Posts for July 15, 2010

BONUS DEPRECIATION: NAM URGES CONGRESS TO RESTORE INVESTMENT INCENTIVE

July 15, 2010 – NAM Capital Briefing

The important issue of bonus depreciation is gaining traction. The House Small Business Committee held a hearing July 14 on bonus depreciation and its impact on small business. In response, National Association of Manufacturers (NAM) Vice President of Tax and Domestic
Economic Policy Dorothy Coleman urged Congress to act. “At a time when manufacturers face much uncertainty, this incentive will help them make needed investments and encourage job creation,” Coleman said.

On June 21, Senate Finance Committee Chairman Max Baucus (D-MT) and Ranking Member Charles Grassley (R-IA) introduced legislation (S. 3513) to extend bonus depreciation for companies of all sizes for one year through 2010. The bipartisan bill is designed to stimulate business investment and help create jobs.

While this stand-alone legislation will not move on its own in the Senate, Chairman Baucus has offered a substitute amendment to the Small Business Lending (and Tax) bill (H.R. 5297), which would extend retroactively bonus depreciation through 2010. This legislation is currently pending on the Senate floor with possible action to occur as early as next week or later in July. The House passed H.R. 5297 earlier this year, but it did not include an extension of bonus depreciation.

A temporary 50-percent bonus depreciation provision was included in both the 2008 and the 2009 economic stimulus laws. Bonus depreciation simply allows a company to accelerate the amount of depreciation taken in the year purchased by permitting businesses to immediately deduct 50 percent of the cost of new machinery, equipment and other essential capital investments. As the nation recovers from the economic downturn, an extension will help boost sales for manufacturers of these products and contribute to job creation and overall economic growth.

Although this provision has been valuable in promoting investment, this proven incentive expired at the end of 2009. Since its expiration, investments have slowed considerably.

According to the Bureau of Economic Analysis at the U.S. Department of Commerce, business investment in equipment and software rose at an annual rate of 19 percent in the fourth quarter of 2009 but slowed to an 11.4 percent pace in the first quarter of 2010.

The NAM is actively encouraging members in both chambers and on both sides of the aisle to move forward on extending bonus depreciation and has taken a leadership role in calling for prompt congressional action on this issue. Earlier this year, the NAM led a group of more than 80 associations in sending a letter of support to House and Senate leadership.

The letter stated, “Reinstating bonus depreciation will help inoculate the economy against a backward slide in business capital investment in the months ahead, enhance the benefits of other job creation legislation, encourage recovery in fragile, capital-intensive sectors of the economy and, most significantly, put Americans back to work.”

Extending bonus depreciation for one year clearly has broad, bipartisan support in Congress and the Administration. With little time remaining on a busy Senate calendar before the August recess begins in a few weeks, final Senate action on H.R. 5297 is uncertain.

The economy is not recovering at the pace many had hoped. Just this week, Federal Reserve leaders changed their expectations and indicated the economic recovery is proceeding more slowly than they had projected earlier this spring. This highlights the need for Congress to act swiftly to reinstate this important incentive that will help spur economic growth and provide relief to manufacturers of all sizes.

For more information, contact NAM Vice President of Tax and Domestic Economic Policy Dorothy Coleman at dcoleman@nam.org or (202) 637-3077.

CHALLENGING EPA REGULATIONS RELATING TO GHGS

July 15, 2010 – NAM Capital Briefing

The NAM and 16 other business associations have filed four petitions for review in the U.S. Court of Appeals for the D.C. Circuit, challenging EPA regulations from 1978, 1980 and 2002 that are now part of the EPA's effort to regulate GHGs from stationary sources of emissions. No one anticipated that these previously issued rules would now be used to mandate GHG permit requirements, but that is the interpretation the EPA has adopted. The NAM also filed an administrative petition for reconsideration with the EPA on the same rules. The NAM’s lawsuits and the administrative petition challenge each of the four older rules to the extent that the EPA considers them to allow the regulation of pollutants such as GHGs that are not subject to a National Ambient Air Quality Standard (NAAQS). The NAM’s administrative petition goes into great detail regarding the grounds for our request. These Related Documents also contain the text of the regulations being challenged: NAM petition to EPA to reconsider PSD rules (July 6, 2010); NAM petition re: 2002 PSD & SIP Rule (July 6, 2010); NAM petition re: Part 52 Rule (1978) (July 6, 2010); NAM petition re: Part 51 Rule (1978) (July 6, 2010); NAM petition re: 1980 PSD Rule (July 6, 2010). Details: Quentin Riegel, (202) 637-3058.

CHINA'S ECONOMIC GROWTH SLOWS

July 15, 2010 – Today in Manufacturing.net
World's third-largest economy expanded by 10.3 percent in second quarter, down from first quarter's explosive 11.9 percent growth and possibly weakening a global recovery... continue

FED TRIES TO BOLSTER RECOVERY

July 15, 2010 – Today in Manufacturing.net
Federal Reserve officials cut their forecasts for growth this year and signaled they stood ready to take new steps to keep the recovery alive if the economy worsens... continue

REPORT: MANUFACTURING ACTIVITY DROPS IN JUNE

Today in Manufacturing.net
Federal Reserve says industrial production edged up 0.1 percent, but manufacturing activity dropped amid fears that the economic recovery is stalling ... continue

NEW CLAIMS FOR JOBLESS BENEFITS FALL SHARPLY

July 15, 2010 – Today in Manufacturing.net
Labor Department said Thursday that new claims dropped by 29,000 to 429,000, the lowest level since August 2008... continue

NLRB CONSIDERS ELECTRONIC “CARD CHECK”

July 15, 2010 – NAM Capital Briefing


The National Labor Relations Board (NLRB) recently published a request for information for “secure electronic voting services” that include electronic balloting devices. The NRLB is looking for solutions “that support mail, telephone, web-based and/or on-site electronic voting” and indicated that it is interested in performing union representation elections through remote devices – which is much different from the current process of NLRB-supervised elections that typically take place at work sites through manual ballots.

With the jobs-killing Employee Free Choice Act (EFCA) stalled in Congress, organized labor is turning to the Executive Branch and federal agencies such as the NLRB to implement the goals of the EFCA. The NAM is concerned that this effort could lead to an electronic version of “card check,” which is one of the primary components of the EFCA.

Employees working at small and medium manufacturers in the United States have cause for alarm. Remote-access elections could expose workers to harassment because they would not allow for the proper levels of NLRB supervision and transparency that exist within the current election process. They may also shorten the timeframe allowed to contemplate the costs and benefits of electing labor unions to be their exclusive representative for purposes of collective bargaining.

The NAM sent a letter to the NLRB on July 1 outlining manufacturers’ concerns with the move, which would strip away the necessary protections currently afforded to employees. Manufacturers will continue to oppose elements of organized labor’s agenda that threaten the interests of employers and employees alike.

Contact your representatives and urge them to oppose this effort. For more information, contact NAM Director of Employment and Labor Policy Keith Smith at ksmith@nam.org or (202) 637-3045.

PUBLIC NUISANCE LITIGATION OVER CLIMATE CHANGE IS A POLITICAL QUESTION

July 15, 2010 – NAM Capital Briefing

A native village in Alaska sued various energy companies, alleging that greenhouse gas emissions cause climate change and made them relocate their village because of flooding. The trial court dismissed the case because it involves political questions that are not for courts to decide. It also said the plaintiffs did not have standing because they were unable to establish that their injuries are fairly traceable to the named defendants.

The issue is now on appeal to the Ninth Circuit. The NAM filed an amicus brief July 7, arguing that the case represents an unprecedented attempt by environmental lawyers to recast public nuisance as a "super tort", in an effort to bypass four time-honored elements of fundamental public nuisance law. Their theory is unfounded in federal or state law, and they cannot establish direct causation between the defendants' energy activities and the plaintiffs' injuries. In addition, to determine whether the elements of proving public nuisance were met, a court would have to address complex political questions and establish nationwide emissions standards. Even the plaintiffs admitted the case was borne out of their frustration with the legislative process. Allowing this kind of suit would give rise to endless claims of liability in highly speculative mass tort cases after every harsh weather event. Native Village of Kivalina v. ExxonMobil Corp. (9th Cir.). Details: Quentin Riegel, (202) 637-3058.

SENATE POISED TO APPROVE FINANCIAL REGULATION BILL

July 15, 2010 – NAM Capital Briefing

The Senate is expected this week – possibly as early as today – to approve the conference report on the Wall Street Reform and Protection Act (H.R. 4173), passed by the House 237–192 on June 30. The Senate action will clear the way for final enactment of the financial reform legislation. We were successful in our efforts to exempt manufacturers and other commercial end-users of over-the-counter derivatives from new regulations on derivatives, however, we are concerned the cost of derivatives transactions with commercial end-users will increase because of the increased costs imposed by the bill on swap dealers and major swap participants. We also appreciate that the final conference report includes the NAM-supported language clarifying that only non-financial companies “predominantly engaged” in financial activities will be subject to prudential regulation. At the same time, we have concerns about the impact of the new and complex regulatory system set up by the new legislation on the U.S. economy. Moving forward, the NAM is committed to working with Congress and regulators to minimize the negative impact of the bill on manufacturers.

SENATE WILL TAKE UP ENERGY LEGISLATION PRIOR TO AUGUST RECESS

July 15, 2010 – NAM Capital Briefing

Senate Majority Leader Harry Reid (D-NV) announced this week that the Senate will take up a comprehensive energy and climate package the week of July 26. Leader Reid stated the climate bill would likely include four main provisions: oil spill response, energy efficiency measures, clean energy production and a utility-only cap-and-trade proposal. Senators John Kerry (D-MA) and Joseph Lieberman (I-CT), the architects of an economy-wide cap-and-trade measure, have floated a scaled-down utility-only proposal. Senator Jeff Bingaman (D-NM), chair of the Senate Energy and Natural Resources Committee, also is considering introducing a utility-only approach that would allow manufacturers to opt into the program if they choose. While the utility-only proposals are still in draft form, the NAM remains concerned about energy cost increases for manufacturers.