Washington Report (May 2024)

Farm Bill
This month has featured some significant developments on reauthorizing the Farm Bill. On Friday, House Agriculture Committee Chairman Glenn Thompson (R-PA) unveiled text of his legislation renewing the statute that undergirds our nation’s farm and nutrition programs, but also includes numerous provisions promoting wood products and forestry. 

Chairman Thompson’s bill renews the Community Wood grant program that promotes development and production of innovative wood products (like mass timber/cross laminated timber or CLT), as well as heating and renewable energy technologies that rely on sawmill residuals. His bill will also reauthorize the Wood Innovation Grant program that also promotes deployment of mass timber/CLT projects across the country. The bill also includes provisions to promote active forest management on our nation’s federal forest landholdings. On workforce, there is language in the legislation based on the Jobs in the Woods Act to stand up training programs around the country to entice young adults to enter the forestry and forest products workforce. 

A markup of this legislation will take place May 23 in the House Agriculture Committee. The bill unveiled Friday is 941 pages. WIA will be analyzing the text and will provide more analysis once we have reviewed its many provisions. Unfortunately, Democrat leadership in the House has been publicly criticizing the proposal so it will likely move from committee on a party line vote. We will have a better feel for prospects in the House after Thursday. 

In the Senate, Senator Debbie Stabenow (D-MI), Chairman of the Senator Agriculture, Nutrition and Forestry Committee-unveiled a 94-page summary of her version of a Farm Bill in early May. 

Her legislation, which is not supported by her Ranking Member Senator John Boozman (R-AR), doubles the funding for the Community Wood grant program to $50 million a year over the life of the Farm Bill. That amounts to $250 million—a significant investment in building with wood and deploying biomass energy systems around the country. Her bill also makes changes and beefs up the Bio Preferred program which is a procurement preference and labeling program for biobased products, which includes wood building materials. 

There is no sense yet when the Senate is looking to move on this legislation or when legislative text will be available.

Tax
Earlier this month, the House Ways & Means Committee announced formation of 10 “tax teams” comprised of Republicans on the committee to explore ways to avoid the tax cliff that is looming at the end of 2025. Under the Tax Cuts and Jobs Act, a number of key business benefits are set to expire at the end of next year, including the Section 199A benefit which is the 20 percent deduction for businesses structured as S Corporations. The ten teams will address:

• American Manufacturing
• Working Families
• American Workforce
• Main Street
  
• New Economy
• Rural America
• Community Development
• Supply Chains
• U.S. Innovation
• Global Competitiveness 

WIA will follow deliberations of these teams closely and report on developments.

In other tax news, the House-passed tax legislation (H.R. 7024) that retroactively restores and extends key tax benefits like 100 percent bonus depreciation continues to be in irons in the Senate unfortunately. It appears at this point that, despite an overwhelmingly bipartisan vote in the House, Senate Republicans are not going to get on board this year and that any tax activity in Congress will have to wait until 2025. Nevertheless, WIA continues to meet with Senate offices daily to urge support for this legislation in hopes that the impasse may be broken.

Department of Labor Overtime Rule
On April 23, the Department of Labor (DOL) unveiled a final overtime pay rule that will qualify salaried workers classified as executive, administrative or professional (EAP) earning less than $43,888 a year for 1.5 times pay if they work more than 40 hours a week. The current threshold is $35,568 a year. This bump-up will be implemented in two phases. The first increase will kick-in on July 1 of this year. The threshold will expand again to salaried workers making less than $58,656 on Jan. 1, 2025.

The rule’s objective is to increase wages for workers in low-wage but salaried occupations across the economy by making them eligible for time-and-a-half pay. Most hourly workers are already entitled to overtime pay, but non-hourly EAP workers are exempt unless they earn less than the threshold set by the Labor Department.

An Economic Policy Institute analysis of the rule found that 4.3 million more workers will be eligible for overtime pay because of this action. Going forward, salary thresholds for overtime eligibility will be updated every three years. 

The final rule will certainly face a legal challenge as did a similar rule issued by the Obama Administration. That rule was struck down by a federal judge in a challenge led by the U.S. Chamber of Commerce. The current threshold of a little over $35,000 was put in place by a rule adopted during the Trump Administration. As we have noted in previous policy updates, the Biden Administration is in overdrive mode pushing out these regulations in an effort to protect the President’s policies from Congressional Review Act (CRA) repeal should there be a different Administration next year. CRA reaches back to any regulation finalized within 60 Congressional days in the previous calendar year. The current estimate is that any CRA action would apply to any Biden Administration regulations finalized sometime in late May. In addition to litigation, we expect to see legislation introduced to overturn the rule and will keep you apprised of activity on that front.