Policy and Legal

Washington, D.C. – Following the Environmental Protection Agency’s announcement on per- and polyfluoroalkyl substances in drinking water, National Association of Manufacturers President and CEO Jay Timmons issued the following response:

“We’re encouraged that the EPA has listened to the voices of manufacturers and extended the compliance deadline for unworkable national primary drinking water standards for PFOA and PFOS and committed to reconsidering the blatantly unlawful regulatory determinations for several other PFAS compounds.

“If the U.S. wants to stay a global manufacturing leader, we need practical, commonsense PFAS regulations. Manufacturers support science-based regulations that protect health and the environment and are in line with the Safe Drinking Water Act requirements. However, the Biden-era standards for PFOA and PFOS are deeply flawed, the costs they impose exceed any demonstrable benefit and the industries they harm include those vital to our national interests, including semiconductors, telecommunications and defense systems. The Pentagon has even raised alarms about long-term risks, including supply chain disruptions, that these standards would create.

“In addition to conflicting with manufacturers’ best interests, these standards also go against the Trump administration’s goal to make the U.S. the best place to build, grow and create jobs—a goal the administration is advancing by rebalancing regulations. The administration has done remarkable work to advance that goal, but today’s decision moves in the opposite direction.

“The decision runs counter to past efforts to cut red tape and boost manufacturing by putting shovels in the ground, more people to work, more products on the shelves and more prosperity into our communities. We don’t have to choose between supporting manufacturing and clean water in our communities.”

-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 $2.94 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.

NAM President and CEO Jay Timmons moderated a panel of state governors at SelectUSA on Monday, discussing the effects of AI and the policies that have aided manufacturers in the leaders’ respective states.

The panel: Four governors participated in the “Governors Investing in American Technological Competitiveness” panel—Govs. Mike Dunleavy of Alaska, Wes Moore of Maryland, Gretchen Whitmer of Michigan and Glenn Youngkin of Virginia.

• SelectUSA, a U.S. government program led by the U.S. Department of Commerce, aims to promote and support job-creating investment in the U.S.

Timmons says: “I want to thank you so much for your leadership on behalf of manufacturers everywhere,” said Timmons, as he kicked off the panel discussion.

• “You’ve got an important perspective serving both in the State House and on the front lines to tell us how manufacturing is evolving and also the opportunities that AI presents, as well as emerging technology. Now by harnessing these technologies, it becomes clear that the United States is the best place to invest the next dollar in manufacturing.”

The AI transformation: When asked how AI is transforming their states, the governors had a range of answers.

• “We are a logistics state, and for us, our oil and gas industries are huge,” said Dunleavy. “Our mining industries are huge. Our fishing industries are huge, and those industries are capitalizing on AI for a whole host of reasons and methods. I know in the oil industry it’s making drilling a lot more efficient. And so these efficiencies are going to result in better approaches, better products, better services.”
• “If you think about the assets that the state of Maryland has, the reason that AI was so important is … that Maryland has such uniquely tethered assets to our state that made AI … desirable there,” said Moore. “[I]n the state of Maryland, you have the Johns Hopkins data center and AI initiative and the University of Maryland AI center, and you also have the University of Maryland serving as a capital of quantum. … We think it’s important for our states to be on the front edge of this, instead of waiting for consequences.”
• “We know that some of our natural assets, like having the most engineers in the country per capita, like institutions like the University of Michigan or Wayne State or Michigan State University … give us an opportunity when it comes to AI,” said Whitmer.  “Michigan will be the first state in the nation, perhaps the first place in North America, to restart a nuclear facility. … [T]here’s no question [that] if we are going to meet our clean energy goals and power the technology that is going to drive … almost every facet of our life, we’ve got to have the clean energy to do that.”
• “It’s estimated that 70% of the internet traffic of the world goes through Virginia, and that gives us a great opportunity to not just lead the nation, but lead the world in the advancement of AI,” said Youngkin. “And we’ve seen huge investment across the state. What that also requires is collaboration with our university and high school education system . . . and that allows us to really develop a unique pipeline of talent. … [A]t the heart of the application of AI is how it translates into driving efficiencies and opportunities and new capabilities in manufacturing.”

The bottom line: “As you heard from these four leaders—manufacturing powers the economic prosperity of the United States,” Timmons said in conclusion. “New technology opens new doors to do so, and the right policy decisions—and the right leadership—will make all the difference.”

Watch the whole thing: You can view the panel discussion on C-SPAN here.

During United for Infrastructure’s Infrastructure Week, the NAM—an active member of the steering committee—participated in several events in Washington, D.C., highlighting the urgent need for permitting reform to accelerate U.S. building projects.

A reception: The NAM hosted a reception to kick off Infrastructure Week 2025 at its headquarters in partnership with United for Infrastructure, with special guest Sen. Shelley Moore Capito (R-WV), chair of the Senate Committee on Environment and Public Works.

• Nucor, Fluor Corporation and CRH sponsored the event.

A panel: NAM Vice President of Domestic Policy Chris Phalen spoke at the United for Infrastructure signature event, underlining the need for commonsense trade and permitting policies.

• “I think we can work with governments to address supply chain challenges,” he said when asked about tariffs. “We have a really important window of opportunity over the next 50 odd days to get some deals that provide zero tariffs on industrial trade. That is what manufacturers support.”
• “Manufacturers rely on transportation networks … to get our goods to and from ports to customers,” Phalen said regarding infrastructure, “but we also are making everything that goes into making transportation work, from aluminum to steel, from asphalt to aggregates, copper, circuitry and the large industrial machinery that builds [and] maintains roads, bridges, factories [and] power plants. So, it’s kind of a virtuous cycle where we’re investing in infrastructure.”

“Comprehensive manufacturing strategy”: Phalen also gave a brief overview of the NAM’s “comprehensive manufacturing strategy.”

• Revising the regulatory framework is a key priority, he said. “We’ve submitted dozens of letters to 10 separate federal agencies as part of President Trump’s deregulatory agenda. Manufacturers every year are spending $350 billion just to comply with federal regulations. And so we’ve been really pleased to see the start of this regulatory rebalancing from the administration.”
• Phalen cited moves including “reopening LNG export facility applications, rebalancing Clean Air Act rules … and streamlining and improving the process to improve new chemicals … at the EPA.”
• “Probably most important is permitting reform,” he added. “Manufacturers operate and employ and invest in the communities where we’re producing, so we don’t want to see any short-circuiting of public input. … [T]here does have to be recognition, though, that the way that things were set up in the late ’60s and early ’70s is hindering infrastructure of all kinds right now.”

A roundtable: The NAM also participated in a roundtable on continuing federal support for water infrastructure investments. NAM Director of Transportation, Infrastructure and Labor Policy Max Hyman shared perspectives on how these investments benefit manufacturers by driving demand for their products and providing an essential service for operations.

The last word: As NAM President and CEO Jay Timmons said during the reception, “Infrastructure is the foundation of manufacturing in the U.S.”

The House Ways and Means Committee has released legislative text for the tax provisions of the “one big, beautiful bill” that Congress plans to pass in order to implement President Trump’s legislative agenda (The Hill).

• The Ways and Means bill includes the “to-do” list the NAM has called for throughout our “Manufacturing Wins” tax campaign, including reinstating the “tax trifecta,” increasing the pass-through deduction to 23% and preserving tax reform’s individual and corporate tax rates.

The NAM says: “Chairman [Jason] Smith and the Ways and Means Committee are delivering what manufacturers in America have called for and what our industry needs to compete and win,” said NAM President and CEO Jay Timmons.

• “The 2017 tax reforms were rocket fuel for manufacturers—driving job growth, higher wages and investment in communities. This bill brings us closer to the vision of a 15% effective tax rate for manufacturers that President Trump and I discussed in 2016.”

On pass-throughs: “For the 96% of manufacturers that are organized as pass-through businesses, this bill is more than policy—it’s a path to growth,” Timmons said, in a quote that was cited by The Hill.

• “It means the ability to buy equipment, hire workers, increase pay and expand operations with greater certainty and confidence. Not only is the Ways and Means Committee preserving the benefits of the Tax Cuts and Jobs Act for these businesses—this bill makes the law even more competitive, including by increasing and making permanent the job-creating pass-through deduction.”

The whole deal: “The Ways and Means Committee’s bill reflects the full range of NAM tax priorities, which will drive manufacturing growth in America,” Timmons continued.

• “To support small business job creation, the bill increases [to 23%] and makes permanent the pass-through deduction, protects more family-owned manufacturers from the estate tax [by increasing the exemption to $15 million] and maintains the TCJA’s pro-growth tax rates.”
• “To bolster America’s competitiveness on the world stage, the bill preserves the 21% corporate tax rate as well as the TCJA’s international tax provisions.”
• “And to incentivize investment and innovation in the United States, the bill revives and extends immediate R&D expensing, full expensing for capital equipment purchases and a pro-growth standard for interest deductibility [for the years 2025–2029].”
• “Congress must act on the Ways and Means bill and make these pro-growth tax provisions permanent—because when manufacturing wins, America wins.”

Bottom line: “This is a great leap forward in securing very competitive tax policy that will attract investment and create jobs here in the United States,” Timmons said to The New York Times (subscription) yesterday, building on the NAM’s urgent push in recent weeks to jumpstart a “comprehensive manufacturing strategy” to bolster investment, hiring and growth in the United States.

Washington, D.C. – The National Association of Manufacturers commends Chairman Jason Smith (R-MO) and the House Ways and Means Committee for their bold leadership in acting on manufacturers’ top policy priority in our comprehensive manufacturing strategy: preserving and extending President Trump’s historic 2017 tax reforms. Today’s monumental action marks a vital step forward in securing a competitive tax environment that empowers manufacturers to create jobs, invest, grow and compete.

“Chairman Smith and the Ways and Means Committee are delivering what manufacturers in America have called for and what our industry needs to compete and win,” said NAM President and CEO Jay Timmons. “The 2017 tax reforms were rocket fuel for manufacturers—driving job growth, higher wages and investment in communities. This bill brings us closer to the vision of a 15% effective tax rate for manufacturers that President Trump and I discussed in 2016.

“For the 96% of manufacturers that are organized as pass-through businesses, this bill is more than policy—it’s a path to growth. It means the ability to buy equipment, hire workers, increase pay and expand operations with greater certainty and confidence. Not only is the Ways and Means Committee preserving the benefits of the Tax Cuts and Jobs Act for these businesses—this bill makes the law even more competitive, including by increasing and making permanent the job-creating pass-through deduction.

“The Ways and Means Committee’s bill reflects the full range of NAM tax priorities, which will drive manufacturing growth in America. To support small business job creation, the bill increases and makes permanent the pass-through deduction, also protects more family-owned manufacturers from the estate tax and maintains the TCJA’s pro-growth tax rates. To bolster America’s competitiveness on the world stage, the bill preserves the 21% corporate tax rate as well as the TCJA’s international tax provisions. And to incentivize investment and innovation in the United States, the bill revives and extends immediate R&D expensing, full expensing for capital equipment purchases and a pro-growth standard for interest deductibility.

“The stakes are clear: failing to preserve these policies will put nearly 6 million American jobs at risk. To keep the rocket fueled, Congress must act on the Ways and Means bill and make these pro-growth tax provisions permanent—because when manufacturing wins, America wins.”

Timmons joins Chairman Smith to discuss the results of the NAM’s groundbreaking tax study at an event in January along with House Speaker Mike Johnson (R-LA), House Majority Leader Steve Scalise (R-LA) and Senate Finance Committee Chairman Mike Crapo (R-ID).

-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 $2.93 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.

Washington, D.C. – National Association of Manufacturers President and CEO Jay Timmons released the following statement today in response to President Trump’s executive order instituting a “Most Favored Nation” policy for prescription drug pricing:

“Biopharmaceutical manufacturers are investing in America. They are innovating cures and treatments for devastating diseases, and they are committed to ensuring that patients can access these life-changing and lifesaving medicines.

“Obstacles to innovation abound. It costs more than $2 billion to bring a new treatment to market, and it can take more than a decade to do so. Nearly 90% of all potential drugs that enter clinical trials never make it to FDA approval, and unregulated middlemen like pharmacy benefit managers drive up the costs of any drugs that are approved. Despite these challenges, biopharmaceutical manufacturers in America are leading the world.

“Manufacturers agree with President Trump that it is vital that Americans have affordable access to lifesaving treatments. That’s why the NAM has for years called on Congress to rein in PBMs. These powerful actors dictate what Americans pay at the pharmacy counter and drive rising health care costs for manufacturers and manufacturing workers alike.

“Importing European-style price controls won’t help Americans access medicines or make them cheaper. Rather, these policies will dampen innovation and R&D, threaten patient access and empower bureaucrats abroad to undermine America’s health system.

“Let’s not punish the innovators who develop and manufacture lifesaving medicines. Instead, let’s tackle the real problem: the middlemen. PBMs make billions by limiting patient choices, inflating prices and pushing costs higher for everyone—without actually making or delivering a single pill.

“Manufacturers are committed to lowering costs and expanding access to care—and to working with the administration to build on the PBM reforms in the Energy and Commerce Committee’s reconciliation bill with patient-first solutions that reduce costs, restore fairness and strengthen American competitiveness.”

-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 $2.93 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.

Amid deep uncertainty about the legal and regulatory environment, attorneys in the manufacturing industry have an opportunity they won’t want to miss. The NAM Legal Center’s Manufacturing Legal Summit, scheduled for Nov. 12–14 in Washington, D.C., has opened registration this week.

The only conference crafted exclusively for manufacturing lawyers, the Summit attracts legal talent from companies of all sizes and sectors. Attendees learn about hot-button legal issues facing the industry, discuss best practices and make fruitful professional connections.

If you have in-house counsel who would benefit from this must-attend event, here’s what you need to know.

The details: This year, the fourth annual Manufacturing Legal Summit will focus heavily on the changes and trickle-down impacts brought about by the new Trump administration. Longtime NAM partner Foley & Lardner LLP will lead a session titled “Tariffs, Trade and Trump: Managing Supply Chain and Tariff Risks During an International Trade Tornado.” Other session topics include:

• Managing your workforce;
• M&A transactions in the manufacturing sector;
• PFAS and chemicals update;
• Administrative law under President Trump;
• AI, privacy and cyber; and
• Updates on the trial bar’s latest tactics.

The benefit: “What we hear consistently is that the opportunity to connect with others in the industry who are dealing with the same challenges is invaluable,” NAM Vice President and Deputy General Counsel of Litigation Erica Klenicki said following last year’s conference.

• “This was my first NAM Legal Summit, and I could not be more pleased with the topics presented, as well as the networking opportunities,” said Erin Tannock, compliance counsel for Viega LLC, about the 2024 Summit. “The content was relevant and current. I even had a few ‘aha’ moments! This event is worth the time, and I will be attending for years to come.”

Credits, too: An additional benefit of the conference is the potential to earn CLE credits, a professional requirement for attorneys. In 2024, attendees earned six or seven CLE credit hours for 32 different jurisdictions.

The last word: “In a year defined by uncertainty, the opportunity to benchmark with your manufacturing peers and the NAM legal team has never been so critical,” said Klenicki.

Washington, D.C. – On the 80th anniversary of Victory in Europe Day, National Association of Manufacturers President and CEO Jay Timmons released the following statement today in response to President Trump’s newly announced trade agreement with the United Kingdom—the first deal since the administration’s recent shift in global tariff policy last month:

“This is a strong start—but not the finish line. The NAM has long advocated for a comprehensive market-opening trade agreement with the U.K., and we welcome this initial commitment to work together to expand industrial market access—to create more manufacturing jobs and strengthen security on both sides of the Atlantic. This framework provides a meaningful foundation—but much more remains to be done. We will continue urging both governments to deliver a full zero-for-zero tariff agreement on all industrial goods at the end of these negotiations so that manufacturers have the certainty they need to plan, hire and compete.

“The U.K. is the fifth-largest market for U.S.-manufactured goods exports. In 2024 alone, manufacturers exported $61.6 billion in manufactured goods. At the same time, $58 billion in critical inputs—spanning automotive parts, pharmaceutical preparations and construction machinery—were imported from the U.K. to power U.S. production. In some sectors, up to 99% of these transactions are between related parties, underscoring the deeply integrated nature of our supply chains.

“Despite this integration, the administration has left the so-called ‘reciprocal’ tariff at 10% for many inputs necessary to keep Americans working. That’s why the NAM continues to call for zero-for-zero tariffs—adding certainty to strengthen competitiveness, lessen price pressures and support growth.

“We also see potential promise in the administration’s efforts to negotiate tailored arrangements on Section 232 tariffs on autos, steel and aluminum, with like-minded partners who share our national economic security interests.

“As the president indicated, we look forward to seeing full written details of the agreement in the coming weeks. With additional deals on the table—and just 61 days to act on the other 89 agreements—we need certainty and urge the administration to maintain momentum and deliver even more for manufacturers so they can invest, plan, hire and compete in America. At the same time, we urge Congress to make the 2017 tax reforms permanent now. If we see more trade agreements, tax reform legislation and more regulatory certainty—as part of our comprehensive manufacturing strategy—manufacturers win. And when manufacturers win, America wins.”

The Background

The NAM has led efforts to deepen U.S.–U.K. manufacturing ties for years. In Spring 2023, Timmons traveled to London to build support for a new trade accord and signed a memorandum of understanding with Make UK to strengthen bilateral manufacturing cooperation. The NAM has remained focused on core priorities, including:

• The elimination of tariffs and nontariff barriers;
• Strong digital trade commitments;
• Robust engagement on intellectual property issues;
• Collaboration on standards, technical regulations, testing procedures and conformity assessment; and
• Ensuring stronger alignment on customs procedures and approaches.

-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 $2.93 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 NAM advised the Department of Commerce on the integral nature of pharmaceutical and semiconductor manufacturers to the U.S. economy, explaining the potential negative impacts of tariffs on these sectors.

Pharmaceuticals: “Most medicines consumed in the U.S. are made in the U.S., and the industry invests more than $100 billion annually to develop new medicines for American patients and patients worldwide,” wrote NAM Vice President of International Policy Andrea Durkin to the Department of Commerce.

• “For manufacturers in the U.S. to sustain our nation’s global advantage in the discovery, development, production and delivery of pharmaceuticals, it is essential to safeguard a stable and reliable pharmaceutical supply chain network. Immediate and broad-based tariffs on imports of pharmaceutical inputs and finished products, many of which are sourced from allies and through related party transactions, undermine that very supply chain network,” she added.

Hurting innovation: “Pharmaceutical companies make up the largest share of [U.S. R&D] investment, accounting for 36.1% of all manufacturing R&D, spending $146.1 billion in 2023,” wrote Durkin. And companies’ ability to invest in R&D is tied directly to their revenue.

• “[F]or every 10% reduction in expected U.S. revenues, pharmaceutical innovation—such as clinical trial starts or new drug approvals—is expected to ultimately fall by 2.5% to 15%,” according to an analysis by the USC Schaeffer Center.

A better way: Instead of imposing counterproductive and damaging tariffs, the administration should adopt a comprehensive manufacturing strategy to support pharmaceutical innovation, wrote Durkin.

• This strategy includes making the 2017 tax reforms permanent, seeking to remedy the workforce skills gap, expediting permitting reform to enable domestic biopharmaceutical companies to expand their operations, fully equipping the Food and Drug Administration with the staff and resources it needs to operate swiftly and effectively, reforming pharmacy benefit managers (underregulated middlemen that drive up the costs of medications) and combatting the counterfeiting of pharmaceuticals.

Semiconductors: “The NAM believes it is vital for global economic leadership and for U.S. national security to promote a world-class semiconductor industry in America,” Durkin wrote to the Commerce Department in a separate communication, noting that chips are used throughout the manufacturing industry, in everything from medical devices, aircraft and spacecraft, data centers, automotive parts and vehicles, industrial automation and much more.

• “Semiconductor manufacturing capacity is expanding rapidly in China, supported by industrial targeting practices such as those set out in Made in China 2025, as well as trade-distorting industrial subsidies by the Chinese Communist Party. Tariffs have neither deterred China’s production advancements nor addressed the underlying unfair advantages conferred by the Chinese Communist Party.”

A better way: Instead of imposing tariffs, the Trump administration should pursue “policies that enable and facilitate domestic investments, unlock opportunities for economies of scale through full participation in global markets and leverage the collective advantages of America’s international allies to help make semiconductor supply chains more resilient,” Durkin wrote.

• “First, the Trump administration should support ongoing efforts by manufacturers to expand manufacturing production in the U.S. and attract, not deter, new investments. … Tariffs on imports that are used to build and operate semiconductor manufacturing facilities should be avoided or rebated.”
• “Second, the Trump administration should seek to maximize market opportunities for U.S. semiconductor exports, thereby strengthening the commercial position of U.S.-produced semiconductors worldwide. This can be accomplished by negotiating zero tariffs in new trade deals, preserving use of duty drawback and more strategic use of Export-Import Bank financing.”
• “Third, to strengthen the long-term resilience of the industry, the U.S. must partner with international allies to secure favorable trade and investment terms and leverage the collective advantages of global supply networks.”

The last word: “The Trump administration should pursue a comprehensive manufacturing strategy to support and sustain innovation and job creation in America, and to ensure the continued preeminence of our world-leading semiconductor and pharmaceutical sectors,” said NAM Managing Vice President of Policy Charles Crain.

Congress should act now to ensure that manufacturers and manufacturing workers are protected from so-called “proxy advisory firms,” the NAM told House lawmakers this week at two congressional hearings.

Flaws abound: Proxy firms—powerful, unregulated entities that advise institutional investors on how to vote on proxy ballot measures at public companies—wield outsized influence and must be reformed, NAM Managing Vice President of Policy Charles Crain told the House Subcommittee on Capital Markets at a Tuesday hearing, “Exposing the Proxy Advisory Cartel: How ISS & Glass Lewis Influence Markets.”

• Proxy firms operate with undisclosed conflicts of interest, are unwilling to allow companies to review their draft reports, and are resistant to correcting mistakes in their final vote recommendations. Despite these flaws, proxy firms “still control a significant share of investors’ proxy votes—giving them sway over important corporate decisions,” Crain said.
• In 2020, after years of NAM advocacy, the Securities and Exchange Commission finally adopted a rule to rein in these powerful firms—yet today, proxy firms remain unregulated due to ongoing legal challenges and regulatory neglect.
• “The SEC’s 2020 rule has spent five years hung up in court,” Crain told the subcommittee. “The NAM has had to defend the rule across three separate cases—one of which has oral arguments scheduled for this Friday.”

SEC has authority: Although the largest and most influential proxy firm, Institutional Shareholder Services, “is now claiming in court that the SEC lacks the authority to regulate proxy voting advice at all,” the Securities Exchange Act of 1934 clearly provides the SEC the authority to regulate proxy solicitation, which includes the activities of proxy firms, the NAM said.

Tighten the reins now: “Even assuming that the NAM is successful in defending the SEC’s authority, there is more work for Congress to do,” Crain continued. This entails acting on six House bills that would:

• Create a comprehensive registration regime for proxy firms;
• Ensure that proxy firms remain subject to anti-fraud liability;
• Ban certain proxy firm conflicts of interest;
• Regulate the use of automated “robo-voting” systems;
• Ensure that investment managers carry out their fiduciary duties to their clients when hiring proxy firms; and
• Direct the SEC to conduct a thorough study on proxy firms and the proxy process.  

Retirement savings in jeopardy: On Wednesday, Crain delivered a similar message for the House Subcommittee on Health, Employment, Labor, and Pensions at a hearing titled “Investing for the Future: ERISA’s Promise to Participants.”

• “More than 85% of manufacturing workers are eligible to participate in a workplace retirement plan. These Americans have probably never heard of a proxy firm, and they likely would be shocked to hear that their pension or 401(k) plan assets were being used in a way that could undermine their own retirement security,” Crain explained.
• But that’s exactly what’s happening when pension plan fiduciaries use “plan assets to pursue non-financial ESG goals—or blindly outsourc[e] the voting rights that come with those assets to unregulated and conflicted proxy firms,” he added.
• With their errors, conflicts of interest, political agendas, one-size-fits-all governance standards and more, proxy firms pose huge risks “to everyday Americans’ retirement security,” Crain said.   

Manufacturers support guardrails: “That’s why manufacturers support appropriate guardrails to ensure that ERISA fiduciaries act in plan participants’ best interests when making investment and voting decisions,” Crain explained, adding that the Labor Department under the first Trump administration finalized rules to “do just that.”

• While the last administration largely rescinded those guardrails, Subcommittee Chairman Rick Allen (R-GA) recently introduced a measure that would require ERISA retirement plan fiduciaries to prioritize financial returns when making investment decisions on behalf of clients and to exercise closer oversight of proxy firms.  

Stand up for workers: “Now is the time for Congress and the [Department of Labor] to stand up for these workers and ensure that ERISA plans are operating in their participants’ best interests,” Crain concluded.

In the news: Bloomberg (subscription) covered Crain’s testimony, as did Pensions & Investments (subscription) in two  articles.      
 
What’s next: As Crain previewed in his testimony, the NAM Legal Center will participate in oral arguments on Friday, May 2, before the U.S. Court of Appeals for the DC Circuit—arguing that the SEC has the authority to regulate proxy firms, and that the agency’s 2020 rule doing so was lawful. 

• “Is this high stakes? Absolutely,” Crain told Bloomberg. “Is this the end of the fight if the NAM were to lose? No, it’s not.”