Today in Manufacturing
High gasoline prices, government budget cuts and weaker-than-expected consumer spending caused the economy to grow only weakly in the first three months of the year ... continue
Today in Manufacturing
More Americans applied for unemployment benefits last week, the first increase in three weeks and evidence that the job market is still sluggish ... continue
Quick Manufacturing News
A large majority of the 750 global executives who responded to a recent survey said they are willing to invest in training and other education to build and maintain talent. Click to continue
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A Society for Human Resource Management workplace violence survey found that more than 50% of the respondents were concerned that workplace violence might occur at their organization. Click to continue
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It is the first time in 31 years that Japan has recorded a deficit for the month of April. Click to continue
MARKET ANALYSTS DO NOT EXPECT EXTENDED DELAY IN LAUNCH OF CALIF. CAP-AND-TRADE MARKET
By Amanda Luhavalja – UAE Weekly Energy BriefWhile analysts expect that the latest court ruling in California could delay the state's launch of a cap-and-trade program for greenhouse gas emissions, they remain optimistic that an extended delay is unlikely.
For months, market watchers have worried that legal proceedings in California related to a suit filed by community and environmental groups and several individuals in 2009 could push back the start of a cap-and-trade market in the state, scheduled to begin Jan. 1, 2012.
"Our sense is that [the California Air Resources Board] is very committed to the start date, and the key is how they manage the balance of the judge's and court's constraints versus their ability to continue with rule-making and whether adjustments need to be made," said Ethan Ravage, West Coast representative for the International Emissions Trading Association.
On May 20, Superior Court of California, County of San Francisco Judge Ernest Goldsmith ordered CARB to stop further efforts to implement the state's cap-and-trade program until alternatives are properly reviewed.
Goldsmith on March 17 had suspended CARB's work on cap-and-trade pending the board's amending of its "functional equivalent document," which requires the board to assess the environmental consequences of its climate change scoping plan. Goldsmith's latest ruling speaks only to the cap-and-trade program, not all measures in the scoping plan, such as improving energy efficiency and establishing low-carbon-fuel regulations.
"The court ruled in favor of ARB on the majority of issues raised by the petitioners, including finding that the scoping plan fully complies with the requirements of A.B. 32," said Stanley Young, a spokesman for the agency. "We respectfully disagree with the court's determination that ARB did not adequately analyze alternatives to cap and trade program in the scoping plan and will file a notice of appeal [May 23]," Young added.
Lee Smith, partner at Stoel Rives LLP, said in a May 23 blog post: "This revised final order is narrower than the draft order previously circulated in March. … Keep in mind, this lawsuit was filed challenging a [California Environmental Quality Act] type document which is procedural in nature. Thus, once CARB revises the environmental document in the manner required by the court and it is determined to be sufficient at the time the writ is returned, the project may go forward."
Smith added, "[I]n the interim, those portions of AB 32 that are not related to cap and trade, such as mandatory reporting, are still in effect pursuant to the implementation schedule."
Before the latest ruling, observers had said CARB officials had been working in the background to develop the specifics of the cap-and-trade program in anticipation of the market starting on time. Many key elements of the system, including the allocation structure of allowances to electric utilities, have yet to be finalized.
"My understanding is that A.B. 32 legally has to go forward with or without a cap-and-trade program, so the greenhouse gas reduction targets remain for the state," said Gary Hart, emissions market analyst at ICAP Energy LLC. "But yes, the legal fight may delay the allocations, etc. associated with a California cap-and-trade program," Hart added.
In the meantime, "ARB is working on a revised scoping plan alternatives analysis that will fully address the issues raised in the court's decision," Young said. "We intend to bring the revised analysis to the board for consideration as soon as possible."
THOUSANDS OF RECOVERY ACT GRANT RECIPIENTS OWE HUNDREDS OF MILLIONS IN TAXES
By Kathleen Hart – UAE Weekly Energy BriefAmerican Recovery and Reinvestment Act of 2009 contract and grant recipients collectively owe hundreds of millions of dollars in federal taxes, the U.S. Government Accountability Office found in a report released May 24.
The Recovery Act, which was enacted in February 2009, appropriated $275 billion for federal contracts, grants and loans, many of which were awarded for renewable energy, smart grid and other innovative technology projects. As of March 25, $191 billion of the $275 billion had been paid out, GAO said.
GAO was asked to determine whether Recovery Act contract and grant recipients have unpaid federal taxes and, if so, to determine the magnitude of known federal tax debt owed and provide examples of recipients who have known unpaid federal taxes.
To determine, to the extent possible, the magnitude of known tax debt owed by Recovery Act contract and grant recipients, GAO identified contract and grant recipients from the website www.recovery.gov and compared them to known tax debts as of Sept. 30, 2009, from the Internal Revenue Service. To provide examples of Recovery Act recipients with known unpaid federal taxes, GAO chose a non-representative selection of 30 contract and grant recipients, which was then narrowed to 15 based on a number of factors including the amount of taxes owed and the number of delinquent tax periods.
GAO noted that the case studies "serve to illustrate the sizable amounts of taxes owed by some organizations that received Recovery Act funding and cannot be generalized beyond the cases presented." The report contains no recommendations.
"At least 3,700 Recovery Act contract and grant recipients — including prime recipients, subrecipients, and vendors — are estimated to owe more than $750 million in known unpaid federal taxes as of September 30, 2009, and received over $24 billion in Recovery Act funds," the report said. That represented nearly 5% of the approximately 80,000 contractors and grant recipients in data from www.recovery.gov as of July 2010 that GAO reviewed.
The report is the first in a series of reports GAO plans to produce in response to a request by Sens. Carl Levin, D-Mich., chairman, and Tom Coburn, R-Okla., ranking Republican, on the Senate Committee on Homeland Security and Governmental Affairs Permanent Subcommittee on Investigations; Sens. Max Baucus, D-Mont., chairman, and Orrin Hatch, R-Utah, ranking Republican, on the Senate Finance Committee; and Sen. Charles Grassley, R-Iowa, ranking Republican on the Senate Judiciary Committee
"Federal law does not prohibit the awarding of contracts or grants to entities because they owe federal taxes and does not permit IRS to disclose taxpayer information, including unpaid federal taxes, to federal agencies unless the taxpayer consents. The estimated amount of known unpaid federal taxes is likely understated because IRS databases do not include amounts owed by recipients who have not filed tax returns or understated their taxable income and for which IRS has not assessed tax amounts due," GAO noted.
In addition, GAO said that its analysis does not include Recovery Act contract and grant recipients who are noncompliant with, or not subject to, Recovery Act reporting requirements. GAO selected 15 Recovery Act recipients for further investigation. For the 15 cases, GAO found "abusive or potentially criminal activity, i.e., recipients had failed to remit payroll taxes to IRS. Federal law requires employers to hold payroll tax money 'in trust' before remitting it to IRS. Failure to remit payroll taxes can result in civil or criminal penalties under U.S. law," the report said.
The amount of unpaid taxes associated with the case studies was about $40 million, ranging from about $400,000 to more than $9 million in the individual cases, GAO found. The report added that the IRS has taken collection or enforcement activities against all 15 of the recipients.
HOUSE PASSES AMENDMENT TO PREVENT RESTRICTIONS ON POLITICAL SPEECH
NAM Capital BriefingThe U.S. House of Representatives passed an amendment on May 25 to the National Defense Authorization Act to prevent federal agencies from collecting information on political contributions as a condition of federal contracts. The amendment came in response to a leaked, draft Presidential Executive Order that would seek to implement provisions of the DISCLOSE Act (The Democracy Is Strengthened by Casting Light on Spending in Elections Act) through administrative action. The DISCLOSE Act would curb the First Amendment rights of many corporations that regularly participate in contracts with the federal government or have limited foreign ownership or control. The NAM issued a key vote letter in favor of the amendment offered by Representative Tom Cole (R-OK). The amendment passed by a vote of 261 - 163 with bipartisan support. Manufacturers will continue to oppose efforts to tie federal contracts to political contributions and to protect the First Amendment rights of job creators.
NAM SUPPORTS REPEAL OF THE HEALTH INSURANCE TAX
NAM Capital BriefingNAM joined with 26 associations in a May 26 thank you letter to Reps. Charles Boustany (R-LA) and Dan Boren (D-OK), the lead sponsors of H.R. 1370. This bill would repeal the Health Insurance Tax (HIT) included in the 2010 health care law. This tax would be paid by health insurance companies and would be calculated based on the revenues earned from selling fully-insured health insurance plans. The tax is expected to be passed on to employers via higher premiums, which would ultimately affect their employees. HIT is scheduled to become effective in 2014. Similar legislation, the Small Business Health Relief Act (S. 1049), has been introduced in the Senate by Sen. Jon Kyl (R-AZ) on May 23. This legislation would repeal the HIT as part of a broader reform of the 2010 health care law. It is important to note that self-insured health plans would be excluded from the HIT. Details: Monica McGuire, (202) 637-3076.
NAM CONTINUES TO OPPOSE THREE PERCENT GOVERNMENT WITHHOLDING THAT WOULD INCREASE COSTS AND STIFLE GROWTH
NAM Capital BriefingOn May 26, the NAM submitted a statement for the record as the House Small Business Contracting and Workforce Subcommittee held a hearing on “The Need to Repeal the 3% Withholding Provision.” The NAM has long advocated the repeal of the withholding requirement. Otherwise, manufacturers of all sizes will face an increase in the cost of doing business as the tax draws resources away from much needed investment and jobs. The wide scope of the withholding requirement, enacted in 2006 and currently set to go into effect in 2013, will impose additional costs and a significant administrative burden on all government contractors. The NAM has opposed this new withholding requirement since it was first enacted.
NAM SUPPORTS MOBILE WORKFORCE TAX FAIRNESS LEGISLATION
NAM Capital BriefingThe NAM submitted a statement for the record of the House Judiciary Subcommittee on Courts, Commercial and Administrative Law hearing held May 26 on H.R. 1864, the “Mobile Workforce State Income Tax Simplification Act of 2011.” Recently introduced by Reps. Howard Coble (R-NC) and Hank Johnson (D-GA), the bipartisan bill would establish fair and uniform rules clarifying that states cannot assess income taxes on non-resident employees who temporarily work in a state. If enacted, employees who work out-of-state for 30 days or fewer during a calendar year would not have to file an income tax return, pay income taxes, or seek a refund of tax overpayments from the nonresident state. Also, employers would no longer be required to calculate and remit state income tax withholdings for these short work periods. H.R. 1864 would create a bright line test that would benefit companies of all sizes, representing a cross-section of industries and their mobile workforces. NAM supports this legislation and encourages you to reach out to your representative about co-sponsoring this important bill.
LEGAL CHALLENGE TO EPA’S OVERSTEP ON GREENHOUSE GAS ADVANCES
NAM Capital BriefingOn May 20, the NAM and 79 other parties filed an extensive opening brief challenging the legality of EPA’s use of its “endangerment” finding to regulate greenhouse gas (GHG) emissions. This brief contains the principal legal arguments against EPA’s finding, and is part of a series of suits the NAM has brought challenging the agency’s authority and procedures in this area. The NAM is concerned that the EPA continues to overstep its authority, particularly here without any substantial claims that GHG emissions endanger the public health or welfare of the United States. The government’s response is due in August, and oral arguments are expected to be scheduled for early 2012.
EPA REGULATION OF PORTLAND CEMENT RAISES LARGER ISSUES FOR MANUFACTURERS
NAM Capital BriefingThe NAM and other associations filed an amicus brief on May 23 supporting a court challenge to EPA’s rule establishing national emissions standards for hazardous air pollutants (NESHAPs) for the Portland Cement manufacturing industry. The rule, issued last September, involves interpretations of EPA duties and discretion that are relevant to NESHAPs for other industries, such as chemical plants, pulp and paper mills, steel pickling operations and wood furniture manufacturing. Of particular concern is EPA’s pollutant-by-pollutant approach, which establishes emissions limits that cannot be met by any existing facility. We highlighted the special problems inherent in sudden, unexpected failures of process equipment or pollution control technology, which EPA no longer recognizes as special circumstances that should fall outside of emissions standards for normal operations. Further, EPA failed to recognize that the source of raw materials at different plants makes compliance with a uniform national standard difficult or impossible.
Michael Frohlich – NAM ShopFloor Blog
This morning the Republican Caucus released a new economic plan, America’s Job Creators: Empowering Families, Small Businesses and Entrepreneurs.
Manufacturers are pleased to see that these critical economic issues are being discussed in Congress and believe many of the proposals put forth will address the need to establish a level of certainty for job creators to invest in the future, expand, and enhance America’s global competitiveness.
Key points of the Plan Include:
· Pass the pending Free Trade Agreements with South Korea, Panama and Columbia
· Address the Tax Code to Help Job Creators
· Encourage Economic Growth
· Maximize Domestic Energy Production to Ensure an Energy Policy for the 21st Century
· Pay Down America’s Unsustainable Debt
This proposal serves as a starting point for congressional debate moving forward. Manufacturers believe Congress must adopt a strategy that will reduce the aggressive regulatory burden of the federal government and reform our tax code, lowering the corporate tax rate for manufacturers large and small, while at the same time protecting those businesses that file as individuals as well.
Manufacturers are pleased to see the proposal and look forward to the coming congressional debate on these important issues.
For more on the plan:
· PDF of the Full Plan
· Information on the Plan
· Summary on the Plan
· 1-Pager on the Plan
Joe Trauger - NAM ShopFloor Blog
In 2008, Arizona was the first state to go beyond existing Federal laws and impose additional hiring responsibilities and penalties on employers. Some states have since followed, resulting in a state-by-state patchwork of varied enforcement and hiring mechanisms, making the process increasingly difficult, burdensome and costly for employers doing business in multiple states.
Today, the Supreme Court found that the Arizona law falls within the authority Congress has given the states and they have the right to mandate that employers use E-Verify, the Federal verification program and impose certain penalties.
Employers need a reliable, accurate and efficient employment eligibility verification system that also provides fair enforcement of the laws. This includes a consistent system that provides a coherent hiring process across all states. Manufacturers are concerned that this ruling opens the door to additional state action that will make the hiring process more confusing.
Federal preemption of state laws and a safe harbor for employers is necessary to ease the regulatory burden that will continue to be imposed one state at a time.
Joe Trauger is vice president for human resources policy, National Association of Manufacturers.
Michael Frohlich – NAM ShopFloor Blog
The Senate Judiciary Committee unanimously approved the PROTECT IP Act today with a bipartisan voice vote. Manufacturers across the country are applauding this broad consensus and support of legislation that brings the shutting down of websites that sell stolen and counterfeit intellectual property one step closer to reality.
All manufacturing sectors depend on the Internet to facilitate transactions among suppliers, vendors and customers. Unscrupulous actors online are threatening the growth of these businesses and the jobs they create. It was encouraging to see both Republicans and Democrats unite behind an issue so critical to protecting manufacturers.
We believe this unanimous support by the Senate Judiciary Committee should sends a strong message to members of the House and Senate that Intellectual Property theft and rogue websites that result in job losses are unacceptable.
The next stop for this legislation is the Senate floor. Manufacturers are optimistic that the Senate will take swift action to pass this legislation and urge the House to follow suit.
Read the full letter of support for the PROTECT IP Act that went to Senate, which the NAM signed onto, joining with nearly 200 other companies.
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Michael Frohlich –NAM ShopFloor Blog
On January 18, 2011, President Obama signed Executive Order 13563. The order states, “Our regulatory system must protect public health, welfare, safety, and our environment while promoting economic growth, innovation, competitiveness, and job creation.” While it is positive to see the President concerned about promoting economic growth, we hope he follows through on this. There has been much talk of relieving regulatory burdens and streamlining the process for domestic energy production, but no action has followed. The time for talk is over, we need action now to help create jobs and maintain manufacturer’s global competitiveness
Writing in the Wall Street Journal, Cass Sunstein, the President’s Regulatory Czar stated, “We are taking immediate steps to save individuals, businesses, and state and local governments hundreds of millions of dollars every year in regulatory burdens.” He also added:
“The initial review announced today is just the start of an ongoing process. Our goal is to change the regulatory culture of Washington by constantly asking what’s working and what isn’t. To achieve that goal, we need to obtain real-world evidence and data. We also need to draw on the experience and wisdom of the American people—which is why the president has put an emphasis on asking the public for their comments, ideas and suggestions. And so, before today’s plans are finalized, the public will weigh in.”
View the full piece from Mr. Sunstein in the Wall Street Journal.
Mr. Sunstein also spoke at the American Enterprise Institute and on Capitol Hill yesterday.
Manufacturers hope that during this process, the EPA and the Administration take substantive steps to reduce the regulatory burden that is stifling job creation and job growth. At a time of high unemployment, the last thing manufacturers need to face are costly and burdensome regulations that prevent future investment, expansion and reduce their global competitiveness.
Update: Read the statement from the National Association of Manufacturers on the results of the review here.
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