AFS Agenda for a Strong Metalcasting Economy

AFS is the only association working full-time to advocate for a positive business climate for the $33 billion Metalcasting economy. Metalcasting is essential to manufacturing, national defense and job creation. To help AFS advance this agenda through Corporate Membership, call Ben Yates at (847) 824-0181 X 205.

To read the American Foundry Society 2019 Federal Priority Issues, please click here.
 

Key Issues:

 

EPA’s Affordable Clean Energy Rule

On June 19, 2019, EPA issued the Affordable Clean Energy rule (ACE), an effort to provide existing coal-fired electric utility generating units, or EGUs, with achievable and realistic standards for reducing greenhouse gas (GHG) emissions. This action finalized two related, but separate and distinct rulemakings: 

  1. The repeal of the Clean Power Plan (CPP) ; and
  2. New implementing regulations and emission guidelines to address GHG emissions from existing coal-fired EGUs and provide greater flexibility for states in reducing emissions from existing power plants consistent with the authority of Clean Air Act (CAA).  

AFS supports EPA’s final actions on these rulemakings.

AFS has expressed opposition to the Clean Power Plan (CPP) from its inception. Through its Air Quality Committee, AFS submitted comments asserting that the CPP would impose significant negative impacts on metalcasting operations because the rule would force the closure of most coal-fired utilities, thereby disrupting energy grid reliability and imposing higher electricity costs. In addition, the CPP exceeded EPA’s statutory authority to regulate emissions from existing power plants. EPA has sought to repeal the CPP primarily because it exceeds the agency’s authority under the CAA.  

With regards to implementing regulations and emission guidelines, ACE establishes heat rate improvement (HRI), or efficiency improvement, as the best system of emissions reduction (BSER) for CO2 from coal-fired EGUs. By employing a broad range of HRI technologies and techniques, EGUs can more efficiently generate electricity with less GHG emissions. 

The BSER is the best technology or other measure that has been adequately demonstrated to improve emissions performance for a specific industry or process (a “source category”). In determining the BSER, EPA considers technical feasibility, cost, non-air quality health and environmental impacts, and energy requirements. The BSER must be applicable to, at, and on the premises of an affected facility. 

ACE lists six HRI “candidate technologies,” as well as additional operating and maintenance practices. For each candidate technology, EPA has provided information regarding the degree of emission limitation achievable through application of the BSER as ranges of expected improvement and costs.

States will establish unit-specific “standards of performance” that reflect the emission limitation achievable through application of the BSER technologies. These technologies, equipment upgrades, and best operating and maintenance practices were determined to comprise the BSER because they can be applied broadly and are expected to provide significant HRI without limitations due to geography, fuel type, or other factors beyond the facility’s property line. 

In promulgating the ACE rule, EPA has provided a more clear definition of BSER by identifying a list of heat-rate efficiency improvements.  States are allowed to determine which heat-rate efficiency improvements are most appropriate on a unit-by-unit basis and to provide incentives to existing power plants to implement efficiency improvements without triggering more stringent new source review (NSR) requirements.  This approach also does not require fuel switching at existing power plants, and focuses exclusively on environmental policy and not energy policy. 

The CAA provides that states establish the standards of performance and explicitly directs EPA to allow states to consider “the remaining useful life of the source” and other source-specific factors in establishing standards of performance.  States will evaluate applicability to their existing sources of the six candidate technologies and improved operating and maintenance practices and take into consideration source-specific factors in establishing a standard of performance at the unit level.

The proposed rule allows states up to three years to develop their state implementation plans (SIPs) for CO2 emissions reductions.  EPA has also issued clarification regarding what is needed for a complete SIP and provided 12 months to act on a complete SIP.  States will submit plans to EPA that establish standards of performance and include measures that provide for the implementation and enforcement of such standards. The plan submissions must explain how the state applied the BSER to each source – and how the state took other factors into consideration – in setting unit-specific standards.

The final ACE rule would continue to decrease CO2 emissions by as much as 35 percent below 2005 levels (which is similar to the targets of the CPP) -- a reduction of approximately 11 million short tons of CO2 by 2030. The final ACE rule represents a thoughtful, responsible, and cost-effective approach to reducing CO2 emissions from existing power plants through requirements that are within the authority provided by the Clean Air Act. This approach should help ensure that the metalcasting industry will have reliable and affordable energy sources without burdensome regulatory requirements.

If you have any questions or would like additional information on this issue, please contact Jeff Hannapel with the AFS Washington Office at jhannapel@thepolicygroup.com.

 

Clean Water Act Jurisdiction final Rule

On June 29, 2015 EPA and the U.S. Army Corps of Engineers (Corps) published a final regulation to expand Clean Water Act (CWA) definition of “waters of the United States” or WOTUS. Specifically, this action subjected a broad range of routine activities of industrial, agricultural and commercial operations to jurisdiction of the CWA and triggered the need for federal permits for these activities. 

Several states, industry and agricultural groups, and environmental groups filed legal challenges to the final rule in several different federal courts. A district court in North Dakota invalidated the rule in 13 states, and, the U.S. Court of Appeals for the 6th Circuit issued a nationwide stay of the rule until the case could be reviewed. The U.S. Supreme Court agreed to hear the case to determine if the 6th Circuit properly asserted exclusive jurisdiction over the legal challenges. 

On July 27, 2017 EPA and the Corps proposed to rescind the final rule and to recodify the pre-existing regulatory language. While this proposed action was still pending, the U.S. Supreme Court unanimously held on January 22, 2018 that challenges to the June 2015 final WOTUS rule must be filed in federal district courts rather than in federal appeals courts. The ruling did not address the merits of challenges to the WOTUS Rule, only the proper jurisdiction to hear the case.

The Court’s decision on the proper venue to litigate the merits of CWA challenges was significant because claims must first be heard in federal district court to be eligible for appellate review. The decision also undermined the Sixth Circuit decision to impose a nationwide stay on the WOTUS Rule. Accordingly, the 2015 WOTUS Rule would go into effect, at least until it is rescinded or replaced, in the 37 states where it was not also stayed by a North Dakota district court judge.

The ongoing efforts by EPA and the Corps to rescind and replace the 2015 WOTUS rule requires notice and comment, a time-consuming process that likely will be protracted by litigation.  In the interim, facilities would have be forced to abide by the ill-defined, uncertain, existing pre-WOTUS-Rule regulations, case law, and agency guidance on what is meant by “waters of the United States.” As a result in February 2018, EPA and the Corps extended the effective date of the WOTUS rule for two years.  This action helped to minimize the uncertainty and confusion regarding CWA jurisdiction over waters of the U.S. until the rulemaking to rescind the WOTUS rule can be finalized.

In December 2018 EPA issued its proposed new definition of WOTUS under the Clean Water Act.  The proposed rule replaces the Obama Administration's WOTUS rule that was widely criticized as being too broad. The proposed rule appears to provide a much more reasonable approach to the limits of Clean Water Act jurisdiction for waters of the U.S.  Fortunately, it appears that these actions will result in a new rule with a more favorable approach to defining waters of the U.S. for the metalcasting industry. EPA indicated that it has scheduled to issue the final WOTUS rule by September 2019.

AFS supports the actions EPA has taken to clarify and simplify the regulatory requirements for defining WOTUS. If you have any questions or would like additional information on this issue, please contact Jeff Hannapel with the AFS Washington Office at jhannapel@thepolicygroup.com.

 

Multi-Sector General Permit for stormwater discharges

EPA issued the final Multi-Sector General Permit (MSGP) on June 16, 2015. Several industry groups and environmental groups filed legal challenges to the final MSGP. In response to this challenge, EPA entered into a settlement agreement to have the National Academies of Science (NAS) conduct a two-year study to evaluate the stormwater benchmark monitoring requirements. 

In February 2019 NAS released its report on Improving the EPA Multi-Sector General Permit for Industrial Stormwater Discharges.  The report including the following recommendations.

  • NAS recommends that benchmarks should be revisited, including the possible suspension or removal of benchmarks for iron and magnesium, until more data can be collected.
  • The development of new numeric stormwater effluent limitations is not recommended at this time.
  • EPA and states should consider more stormwater monitoring, but balance the need to improve data quality with the burdens associated with increased monitoring.
  • Consideration should be given to the development of stormwater retention standards.

AFS supports the general findings of the NAS study and looks forward to working with EPA and states to implement reasonable solutions to address stormwater discharges from metalcasting operations. If you have any questions or would like additional information on this issue, please contact Jeff Hannapel with the AFS Washington Office at jhannapel@thepolicygroup.com.

 

 

Tax Policy

AFS aggressively advocates for policies that encourage capital investment, and restore simplicity and certainty to the U.S. metalcasting industry. AFS supported the successful 2017 effort by Congress and the President to reform the tax system. The association will continue to work with policymakers as other tax issues arise, drawing on the following principles:

AFS supports the following key tax principles:

  • Lower Tax Rates - Lower tax rates, that are more competitive with other industrialized countries, should apply to companies of all sizes no matter how they are organized, including corporations and pass-through entities.
  • Full Expensing for Capital Equipment - AFS supports retaining a robust capital cost-recovery system such as accelerated depreciation and full expensing, to drive new investments in foundries.
  • Strong & Permanent Research and Development (R&D) – AFS supports maintaining a permanent R&D incentive to keep metalcasters performing R&D and boost U.S. innovation.
  • Permanent Estate Tax Repeal – The association supports full repeal of the estate tax. Since many foundries are family-owned, they must plan for the estate tax if they want to keep the business operating after the death or retirement of the owner.  Permanent repeal will keep family-owned foundries operating for future generations.
  • Preserve LIFO (Last In, First Out) Accounting Method –  Continue to permit the use of LIFO, a widely accepted inventory accounting method which has been recognized in the U.S. tax code for more than 70 years. Repealing LIFO accounting would cause companies using LIFO to report their LIFO reserves as income, resulting in a massive tax increase on many foundries. 

 

International Trade 

AFS supports vigorous enforcement of U.S. trade laws. Too often, foreign countries have engaged in unfair and unlawful trade practices, such as currency manipulation, subsidies, and dumping, which result in an uneven playing field, and a shift of market share away from the U.S. These practices must come to an end.

U.S. metalcasters are major consumers of metals. Foundries are dependent on access to adequate supplies of globally priced raw materials to become and remain globally competitive. Countries such as China, in an effort to expand their manufacturing economies through exports and with heavy government subsidization, have dramatically increased their metals production capacities.  This excess capacity has led to increased shipments of metals and castings abroad.

For example, in 2000, China produced only about 11 percent of the world’s aluminum. Now, after joining the World Trade Organization (WTO) on December 11, 2001, it produces more than half. Meanwhile, the number of foundries in the U.S. has dropped from 2,380 in 2005 to about 1,950 today. This reduction is due in part to unfair foreign competition.

More than 20 percent of castings sold in the U.S. are made outside of North America, primarily from Asia. That statistic understates the impact of unfair trade practices, in that as the trade deficit has grown, more manufactured goods that contain castings are imported into the U.S. Needless to say, casting-sales statistics do not capture the value of castings that are part of finished goods imported into the U.S.


AFS supports:

  • Strong enforcement actions that will address unfair trade and market-distorting policies, and ensure a fair and even playing field for U.S.-based casting producers.
  • The inclusion of Buy-America requirements and manufactured in the U.S. provisions for  taxpayer-funded infrastructure projects.
  • New and updated trade agreements that strengthen North American metalcasters, and would crack-down against foreign firms re-routing various manufactured products, including castings, through third countries/regions, eliminate tariff and non-tariff barriers to U.S. exports, enhance reciprocal government procurement market access, and discipline currency manipulation and market-distorting state-owned enterprise (SOE) activities.
  • Federal investigations to review the strategic importance of metals and metalcasting to U.S. national defense and to the U.S. economy.
  • Reshoring. Educating all manufacturers and buyers on the advantages of reshoring. AFS is a sponsor of The Reshoring Initiative. 
  • Exports. AFS encourages member companies to explore exports as a means of broadening their customer base.

 

Infrastructure Policy

The nation’s infrastructure is one of our greatest assets.  It is the foundation of our jobs, quality of life, economic competitiveness, and even national security. Yet the nation’s transportation, water, energy, and communications infrastructure are crumbling, under-funded, poorly maintained, and inadequately designed to meet 21st century needs.  Most of our buried drinking water infrastructure was built 75-100 or more years ago. Substantial and long-term investments in all kinds of infrastructure are needed to expand our economy, grow jobs and compete globally. 

Metalcasters play a critical role in our nation’s infrastructure network – we help build infrastructure!  We manufacture key components for construction equipment, tractors and trucks, railroad, energy sector, water works, buildings, and so much more. In fact, over 40% of all castings are dedicated to infrastructure. America has a world-class economy and we should have world-class infrastructure to match. Investing in infrastructure is worth it.  Few investments would have a greater positive impact on our economy and the metalcasting industry than infrastructure. 

AFS is working to advance the following goals:

  • Support funding for Long-Term Projects.  Increased funding of infrastructure improvements should be directed towards long-term, multi-year projects that focus on rebuilding the nation’s bridges, roads, waterways, railroads and energy infrastructure. 

  • Streamline and accelerate the federal permitting process.  Our nation’s lengthy permitting and environmental review process can add to projects’ time and cost, while deterring the entry of private capital.
  • Ensure materials for infrastructure projects are produced in the U.S. Infrastructure projects should require that all iron and steel used to rebuild the nation’s infrastructure is produced in the United States, including metal castings. Specifically, the domestic preference provisions should be consistent with the longstanding application of the existing Buy America provisions for surface transportation projects administered by the Transportation Department.
  • Reinvest in our Nation’s Water Infrastructure.
    • Support full funding for the EPA State Revolving Loan Funds Programs. This federal-state partnership provides a permanent, independent source of low-cost financing for range of water quality infrastructure projects.
    • Support full funding for the Water Infrastructure Finance and Innovation Act (WIFIA). This new program provides long-term, low-cost credit assistance for financing large water or wastewater infrastructure projects. 
  • Complement and strengthen existing tools, such as municipal bonds, that successfully deliver infrastructure investments at the federal, state and local levels.

 

Safety & Health Policy

AFS members share the critical goal of ensuring the safety and health of their employees as a top priority in the workplace. Our member companies have made substantial efforts to decrease the number and frequency of workplace incidents and continue to work through AFS to share information and best practices to meet their shared goal of improving occupational safety and health. 

AFS’ Safety and Health Committee provides a wide variety of information and services on metalcasting industry safety and health through our numerous safety resources, including quarterly meetings, webinars, seminars, and the annual association Environmental, Health & Safety Conference. AFS, along with OSHA, and other industry partners, participate in small business regulatory safety roundtables on occupational safety and health, issues hosted by the Small Business Administration’s (SBA) Office of Advocacy.

AFS supports:

  • Ensuring that new and existing workplace safety regulations are as practical, performance-oriented, technologically attainable, and cost-effective as possible.
  • A cooperative enforcement approach at OSHA. The federal agencies and employers should work in partnership to advance workplace safety and health.
  • Codifying the Voluntary Protection Program (VPP), a key employer employee-OSHA collaborative workplace safety program. The Administration should also demonstrate its commitment to continuing the work of the VPP.