We wish we were making this up: Federal Government has no idea how it is managing environmental reviews

A new report on the Obama Administration admits a stunning lack of oversight of our nation’s bedrock environmental law, the National Environmental Policy Act (NEPA). NEPA is the law that requires all major projects — think highways, bridges, pipelines, transmission lines — to submit to a comprehensive review of their potential environmental impacts prior to construction. NEPA is often the largest, costliest, most time-consuming regulatory hurdle developers face before they can build. It also is a common target for abuse, as there are countless ways to throw a wrench in the process and make the review take even longer (see XL, Keystone). The longer the delay, the more likely the developer walks away. Project opponents don’t even need a “win” on NEPA to win; the delay is often enough.

The White House Council on Environmental Quality (CEQ) administers NEPA, and for the past few years has assured us that it is best suited to streamline the environmental review process. Today’s report shows CEQ hasn’t even been watching. Consider what the General Accountability Office (GAO) found:

  • The Administration does not have accurate data on the number or type of environmental reviews conducted each year.
  • The Administration does not know how much it spends on environmental reviews, or how much typical environmental reviews cost.
  • The Administration has no idea how long a typical NEPA review takes. GAO instead cites to a nonprofit group, the National Association of Environmental Professionals (NAEP). NAEP estimates that the average environmental impact statement (EIS) takes 4.6 years, the highest it’s ever been. NAEP also estimates that the time to complete an EIS increased by 34.2 days each year from 2000 through 2012.
  • The Administration thinks the majority of NEPA reviews are the shorter Environmental Assessments (EA) or Categorical Exclusions (CE), but it really doesn’t have any data.
  • No government-wide system exists to track NEPA litigation or its associated costs.
  • Delays sometimes occur because agencies assume they will be sued and spend more time making the review “litigation-proof.” Yet there is no evidence that these efforts actually improve the review document.

The White House opposed efforts to streamline NEPA in a bill passed by the House last month. Yet the President promised again this year that he would cut the red tape plaguing these reviews. How in heavens name is the Administration properly able to cure what ails NEPA when they’ve made no attempt whatsoever to diagnose the problem?

It’s time for Congress to step in here. Please.

 

 

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Just What the Doctor Ordered

Last Friday President of the Federal Reserve Bank of Minneapolis Narayana Kocherlokata (Ph.D.), noted in a speech that, “the future course of the U.S. economy is not predetermined by the events of the past seven years. Both history and theory have the same lesson: It is possible to undo what might now appear to be permanent changes.” The way that he proposes to do this is by reducing he suggests is by, “reducing the tax rate on the process of transforming current goods into future goods. In practice, the government can accomplish such a reduction in a relatively targeted fashion by allowing businesses to completely expense any investments into equipment, structures, or R&D.” Doing so, “leads to a higher rate of capital accumulation, which stimulates future economic activity by lowering the future costs of production,” something all manufacturers agree is critical.

This particularly timely prescription for economic recovery comes just days after two bills were introduced to make two critical, pro-investment incentives permanent, H.R. 4457, by Reps. Tiberi (R-OH) and Kind (D-WI) to permanently extend increased Section 179 expensing and H.R. 4438 to simplify and make permanent the research credit introduced by Reps. Brady (R-TX) and Larson (D-CT. These bills are just what the Ph.D. ordered.

The NAM has long supported the extension of enhanced Section 179 expensing and the bill introduced by Reps. Tiberi and Kind would take this one step further and make this important pro-growth, pro-investment incentive permanent. The expiration of the enhanced Section 179 at the end of 2013 has put investment decisions on hold for many small and medium sized manufacturers who do not know what tax provisions may be in place by the end of this year. H.R. 4457 would raise the cap for Section 179 expensing from $25,000 where it is today to $500,000 with a $2 million phase out. Making this provision a permanent part of the tax code will help these manufacturers invest and compete but it will also help those manufacturers whose customers rely on enhanced Section 179 to help defray the tax cost of their investment.

Likewise, the R&D tax credit is a proven incentive for spurring private-sector investment in R&D and creating domestic, high-wage R&D jobs, as 70% of credit dollars are used to pay the salaries of high-skilled R&D workers. For manufacturers, R&D fuels innovation that translates into new product development and increased productivity—two key factors necessary for growth in manufacturing. Unfortunately, the credit has never been a permanent part of the tax code since it was first enacted in 1981, and Congress recently allowed the R&D Credit to expire on December 31, 2013, creating unnecessary uncertainty for American manufacturers. The NAM supports the strengthened, permanent R&D credit provided in H.R. 4438, which will enhance the credit’s incentive value and increase U.S. competiveness in the global race for R&D investment dollars.

So while not full expensing, by seeking to make these important policies permanent, these two measures would go a long way towards injecting some certainty and growth into our still lagging economy and would be actions manufacturers would certainly applaud.

Carolyn Lee is Senior Director of Tax Policy for the National Association of Manufacturers.

Christina Crooks is Director of Tax Policy for the National Association of Manufacturers.

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New NAM Video Explains Impact of Ozone Regulations

I have continued to underscore the importance of reducing regulatory burdens and regulatory uncertainty, particularly as our economy continues to recover. With that in mind, and after careful consideration, I have requested that Administrator Jackson withdraw the draft Ozone National Ambient Air Quality Standards at this time.” –President Obama, September 02, 2011

With the unemployment rate hovering above 9% and in the early stages of his reelection campaign, in September 2011, President Obama told the Environmental Protection Agency (EPA) to stop its work on a new ozone regulation – a regulation that by the administration’s own estimate would have cost industry and consumers as much as $90 billion per year. Now, just two and a half years later, the administration is once again considering a new ozone regulation, and again the costs to manufacturers and the economy could reach never-before-seen levels.

While we are still months away from the release of a proposed ozone rule, the rulemaking process is very much underway – EPA has developed its draft documents, its science advisors have met and environmental advocacy groups are in court seeking to expedite the whole process. Meanwhile, manufacturers are becoming uncomfortably reacquainted with the concept of the administration levying a regulation that makes expansion in many, if not most, parts of the country difficult at best and in some cases impossible.

With so much at stake for manufacturers, the NAM is committed to being involved at every stage of the ozone review and rulemaking process to ensure the administration gets it right. We will work with elected and appointed officials at all levels of government and educate the general public about the regulation, the steady and consistent air quality improvements that have been made over the last 30 years and the improvements that will continue to take place based on laws already on the books. But we will also work to ensure the public understands the consequences of the administration going too far by proposing unattainable standards and how with the right policies we can have both a clean environment and a strong manufacturing economy.

Below is a video the NAM developed that provides some background information on EPA’s review of a new ozone regulation and what’s at stake for manufacturers and the economy.

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Democrats Ask for Action on Keystone XL while White House Offers No Clear Deadline

Senate Energy and Natural Resources Committee Chairwoman Mary Landrieu (D-LA), joined by ten Democratic senators, sent a letter to President Obama on April 10 pleading with the Administration to commit to a timeline for a final decision on Keystone XL. At well over five years since the application was first received, the Administration has been criticized for repeatedly delaying the process. The 11 senators agreed with critics, calling the process “exhaustive in its time, breadth, and scope. It has already taken much longer than anyone can reasonably justify.”

Sen. Landrieu and her colleagues asked the President to require Secretary of State John Kerry to make a decision on Keystone XL. The project is currently subject to 90-days of public and inter-agency comment, which is set to expire in early May. The 11 senators asked the President set a deadline for the State Department to make its determination within 15 days of the end of the comment period, and for the President to commit to making a decision no later than May 31, 2014.

Given the final environmental impact statement came to effectively the same conclusion as all previous reviews of the project, these Senators urge the President to action. Yet the Administration refuses to commit to any firm timeline to make a decision on permit that is long overdue. The NAM has repeatedly called for approval of Keystone XL, a strong component of an “all of the above” energy strategy. Today we can add these 11 senators to the overwhelming majority of Americans who believe Keystone XL should be approved.

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Monday Economic Report – April 14, 2014

Here is a summary of this week’s Monday Economic Report:

In the minutes of its March Federal Open Market Committee (FOMC) meeting, the Federal Reserve Board highlighted the negative impact of weather events on first-quarter growth. Winter storms hampered business investment, construction, consumer spending and manufacturing production. Nonetheless, the Federal Reserve still anticipates real GDP growth of between 2.8 and 3.0 percent in 2014, faster than last year’s 1.9 percent expansion. While this reflects a slight downgrade in the outlook for the year from the last forecast, it continues to suggest that the economy will regain its momentum moving forward. The Federal Reserve also predicts growth of 3.0 to 3.2 percent in 2015. The International Monetary Fund’s World Economic Outlook, which was released last week, mirrors these figures in its own forecasts for the United States.

The highlight of the FOMC minutes was the background discussion among participants regarding future monetary policy actions. The Federal Reserve largely feels that the U.S. labor market has a lot of “slack” in it, which is not reflected by the 6.7 percent unemployment rate. Despite improvements in the unemployment rate, weaknesses continue, with the participation rate near 30-year lows and high rates of both underemployment and part-time employment. While some FOMC members feel there has been sufficient economic progress to warrant less stimulative monetary policy measures, the majority view the current labor market as sufficiently weak enough to continue the Federal Reserve’s highly accommodative actions for the foreseeable future. The Federal Reserve will continue to reduce its long-term asset purchases, but short-term interest rates will likely not rise until next year at the earliest. Inflationary pressures remain modest, providing the Federal Reserve with some wiggle room to do its stimulative measures.

The most recent Job Openings and Labor Turnover Survey (JOLTS) data suggest the labor market for manufacturers remains soft. The number of manufacturing job openings declined for the third month in a row in February. Postings have been lower since peaking in November, and the December to February time frame mirrored the weather-related weaknesses seen in other data. Net hiring was also lower in those three months, with 2,000 more separations than hires in February. Still, the manufacturing sector has added an average of 12,125 workers each month since August, mirroring the uptick in demand and production that we have seen since that point. We are hopeful that hiring begins to accelerate again in the coming months.

Looking at the sentiment surveys last week, businesses and consumers were more upbeat. The California Manufacturing Survey from Chapman University reported rising expectations for new orders and production for the second quarter, but with employment growth remaining soft. Both durable and nondurable goods activity were anticipated to expand modestly in the current quarter. Likewise, small business owners in the National Federation of Independent Business’ (NFIB) survey were more optimistic about future sales, and those saying the next three months were a good time to expand edged marginally higher. Still, earnings remained weak, and the percentage suggesting they would bring on more workers moved lower. The University of Michigan and Thomson Reuters also noted improved consumer sentiment, a welcome gain after three months of dampened enthusiasm.

This week will be a busy one on the economic front, specifically with new reports on housing starts and industrial production. We hope to move beyond the weather-related weaknesses from earlier this year, and March’s manufacturing output numbers are expected to show a continued rebound. Similarly, housing starts moved slightly higher in February, but permits surpassed the 1 million mark for the first time since November; yet, rising interest rates, financial challenges for potential buyers and low inventory remain concerns. Other highlights this week include new data on consumer prices, leading indicators, manufacturing surveys from the New York and Philadelphia Federal Reserve Banks and state employment.

Chad Moutray is the chief economist, National Association of Manufacturers. Note that General Electric Chief Economist Marco Annunziata will prepare the Monday Economic Report for April 21.

participation rate - apr2014

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Global Manufacturing Economic Update – April 11, 2014

Here is the summary for this month’s Global Manufacturing Economic Update:

In its latest World Economic Outlook, the International Monetary Fund (IMF) now predicts global GDP growth of 3.6 percent in 2014 and 3.9 percent in 2015. The forecast for this year was essentially unchanged from the outlook in October, and it suggests that the global economy continues to recover. Global growth in 2013 was 3.0 percent. The IMF projects U.S. growth of 2.8 percent this year and 3.0 percent next year, up from 1.9 percent last year. Europe is another area where the IMF sees progress this year—albeit quite modestly—with real GDP growth of 1.2 percent in 2014 and 1.5 percent in 2015, with the continent emerging from its deep two-year recession. Despite the slightly better data overall, the IMF worries about low inflation in advanced economies, structural challenges in emerging markets and geopolitical risks.

The IMF also notes that China’s economy continues to decelerate, with real GDP growth of 7.5 percent in 2014 and 7.3 percent in 2015. This is consistent with recent data, which show activity in the manufacturing sector slowing down. The HSBC China Manufacturing Purchasing Managers’ Index (PMI) has contracted for three straight months with falling levels of new orders and output. On the positive side, export sales appeared to pick up a bit in March. Next week, we will get new data for industrial production, fixed-asset investment and retail sales. Each has eased significantly in recent reports. Still, even with these slower rates, the outlook for China remains strong overall, and China has already begun to put stimulative measures in place to boost the economy further. As noted in the past report, the Bank of China has also supported a depreciation of the yuan in the past few months, but it asserts that its actions have been mainly to fend off speculators.

Weaknesses in China and Russia have also weighed heavily on manufacturing activity figures for emerging markets. The HSBC Emerging Markets Manufacturing PMI fell below 50 for the first time since July as demand and production stagnated. Nonetheless, outside of China and Russia, the picture for emerging markets was somewhat more positive. Several countries continued to experience modest growth rates, albeit with a slower pace than the month before in some cases. Two notable strengths among emerging markets hail from Eastern Europe. The Czech Republic and Poland continue to see strong growth in their manufacturing sectors despite some deceleration in March. For instance, the production index in the Czech Republic has now exceeded 60 for two straight months, a sign that output is experiencing healthy gains of late.

In all of Europe, manufacturers report slow-but-steady progress. The Markit Eurozone Manufacturing PMI has now expanded for nine consecutive months, an encouraging sign after the deep two-year recession. France, which had lagged behind many of its peers on the continent, had its manufacturing PMI figure exceed 50 for the first time since July 2011. However, overall economic growth remains modest. The unemployment rate continues to be elevated, even as it fell below 12 percent for the first time in 13 months. Weak income growth has caused many to worry about possible deflationary concerns. Annual inflation rates in the Eurozone have fallen from 1.7 percent in March 2013 to 0.5 percent in March 2014, and producer prices declined in February. Aware of these trends, the European Central Bank (ECB) held interest rates steady and said it was prepared to pursue quantitative easing, if necessary, to stimulate the economy further.

Meanwhile, the U.S. trade deficit widened in February due to a decrease in goods exports and an increase in service-sector imports. Manufactured goods exports in the first two months of 2014 were 0.6 percent lower than during the same time period last year, which was disappointing. Nonetheless, we continue to be optimistic that better economic growth rates abroad will lead to improvements on the export front. Fortunately, four of our top five markets for U.S.-manufactured goods notched year-to-date increases in the first two months relative to last year, including Mexico, China, Japan and Germany.

Efforts to move forward U.S.–European and Asian–Pacific negotiations continue, and the World Trade Organization (WTO) is heading to the next stage of implementing the recently completed Trade Facilitation Agreement. On the legislative side, Export-Import (Ex-Im) Bank reauthorization efforts continue, while manufacturers keep pressing for congressional action on key trade legislation, such as Trade Promotion Authority (TPA) and the Miscellaneous Tariff Bill (MTB).

Chad Moutray is the chief economist, National Association of Manufacturers.

eurozone inflation rates - apr2014

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NAM End-User Priorities Advance in House CFTC Reauthorization

Legislation to ensure that certain Dodd-Frank requirements do not overburden manufacturers advanced on Wednesday when the House Agriculture Committee approved legislation to reauthorize the Commodities Futures Trading Commission (CFTC) (H.R. 4413) that included a number of NAM end-user priorities. Prior to consideration of the bill, the NAM joined the Coalition for Derivatives End-Users in urging committee members to approve the bill.

As approved by the committee, H.R. 4413 would ensure that manufacturers and other nonfinancial end-users would not be subject to mandatory margin requirements when hedging business risk. This provision is similar to a bill (H.R. 634) that already passed the House overwhelmingly last year with 411 votes, but has yet to be considered in the Senate even though the bill (S. 888) is backed by 20 Senators from both sides of the aisle. A recent survey finds that without this fix, a company that uses derivatives to hedge commercial risk may be forced to sideline approximately $125 million, negatively impacting business investments, R&D, and job creation.

Manufacturers that use a centralized treasury unit or hedging center would also be relieved of unintended consequences stemming from Dodd-Frank in the Agriculture Committee’s bill. Currently, companies that use this centralized structure, a best practice in corporate treasury, may be forced to clear and margin their hedges since this unit may be considered a “financial entity,” preventing them from taking advantage of the end-user exemptions provided by Dodd-Frank. The CFTC reauthorization includes language stemming from a bipartisan bill (H.R. 677) which was approved by the Committee last year.

The CFTC reauthorization also included provisions from another bill (H.R. 3814) the NAM has supported to require the CFTC take an affirmative action before lowering the swap dealer de minimis threshold. Without action, the exemption level for engaging in a de minimis quantity of swap dealing automatically drops from the current $8 billion threshold down to $3 billion in 2018.

This bill was approved overwhelmingly by a voice vote, and will next move to the House floor. The NAM is also advocating for the Senate to include these important pro-manufacturing issues in their version of the CFTC reauthorization.

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Ambush is Coming

Today the National Labor Relations Board convened a two-day public hearing on its proposed “ambush election” rule, noticed earlier this year to demonstrate its supposed commitment to transparency and fair review.  This is the recycled rule—previously rejected by a Federal Appeals’ Court—which would shorten the timeframe, to as few as 10-14 days, in which a union election can take place after a petition is filed.  The rule would also prohibit certain challenges employers can currently make prior to the election and would also allow the union to receive employees’ private information, such as personal email addresses and home addresses and telephone numbers. It’s patently obvious that this rule is an attempt to stack the deck in favor of the radical agenda we’ve seen out of the NLRB for several years now. While this may be just a “show hearing” for the Board, manufacturers are taking this opportunity to again raise our voice in dissent – because ambush elections are as damaging as they sound.

The NAM will present on two topics tomorrow and stress that by “compressing the timeframe for a representation election, the proposed rules would eviscerate the right of employees to make an informed exercise of their rights, as well as impair the employers’ rights to communicate their position to employees.” The rule would also “chill the free, uninhibited, robust debate regarding the issue of unionization contemplated by Congress enacting the NLRA.”  The NAM will also point that requiring employers provide certain confidential information, such as personal email addresses, telephone numbers, home addresses, and work shift information will “provide a wealth of information rendering employees vulnerable to harassment or worse. Providing such information without safeguards exposes both the employee and employer to risk.”

While the idea of having this public hearing on its face would fit the definition of an open and transparent government rulemaking process, the hearing itself is more reminiscent of other public “hearings,” which have been held lately. Hearings where only one side is permitted to ask questions and presenters are limited to a mere five minutes to present one particular aspect of the proposed rule, rather than the rule as a whole.  In the end, it is hard to believe this hearing is anything more than checking the transparency box for the Board.  The reality is, employers should be preparing for an ambush election – and the Board should prepare for a fight.

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Manufacturers applaud introduction of the Safe and Accurate Food Labeling Act

On Wednesday, Reps. Mike Pompeo (R-KS) and G.K. Butterfield (D-NC) introduced bipartisan legislation (H.R. 4432) that would create a federal standard for the labeling of foods and beverages made with genetically modified ingredients (GMOs). The bill, known as the Safe and Accurate Food Labeling Act of 2014, is a commonsense measure that would establish uniformity in food and beverage labeling and ensure the labeling of products addresses health and consumer safety concerns. Currently, no such standard exists and, as states consider their own labeling standards, a myriad of conflicting state standards could dramatically increase costs for both producers and consumers. The National Association of Manufacturers (NAM) supports the legislation and praises Reps. Pompeo and Butterfield—and original cosponsors Reps. Marsha Blackburn (R-TN), Jim Matheson (D-UT) and Ed Whitfield (R-KY)—for their leadership in advancing federal policies that will ensure a safe and affordable food supply.

The U.S. Food and Drug Administration (FDA) is the nation’s foremost food safety agency. The Safe and Accurate Food Labeling Act would provide the agency with the authority it needs to establish voluntary standards for GMO products and to require mandatory labeling of GMO products if they are found to be unsafe or materially different from foods produced without GMOs. The Safe and Accurate Food Labeling Act of 2014 will ensure that federal policies on food labeling protect consumers and allow them to make the best food and beverage choices for their families. H.R. 4432 would accomplish the following:

  • Ensure food safety: Requires FDA to determine the safety of a GMO and whether the GMO is materially different from traditional food before it can be introduced into commerce.
  • Establish labeling standards: Provides FDA authority to issue regulations for the voluntary labeling of food and beverage products containing GMO ingredients.
  • Require mandatory labeling based on health and safety: Directs FDA specify labeling requirements for GMO foods to protect health and safety or to prevent the label of a GMO food from being false or misleading, based on any material difference between the GMO and the comparable traditional food.
  • Provide consistency in labeling: Requires FDA to issue regulations defining the term “natural” so that food and beverage companies and consumers have a consistent legal framework that will guide food labels and inform consumer choice.
  • Eliminate confusion: Preempts state labeling standards to avoid the confusion and uncertainty of a 50-state patchwork of GMO safety and labeling laws and affirms the FDA as the nation’s authority for the use and labeling of genetically modified food ingredients.

Food and beverage manufacturing accounts for 1.65 million jobs in the United States and is critically important 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 U.S. than anyone else. In the past 3 years, the food sector has contributed $3 billion in food and cash to fight hunger and malnutrition.

GMO technology has fostered a revolution in American agriculture that has benefitted consumers in the U.S. 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. Click here to contact Congress to urge support for the Safe and Accurate Food Labeling Act of 2014.

For more information about GMOs and the need for a federal labeling standard, visit www.CFSAF.org.

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NAM Member Testifies on Benefits of LNG Exports

LNG exports will create jobs and create a positive ripple effect throughout the manufacturing supply chain. That was the message today from Chart Industries Vice President and Secretary Matt Klaben at a House Ways and Means hearing focused on the trade implications of U.S. energy policy and the export of liquefied natural gas (LNG).

Klaben addressed the importance of free trade and open markets over market-distorting barriers to trade. He also highlighted Chart’s story of job creation and the type of advanced manufacturing that would take place across the country if these terminals are approved. Below are excerpts from Mr. Klaben’s testimony:

For manufacturers, natural gas is a critical component of an “all-of-the-above” energy strategy that embraces all forms of domestic energy production, including oil, gas, coal, nuclear, energy efficiency, alternative fuels and renewable energy sources…

Chart’s participation in the LNG value chain has put us in a position to create many good-paying jobs in communities across the U.S. In recent years, we have invested tens of millions of dollars to expand our facilities in various American communities to be prepared for these opportunities…

If Chart is selected to supply equipment for just one average-sized export terminal, it would support hundreds of jobs at Chart facilities, and further hundreds of jobs with Chart suppliers in other communities around the U.S…

Chart and its suppliers are not alone—we represent just a small part of the LNG value chain and the total work needed. Each LNG export terminal costs roughly $10 billion to construct. Each project would create thousands (and in some cases tens of thousands) of jobs and generate billions of dollars in economic benefits. Manufacturers across the country would create jobs making compressors, heat exchangers, storage tanks, pipes, valves and other components of these state-of-the-art infrastructure projects.

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