Regulatory and Legal Reform

The NAM testified before the U.S. Copyright Office last week, explaining how two proposed exemptions from copyright protections would weaken manufacturers’ intellectual property rights, do significant harm to their businesses and potentially endanger consumers.

What’s going on: The Copyright Office is considering whether to recommend two exemptions from the Digital Millennium Copyright Act that would allow users to circumvent measures protecting copyrighted content.

• One proposal was designed to allow the so-called “right-to-repair” by enabling access to operational data (including diagnostic and telematics data) from automobiles, agricultural vehicles, marine vessels and more. The other is focused on industrial equipment.

NAM speaks out: “The basis of the so-called ‘right-to-repair’ movement hinges on the false notion that owners do not have the ability to repair their own equipment,” NAM Vice President of Domestic Policy Charles Crain said at the recent hearing. “The truth, however, is that the majority of [original equipment manufacturers] already provide a wide range of resources and tools that allow users—and third-party repair businesses—to maintain, diagnose and repair products.”

• The NAM previously submitted comments urging the Copyright Office not to adopt the proposed exemptions.

Why it’s important: “These exemptions would undermine manufacturers’ IP rights in service of right-to-repair—and the record does not support their adoption,” Crain continued.

• The exemptions are too broad and inadequately defined, and their proponents have “failed to show that users will be adversely affected absent the ability to circumvent [copyright law].”
• What’s more, the exemptions “would expose proprietary information to public consumption and use, likely endangering consumers and allowing for unlawful modifications of government-mandated safety and emissions limits.”

The last word: “In short, right-to-repair is a solution in search of a problem,” Crain said.

In a move that will hinder the growth of manufacturing in the U.S., according to the NAM, the Environmental Protection Agency on Friday designated two widely used chemicals as hazardous substances under the Comprehensive Environmental Response, Compensation and Liability Act, or Superfund law, Law360 (subscription) reports.

What’s going on: The addition of two per- and polyfluoroalkyl substances, or PFAS, to the federal list “means the EPA can investigate and clean up releases of the chemicals and ensure that leaks, spills and other releases are reported. Under CERCLA, the government and other parties can sue for contributions to cleanups and to recover costs related to those actions.”

• The newly added PFAS are perfluorooctanoic acid, or PFOA, and perfluorooctanesulfonic acid, or PFOS. PFAS have been used across industries for decades for their unmatched ability to douse fires and resist corrosion, stains and grease.
• The news comes the same month the EPA announced the first-ever national regulation limiting PFAS levels in drinking water to near-zero levels.

What’s in it: “The rule requires entities to immediately report releases of PFOA and PFOS that meet or exceed the ‘reportable quantity’ to the National Response Center, state or tribal emergency response commission, and the local or tribal emergency planning committee, according to the EPA.”

Why it’s problematic: “[T]his unprecedented use of CERCLA authority by the EPA will only hamper President Biden’s vision of growing the manufacturing sector in the U.S.,”  NAM Managing Vice President of Policy Chris Netram said, adding that manufacturers support smart efforts to remove harmful substances from the environment.

• “The unique and unmatched chemical bond of these compounds means that there are no existing replacements for the critical products they make up.”
• Furthermore, the overly broad designation of PFOA and PFOS as hazardous “will make it harder for our industry to create innovative products and jobs.”

Washington, D.C. – Following the release of the Environmental Protection Agency’s rule designating perfluorooctane sulfonic acid, also known as PFOS, and perfluorooctanoic acid, also known as PFOA, as hazardous substances under the Comprehensive Environmental Response, Compensation and Liability Act, National Association of Manufacturers Managing Vice President of Policy Chris Netram released the following statement:

“Manufacturers support efforts to mitigate harmful chemicals from impacting our environment and the health of our nation, but this unprecedented use of CERCLA authority by the EPA will only hamper President Biden’s vision of growing the manufacturing sector in the U.S. The unique and unmatched chemical bond of these compounds means that there are no existing replacements for the critical products they make up.

“The NAM is not opposed to commonsense regulations of PFAS chemicals, and manufacturers are committed to environmental stewardship, while recognizing in many cases we will need to continue to use these chemicals for the foreseeable future. However, designating these compounds as hazardous substances is a blunt, overreaching decision that will make it harder for our industry to create innovative products and jobs.”

-NAM-

The National Association of Manufacturers is the largest manufacturing association in the United States, representing small and large manufacturers in every industrial sector and in all 50 states. Manufacturing employs nearly 13 million men and women, contributes $2.89 trillion to the U.S. economy annually and accounts for 53% of private-sector research and development. The NAM is the powerful voice of the manufacturing community and the leading advocate for a policy agenda that helps manufacturers compete in the global economy and create jobs across the United States. For more information about the NAM or to follow us on Twitter and Facebook, please visit www.nam.org.

The Federal Trade Commission will vote next week on the final version of a rule that would prohibit noncompete agreements between employers and their employees, Law360 (subscription) reports.

What’s going on: “According to the FTC’s announcement, the agency’s five commissioners will vote April 23 on whether to ‘authorize public disclosure of the proposed final rule,’ first unveiled in draft form in January 2023. Assuming a vote in the affirmative, staffers will give a presentation on the rule, followed by a second vote to issue the rule in its final form.”

• The agency did not indicate which, if any, changes it has made to the previous version of the rule.
• The FTC received more than 26,000 comments on the rule during the 90-day public comment period.

Why it’s important: A noncompete ban would cause disruption to the majority of manufacturing operations in the U.S., a 2023 NAM survey found.

• Some 70% of manufacturers in the U.S. use noncompete agreements, and they do so to safeguard intellectual property, sales information, industrial processes and business strategies.
• Approximately 66% of survey respondents—representing manufacturers of all sizes—said a ban would interfere with their operations.
• Around 50% of those polled said a ban would have a negative effect on their investment in employee training programs.

The NAM says: “The FTC’s proposed rule severely threatens manufacturers’ ability to protect intellectual property and responsibly invest in their employees,” said NAM Director of Transportation, Infrastructure and Labor Policy Max Hyman.

• “The NAM remains engaged on this critical issue for our members and will weigh our options in response to the commission’s vote next week.”

Municipal water systems will soon be required to remove six types of per- and polyfluoroalkyl substances, or PFAS, from drinking water, The New York Times (subscription) reports.

• But the move could backfire and have adverse effects on manufacturers, the NAM said Thursday.

What’s going on: The Environmental Protection Agency on Wednesday announced the first-ever national rule limiting PFAS “to near-zero levels.”

• PFAS are compounds that have been used for decades due to their rare ability to douse fires and resist grease, corrosion and stains. They’re found in everything from semiconductors to medical devices and renewable-energy production equipment.
• But under the new mandate water systems across the U.S. will have three years to monitor the chemicals and a further two years to put into place technology to reduce the compounds’ levels in the water.
• The utilities “would be required to notify the public and reduce contamination if levels exceeded the new standard of 4 parts per trillion for [PFOA and PFOS]. Previously, the agency had advised that drinking water contain no more than 70 parts per trillion of the chemicals.”

The background: The rule comes just over a year after the EPA proposed the first federal limits on two PFAS chemicals, known as PFOA and PFOS.

The funding: The 2021 Bipartisan Infrastructure Law set aside $9 billion to help communities with PFAS removal. The government will make $1 billion of it available to states and territories to help defray the cost of testing and treatment over the next few years.

Higher prices, less security: The new standard is wholly infeasible, NAM Managing Vice President of Policy Chris Netram said, and will lead to cost increases throughout the supply chain and make our national defense more difficult.

• “In many instances, there is no viable alternative for these chemicals, and companies may be forced to change plans dramatically” to comply with the new rule, he said. “The severity of the proposed regulations will mean higher prices for everything—community water and waste systems, medical treatments and electronics. More alarming, the regulations will make it more difficult to produce the equipment our military needs to defend our nation.”

What we’re doing: The NAM is weighing legal options for reversing the final rule, according to Netram.

The Senate this week approved a resolution to repeal the National Labor Relations Board joint employer rule, Reuters (subscription) reports.

What’s going on: In a 50–48 vote Wednesday, the Democrat-controlled Senate passed a Congressional Review Act resolution to block an NLRB “rule that would treat companies as the employers of many of their contract and franchise workers and require them to bargain with those workers’ unions.”

• President Biden pledged to veto the resolution, which the House approved in January. A veto would send the measure back to Congress, where it appears to lack the necessary votes for an override.
• The CRA “allows Congress to repeal agency rules through a majority vote in both houses.” The president must sign the resolution for it to take effect.
• The rule was scheduled to go into effect in February but was blocked by a federal judge in Texas. The NLRB is considering options in response to the decision.

What it would do: “The rule would treat companies as ‘joint employers’ of contract and franchise workers when they have control over key working conditions such as pay, scheduling, discipline and supervision, even if that control is indirect or not exercised.”

Why it would be problematic: The NLRB requirement would lead to confusion about which businesses should be considered employers, “disrupting franchising and routine contracting arrangements,” according to another Reuters article.

The NAM says: The joint employer rule would “harm manufacturers at a time when they need the flexibility and contingency offered through temporary and contract workers to best manage supply chain impacts, demand for manufactured products and other inflationary challenges,” the NAM told the NLRB in December.

Washington, D.C. – Following the release of the Environmental Protection Agency’s rulemaking surrounding the monitoring for per- and poly-fluoroalkyl substances (PFAS) in municipal water systems, National Association of Manufacturers Managing Vice President of Policy Chris Netram released the following statement:

“Manufacturers support efforts to remove potentially harmful chemicals from our water systems, but again the EPA has set standards that are not feasible and will directly threaten manufacturers’ ability to invest, innovate and create jobs in America. In many instances, there is no viable alternative for these chemicals, and companies may be forced to change plans dramatically to grow facilities and hire new workers.

“The severity of the proposed regulations will mean higher prices for everything—community water and waste systems, medical treatments and electronics. More alarming, the regulations will make it more difficult to produce the equipment our military needs to defend our nation. The final rule requires water systems to monitor, sample and treat at near zero levels, which will increase costs throughout the supply chain. We are looking at all options to reverse this harmful decision and to slow the regulatory onslaught that directly undermines the president’s efforts to grow manufacturing in the United States.”

-NAM-

The National Association of Manufacturers is the largest manufacturing association in the United States, representing small and large manufacturers in every industrial sector and in all 50 states. Manufacturing employs nearly 13 million men and women, contributes $2.89 trillion to the U.S. economy annually and accounts for 53% of private-sector research and development. The NAM is the powerful voice of the manufacturing community and the leading advocate for a policy agenda that helps manufacturers compete in the global economy and create jobs across the United States. For more information about the NAM or to follow us on Twitter and Facebook, please visit www.nam.org.

A newly finalized rule from the EPA will require chemical and plastics plants to slash emissions of two widely used compounds, according to The Wall Street Journal (subscription).

What’s going on: The EPA’s final rule, released Tuesday, requires manufacturing facilities to curb emissions of chemicals including ethylene oxide and chloroprene. These two chemicals have broad applications, from sterilizing medical equipment to producing synthetic rubber.

• The rule would affect about 200 plants across the U.S. and include a requirement for “fenceline monitoring,” the use of technology to measure the ambient air concentration for certain chemicals.
• Once in effect, the regulation could reduce emissions of both compounds by almost 80% annually, the EPA said.

The background: The news comes less than a month after the EPA finalized a rule to regulate the use of ethylene oxide as a sterilizing agent, a decision that will affect the way most medical devices—including complex, lifesaving ones, such as artificial heart valves—are sterilized.

Regulatory onslaught continues: “While the EPA listened to some of manufacturers’ concerns, such as allowing more time for companies throughout the supply chain to assess the impact on their operations, the rulemaking adds to the ongoing regulatory onslaught our industry has been facing,” said NAM Managing Vice President of Policy Chris Netram.

Effect on supply chains: The fenceline monitoring schedule will be a “significant burden” to manufacturers, as will the EPA’s requirement that operations be fully shut down for small plant repairs, Netram continued.

• “The potential disruption to supply chains could make it more difficult to create jobs in communities across the country.”

The Federal Communications Commission is set for an April 25 vote to bring back “net neutrality,” aiming to reinstate a national regulatory framework for broadband internet services, Fox Business reports. The NAM is speaking out against it.

What is it: “The Biden administration’s rule would regulate broadband services as an essential resource under Title II of the Communications Act.’’

How did we get here: “In 2015, the FCC adopted the Obama administration’s [net] neutrality rules, known as the Open Internet Order. The rules survived a legal challenge with a favorable ruling by a federal appeals court in 2016.”

• In 2017, the Trump administration rolled back broadband regulation with a regulation known as the Restoring Internet Freedom rule, citing it as an impediment to innovation and investment by internet service providers. This decision held up against a legal challenge.
• By 2021, President Biden’s executive order suggested reviving Obama-era broadband rules. With Democrats leading the FCC by October 2023, a formal process began, setting the stage for a conclusive vote.

What would happen next: The NAM sent detailed feedback to the FCC last December, warning that reinstating broadband regulation “will lead to a slowdown in innovation and investment.”

• The NAM’s feedback pointed to the negative impact of the Obama administration’s previous attempt to implement the policy: “In 2015, the last time the FCC sought to regulate broadband under Title II, annual industry capex fell by half a billion dollars.”
• The FCC’s decision exceeds its authority and could also be subject to litigation: “Congress has not explicitly given the commission the authority to regulate broadband and reclassify it in this way; therefore, the FCC lacks authority to do so.”

Our take:  “As with the other elements of the regulatory onslaught out of Washington these past few years, this is yet another solution in search of a problem, because we already have an open and fair internet,” said NAM Senior Director of Technology Policy Franck Journoud. “As we’ve warned, this will regulate broadband as if it were the same as rotary telephone service, which would slow innovation. The commission really is doing nothing to answer the question of ‘why’ this policy should be brought back.”

• The NAM has long opposed broadband regulation and went to court to support the FCC’s 2017 decision to repeal the rule. As NAM Chief Legal Officer Linda Kelly said, “Internet-driven technology is at the heart of modern manufacturing, and the FCC’s decision to repeal the onerous 2015 net neutrality rule was a victory for the competitiveness of manufacturers in America.”

The NAM will closely follow the FCC’s latest vote on net neutrality and is prepared to oppose any decision to restore this outdated policy.

The Biden administration on Monday announced that TSMC’s Arizona subsidiary will receive up to $6.6 billion in grants from the 2022 CHIPS and Science Act, The New York Times reports. The announcement is the latest move by the Biden administration to make the United States a leading producer of cutting-edge semiconductor technology.

What’s going on: The funding “will help support the construction of TSMC’s first major U.S. hub, in Phoenix. The company has already committed to building two plants at the site and will use some of the grant money to build a third factory in Phoenix, U.S. officials said on Sunday.”

• The company will “increase its total investments in the United States to more than $65 billion, up from $40 billion.”
• “TSMC’s investment is expected to create about 6,000 direct manufacturing jobs and more than 20,000 construction jobs, federal officials said.”
• In addition to the grants, the federal government is also offering TSMC up to $5 billion in loans.

Impact on U.S. chip production: “With projects such as TSMC’s, the U.S. is on track to make about 20% of the world’s cutting-edge chips by 2030, the Commerce Department said. It called the project the largest foreign direct investment in a new project in U.S. history,” reports The Wall Street Journal (subscription).

• Earlier this year, the Biden administration announced major chips funding awards for Intel and GlobalFoundries.

The NAM’s reaction: “Today’s announcement from TSMC and @CommerceGov makes America stronger,” the NAM wrote in a social post Monday. “The NAM-championed CHIPS and Science Act continues to spur new investments in cutting-edge semiconductor technology that is essential to advancing U.S. economic competitiveness.”