The Environmental Protection Agency’s recently finalized standard for particulate matter (PM2.5) will hamstring U.S. economic growth, job creation and competitiveness—and it must be reversed, the NAM told the House Thursday.
What’s going on: “The EPA’s unworkable PM2.5 standard … of 9 [micrograms per cubic meter of air] is in line with background levels of particulate matter in many parts of the country,” NAM Managing Vice President of Policy Chris Netram told committee members during “Safeguarding American Prosperity and People’s Livelihoods: Legislation to Modernize Air Quality Standards,” a hearing of the House Energy and Commerce Subcommittee on Environment, Manufacturing and Critical Materials.
- “In other words, the standard is now so low that companies will be expected to reduce their emissions below what naturally occurs.”
- The result of an overly stringent National Ambient Air Quality Standards level: Large swaths of the U.S. will be forced into “nonattainment” status, making permitting for critical infrastructure nearly impossible and all but guaranteeing job cuts, not growth, Netram said in his testimony, which Bloomberg (subscription) covered.
Why it’s important: A particulate matter standard of 8 micrograms per cubic meter of air—only slightly below the newly finalized level—would result in a loss of up to $200 billion in economic activity and almost 1 million jobs, according to a recent NAM study.
- As far as global competitiveness is concerned, the new limit effectively cuts America off at the knees, Netram continued. “Europe’s current PM standard is 25; China’s is 35. If we want the next manufacturing dollar to be spent in America rather than abroad, a standard of 9 is simply not feasible.”
What should be done: Lawmakers should introduce a Congressional Review Act resolution to overturn the new standard as soon as possible, Netram urged. The NAM also highlighted key NAAQS reform policies Congress is considering:
- Extend the EPA review period to 10 years.
- Allow the EPA to count wildfire mitigation as exceptional “rather than holding manufacturers accountable for PM they can’t control.”
- Require the EPA to consider the economic effects of a tightened standard.
Small businesses are a critical part of both manufacturing and the U.S. economy at large, but the federal government’s costly regulatory onslaught is putting their continued existence at risk, the NAM told House lawmakers Wednesday.
What’s going on: “In the manufacturing sector, the majority of firms are small,” NAM Vice President of Domestic Policy Brandon Farris told the House Committee on Small Business during the hearing “Burdensome Regulations: Examining the Impact of EPA Regulations on Main Street.”
- “These firms are the backbone of the manufacturing supply chain, often producing key components for larger firms … [but] manufacturing faces significant headwinds in the form of the cost, complexity and uncertainty associated with overreaching and burdensome federal regulations.”
Why it’s important: The seemingly endless conveyor belt of new federal rules for the industry is costing manufacturers “shocking” amounts, disproportionately imperiling manufacturers—small ones in particular, Farris continued.
He cited NAM data finding that:
- The federal cost of regulations for manufacturers in 2022 was roughly $350 billion, a 25% increase from 2012; and
- The average manufacturer in the U.S. pays $29,100 per employee per year to comply with federal rules, while for the average small manufacturer, that price is $50,100.
Where it’s coming from: Farris cited other recent examples of onerous federal rulemaking, including:
- The Environmental Protection Agency’s recently finalized update to the National Ambient Air Quality Standard from 12 micrograms per cubic meter of air to 9 micrograms, a level approaching naturally occurring levels in many parts of the U.S., according to Farris, and one that “will make manufacturing in the U.S. less competitive globally”;
- The Department of Energy’s recent freeze of liquefied natural gas export permits, which, given increased European reliance on U.S. LNG since the start of Russia’s war in Ukraine, risks “leav[ing] our allies [and] our manufacturers in the cold”; and
- The Securities and Exchange Commission’s proposed climate disclosure rule, which “would increase manufacturers’ compliance costs dramatically, divert resources from job creation and growth, expose companies to increased liability, reveal proprietary and confidential information and ensnare wide swaths of the manufacturing supply chain.”
What must be done: Manufacturers aren’t asking legislators to cut corners, Farris said.
- Rather, they are seeking “regulatory certainty that can guide investment decisions and ensure that this country’s economic competitiveness is not outpaced or outflanked or overtaken by nations that do not share our values.”
To learn more about the high cost of overregulation, visit Manufacturers for Sensible Regulations, a coalition created by the NAM and members of the NAM’s Council of Manufacturing Associations and Conference of State Manufacturers Associations that’s intended to address the recent regulatory onslaught from federal agencies.
The Biden administration is “very concerned” about U.S. reliance on China for critical minerals, U.S. Energy Secretary Jennifer Granholm said Wednesday, according to CNBC.
What’s going on: China’s dominance in the world’s critical minerals supply chain is “one of the pieces of the supply chain that we’re very concerned about in the United States,” Granholm told the news outlet on the sidelines of the International Energy Agency’s 2024 Ministerial Meeting in Paris.
- China produces approximately 60% of all rare earth elements, which are critical to alternative-energy technologies, such as electric vehicles.
Why it’s important: “As part of a rapid uptick in demand for critical minerals, the IEA has warned that today’s supply falls short of what is needed to transform the energy sector,” according to the article.
What the administration is doing: Both production and processing of critical minerals “have to be addressed,” Granholm said.
- “And that’s why we are working very closely to ensure that we have identified which raw materials [or] critical minerals we need to be able to do our transition to a clean energy economy.”
The NAM says: “Other countries are taking all possible measures to develop domestic sources of critical minerals, and it should be a wake-up call to the U.S. that we need to be doing the same,” said NAM Vice President of Domestic Policy Brandon Farris. “We also need to reform our broken permitting system to get these projects operational as soon as possible.”
For nearly 50 years, Rinnai America Corporation has been selling innovative products in the United States. But as the Department of Energy prepares to unveil new rules in April, the water heater manufacturer is bracing for a big—and unnecessary—setback to its operations.
The background: There are a lot of water heater options on the market, and consumers must make a few key choices.
- First, they can choose between electric and gas heaters.
- Second, if they choose a gas heater, they can select one with a tank or one without.
- Finally, even tankless gas heaters come in two forms: condensing or noncondensing. Condensing heaters are used generally in colder environments, while noncondensing units are better for warmer climates.
The rule: The Department of Energy has proposed regulations on gas water heaters that would go into effect in 2029.
- However, the proposed efficiency requirements for tankless gas water heaters are so strict that noncondensing tankless units would not qualify—removing a cost-effective option from the market, and one that is in fact comparatively efficient.
- “The DOE is not taking into consideration what is best for the consumer, best for the industry and best for the environment overall,” said Frank Windsor, president of Rinnai America Corporation. “This is a shortsighted decision that doesn’t take into account the ramifications.”
The consumer impact: The DOE’s rule would restrict consumer choice severely by creating a de facto ban on noncondensing tankless heaters.
- “Consumers are getting hurt,” said Windsor. “Around 20% of consumers want tankless options”—including noncondensing tankless heaters.
The industry effect: Rinnai invested $70 million in 2022 in a new Georgia facility that makes noncondensing tankless gas heaters.
- “We built this new facility to make tankless water heaters that give consumers significant energy efficiency at a low price—and now the DOE is saying that, by 2029, you can’t make noncondensing units anymore,” said Windsor.
- “We’ve got close to 200 people working for us in Griffin, Georgia, so it impacts a lot of people.”
The innovation loss: According to Windsor, the rule is also counterproductive because it forces companies like Rinnai to reallocate funds that otherwise could go toward product innovation.
- “We’re going to have to spend money to retool that plant, and then we’ll get taxed on the capital for the plant that we can’t use anymore—and that’s all money that we would’ve spent on product innovation,” said Windsor.
The last word: “Why would you eliminate the availability of a cost-effective, efficient product and force the consumer to buy a more expensive option?” asked Windsor.
Learn more about the high costs of regulations, and the extreme burden on small manufacturers, in this recent NAM study. And check out Manufacturers for Sensible Regulations, a coalition created by the NAM and members of the NAM’s Council of Manufacturing Associations and Conference of State Manufacturers Associations, which is intended to address the regulatory onslaught coming from federal agencies in recent years.
A senior Department of Energy official told the Senate at a Thursday hearing that the Biden administration’s recent decision to pause liquefied natural gas export permits will neither affect supplies to U.S. allies nor jeopardize international energy security, Reuters reports.
- Yet, data supplied by the NAM to the Senate Committee on Energy and Natural Resources ahead of the hearing shows otherwise.
What’s going on: “‘It will not affect our ability to supply our allies,’ [U.S. Deputy Energy Secretary David] Turk said, adding that it does not affect already approved exports.”
- “A U.S. official earlier on Thursday told Reuters ‘I don’t think we’re concerned at all about our ability to meet (European) demand.’”
- The Senate hearing on the LNG permit export pause follows a House hearing on the same topic earlier in the week.
However … Since the 2022 start of Russia’s war against Ukraine, Europe has come to rely increasingly on the U.S.—the world’s top LNG exporter—for natural gas, the NAM told lawmakers.
- “Europe is currently the primary destination for U.S. LNG, accounting for 67% of total exports in the first six months of 2023,” NAM Managing Vice President of Policy Chris Netram said. “For comparison, 64% of the United States’ global LNG exports in 2022, and 23% of American exports in 2021, went to the European Union. … [T]he war in Europe [even] forced diversions of LNG cargo that was bound for Asia.”
“Wrong direction”: Sen. Joe Manchin (D-WV), who called the hearing, said freezing liquefied natural gas export permits is “the wrong direction for our country,” whose LNG exports are helping allies in need.
- “Shockingly, in the White House statements [regarding the permit freeze], there is no reference at all to the crisis created by Putin’s invasion of Ukraine, to the growing instability in the oil-and-gas-producing regions in the Middle East following Hamas’ attack on Israel or to any other crisis that U.S. LNG exports can help address.”
Environmental concerns: Though “Turk said the review will also consider pollution impacts on people living near LNG facilities … [and] ‘take into account all of the health environmental impacts,’” CNBC reports, the permit freeze could “benefit producers of energy sources with significantly higher emissions than [U.S.] LNG,” Netram continued.
- “According to the DOE, Russian exports to Europe had 40% more global warming potential than U.S. LNG across 20 years. Russian gas also had 20% more global warming potential than European coal. Clearly, U.S. LNG exports are better for the environment and help the U.S. and our allies achieve our climate goals.”
What’s next: The moratorium “could face court challenges,” according to CNBC. “A group of 23 Republican state attorneys general in a letter sent to the administration on Tuesday [said] that the Biden administration’s pause is illegal, arguing that the natural gas law requires the DOE to approve LNG exports unless it shows that doing so would not be in the public interest.”
In a move that could have a significant negative impact on manufacturing in the U.S., the Environmental Protection Agency on Wednesday finalized an update to the federal air quality particulate matter standard.
What’s going on: The EPA announced a significantly stricter National Ambient Air Quality Standard for fine particulate matter (PM2.5), lowering the level from 12 micrograms per cubic meter of air to 9 micrograms.
The background: America’s air is actually cleaner than ever, due in large part to manufacturers’ commitment to innovation.
- In fact, the EPA recently reported that PM2.5 concentrations have declined by 42% since 2000.
- Yet, last year, the agency signaled that it was considering lowering the standards even further, to as low as 8 micrograms per cubic meter—and while the NAM and manufacturers spoke out against the move, the EPA moved ahead.
The problem: If enacted, such an aggressive standard would make it far more difficult and costly for manufacturers to operate in the United States.
- It would put huge swaths of the country in “nonattainment,” meaning that they would not meet ambient air quality standards. Factories in nonattainment areas would be unable to operate. Permitting would become almost impossible, and economic development would grind to a halt.
- A recent NAM-commissioned analysis by Oxford Economics found that a standard at this level could reduce GDP by nearly $200 billion and cost as many as 1 million jobs through 2031.
Our take: “The Biden administration’s new PM2.5 standard takes direct aim at manufacturing investment and job creation in direct contradiction to the president’s stated goal of strengthening manufacturing in communities all across America,” said NAM President and CEO Jay Timmons.
- And it will “mak[e] an already gridlocked permitting system further gridlocked” and discourage long-term investments by manufacturers.
Unfair disadvantage, tough choices: It would put the U.S. at a disadvantage with global competitors, too, Timmons added.
- “Manufacturers in America will also be hard pressed to make long-term investment plans domestically as our global competitors have set more reasonable goals. The EU standard is currently 25, and a proposal there would be to reach 10 by 2030. The UK has a target of 10 by 2040.”
- And it would require state and local officials to make difficult decisions about which critical infrastructure projects in their areas move forward, Timmons continued.
High cost, little impact: What’s more, the tightened rule won’t address the greatest sources of particulate matter, according to NAM partners the American Forest & Paper Association and American Wood Council.
- The “EPA’s rule delivers a devastating blow to U.S. manufacturing and the economy while doing nothing to address the largest sources of particulate matter, including wildfire smoke,” they said in a joint statement. “This unworkable air rule undermines President Biden’s promise to grow and reshore manufacturing jobs.”
- “This administration has set the PM2.5 NAAQS at near background levels, ensuring permit gridlock for most manufacturing sectors around the country, while failing to address 84% of overall PM2.5 emissions.”
Next steps: The NAM has spoken out repeatedly against this stricter regulation and will continue to call on Congress to reverse it.
The last word: “The U.S. already has some of the strictest air standards in the world, and thanks to manufacturers’ innovation and leadership, some of the cleanest air and best environmental records,” Timmons concluded. “Manufacturers will consider all options to reverse this harmful and unnecessary standard, because it is our duty to stand against policies that hold our country back.”
What’s going on: The EPA announced a significantly stricter standard for fine soot, lowering the National Ambient Air Quality Standards for fine particulate matter (PM2.5) from 12 micrograms per cubic meter of air to 9 micrograms.
- In fact, the EPA recently reported that PM2.5 concentrations have declined by 42% since 2000.
- Yet, last year, the agency signaled that it was considering lowering the standards even further anyway—and while the NAM and manufacturers spoke out against the move, the EPA moved ahead.
Unfair disadvantage, tough choices: It would put the U.S. at a disadvantage with global competitors, too, Timmons added.
Washington, D.C. – Following the decision by the Environmental Protection Agency to lower the National Ambient Air Quality Standards for fine particulate matter (PM2.5) to 9 micrograms per cubic meter, National Association of Manufacturers President and CEO Jay Timmons released the following statement:
“The Biden administration’s new PM2.5 standard takes direct aim at manufacturing investment and job creation, in direct contradiction to the president’s stated goal of strengthening manufacturing in communities all across America.
“The new standard of 9 and the EPA’s paltry 60-day implementation window will guarantee projects currently under permitting review will have to comply with this onerous decision, making an already gridlocked permitting system further gridlocked.
“Manufacturers in America will also be hard pressed to make long-term investment plans domestically as our global competitors have set more reasonable goals. The EU standard is currently 25, and a proposal there would be to reach 10 by 2030. The UK has a target of 10 by 2040.
“Governors and mayors will now have to make difficult decisions under this untenable standard. New manufacturing investments envisioned by the CHIPS and Science Act, the Bipartisan Infrastructure Law and the energy provisions of the Inflation Reduction Act will be subject to these new requirements. This revised standard will force some communities to choose which—if any—investments can proceed without running afoul of the EPA’s decree.
“By implementing such a radical standard here, our country is ceding our competitive advantage with an unforced error. All of these choices could have been avoided with a more sensible standard and a longer implementation runway.
“The EPA itself says that some 70% of particulate matter comes from nonmanufacturing sources, such as wildfires (29%), agriculture and prescribed fires (15%), crop and livestock dust (12%), unpaved road dust (10%), paved road dust (3%) and “dust” (2%). Before forcing actions that will curtail manufacturing investment and infrastructure development, the federal government should first determine how to deal with what is occurring naturally.
“To be sure, manufacturers proudly stood up for funding in the Bipartisan Infrastructure Law, CHIPS and Science Act investments and many of the policy provisions outlined in the IRA. But there is no doubt that our country will be unable to realize the benefits of these legislative accomplishments with this new rule in place. As counties and cities find themselves in nonattainment, this grave mistake will drive investment away from the United States, derail permitting and weaken the economy for all.
“The U.S. already has some of the strictest air standards in the world, and thanks to manufacturers’ innovation and leadership, some of the cleanest air and best environmental records. Manufacturers will consider all options to reverse this harmful and unnecessary standard, because it is our duty to stand against policies that hold our country back.”
Per the EPA: Nonattainment is any area that does not meet (or that contributes to ambient air quality in a nearby area that does not meet) the national primary or secondary ambient air quality standard for NAAQS.
The EPA recently reported that PM2.5 concentrations have declined by 42% since 2000, driven by major emissions reductions from both mobile sources and the power sector. As a result, America’s air is cleaner than ever.
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 $2.85 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 Biden administration’s proposal to invoke so-called “march-in” authority to seize the rights to patents developed in any part with federal funding would undermine the American innovation economy, the NAM told the federal government Tuesday.
What’s going on: A proposal put forth in December by the Biden administration would allow the government to seize private-sector patents for products it considers too costly.
Why it’s important: “Undermining manufacturers’ [intellectual property] rights would have sweeping ramifications for innovation in the United States and America’s world-leading innovation economy,” the NAM told the Biden administration.
- “In particular, start-ups and small businesses would bear the brunt of the drastic changes proposed by the administration, as … government march-in would disincentivize early-stage entrepreneurship and dissuade much-needed capital formation from outside investors.”
The background: The Bayh-Dole Act, passed in 1980, allows recipients of federal research dollars to license groundbreaking technologies to private-sector companies to commercialize them.
- “Prior to the act’s passage, the government held approximately 28,000 patents—yet fewer than 4% of those patents were licensed to the private sector. This is because private-sector participants viewed these patents as ‘contaminated by government funding,’” according to the NAM.
- Bayh-Dole includes a narrow “march-in” provision that allows the government to step in to ensure consumer access to certain products during times of crisis—but march-in “has never previously been used during the 44 years since the law’s enactment,” the NAM said.
- Allowing march-in based on the price of a product or technology “would hinder industry collaborations with research universities and laboratories across the country, stymieing manufacturers’ efforts to develop the products and technologies of the future and bring them to the public.”
What we’re doing: Last month, the NAM launched a seven-figure ad campaign opposing the proposal.
- The administration should “provide certainty to manufacturers and other stakeholders in the innovation economy by affirmatively and unequivocally withdrawing the proposal—and making clear that the administration will not implement any of its recommendations,” the NAM said.
The last word: “Undermining America’s world-leading patent system is a recipe for reduced innovation and significant economic damage, with a disproportionate impact on small manufacturers,” said NAM Vice President of Domestic Policy Charles Crain.
- “The administration’s march-in proposal would raise the spectre of government price controls on a wide range of technologies—fundamentally reshaping how life-changing innovation is developed, financed and commercialized in the United States. The administration must affirmatively and unequivocally withdraw this radical and flawed proposal.”
Pharmacy benefit managers are contributing to the skyrocketing cost of health care for manufacturers and must be reined in—and that’s why the NAM supports the bipartisan Delinking Revenue from Unfair Gouging (DRUG) Act, passed yesterday by the House Oversight and Accountability Committee.
What’s going on: PBMs, created in the 1960s with the intention of keeping prescription drugs affordable, are now doing the very opposite, the NAM informed the committee ahead of Tuesday’s markup.
- PBMs “increas[e] the price that health plan participants pay for medicines,” NAM Vice President of Domestic Policy Charles Crain said. “By applying upward pressure to list prices that dictate what patients pay at the pharmacy counter, pocketing manufacturer rebates and failing to provide an appropriate level of transparency about their business models, PBMs increase health care costs at the expense of manufacturers and manufacturing workers.”
- In addition to other reforms, the DRUG Act would require “delinking”—ensuring that PBMs charge a flat rate for their services rather than charging a percentage of a medication’s list price. This critical reform would “remov[e] PBMs’ incentive to put upward pressure on list prices in order to maximize their own profits,” Crain said.
Why it’s important: The NAM—whose advocacy, including a six-figure ad campaign, helped lead the DRUG Act to passage by the House Oversight Committee—“has long favored delinking PBM compensation from the list price of medications, including in the commercial market,” Crain continued.
- The NAM will continue to advocate for PBM reforms that “will benefit employers by making PBM contracts more straightforward, transparent and predictable—and will benefit workers by reducing the prices they pay out of pocket for their prescriptions.”