by Omar S. Nashashibi, co-founder, The Franklin Partnership, LLC
“Government’s view of the economy could be summed up in a few short phrases: If it moves, tax it. If it keeps moving, regulate it. And if it stops moving, subsidize it.” – President Ronald Reagan
Each Oval Office occupant has an opportunity to put his imprint on the regulatory body that is the federal government. And have no doubt, Republican or Democrat, all presidents add more regulations than to
the books. Former President Donald Trump in 2020 released 3,353 final rules in the Federal Register, nearly 400 more than the previous year. In contrast, Congress passed 176 laws signed by former President Trump in 2020, forcing manufacturers to watch both branches of government closely.
As we look to the remaining years of the Biden administration’s first term, businesses should examine which new regulations loom on the horizon that will impact the industry. As of this writing on April 22, 2022, federal agencies have published 24,232 pages of rules, regulations and notices in the Federal Register. These actions only four months into the year include 966 final rules and an additional 690 proposed rules.
The Federal Register, where the government communicates its actions to the public, publishes notices and rules from 432 federal agencies. That is a lot of regulators to track if you are among the most regulated industries – manufacturing. Let us examine a few on the agenda for the coming year.
OSHA recently announced a National Emphasis Program (NEP) to enforce worker safety from exposure to heat, both in outdoor and indoor employment settings. Inspectors will target specific sectors, including manufacturing, but also inquire about heat safety protocols upon an unrelated site visit. This NEP is a precursor to a broader rule on which OSHA is working that would require personal protective equipment, engineering controls and other safeguards when the heat index exceeds 80-degrees Fahrenheit. As we approach the summer months, manufacturers may want to begin thinking about that threshold and how it impacts their operations were OSHA to issue a final 80-degree heat index rule in the next year.
The Biden administration is picking up where the Obama OSHA team left off, focusing on data and information collection. OSHA published a rule on March 30, 2022, to “Improve Tracking of Workplace Injuries and Illnesses.” Many employers with more than 10 employees are required to keep a record of serious work-related injuries and illnesses with manufacturers and other industries filing their Form 300A electronically by March 2
of each year.
OSHA’s proposed rule would require manufacturing establishments with 20 or more employees to continue to file electronically Form 300A and also mandate that manufacturing businesses with 100 or more employees submit Form 300 Log and Form 301 Incident Report information once a year to OSHA. Employers have long objected to publicly releasing this information without explanation that could cause students, parents and others to not pursue careers in manufacturing.
Also at the Department of Labor, the Wage and Hour Division is holding nation-wide listening sessions on its efforts to increase the time and a half overtime threshold for covered salaried employees from the current $35,568 per year to over $50,000. While some groups continue to press the Biden administration for a threshold exceeding $80,000 for executive, administrative and professional (EAP) employees, sources indicate to expect an exemption around $55,000, meaning those earning under that threshold will receive overtime pay.
In September 2022, OSHA expects to release a new
proposal for controlling hazardous energy under the Lock-Out/Tag-Out (LOTO) rule. The Labor Department has long delayed updating this regulation that covers countless machines operating in thousands of manufacturing plants across the country.
On the environment side of the regulatory bureaucracy, the Biden administration is taking a whole of government approach to climate change. The Department of Energy recently initiated an industrial decarbonization initiative targeting several industries, including iron and steel (and products derived from those metals) and the food and chemical industries, among others. Regulators are exploring how manufacturers and others can reduce the carbon footprint of their operations and supply chain.
Regulators also released a final rule for light-duty
passenger vehicle model years 2024-2026, which largely follows a prior proposal for an 8% increase in fuel efficiency annually for model years 2024 and 2025, followed by a 10% increase for model year 2026. The standards will require an industry-wide fleet average of approximately 49 mpg in the 2026 model year.
The EPA still is working to finalize its social cost of carbon calculation, which affixes a specific dollar amount to a ton of carbon emission. This financial cost to health and economic productivity is then used by regulators to justify new environmental regulations covering business operations. Among such rules under consideration include those to restrict power plant operations, tighten environmental reviews of infrastructure projects and limiting particulate matter in the air emitted by manufacturing plants.
A project of the Competitive Enterprise Institute found that federal regulations cost $1.9 trillion annually and above are only a few of the regulatory priorities of the current White House. If the Democrats lose either the House, Senate or both in the November 2022 elections, a divided Washington, D.C., will force President Biden to go on his own and issue more regulations. Few expect a Republican-controlled Congress to work with President Biden on a bipartisan agenda, leaving more regulatory action the likely approach for the
White House.
An increase in activity is expected in the coming months from OSHA, NLRB, EPA and other regulators as they prepare to have many of their new rules take effect in the coming year. Knowing many actions will face legal challenges, policymakers at federal agencies are increasingly becoming more active. Many well-intended regulations often fail to achieve their goal while imposing unanticipated impacts on manufacturers.
Manufacturers continue to experience increased product costs due to the pandemic and inflation, but they also should factor in the higher price of doing business due to some coming regulations. Factoring in the heat index rule, overtime increases or environmental compliance into business strategies now could save thousands, or
millions, later.
Omar Nashashibi is a founding partner at The Franklin Partnership, LLC, a bipartisan government relations and lobbying firm retained by The American Mold Builders Association in Washington, D.C.