Washington Report - March 19th, 2024

Tax
On Tuesday, March 5th, the Senate Finance Committee held a hearing titled American Made: Growing U.S. Manufacturing through the Tax Code. Chairman Ron Wyden’s (D-OR) opening remarks were notable in that he highlighted his frustration over the Senate’s lack of action on the tax package that passed the House overwhelmingly earlier this year. The slate of witnesses echoed the same sentiment with CEOs from manufacturing companies and a labor union representative extolling the virtues of the business tax provisions in the package. 

The timing of this hearing is interesting as influential Senate Republicans are beginning to publicly peel away from GOP opposition to the proposal. Senators Steve Daines (R-MT) and Todd Young (R-IN) are the latest to signal that they would vote for the House-passed measure, which revives retroactively the 100 percent bonus depreciation benefit, the research and development tax credit, increases the limitations on expensing depreciable business assets under Sec. 179 and enhances interest expense deductibility provisions. In our discussions with Senate offices on both sides of the aisle, indications are that the package would easily clear the 60-vote threshold on the Senate floor if a vote were scheduled on the house bill—H.R. 7024. We are surmising that this hearing was held to further solidify the case for action on the tax package and that Leader Schumer is pondering bringing the bill up for a floor vote in the near future. We will keep you apprised of developments. 

Administration Budget
The Biden Administration unveiled its budget for Fiscal Year 2025 on Tuesday, March 15th. As is typical with every administration, the annual budget release ritual is more of a messaging exercise about the current President’s aspirational policy priorities. The Biden Administration’s FY 2025 budget follows this script. That said there are some notable items in the document around workforce development. For one, the budget provides $200 million to launch the Sectoral Employment through Career Training for Occupational Readiness (SECTOR) program, which will seed and scale a comprehensive approach to sector partnerships, needed wraparound services and training programs focused on growing industries that lead to job placement in a high-quality job. 

The Budget also provides an increase of $50 million in apprenticeship programs, for a total of $335 million. This funding will expand access to Registered Apprenticeships, with a particular focus on directing apprenticeship resources toward increasing the number of workers from historically underrepresented groups. WIA continues to sort through the language in the President’s budget submissions and will follow relevant items in the proposal as the appropriations process for FY 2025 commences.

DOL Accepting Comments on Proposed Apprenticeship Rule
Late last month, the Department of Labor’s (DOL) Employment and Training Administration released a proposed rule that would significantly overhaul the registered apprenticeship program. Among other things, the proposed rule would:

• Update key areas related to standards of apprenticeship, including determining occupations suitable for registered apprenticeship; adding diversity, equity, inclusion, and accessibility (DEIA) strategies to recruitment; requiring a minimum duration of 2,000 hours of on-the-job learning and 144 hours of related instruction; and revising labor standards (such as prohibition of non-compete and non-disclosure provisions in apprenticeship agreements).
  
  
• Add paperwork requirements, including data reporting requirements, and require employers to maintain records on credentials, apprenticeship progress, and end-point assessments.
  
  
• Propose a new registered Career and Technical Education (CTE) Apprenticeship program linked to high school, community college, and university levels. This program would require 900 hours of paid on-the-job training and at least 540 hours of CTE apprenticeship-related instruction.

The Associated Building and Contractors (ABC) has panned the proposal, as has House Education and Workforce Committee Chairwoman Virginia Foxx (R-NC-05) and Senate Health, Education, Labor and Pensions (HELP) Committee Ranking Member Bill Cassidy (R-LA). In a survey of its members, ABC found that the proposal will discourage employer and provider participation in the Government Registered Apprenticeship Program (GRAP) by needlessly adding more uncertainty and costs in the form of new recordkeeping and reporting requirements while also eliminating popular flexible, competency-based approaches to workforce development that are attractive to apprentices and employers. Representative Foxx and Senator Cassidy both issued statements opposing the rule on the grounds that it would fundamentally make employer participation in registered apprenticeships more difficult.

DOL accepted comments on the proposal through March 18.

Workforce Development
During the week of March 4th, the Biden Administration issued an Executive Order (EO) to promote and expand use of registered apprenticeships.

The focus of this EO is the federal workforce. It calls for federal departments and agencies to take steps to utilize Registered Apprenticeship programs to train and develop incumbent workers and candidates for employment so that they obtain the skills necessary to meet the current and emerging needs of the federal workforce.

Mass Timber
Last Thursday, the U.S. Department of Agriculture made an announcement about its efforts to “Strengthen the American Bioeconomy Through a More Resilient Biomass Supply Chain.” Embedded in the announcement was this Implementation Framework that includes a number of positive initiatives that USDA intends to undertake in the coming year. Among the many steps identified, several focus on building markets for wood products. Below are two specific deliverables: 

• Support increased utilization of woody biomass for biobased production through the Wood Innovations Grant (WIG) Program. USDA will continue to leverage its Wood Innovations Grant Program to enhance utilization of woody biomass for biobased production, such as for mass timber affordable housing projects that will showcase innovative uses of cross-laminated timber as a substitute for concrete and steel, leading to wider adoption of these techniques and thus market demand for these products. Grants provide financial and technical assistance to State or Tribal governments, industry, and other partners to increase manufacturing capacity for wood products, strengthen markets that support ecological restoration, and enable development of commercial facilities for woody biomass and other wood products. 
  
  
• Invest in facilities and innovative equipment through the Community Wood Grant Program. The Community Wood Grant Program supports local economies by funding ready-to-implement projects that expand the number of thermally led wood energy systems in the United States or build and expand innovative wood products manufacturing facilities. These grants support local and domestic renewable energy and wood products while creating local markets for low quality wood biomass that support forest management and industrial residue use.

Secretary Vilsack is a strong supporter of mass timber dating back to his service as Secretary of Agriculture in the Obama Administration. WIA will be following up with staff teams for both the Wood Innovation Grant and Community Wood programs for additional details.