Washington Report - October 17, 2023

Congress
It has been an extraordinary few weeks in our nation’s capital. On the afternoon of September 30, in defiance of virtually all predictions, then Speaker Kevin McCarthy (R-CA) worked with House Democrats in agreeing on and passing a Continuing Resolution (CR) to keep the government funded until November 17—and keep the doors open for the WMMA Fly-In. The CR (H.R. 5860) was relatively “clean” with no additional funding for Ukraine which has become a politically volatile topic in the House. The measure does, however, include $16 billion in disaster relief funding and extends the authorization for the Federal Aviation Administration until the end of this year. FAA’s authority would have expired October 1 without Congressional action. The 71-page CR passed the House 335-91 and was sent to the Senate, which approved the measure 88-9.  President Biden signed the bill hours before a government shutdown.  

The ink was not even dry on the new law when sabers began rattling from the right flank of the House Republican Conference led by Rep. Matt Gaetz (R-FL). Representative Gaetz followed through on his threat to file a “motion to vacate the chair” and force a vote on removing Speaker McCarthy. That effort prevailed when 8 Republicans joined with all Democrats in the House in voting for the motion. Rep. Patrick McKenry (R-NC) is the Speaker Pro Tempore as he was at the top of a list of names that Kevin McCarthy submitted when he won the Speaker position back in January. Upon assuming his role, Rep. McKenry promptly gaveled the House into recess for a week so that the Conference could sort out its leadership crisis. 

This week, the House of Representatives continues to be Speaker less. House Majority Leader Steve Scalise edged out House Judiciary Committee Chairman Jim Jordan in a closed-door Republican conference vote. Unfortunately, that was just one step in the process and Mr. Scalise failed to secure the requisite number of votes necessary to take the gavel. That threshold is 217 if every one of the current members votes and does so for a candidate by name. There are 433 members, with two vacancies, so a majority is 217. Right now, the GOP is discussing alternatives such as providing additional powers to Speaker Pro Tem McHenry. There is also discussion among Republican and Democrat moderates about forming a coalition governing agreement in the House, but that scenario is unlikely. The situation is fluid and a resolution is not clear at this juncture. 

The conflict in Israel this week has put pressure on the GOP to unify and elect a leader, but thus far there are several holdouts that have signaled that they do not intend to vote for any of the candidates that have come forward. The effect of the turmoil in the House is that it clouds the future on key legislative deliverables that were on deck for this Fall, including the Farm Bill reauthorization, the House Ways & Means Committee-passed tax benefit extension package and the supply chain bills that passed the House Transportation and Infrastructure Committee this summer. Congress only has a few dozen legislative days left in the calendar year and this development is not alleviating concerns that time is running out for meaningful action on issues important to the business community. WMMA continues to meet with key committee staff and our champions on the Hill to urge action on Farm Bill, workforce development, extension of key tax benefits like full expensing and the supply chain package which awaits House floor action. All of these items are in limbo until the House majority elects a new Speaker.  

WMMA Signs Steel and Aluminum Trade Letter
WMMA joined with 14 other trade associations on a letter to the U.S. Trade Representative, the Secretary of Commerce and Members of the European Commission urging the U.S. and the European union to forge a lasting trade agreement to resolve the 5-year dispute and permanently eliminate transatlantic steel and aluminum trade barriers.

The letter points out that the October 2021 trade agreement negotiated by the U.S. and EU is a temporary deal and expires January 1, 2024. That deal partially reduces tariffs on European exports of steel and aluminum to the US. through a tariff rate quota (TRQ) system and temporarily vacated EU punitive tariffs. However, tariffs may be reinstated at the beginning of next year if another agreement is not reached. Moreover, American manufacturers that import certain European steel face additional compliance costs associated with the TRQ system in that these importers pay a 25 percent tariff up front and then apply for reimbursement. This process at best results in delayed refunds or outright rejection.

Independent Contractor Rule
Late last month, the Office of Information and Regulatory Affairs (OIRA) completed its final review of the proposed Independent Contractor rule. Completion of the review process opens the door for a final rule to be released sometime this month. The public comment period for the proposal closed on December 12, 2022 and the Department of Labor has been processing those comments since that time. The final regulation will replace the Trump-era rule that provided a clear definition of the independent contractor and employer relationship and was generally more lenient in allowing employers to classify workers as contractors. The proposed rule expands the coverage of the Fair Labor Standards Act by reclassifying many individuals as “employees” who, under current law, are working as independent contractors. If the final rule is not modified based on public comments, it could create inefficiencies and increase costs throughout virtually the entire economy. 

This issue has been a major concern for sectors like trucking and construction which rely on the independent contractor model. There is a coalition here in Washington that focuses solely on this issue and is made up of industries that utilize independent contractors. Next steps on this issue are unclear, but WMMA will check-in with the coalition once the rule is final and inquire about its litigation/advocacy strategy.

Federal Forest Management Bill Reintroduced
In late September, Senate Energy & Natural Resources Committee, Chairman Joe Manchin (D-WV) and Ranking Member John Barrasso (R-WY) reintroduced the “Promoting Effective Forest Management Act of 2023” (S. 2867). The bill seeks to address the wildfire crisis on our federal forestlands by encouraging the Forest Service to establish yearly acreage targets for mechanical thinning, mandating a scientific basis for changes to definitions of old growth and mature forests and address shortages plaguing the logging workforce. The bill was referred to Senator Manchin’s committee. We will keep you apprised of progress.