Washington Report - February 20, 2024

Tax Package Clears House
On January 31, the House of Representatives overwhelmingly passed favorable tax legislation (H.R. 7024), which retroactively extends key tax benefits important to WIA members. The vote was 357-70, with 188 Democrats and 169 Republicans voting in favor. Heading into the vote, leadership in the House was hoping for broad bipartisan support to generate momentum in the upper chamber, and that objective was achieved.

As we have noted, however, the sledding becomes more difficult in the Senate. Senate Republicans, including the Ranking Member of the Senate Finance Committee—Mike Crapo (R-ID)—want the bill to go through “regular order” and be marked up in the Finance Committee (instead of proceeding straight to the Senate floor) so that Members may offer amendments. There is GOP angst in the upper chamber around the Child Tax Credit and the “pay for”—Congressional parlance for existing funds that may be reprogrammed to offset the budget impact. Regarding the latter, the bill is “paid for” by ending new filings for funds under the Employee Retention Tax Credit (ERTC), which was set up during the pandemic to help employers and employees. The program has also served as a platform for fraud, with hordes of phone solicitors encouraging small businesses to apply for funds. The bill attempts to crack down on this fraud. Republicans are also concerned about changes to the Child Tax Credit that may relax work requirements. The downside risk of holding a markup on the legislation is that the House-passed product will be altered in ways that are unacceptable to the coalition of supporters that passed it through the House.

The bottom line is that more work clearly needs to be done, and WIA will be working hard on our Senate champions in the coming weeks. Earlier this month, we met with Senators Ron Johnson (R-WI) and Thom Tillis (R-NC), who sit on the Finance Committee, to express our support and urge expeditious action. Senator Tillis believes the ERTC “pay for” is artificial and more of an accounting gimmick. He would like to have an opportunity to offer amendments if a markup is scheduled. We also met with Senator J.D. Vance (R-OH), who admitted that there are challenges in the Senate, but he was sanguine about the bill’s prospects and told us that the Senate would ultimately pass a bill.

Regarding timing, Congress is in recess this week, which means any action on a bill will not happen until early March at the earliest. As always, we will keep you apprised of developments.



Career and Technical Education (CTE)
On February 1, co-chairs of the Congressional Career and Technical Education Caucus, Representatives GT Thompson (R-PA) and Suzanne Bonamici (D-OR), introduced a resolution designating February as National CTE Month. 

This resolution highlights the CTE education track as a pathway toward good paying, rewarding jobs. GT has been a long-time champion of workforce development and CTE initiatives. In fact, his Agriculture Committee staff is working on language for the upcoming Farm Bill reauthorization that would include funding for workforce training in the wood products supply chain. We will provide more details on that effort as they become available. 



Particulate Matter Standard
In late January, U.S. Environmental Protection Agency Administrator Michael Regan signed a final rule dramatically tightening the National Ambient Air Quality Standard for fine particulate matter (PM NAAQS). In the run-up to the signing, WIA had heard that the standard for fine particulate matter (known as PM 2.5—for 2.5 microns in size) would be lowered from 12.0 micrograms per cubic meter (µg/m3) to 9.0 µg/m3, and the effective date would be 60 days after the rule is published in the Federal Register. Unfortunately, what we heard was correct. PM 2.5 is emitted primarily from combustion, ranging from wildfires and wood heaters to manufacturing operations to cars and trucks on the roads. 

The major concern with this action is that it will bring numerous localities around the country into nonattainment for this pollutant, as 9.0 µg/m3 is essentially the background level for particulate matter. This means that any permit for the expansion of a facility, for example, will require an air quality analysis that considers the revised PM2.5 NAAQS. 

Numerous trade groups and businesses opposed this action as it could severely curtail upgrades or expansion at sawmills and other large wood products facilities. Industry made the point that this action threatens to stifle the Administration’s signature legislative achievement—the Inflation Reduction Act—as the many industrial projects that are receiving IRA funding may not be able to proceed. 

The National Manufacturers Association, in a media statement, said, “Manufacturers in America will also be hard-pressed to make long-term investment plans domestically as our global competitors have set more reasonable goals. The EU standard is currently 25, and a proposal there would be to reach 10 by 2030. The UK has a target of 10 by 2040.”

The next steps are unclear, although litigation is being contemplated, and a coalition of affected industries is being assembled to forge a strategy. We will remain close to this issue and report on developments.



Wood Products Import Legislation Introduced
Earlier this month, Senators Pete Ricketts (R-NE), Roger Wicker (R-MS), and Katie Britt (R-AL) introduced the Strengthen Wood Products Supply Chain Act—S. 3721. The bill attempts to make the process of importing wood products more streamlined and efficient.