Prior to departure for the Thanksgiving holiday, lawmakers in Washington, D.C. avoided a federal government shutdown by passing an extension of funding at current levels into 2024. The U.S. House GOP designed the concept whereby many of the twelve less controversial spending bills will now come up for a vote by January 19 and the more contentious appropriations such as those for the Departments of Defense, Labor, and Education expiring February 2nd. House Republicans relied upon Democrats to pass the measure by a vote of 336 to 95 against.
Extending the government spending deadline beyond the 2023 calendar year creates a challenge for many other priorities for manufacturers that One Voice is working to finalize. Losing a legislative vehicle in December to move a fix for the Research and Development activities and restoring full 100 percent expensing creates a challenge and reduces the likelihood of passage of a bill removing the requirement to amortize R&D activities prior to the end of 2023. One Voice is working with lawmakers and senior staff to reach a deal on tax provisions that Congress could attach to a moving bill.
Joint Employer Rule Challenged by CRA Resolution
Republicans in Congress have introduced Congressional Review Act (CRA) resolutions to rescind the Biden administration’s final joint employer rule, which would expand the factors that can establish a joint employment relationship to include indirect and unexercised control over the terms and conditions of a job. The resolutions were introduced on November 7, 2023, by Representatives John James (R-MI), Virginia Foxx (R-NC), and Speaker of the House Mike Johnson (R-LA), as well as Senators Bill Cassidy, M.D. (R-LA), Joe Manchin (D-WV), and Senate Majority Leader Mitch McConnell (R-KY).
The CRA process allows Congress to repeal recent agency regulations with only a majority vote in both the House and the Senate as well as prohibit the agency from issuing any rules that are “substantially the same” as the overturned regulation. In order to pass, at least two Senate Democrats would have to join all Republicans, in approving the resolution which would then likely face a veto from President Biden. Congress has up to sixty consecutive legislative days to pass a CRA.
The final rule, published on October 26, 2023, would replace the Trump-issued standard that shielded companies from shared liability for unfair labor practices and responsibility for bargaining with a union, which took effect in April 2020. Under the new final rule, employers would be considered joint employers if they co-determine “essential terms and conditions of employment,” such as scheduling, wages, and benefits.
The rule is set to take effect on February 26, 2024, after the NLRB extended the effective date to account for legal action against the rule.
EPA Expected to Tighten PM2.5 Limits
The Environmental Protection Agency (EPA) is on track to release a final rule likely tightening the national ambient air quality standards (NAAQS) for fine particulate matter (PM2.5) by the end of the year, despite opposition from industry stakeholders and more than 70 Republican members of the House of Representatives. The White House Office of Management and Budget’s (OMB) Office of Information and Regulatory Affairs (OIRA) received the “Reconsideration of the National Ambient Air Quality Standards for Particulate Matter” regulation on September 22, 2023. The review process typically takes up to 90 days but can vary depending on the action.
On January 5, 2023, the Environmental Protection Agency (EPA) proposed to strengthen the National Ambient Air Quality Standards (NAAQS) for fine particulate matter (PM2.5) or soot. PM2.5 is a fine inhalable particle resulting from chemical reactions emitted from manufacturing facilities, power plants, and automobiles that are generally 2.5 micrometers and smaller – typically thirty times smaller than a human hair. EPA first established NAAQS for particulate matter in 1971 and has since set and revised standards numerous times for fine particles (PM2.5) and coarse particles (PM10).
In a proposed rule, released in January 2023, EPA suggested lowering the annual standard from its current level of 12 micrograms per cubic meter (µg/m3) to within the range of 9 – 10 µg/m3. The EPA also proposed to retain all other PM standards, including the primary (health-based) and secondary (welfare-based) 24-hour PM2.5 standard at the level of 35 µg/m3, the secondary annual PM2.5 standard at the level of 15 µg/m3 and the primary and secondary 24-hour PM10 standards at the level of 150 µg/m3.
In a November 14, 2023, letter sent to EPA Administrator Michael Regan, the 70 Republican lawmakers, led by House Energy & Commerce Committee Chairwoman Cathy McMorris Rodgers (R-WA) and Environment, Manufacturing, & Critical Materials Subcommittee Chairman Bill Johnson (R-OH), argued that the agency should follow the Obama administration’s example and halt the “discretionary” rulemaking due to its “stifling costs.”
While the EPA accepted public comments on revising the standards to as low as 8.0 µg/m3 or up to 11.0 µg/m3, sources suggest that the EPA will finalize the standard at the limit of 9 ug/m3.
OMB Proposes Changes to Cost-Benefit Guidance
On November 9, 2023, the Office of Management and Budget (OMB) issued final revisions to the government-wide guidance on regulatory analysis, including cost-benefit analysis. OMB released proposed revisions to the Circular A-4 guidance in April 2023, following a Presidential Memorandum issued by President Biden in January 2021 directing OMB to consider steps to update regulatory guidelines for conducting benefit-cost analyses of federal regulations to “reflect new developments in scientific and economic understanding.”
The updated A-4 includes a reduction in the discount rate for curbing the estimated value of benefits that occur in the future. The OMB document calls for regulators to implement a single 2 percent discount rate for estimating costs and benefits from the present to three decades into the future, replacing the two-tier discount rate schedule of 3 and 7 percent which has been in place since 2003.
The new guidance also includes greater attention to the global effects of some rules, stating that while “in many instances” primary analysis of rules should focus on effects of regulations “experienced by citizens and residents” of the United States, there is a range of reasons for also considering impacts on “noncitizens residing abroad.”
The new guidance will apply to all draft proposals submitted after February. 29, 2024, and for draft final rules submitted after December 21, 2024, according to OMB.
USITC to Investigate USMCA Rules of Origin Impacts
The U.S. International Trade Commission has instituted an investigation into the “economic impact and operation” of the U.S.-Mexico-Canada Agreement’s automotive rules of origin for the second of five scheduled reports mandated by USMCA implementing legislation. The report is expected to be finalized and submitted to the President, the House Committee on Ways and Means, and the Senate Committee on Finance by July 1, 2025. The first report was released in June 2023, while the final three reports are due in 2027, 2029, and 2031.
According to the notice, the commission is especially interested in the economic impact of the ROOs on GDP, imports and exports, employment, production, investment, and profit levels in the automotive industry. Additionally, ITC said it was interested in “the operation of the ROOs and their effects on the competitiveness of the United States with respect to production and trade in automotive goods” and whether the rules “are relevant in light of technological changes.”
The commission will conduct a survey as well as hold a public hearing and accept written submissions for the record.
UK Signs Another State-Level Trade Agreement
The United Kingdom has signed its seventh state-level trade deal, this one with Florida, continuing its “twin-track approach” towards trade, pursuing individual trade deals with states while waiting on the U.S. federal government to move forward with a comprehensive free trade agreement.
The signing of the “Memorandum of Understanding on trade and economic co-operation” with Florida on November 14, 2023, came as reports in October 2023 stated that the U.S. and UK would begin negotiations on a “foundational” agreement on trade to conclude before the 2024 elections.
According to the MOU, the UK and Florida will prioritize cooperation in “the space, fintech, life sciences, supply chains, transport, infrastructure, agricultural biotechnology sectors, legal services and lawtech.” It also prioritizes emerging and innovative sectors, such as artificial intelligence and semiconductors.
The MOU is the seventh signed between states and the UK, joining agreements signed by Indiana, North Carolina, South Carolina, Oklahoma, Utah, and Washington. The UK has also stated they are “actively engaging” in talks to sign agreements with California, Texas, Colorado, and Illinois.