On Tuesday, 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.

Biden’s FY 2025 Budget Prioritizes Workforce Development

On Tuesday, the Biden Administration unveiled its budget for Fiscal Year 2025. 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. �������ý 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.

Executive Order on Registered Apprenticeships

Late last week, the Biden Administration issued an Executive Order (EO) to promote and expand use of registered apprenticeships. That EO may be found .

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.

Congressional Review of DOL’s Worker Classification Rule

Congressman Kevin Kiley (R-CA) and Senator Bill Cassidy (R-LA), along with 54 cosponsors, introduced a Congressional Review Act (CRA) to overturn the recent Department of Labor’s (DOL) final rule at redefines how employers classify workers as independent contractors.

Senator Cassidy stated that rule “cost millions of independent professionals across the country their livelihoods while restricting the freedom of many millions more to have flexible work arrangements.” House

Education and the Workforce Committee Chairwoman Virginia Foxx had this to say: “The bicameral Congressional Review Act resolution led by Representative Kiley and Senator Cassidy offers Congress the opportunity to take a unified stand against the Department’s thirst for more government control over America’s workforce. Entrepreneurial opportunities and flexibility should be encouraged, not extinguished with heavy-handed mandates from the federal government.”

Several business organizations are challenging the rule in court including the US Chamber of Commerce and the American Trucking Association (ATA). As we have noted in previous updates on the IC rule, the independent contractor model is popular in the trucking sector. If this rule is allowed to stand in its current form, many contractors in service roles across the economy would be reclassified as “employees,” threatening business models in every link of the supply chain.

1. Tax Relief for American Families and Workers Act (H.R. 7024)

SUPPORT

�������ý’s top legislative goal, H.R. 7024, secured overwhelming support in the House, retroactively extending vital tax benefits for businesses. The bill focuses on pro-growth, pro-jobs tax incentives, with provisions key to LBM including Research and Development (R&D) investment incentives, interest deductibility, and raising the immediate expensing cap for small businesses. It also enhances the Child Tax Credit, contributing to economic competitiveness, job creation, and relief for working families.

Having cleared the House, �������ý’s advocacy efforts are now strategically shifting to the Senate. Challenges, particularly regarding the Child Tax Credit and the “pay-for” mechanism, underscore the need for continued refinement. �������ý is committed to actively working to navigate these challenges and ensure the success of our tax priorities in 2024.

2. The Credit Card Competition Act (S1838)

SUPPORT

Focused on introducing competition into the credit card network market, presently dominated by the Visa-Mastercard duopoly, the Credit Card Competition Act (CCCA) has stood as a key legislative priority for �������ý since its first introduction in 2022. In addressing concerns about inflation and escalating prices, the CCCA’s broader impact is anticipated to positively influence consumer spending and provide relief to small businesses grappling with the financial strains associated with high transaction fees.

�������ý strongly supports the CCCA as it aims to empower merchants, promote better service, and reduce costs, ultimately fostering a fairer credit card market. We will continue to urge lawmakers to prioritize the passage of S. 1838 to bring about positive changes in the credit card market in 2024.

3. Strengthening America’s Supply Chain

SUPPORT

The Transportation and Infrastructure Committee recently approved a . This initiative not only addresses immediate challenges concerning the resilience of the U.S. supply chain, but also brings positive legislation to support CDL drivers by including provisions derived from two pivotal pieces of �������ý priority legislation from 2023: the LICENSE Act and the SHIP IT Act.

In 2024, �������ý is dedicated to advocating for the passage of this comprehensive supply chain legislation package. In an environment where disruptions are increasingly common, our efforts are directed towards legislation that not only addresses current concerns, but also secures long-term adaptability and enhances competitiveness.

4. Workforce Innovation and Opportunity Act (WIOA) Reauthorization (H.R. 6655)

SUPPORT

�������ý recognizes the urgent need for workforce development and endorses H.R. 6655, a comprehensive WIOA reauthorization. The bill allocates 50% of funding to upskill the American workforce, prioritizes employer-led initiatives, and ensures displaced workers access to skill development programs.

Despite the challenges of an election year, �������ý remains hopeful for the bill’s passage, underscoring the industry’s commitment to fostering a skilled and qualified workforce.

More Information to Come

In the coming days and weeks, �������ý will provide more detailed overviews on each 2024 legislative priority. In the meantime, we urge our members to get involved by becoming a champion of the LBM industry.

Take Action: Your involvement is crucial for shaping policies that ensure prosperity and healthy competition in the LBM industry. Help support these priorities through engagement with federal legislators and participating in �������ý’s 2024 Advocacy Day in Washington, D.C.

Stay Informed: Explore �������ý’s advocacy initiatives on our website and stay informed by subscribing to our weekly e-newsletter, The Advocate, offering essential updates on federal regulations, Advocacy Day plans, and weekly reports with must know information from our lobbyist in D.C, Pat Rita.

On Thursday January 18, the House Education and Workforce Committee’s Early Childhood, Elementary and Secondary Education Subcommittee held a hearing to take testimony on how CTE could help address the nearly 9 million job openings in the U.S. that remain unfilled. A good summary of the hearing that the committee compiled may be found .

A number of common themes that we have heard over the years in our advocacy for workforce development were raised at the hearing–namely that parents and educators remain stuck in a “college-for-all” mentality and a shortage of resources for CTE and career-oriented learning. A number of witnesses testified that a main obstacle in growing CTE programs and skills learning is a national shortage of CTE teachers.

Late last year, this committee reported on a Workforce Innovation and Opportunity Act (WIOA) reauthorization bill (H.R. 6655).

Among other things the bill would:

• Upgrade the skills of the American workforce by dedicating 50 percent of the adult and dislocated worker funding towards upskilling workers.
• Create an emphasis on employer-led initiatives that equip workers with the skill sets to fill jobs in critical industries and help the currently employed workforce upskill to avoid displacement and advance their careers.
• Ensure workers displaced from their jobs through no fault of their own can access robust skill development services, including through “individual training accounts.”         

Although 2024 is an election year and legislating will become increasingly difficult as we progress farther into the year, �������ý remains hopeful that a comprehensive WIOA reauthorization bill with ample funding for CTE will make it to the President’s desk. We will keep you apprised of developments.

Tax Updates

We continue to hear that the House will take up the tax package that contains retroactive extension of our trifecta of important business tax incentives (100 percent bonus depreciation and R&D tax credit among them) next week. The bill will reportedly move on the “suspense calendar” which is typically reserved for non-controversial legislation.

As we noted last week, the bill faces some head winds in the Senate as Republicans are looking to make changes to the Child Tax Credit portion of the bill. Senate Finance Committee Ranking Member Mike Crapo (R-ID) expressed concerns about a provision that allows tax filers to use either the current year’s or the previous year’s income to calculate a certain portion of the child tax credit. The Wall Street Journal editorial board also singled out that language in a recent op-ed critical of the bill, claiming it would undermine work incentives.

But we expect a good outcome in the House next week and will turn our focus to the Senate following that vote.

Once again, we are at the brink of another federal government shutdown as funding runs out for roughly half of federal agencies and departments at midnight Friday. �������ý had several meetings this week with Republican Members of Congress in the House who all believed that a shutdown would not materialize. As of this writing, the Senate is poised to consider a Continuing Resolution to fund the federal government into March to allow for more time to forge a fiscal year 2024 spending bill. Specifically, the short-term funding deal would extend the current deadlines from January 19 and February 2 to March 1 and March 8, respectively. The Senate is expected to pass the measure Thursday and the House will take it up on the consent calendar and pass it the same day.

�������ý Tax Priorities Make Positive Shift

We picked up some good news this week on the tax front. The chairs of the House and Senate tax writing committees unveiled an $80 billion tax package that includes, among other things, the �������ý-supported extensions of key business tax incentives that had expired or are phasing out. Specifically, the package retroactively extends the research and development tax credit through 2025. That credit had expired in 2022. Likewise, the package retroactively restores the 100 percent bonus depreciation benefit on investments in machinery and equipment and extends full expensing through 2025. This credit began to phase down in 2023. The measure also increases limitations on depreciable business asset expensing under Section 179. Specifically, the language in the bill increases the maximum amount a taxpayer may expense to $1.29 million, up from the current $1 million, reduced by the amount by which the cost of qualifying property exceeds $3.22 million. The $1.29 million and $3.22 million amounts are adjusted for inflation for taxable years beginning after 2024. The proposal applies to property placed in service in taxable years beginning after December 31, 2023. And finally, the measure restores the more generous Earnings Before Interest, Taxes, Depreciation and Amortization (EBITDA) standard for calculating interest expense deductibility.

In the non-business tax category, the package restores the upper limit on the Low-Income Housing Tax Credit (LIHTC). In calendar years 2018 through 2021, the 9 percent LIHTC ceiling was increased by 12.5 percent, allowing states to allocate more credits for affordable housing projects. This provision restores the 12.5 percent increase for calendar years 2023 through 2025 and is effective for taxable years beginning after December 31, 2022. The bill also makes more robust the Child Tax Credit. Under current law, the maximum refundable child tax credit is limited to $1,600 per child for 2023. This provision increases the maximum refundable amount per child to $1,800 in tax year 2023, $1,900 in tax year 2024 and $2,000 in tax year 2025, along with the inflation adjustment factor.

�������ý signed on to this week in support of the package.

The bill is scheduled to be marked up in the House Ways & Means Committee Friday and Members that we spoke to that sit on the Committee indicated that the goal is to pass the bill through the full House in the next couple of weeks.

Both the House and the Senate have now left town for the holidays and will not return until the second week in January. When they do return, a key deadline will be looming as appropriations for roughly half of the federal government are set to expire on January 19. This will serve as another critical test for House Speaker Mike Johnson and potentially provide a key legislative vehicle to move provisions retroactively extending important tax benefits that have expired or are phasing out. �������ý will hit the ground running in the New Year to keep the pressure on Congress to act on beneficial tax policy, as well as our priorities in the workforce and transportation space.

Old Growth Forest Protection

On Wednesday, the U.S. Forest Service published a notice of intent (NOI) that proposes to amend all 128 forest plans to conserve, manage and recruit old growth forests on National Forest System (NFS) Lands. The NOI states that mature forests within the NFS lands will be used to promote and sustain future old growth forests. Language in the NOI signals that mature forests on federal lands will be managed/recruited to an old forest condition that may negatively impact national forest timber programs across the country. An published by the Forest Service showed that 63 percent of NFS lands are considered mature or old growth forests by the agency. If this action is fully implemented, it will most certainly curtail timber harvesting on federal lands and may result in timber supply issues for sawmills that operate near or around federal forest landholdings. 

The Federal Forest Resource Coalition—a group in Washington that represents mills the rely on the federal forests for timber– released a statement in response to the NOI stating “The Forest Service’s approach here is baffling. Congress has made it clear that job one is reducing the threat of catastrophic fires by thinning our National Forests, something our industry is more than capable of doing. Instead, the same staff who should be planning fuels treatments are going to be engaged in a rushed, top-down effort to amend every forest plan to restrict management options on even more acres of National Forests.”

The NOI has a 45-day comment period that closes on February 2, 2024. The agency will then prepare an Environmental Impact Statement (EIS) by June 2024 that will have a 90-day comment period. The Forest Service has targeted a final EIS publication in January 2025.

House Advances Bill to Extend CTA Deadlines

The House delivered some pre-holiday cheer last week when it advanced the Protect Small Business and Prevent Illicit Financial Activity Act () sponsored by Representatives Joyce Beatty (D-OH) and Zach Nunn (R-IA). This bill extends key deadlines under the Corporate Transparency Act (CTA). Recall that this anti-fraud/anti-corruption law, slated to take effect in less than two weeks, imposes recordkeeping and reporting requirements on small businesses with stiff penalties for non-compliance. The bill passed on a 420 to 1 vote.  

While the House was approving the Nunn bill, a bicameral group of more than 80 senators and representatives to the Financial Crimes Enforcement Network (FinCEN)—the arm of the Treasury Department charged with implementing the statute–calling for a one-year delay of all reporting requirements under the CTA. Led by Senators Mike Rounds (R-SD) and Rick Scott (R-FL) alongside Representatives Warren Davidson (R-OH) and Patrick McHenry (R-NC), the group writes:

Unfortunately, FinCEN is woefully behind in educating small business owners and stakeholders of their new obligations under the CTA that begin in just a few short weeks. In fact, a National Federation of Independent Business (NFIB) survey found that 90 percent of respondents were entirely unfamiliar with these reporting requirements. Even more concerning is that the CTA has civil and criminal penalties of up to $10,000 and two years of jail time for failure to comply. This lack of awareness and education is alarming and must be addressed before the law is implemented. Dozens of organizations, representing millions of small businesses operating in every state and community across the country, have already publicly expressed their strong support for delaying implementation of the beneficial ownership information (BOI) reporting requirements by one year.

While the Senate has left town and will not be acting on the issue before the new year, we expect that, given the widespread support in both chambers for extending CTA compliance deadlines, the Senate will act quickly in January on approving legislation.

This week, House Republican Conference Chair Elise Stefanik (R-NY), Education and the Workforce Committee Ranking Member Bobby Scott (D-VA), Education and the Workforce Committee Chairwoman Virginia Foxx (R-NC), and Health, Employment, Labor, and Pensions Subcommittee Ranking Member Mark DeSaulnier (D-CA) introduced H.R. 6585, the . The legislation provides opportunities for students and workers looking to gain skills in high-demand fields by allowing Pell Grants to support students enrolled in high-quality, short-term workforce programs that will lead to career advancement.

Specifically, the bill authorizes the Department of Education to award Workforce Pell Grants beginning on July 1, 2025, for the 2025-2026 award year. An eligible student for a Workforce Pell Grant must be enrolled in an eligible workforce program, may not have attained a postgraduate degree and must otherwise meet the eligibility criteria to receive a Pell Grant.

In terms of program eligibility to qualify for these grants, workforce programs would have to be at least 150 clock hours of instruction (or an equivalent number of credit hours), but less than 600 clock hours of instruction and offered during a minimum of eight weeks, but less than 15 weeks. Also, a state workforce board must first determine if a program provides education aligned with high-skill, high-wage, or in-demand industry sectors or occupations, meets the hiring requirements of potential in-demand industry or sector employers and satisfies any applicable educational prerequisite requirement for professional licensure or certification in the state or states in which the program is offered.

The bill authorizes $40 million for Fiscal Year 2025 to support this program, and $30 million each subsequent year through FY 2029.

This legislation is promising in that it has bipartisan support from members of the committee that authorizes and oversees workforce development. �������ý will be advocating for this and other workforce development measures as reauthorization of the Workforce Innovation and Opportunity Act takes shape.

Tax Extenders Hearing

The House Ways & Means Committee’s Tax Subcommittee held a hearing on Wednesday to highlight the importance of the Tax Cuts and Jobs Act’s business tax benefits and the need to extend them. Subcommittee Chairman Rep. Mike Kelly (R-PA) noted in his opening remarks not only the importance of acting on tax extensions now, but looming tax deadlines, particularly in 2025 when the Sec. 199A deduction is set to expire. Recall, this is the 20 percent deduction for qualified business income (QBI) for S-Corporations and other pass-through tax structures. �������ý has been advocating aggressively for retroactive extension of the 100 percent bonus depreciation tax benefit, as well as retroactive renewal of the research and development tax credit. We will expand our focus next year on extending Sec. 199A as well.

Rural Forest Markets Act (RFMA)

This week, Senators Bob Casey (D-PA), Debbie Stabenow(D-MI) and Mike Braun (R-IN) introduced the Rural Forest Markets Act, legislation that would provide federal government incentives for private landowners to participate in voluntary carbon markets. Increasingly, forest landowners are looking to boost their return on investment by selling carbon sequestration credits generated from their managed forests to companies looking to offset carbon emissions or otherwise improve their carbon profile. The costs involved in ramping up to participate in these programs can be prohibitive for smaller landowners and this bill seeks to break down cost barriers to entry. 

While well intentioned, the legislation has stirred concern among those in the forest products value chain that worry about what the long-term effects of widescale participation in these markets will have on wood fiber availability. These programs typically require landowners to commit to longer harvesting rotation cycles on their timberland holdings. If enough landowners within a 50-mile radius of a sawmill postpone timber harvests by ten to fifteen years, it could put that sawmill in jeopardy of running out of raw material to make building products. Some more drastic modeling creates scenarios where forest landowners forgo harvesting altogether and rely on carbon credits for their income.

This bill is unlikely to pass, but with Senate Agriculture Committee Chairwoman Stabenow as a cosponsor, there may be efforts to fold this bill into the upcoming Farm Bill reauthorization. House Agriculture Committee Chairman Glenn Thompson (R-PA) has serious concerns with the bill (RFMA) and would likely oppose its inclusion in any Farm Bill rewrite, but �������ý is monitoring developments closely.

This week, a led by Rep. Rudy Yakym (R-IN) and signed by over 150 House Republicans was sent to House Speaker Mike Johnson (R-LA) to urge action by the end of this year on the expired and expiring business tax benefits that were authorized by the Tax Cuts and Jobs Act of 2017. None of the signatories sits on the House Ways & Means Committee and that was by design. Rep. Yakym wanted to show leadership that there is strong support across the Republican Caucus for action by year’s end on these key tax benefits.  

These benefits are:

• Full expensing (100 percent depreciation) of the cost of machinery and equipment in the year in which the costs are incurred.
  • Benefit began to ratchet down this year by 20 percent.
  • Will decrease 20 percent each year until fully phased out in 2027.
• R&D Tax Credit which allows costs of research and development to be written off the year in which they are incurred.
  • Lapsed in 2022.  R&D costs now have to be amortized over 5 years, making investments in the business more costly and restricting cash flow.
  • U.S. is now one of only two developed countries requiring amortization of these costs.
• Restoring EBITDA as the standard for deducting interest expenses.
  • Prior to 2022, business interest expense deductions were limited to 30 percent of Earnings Before Interest, Tax, Depreciation and Amortization (EBITDA). Now they are limited to 30 percent of EBIT—a stricter standard that serves as a tax on investment by making it more expensive for capital intensive industries throughout the supply chain to finance job creating growth.

A package of legislation was reported by the House Ways & Means Committee earlier this year but has not received a floor vote. Those bills are–H.R. 2673, the American Innovation and R&D Competitiveness Act and S. 866, the American Innovation and Jobs Act, which would permanently repeal the R&D amortization provision; H.R. 2788 and S. 1232, the American Investment in Manufacturing Act, which would permanently restore the pro-growth EBITDA interest limitation standard; and H.R. 2406 and S. 1117, the Accelerate Long-Term Investment Growth Now Act, which would permanently extend full expensing.

While Speaker Johnson supports the tax package, the complicating factor is lack of a legislative vehicle. This is an unusual year in that there is no pre-Christmas “fiscal cliff” driving action on a budget deal where tax policy would usually ride. Every year for the last decade, Congress has been at work right up to Christmas week hammering out a budget deal. This year Congress funded the government into early 2024. The only vehicles left on which to legislate this year are the National Defense Authorization Act and legislation extending funding for the Federal Aviation Administration, which runs out December 31. �������ý will keep the pressure on Members of Congress on and off the tax writing committees to urge action on our tax priorities before the end of the year.  

Workforce Development

Earlier this month, co-chairs of the House Career and Technical Education Caucus—Representatives Glenn Thompson (R-PA) and Suzanne Bonamici (D-OR)—introduced a resolution (H.Res. 873) designating November as “National Career Development Month.” In the lengthy “whereas” section of the resolution, the measure notes that career development assistance is a community partnership effort involving the education system, the home and family structure, business, industry, and a wide variety of community agencies and organizations and is not carried out by career development professionals alone.  It further notes that, as of September 2023, there are 6.5 million workers that are unemployed at the same time that employers across the country and in almost every sector struggle to find employees.  The resolution may be found .

With just a week left before funding for the federal government is scheduled to lapse, Congress is once again in a standoff over how to proceed. House leadership had floated the concept of a “laddered” approach to appropriations, whereby a series of separate shutdown deadlines would be established for different agencies. Some would be funded through December 7, others through January 19, 1024. But that plan lacks support and it appears that the Senate’s approach of passing a Continuing Resolution (CR) until mid-December will prevail.
While the upper chamber’s plan would keep the federal government’s lights on past next Friday, it still sets up a pre-holiday, pre year end showdown over spending. It seems to play out like this every year, but the good news is that these year-end funding deals typically provide a platform to move important policy proposals. Likely to ride on this first CR is an extension (possibly yearlong) of the Farm Bill, which expired September 30. On that second funding show down, we expect that package to provide the vehicle for tax legislation discussed below.

Tax Package

A key member of the House Ways & Means Committee reported on Tuesday that Republicans are looking to move $35 to $40 billion of business tax relief in an end of year tax bill in which Senate Democrats are looking to pair with an expansion of the Child Tax Credit in that same price tag range. The business tax extenders would be those for which �������ý has been advocating— extension of the 100 percent bonus depreciation benefit also known as full expensing, extension of the research and development tax credit that expired in 2022 and restoration of the EBITDA standard for calculating interest expense deductibility.

We continue to meet with Members and staff on and off the tax writing committees to urge expeditious action on these critical tax extensions.

Corporate Transparency Act

The small to medium sized business community is once again reaching out to Congress to delay implementation of the Corporate Transparency Act, a little-known federal anti-corruption and anti-fraud law enacted in 2021 that takes effect in a little over a month and a half. �������ý has signed on to a previous letter to House and Senate leadership asking for an implementation delay but given the compliance date is just weeks away the pressure is building. The American Institute of Certified Public Accountants (AICPA) sent to the Financial Crimes Enforcement Network (the implementing and enforcing federal entity at the Department of Treasury) on October 30 outlining its serious concerns with FinCen sticking with the statutory deadline for compliance. The issue is that it is an obscure statute and compliance obligations—which are all reporting requirements—have not been well socialized.

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 on Tuesday when eight Republican’s 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.

Currently, three Members of Congress are in the mix to succeed McCarthy—Majority Leader Steve Scalise (R-LA), Rep. Jim Jordan (R-OH) who chairs the House Judiciary Committee, and Rep. Kevin Hern (R-OK), Chairman of the Republican Study Committee. Former President Donald Trump has also been mentioned as a potential candidate.

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 weeklong recess is not alleviating concerns that time is running out for meaningful action on issues important to the business community. �������ý continues to meet with key committee staff and our champions on the Hill to urge action on workforce development, extension of key tax benefits like full expensing, and the supply chain package that awaits House floor action. All of these items are in limbo until the House majority elects a new Speaker.

Last week, the House Energy and Commerce Committee’s Environment, Manufacturing and Critical Materials Subcommittee held a hearing to receive testimony from witnesses about the impacts of EPA’s proposed particulate matter (PM) 2.5 rule. Particulate matter is a broad descriptor for fine particles such as dust from unpaved roads or fields that may become airborne and inhaled. Sources of PM are myriad and include construction and logging sites, manufacturing operations, vehicle exhaust and wood burning. In January, EPA proposed tightening the current PM 2.5 standard (which regulates fine particles equal to or less than 2.5 microns in size) from the current 12 micrograms per cubic meter to somewhere in the 8-10 micrograms per cubic meter range.

To provide context, 9 micrograms per cubic meter is considered the background level for PM 2.5—meaning that is the level that is in currently in the air we breathe. Serious concerns have been raised by the business community about what this action would do to the ability of manufacturers to expand operations, for example, or conduct most commercial activity in areas that would automatically fall into nonattainment following imposition of a stricter PM 2.5 standard.

Earlier this year, Senate Environment and Public Works Committee Chairman Shelley Moore Capito (R-WV) introduced legislation (S. 2125) that seeks to address some of the underlying issues that have led to the current PM 2.5 challenge. Under the Clean Air Act, EPA is required to review National Ambient Air Quality Standards (NAAQS) for the six so-called “criteria” pollutants—of which particulate matter is one. This has resulted in a situation where standards are set and almost immediately are under EPA review again, creating uncertainty for the regulated community. Capito’s bill would change the mandatory review period from 5 to 10 years and authorize EPA to consider technological feasibility when considering revising NAAQS. Currently her bill is pending in the Senate Environment and Public Works Committee and has 8 Republican cosponsors.

Hope for 100% Bonus Depreciation

In conversations with committee staff and key Congressional offices this week, �������ý picked up signals that there may be some life in efforts move a tax package through the House. Recall that the House Ways & Means Committee reported a group of bills earlier this summer that extend a number of business tax benefits that had expired or are phasing out. These include the 100 percent bonus depreciation for investments in machinery and equipment and the research and development tax credit. The former began to ratchet down beginning this year and the latter sunset in 2022. The package has not received House floor consideration because several Republicans and Democrats from high state and local tax (SALT) states have been advocating for inclusion of language either modifying or removing the $10,000 SALT cap. House Ways & Means Committee Chairman Jason Smith has been hearing increasingly from small businesses in Missouri that the bonus depreciation issue is having a serious impact on their bottom line. Smith signaled he intends to push leadership to schedule a floor vote on the package later this fall and that progress was being made on the SALT issue.

In terms of legislative vehicles, the Taiwan Expedited Double Tax Relief Act may be the bill on which these tax extenders ultimately ride. This legislation has moved out of both the House Ways & Means and Senate Finance Committees with bipartisan support. There is a scenario which is shaping up where the tax extenders are amended into the bill later this year and passed. We will keep you updated on our progress.

Government Shutdown Remains Likely

As we have noted in our last several Advocates, a federal government shutdown of some duration is looking likely. Earlier this week, the Senate approved a procedural motion to advance a continuing resolution (CR) to fund the government through November 17. That CR also provides approximately $6.15 billion in funding for Ukraine and $5.99 billion in disaster assistance. The legislation also temporarily extends the authority of the Federal Aviation Administration, which also expires at midnight Saturday.

This measure is expected to pass the Senate on a bipartisan vote this week, but right now is dead on arrival in the House. For this reason, we anticipate a lapse in federal government funding beginning October 1. The bottom line is that, given the evenly divided partisan makeup of both chambers, at some point House Republicans are going to have to reach across the aisle to pass a government funding measure. �������ý is close to the action here in Washington and will report on developments.