One Voice | Government Advocacy for the Metalworking Industry

 

On Tuesday, August 9, 2022, President Biden officially signed the CHIPS and Science Act into law. One Voice lobbied extensively on this significant legislation that directly invests billions of dollars in manufacturing in America at a time when many companies reconsider their previous decision to offshore production. The bill contains tens of billions of dollars for semiconductor manufacturing incentive programs, among other provisions designed to boost U.S. innovation and competition against China.

 

The package includes $52 billion in support for the semiconductor industry, plus additional provisions such as $13 billion for STEM workforce development, $10 billion for the creation of regional technology hubs to focus on technology development, job creation, and expanding U.S. innovation capacity, $829 million for the creation of new Manufacturing USA institutes, triples spending for MEPs, and several other provisions such as one creating a National Supply Chain Database to assist businesses with supplier scouting and minimizing supply chain disruptions. 

 

Additionally, the legislation contains an advanced manufacturing investment tax credit (ITC) that provides a 25 percent investment tax credit for investments in semiconductor manufacturing. The credit covers manufacturing equipment, the construction of semiconductor manufacturing facilities, and the manufacturing of equipment required for the production of semiconductors. 

 

This bill marks one of the most significant investments in domestic manufacturing in a decade, not just to meet current demand but to also develop a longer pipeline for critical industries around the country. 

 

The Senate has approved a budget reconciliation package with over $300 billion in funding to decarbonize industries across the economy. The chamber approved the bill on August 7, 2022, on a 51-50 vote after a tiebreaking nod from Vice President Kamala Harris. The House is returning to Washington from its summer recess to vote on the bill on Friday, August 12. 

 

The measure includes the largest climate and energy legislation ever enacted by Congress, with $374 billion for an array of investments some project to enable a roughly 40 percent GHG emissions reduction by 2030, compared to 2005 levels. The bill includes $60 billion in tax credits or other supports for onshoring clean manufacturing including, $2 billion in grants to retool existing auto manufacturing facilities to manufacture clean vehicles and a $10 billion investment tax credit to build clean technology manufacturing facilities, like facilities that make electric vehicles, wind turbines and solar panels. 

 

The climate language in the Senate-approved bill is mostly identical to a reconciliation text released in late July that reflected an agreement between Schumer and longtime holdout Sen. Joe Manchin (D-WV), however, some portions of the bill, including the tax provisions, had to be changed to win the support of Senator Kyrsten Sinema (D-AZ). 

 

The original deal between Schumer and Manchin included a tax revenue proposal with a corporate alternative minimum tax (AMT) imposing a 15 percent minimum tax on adjusted financial statement income for corporations with profits above $1 billion and closing of the carried interest loophole used by private equity executives. However, to win the support of Sinema the carried interest provision was removed, and instead, a 1 percent excise tax on stock buybacks was included. Changes also included providing carveouts in the corporate AMT for manufacturers and private equity firms and an extension of the excess business loss limitation rule for pass-throughs. The provision was scheduled to sunset but has been extended through 2028. One Voice continues to highlight that multinationals should not receive incentives to manufacture overseas but domestic tax policy should encourage production here at home including through R&D research tax credits and the use of accelerated depreciation. 

 

The White House Council on Environmental Quality (CEQ) has sent the draft phase 2 regulation to overhaul how agencies implement the National Environmental Policy Act (NEPA) to the White House Office of Information and Regulatory Affairs (OIRA) for review in one of the final steps before it can be officially be published.

 

The phase 2 rule follows an earlier final rule issued in April in the Biden administration’s plan to reverse the Trump-era rulemaking, which significantly revised the NEPA regulations for the first time since 1978. The phase 1 rule made core changes to the NEPA overall implemented in 2020 during the Trump Administration. The Trump administration’s rewrite of the regulation made a variety of procedural changes to NEPA to accelerate infrastructure projects. 

 

This phase 1 rule makes three core changes to NEPA. Under the final rule, issued on April 20, 2022, agencies again are required to assess direct, indirect, and cumulative effects. The rule also reverts to the prior definition of a project's "purpose and need" to stress it is not the applicant's prerogative; and states that the CEQ rule is the floor, not the ceiling, for how agencies implement NEPA when they review major federal actions. The White House's phase 1 NEPA rule took effect in May. The phase 2 rule is expected to make broader changes to the 2020 rewrite.

 

Republicans in Congress are trying to halt the regulation, however, on Capitol Hill. Senator Dan Sullivan (R-AK) has introduced a Congressional Review Act (CRA) resolution, S.J.R. 55 that would overturn the phase 1 rule. The CRA measure, which has the support of all 50 Senate Republicans, can clear the Senate on a simple majority vote and cannot be filibustered. However, it must also clear the Democratic House and be signed by President Joe Biden to take effect absent a successful veto override effort.