is in charge. Manufacturers strongly support the EPA’s mission to protect health and the environment.

Health Reform: One Bill at a Time

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The House Ways and Means Committee will soon mark up bipartisan legislation to repeal the Independent Payment Advisory Board (IPAB), a non-elected body established as part of the Affordable Care Act (ACA). The original intent for the creation of the IPAB was for the executive branch to form an appointed independent body to decrease the growth rate of Medicare expenditures and do so without the input or approval of Congress. Unfortunately, the IPAB takes congressional oversight and decision-making out of the equation and allows blunt actions to the Medicare program go unchecked. The National Association of Manufacturers (NAM) agrees with hundreds of other groups: the IPAB must go.

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ARPA-E and the Continuing Need for Transformation‎al Energy Technologies

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This Friday is Manufacturing Day, when more than 2,500 manufacturers (and counting) will open their doors and show the world what modern manufacturing looks like. When it comes to energy and the environment, modern manufacturing and the solutions we provide are the key to solving the many challenges that confront us.

The good news is that we’ve come a long way already. Disruptive technologies have already changed the way we produce and use energy and will continue to do so in the future. Hydraulic fracturing and horizontal drilling unlocked vast natural gas resources and changed the face of manufacturing in America. Advanced technologies like battery storage, demand-side management, electric vehicles, small modular nuclear reactors and many others will almost surely do the same.

It’s great to talk about those transformational technologies, and while a competitive market is generally the best way to encourage their development, the reality is that both the public and the private sector have roles to play. For instance, government can play a positive role ‎in support of the research and development (R&D) of alternative energy sources or technologies at a pre-commercial stage. There is also an important federal role to be played in basic R&D of new high-risk energy efficiency and waste minimization technologies in energy-intensive industries, particularly where private-sector incentives may be inadequate.

That brings us to the Advanced Research Projects Agency – Energy (ARPA-E), a 10-year-old program that has found itself in the middle of a debate over the role of federal spending ‎on energy R&D programs. Manufacturers have long supported ARPA-E, which we believe is a valuable program to fund high-risk, transformational energy technologies that the private sector may not yet be ready to invest in. The Department of Energy reports that, since 2009, ARPA-E has provided more than $1.5 billion in financing to more than 580 projects. Fifty-six of those projects have formed new companies; 68 projects have partnered with other government agencies to further development; and 74 projects have attracted more than $1.8 billion in follow-on funding.

The National Academy of Sciences (NAS) recently ‎completed an assessment of the program and concluded that ARPA-E has been successful and deserves a longer timeline to pursue its statutory mission. The NAS found that ARPA-E “has the ability to make significant contributions to energy R&D that likely would not take place absent the agency’s activities.”

Several case studies bring this point home. ARPA-E funding helped enable a company called Smart Wires to develop a device that clamps onto existing transmission lines and controls the flow of power within the lines. This is an area of major need for manufacturers, who demand always-on electricity despite a rapidly changing power grid. ARPA-E’s funding allowed Smart Wires to build prototype devices and deploy them for testing. Since this successful test round, Smart Wires has undertaken several rounds of successful fundraising, including $30.8 million in 2015 to bring its PowerLine Guardian product to commercial production.

ARPA-E provided partial funding for a company called 1366 Technologies to develop a novel silicon wafer manufacturing process that could dramatically reduce the cost (and increase the durability) of solar panels. Not only did this company succeed, but the product developed ultimately replaced the leading technology options that had received venture capital funding. ARPA-E’s funding allowed 1366 Technologies the freedom to pursue the basic science that helped lead to commercialization of this technology.

Finally, ARPA-E provided funding for Harvard University to develop slippery surface technologies that yielded extreme energy savings in many industrial settings. After two years, the research had progressed well enough to enable the launch of a startup company, SLIPS Technologies, Inc. (STI), to broadly commercialize the technology. STI was launched in October 2014 with venture capital financing led by the venture capital arm of chemical manufacturer BASF Corporation.

The National Association of Manufacturers supports legislation to keep ARPA-E funded and operating at a high level. In the Senate, Sens. Lisa Murkowski (R-AK) and Maria Cantwell (D-WA) included a provision reauthorizing ARPA-E in their comprehensive energy bill, the Energy and Natural Resources Act of 2017 (S. 1460). In the House, Rep. Eddie Bernice Johnson (D-TX) has introduced the ARPA-E Reauthorization Act of 2017 (H.R. 3681), which contains similar language to the Senate provision.

Health Care Inaction Disappoints, Work Will Continue to Address ACA Concerns

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While manufacturers are disappointed that the Senate effort to repeal key provisions of the Affordable Care Act (ACA) did not come to fruition by the September 30 budget reconciliation deadline, work will continue to address the employee benefits tax known as the “Cadillac” tax, the medical device tax, the health insurance tax (HIT) and other onerous aspects of the ACA. In fact, while the Graham-Cassidy proposal fully repealed the 2.3 percent excise tax on medical devices, it was silent on the HIT and the 40 percent excise tax on employee benefits.

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