TCMA Industry News
AFS Washington Update - January 2013
   Stephanie Salmon  |  January 18, 2012
 

The 113th Congress Checks In for Duty
There are nearly 100 new members of Congress - 84 new House members and 13 new Senators - who were sworn in on January 3 alongside returning members to form the new 113th Congress. The House will be back the week of January 14 for a short session. The key piece of work on the slate for the House will be a vote likely on Tuesday on a major chunk of federal relief for the victims of Hurricane Sandy, through a supplemental appropriation. From Wednesday to Friday, House Republicans will gather in Williamsburg for their annual conference meeting. The Senate is not scheduled to return until after the inauguration, on Jan. 22. Subcommittee assignments for many freshmen lawmakers have not been fully finalized and are expected to be completed during the week of January 22nd.

Possible Contenders For EPA Administrator Position
In December, Lisa Jackson announced she will step down as EPA Administrator after the president's State of the Union address this month. Whoever takes over the agency, one thing is certain: The EPA will move ahead this year with a litany of rules, including a tightening of the ozone standard. Another item at the top of the EPA hit list is greenhouse-gas emissions, viewed as a main contributor to climate change. The Obama administration has imposed a ban on new coal-fired plants, but likely will pursue equally onerous restrictions on existing plants.

EPA Deputy Administrator Bob Perciasepe will serve as the Acting Administrator upon Jackson’s departure. Perciasepe is speculated to be one of the contenders for her permanent replacement. Other top candidates for the position include former Washington State Governor Christine Gregoire; EPA Assistant Administrator for Air and Radiation, Gina McCarthy; former head of the White House Council on Environmental Quality, Kathleen McGinty; and California Air Resources Board Chairman, Mary Nichols. We can expect a contentious confirmation debate when then nominee goes before the U.S. Senate.

Congress: Turnover on Two Key Senate Committees
Oregon Senator Ron Wyden is poised to chair the Committee on Energy and Natural Resources. He’ll take the gavel from New Mexico Democrat Jeff Bingaman, who retired. Wyden says the U.S. in the middle of an abrupt shift: after years of importing natural gas and coal, companies are now rushing to export it. The senator hasn’t taken a position on specific proposals to build coal and natural gas export terminals in the Northwest, though he’s raised concerns that natural gas exports could drive up domestic prices. In fact, he wrote a letter this week to Energy Secretary Steven Chu to redo a recently released federally commissioned consultant’s study that said exporting gas will be a net economic win for the nation, questioning its accuracy.

Republicans shook up the committee membership of the Senate Energy and Natural Resources Committee with the arrival of Sen. Lamar Alexander (TN) and freshmen Sens. Jeff Flake (AZ) and Tim Scott (SC). They are replacing Sens. Bob Corker, Dan Coats and Rand Paul. Sen. Lisa Murkowski of Alaska will remain the ranking Republican member of the committee. Murkowski is piecing together a blueprint for energy policy that she plans to unveil in January. The plan exceeds 100 pages and will outline oil and gas, nuclear, renewable energy, cybersecurity and other policies.

Some changes are also taking place on the Senate Environment and Public Works Committee. Sen. David Vitter (R-LA) will take over as the committee's Ranking Member, replacing Sen. Inhofe (R-OK). Self-imposed rules by Republicans limit them to six years in committee leadership positions. Sen. Roger Wicker (MS) and freshman Sen. Deb Fischer (NE) are the new Republican members of the Senate Environment and Public Works Committee, replacing Alexander and Mike Johanns (NE).

Sen. Barbara Boxer (D-CA) will remain as chairwoman of the Senate Environment and Public Works Committee, which oversees EPA, in the 113th Congress. Underscoring her strong interest to address climate change, this week she announced that she will be adding a climate change counsel to her committee staff.

Taxes: Senate and House Approve Fiscal Cliff Package
In a rare New Year’s Day vote, the U.S. House of Representatives approved a bipartisan compromise to extend the majority of the Bush-era tax cuts, fix a number of expiring tax and spending provisions, and prevent the country from going over the fiscal cliff for the time being by a vote of 257-167. One hundred seventy-two Democrats and 85 Republicans voted in favor of the American Taxpayer Relief Act of 2012, while 16 Democrats and 151 Republicans opposed it. The Democratic-led Senate overwhelmingly approved the bill early Dec. 31. The new law will raise approximately $600 billion in new revenues over 10 years, according to the Congressional Budget Office.

Specifically, the package will raise tax rates for those individuals earning more than $400,000 per year and couples earning more than $450,000, which marks the first time since 1993 that federal income tax rates have gone up for any Americans. The compromise spares tens of millions from the Alternative Minimum Tax. The bill did not extend the payroll tax cut, but it did extend the emergency unemployment benefits for one year. It delays the threat of sequestration, a series of automatic cuts in federal spending, for two months. The timing of the vote was crucial, as the new 113th Congress was sworn in on Jan. 3. Without a deal, the entire process would have started over. President Obama signed the bill into law on Jan. 2.

Highlights of the Deal Impacting Metalcasters:
The following key tax provisions that stand to affect metalcasting facilities were acted on as part of the compromise agreement:

− Individual Rates: Many metalcasting facilities organized as S-corporations or other flow-through entities and that pay taxes at the individual level will not see their tax rates go up. However, the compromise agreement increases tax rates for individuals making more than $400,000 and couples making more than $450,000, from the current 35% to 39.6%.

− Estate Tax: Taxes on inherited estates will go up to 40% from 35%. The package preserves the current estate tax exemption level of $5.12 million but indexes it to inflation for future years.

− Dividends and Capital Gains: Capital gains and dividend tax rates for incomes over $400,000 will increase to 20% from 15%.

− R&D Tax Credit: The proposal provides a 2-year extension of the research and development (R&D) tax credit from Jan. 1, 2012, through Dec. 31, 2013. The credit originally expired Dec. 31, 2011.

− Bonus Depreciation: The compromise offers a one-year extension of the 50% bonus depreciation through the end of 2013.

− Section 179 Expensing: The agreement temporarily extends the increase in the maximum amount and phase-out threshold under section 179 expensing. Under current law, a taxpayer with a sufficiently small amount of annual investment may elect to deduct the cost of certain property placed in service for the year rather than depreciate those costs over time. The proposal would increase the maximum amount and phase-out threshold in 2012 and 2013 to the levels in effect in 2010 and 2011 ($500,000 and $2 million respectively).

− Energy Efficiency Tax Incentives: The package includes extensions of the energy efficiency tax incentives for appliances, new homes and retrofits to existing homes.

− Replace Sequester for Two months: The automatic spending cuts to defense and nondefense programs will be replaced for two months in 2013. The two months of cuts will be replaced by $12 billion in new revenue and $12 billion in spending cuts.

The deal does not address a range of other issues. The legislation creates a new fiscal cliff deadline over spending cuts in February, around the same time the debt ceiling will need to be raised. It is unclear what Congress will decide to do about the sequester after the two-month period has ended. Meaningful tax and entitlement reforms also were left out of the compromise packages. Both are key to long-term deficit reduction. Additional negotiations and legislation will be needed in February.

AFS Signs Industry Letter in Support of Keystone XL Pipeline
In December, AFS and the state groups signed on to an industry-wide letter to President Obama in support of the Keystone XL Pipeline. The president rejected the Keystone XL pipeline project back in January 2012. In the letter, the undersigned businesses and organizations urge the president to move quickly and efficiently with the final review and permitting of the Keystone XL Pipeline stating, “There can be no stronger sign of a commitment to economic growth than approving Keystone XL.”

The President faces mounting pressure on whether to approve the $7 billion proposed Keystone XL oil pipeline between the U.S. and Canada. TransCanada has developed a new route through Nebraska. The State Department is expected to complete its ongoing review of the application in the first quarter of 2013. Environmental activists and oil producers alike are looking to Obama's decision as an indication of what he'll do on climate and energy in the next four years. Support for the pipeline appears to be picking up steam on Capitol Hill.

OSHA Finally Publishes Its 2012 Regulatory Agenda – Crystalline Silica Proposed Rule Anticipated to be Released by May 2013

The agency just released its long-awaited semiannual regulatory agenda for 2012 just before the holidays. OSHA’s proposed rule to address crystalline silica hazards, which has been under review at OMB since February 2011, is categorized as a proposed rule with action slated for May 2013. However, this past fall, OSHA administrator David Michaels said the update could be delayed because regulators need to figure out how to incorporate the new hydraulic fracturing industry into the revised silica rules.

Several other top agency priorities also appear to be on track to move forward. Here is an update on several other proposed regulations that are of interest to the foundry industry:

− Injury & Illness Prevention Program Rule (I2P2)
A top priority for the leadership team at OSHA is the I2P2 rule which would require employers to implement a Program to find and fix hazards not necessarily covered by any existing regulation. The rule is still listed in the Pre-rule State and an NPRM to be published by the end of 2013. This would be nearly impossible to occur since the small business panel (known as the SBREFA process) has not yet started. We are a full year past January 2012 when OSHA was going to convene a SBREFA Panel, which would review the impact of the regulation on small businesses. An AFS member company is lined up to participate in the panel once initiated.

− Combustible Dust Standard
The Regulatory Agenda puts the combustible dust standard in a pre-rule stage from long-term action. The agency anticipates the SBREFA process will begin in October of this year. AFS will have a member company participate in this panel process as well. In 2009, OSHA commenced a rulemaking to develop a comprehensive combustible dust standard for general industry, following a series of recommendations from the U.S. Chemical Safety & Hazard Investigation Board. OSHA says it will use the information gathered from its National Emphasis Program on the hazard to assist in the development of the rule.

− Review & Lookback of OSHA Chemical Standards
Another top priority for the OSHA leadership team has been to update many chemical specific Permissible Exposure Limits (PELs). Most of the existing PELs were adopted in 1971 and only a few have been updated since. The updated Regulatory Agenda calls for a Request for Information (RFI), projected for May 2013, to seek input from the public to help the Agency identify effective ways to address occupational exposure to chemicals. A previous effort to revise many of the current PELs resulted in a final standard that lowered PELS for over 200 chemicals and introduced PELs for 164 previously unregulated chemicals. That standard, however, was successfully challenged in court based on deficiencies in OSHA’s analyses.

− Injury and Illness Recording and Reporting
This rule has moved from proposed to final rule phase. The rulemaking would revise the reporting requirements of employers to report to OSHA the occurrence of fatalities and certain injuries. OSHA says a final action is expected by May 2013.

− Occupational Exposure to Beryllium
This regulatory effort appears on the current agenda in the proposed rule stage. OSHA noted that it has collected information, convened a SBREFA panel and completed the SBREFA report, and completed a scientific peer review of its draft risk assessment. The agency says it plans to issue a proposed rule by July 2013.

− Preventing Backover Injuries and Fatalities
This item – on which the agency has been working throughout the past year and has meetings planned for January – remains in the pre-rule stage. OSHA says the agency is scheduled to review comments by February.

− Efforts to Improve Tracking of Workplace Injuries and Illnesses
This rulemaking remains in the proposed rule phase. OSHA says an updated and modernized reporting system would enable a more efficient and timely collection of data and would improve the accuracy and availability of the relevant records and statistics, and says that it hopes to publish a proposal by May 2013.

The following initiatives are in the final rulemaking stage:

− Electric Power Transmission and Distribution; Electrical Protective Equipment
OSHA intends to amend the corresponding standard for general industry so that requirements for work performed during the maintenance of electric power transmission and distribution installations are the same as those for similar work in construction. A final rule is scheduled for March 2013.

− Walking Working Surfaces and Personal Fall Protection Systems (Slips, Trips, and Fall Prevention)
OSHA has determined that a rule proposed in 1990 tackling the issue is out-of-date and does not reflect current industry practice or technology. It says a final rule is expected by August 2013.

− On-Site Consultation Program
OSHA is proposing to revise its regulations for the on-site consultation program for small businesses. A number of foundries have utilized this program over the years. The agency anticipates final action by April 2013.

The agency also has added some new items to its regulatory agenda:

− Consensus Standards on Signage
OSHA's is updating references to consensus standards in its rules. OSHA plans to publish a direct final rule concurrently with a Notice of Proposed Rulemaking (NPRM) on workplace signage. If the agency does not receive significant adverse comments, it will confirm the effective date of the final rule and withdraw the NPRM. If OSHA does receive significant adverse comments, it will withdraw the final rule and proceed with the rule proposal process.

OSHA also listed requirements for a musculoskeletal disorders (MSDs) recordkeeping columns rulemaking as long-term action, which means there is no set date to proceed. This column has been met with opposition from the business community. As you can see, OSHA has a busy agenda planned for 2013 and AFS is prepared to be actively in these upcoming rulemakings.

OSHA Holds Stakeholder Meetings on Vehicle Backover Injuries, Fatalities
OSHA has scheduled five informal stakeholder meetings to solicit comments on preventing injuries and fatalities from vehicle backovers. The purpose of the meetings is to gather information and evaluate backover risks across various industries, determine whether or how backovers may be prevented by new technology or other methods, and discuss the effectiveness of those measures. The meetings will be held Jan. 8-9, 2013, in Washington, D.C. and Feb. 5, 2013, in Arlington, Texas.

OSHA published a Request for Information on backover hazards in the Federal Register on March 29, 2012. The agency received responses from individuals and organizations about how workers get injured and what solutions exist to prevent injury and death. Seventy-nine workers were killed in 2011 when backing vehicles or mobile equipment crushed them against an object or rolled over them according to Bureau of Labor statistics.

Stepped Up OSHA Penalties Expected to Continue in 2013
OSHA has been able in the last four years to almost double the cost of the average serious violation to $3,000. Also, the number of companies facing total fines above $100,000 has gone up. In 2010, only 164 companies were issued six-figure fines. In 2012, that number jumped to 217, a 32 percent increase. In 2012, a half-dozen or so foundries were initially fined over $100,000 for various violations. One way OSHA is increasing the amounts paid by companies: classifying citations as “willful,” which have a $70,000 maximum, compared to “serious” citations, which have a $7,000 max.

OSHA Cites Ohio Foundry for Noise Hazards
In January, an Ohio gray iron casting plant, COL-Pump Co., became the first foundry of 2013 to be cited publically for 10 health and safety violations by the Occupational Safety and Health Administration (OSHA) because it failed to monitor employees’ exposure to noise hazards and other infractions. OSHA levied $56,880 in fines against the foundry for 10 violations, including “willful” violations regarding the company’s failure to monitor exposure to noise above 85 decibels. The foundry can still contest the violations.

The “willful violations” were cited because COL-Pump failed to establish an audiogram — a graph that charts decibel levels measured — within six months of the first exposure to the increased decibel level. They also failed to provide the graphs to employees. The company was also given a repeat citation for failing to lower the noise exposure in the grinding area of the facility. OSHA cited the company for the same problem in 2009, when six other citations were issued.

OSHA Releases Publication - "Solutions for the Prevention of Musculoskeletal Injuries in Foundries"
This document provides practical solutions to help increase employer and worker awareness of ergonomics-related risk factors, alleviate muscle fatigue, increase productivity, and reduce the number and severity of work-related MSDs. The publication is available at: http://www.osha.gov/Publications/osha3465.pdf

OSHA Releases Online Tool on Cadmium Exposures
OSHA has released a new interactive online tool to help protect workers exposed to cadmium, a key chemical of concern that has been a subject of discussion by stakeholders regarding OSHA permissible exposure limits – here is the link to this tool: http://www.dol.gov/elaws/cadmium.htm

EPA Tightens PM2.5 Air Standards Rules
On December 14, the U.S. Environmental Protection Agency (EPA) finalized its rule tightening the National Ambient Air Quality Standards (NAAQS) for fine particles emitted by a wide variety of sources, including power plants, industrial facilities (as well as foundries), and gasoline and diesel engines. Specifically, EPA has tightened the primary NAAQS for PM2.5 by lowering the level of the annual primary PM2.5 standard from 15 μg/m3 to 12 μg/m3 (a 20% reduction). In August, AFS had urged EPA to maintain the current standard in comments to the agency, before OIRA in December, as well as in testimony before Congress in June.

The rule will become effective 60 days after its publication in the Federal Register, which is expected to occur early in 2013. The rule is one of several rules in recent years tightening the NAAQS for certain pollutants, resulting in additional compliance planning for states and potential clean air permitting complications for foundries contemplating expansions or new construction projects.

EPA anticipates making initial PM2.5 attainment/nonattainment designations by December 2014, with these likely becoming effective in early 2015. Although EPA indicates that fewer than 10 counties nationwide will be out of compliance with the revised PM2.5 NAAQS by the end of the decade, it identifies approximately 66 counties as currently not meeting the standard, including counties in California, Pennsylvania, Ohio, Indiana, and Illinois – areas where a number of foundries are located.

Implementation plans outlining how affected states will comply will be due in 2018, and compliance is required by 2020. States not meeting the standard may need to include in their implementation plans additional measures requiring deeper particulate matter emission cuts. In addition, major construction project or manufacturing facilities expanding their businesses in PM2.5 nonattainment areas will be subject to the stringent requirements of EPA’s Nonattainment New Source Review program, including, potentially, emission offsets and stringent technology standards. Even in counties attaining the standard, applicants (unless grandfathered) will be required under the PSD program to demonstrate that proposed major projects do not cause or contribute to a violation of the revised fine particulate standard.

EPA has revived a years-old permit "grandfathering" policy -- previously scrapped by the Obama administration -- allowing facilities that were already in the permitting process at the time of the revised standard's issuance to avoid having to meet the stricter limit.

EPA Releases Finalized Boiler MACT Rules
EPA finalized changes to the Clean Air Act standards for boilers and certain incinerators, also known as the Boiler Maximum Achievable Control Technology (boiler MACT) rule. As a result, 99 percent of the approximately 1.5 million boilers in the U.S. are not covered or will be able to meet the new standards by conducting periodic maintenance, per EPA.

The final rule dramatically cuts the cost of implementation by individual boilers that EPA proposed in 2010. The rules set numerical emission limits for high emitting boilers and incinerators, which accounts for less than 1 percent of boilers in the sector. For these boilers and incinerators, typically operating at refineries, chemical plants and other industrial facilities, EPA is establishing more targeted emissions limits.

EPA has also finalized revisions to the Non-Hazardous Secondary Materials Rule to provide clarity on what types of secondary materials are considered non-waste fuels and provide greater flexibility in rule implementation. This final rule classifies a number of secondary materials as categorical non-wastes when used as a fuel and allows for operators to request that EPA identify specific materials through rulemaking as a categorical non-waste fuel.

Health Care: IRS Issues Proposed Rule on Shared Responsibility for Employers Regarding Health Coverage
The Internal Revenue Service (IRS) has issued a Proposed Rule in the Jan. 2 Federal Register, outlining how employers will be subject to the Employer Shared Responsibility for health insurance. These provisions were added by the Patient Protection and Affordable Care Act (PPACA). Under the rule, employers hit by the mandate must provide coverage to the employee (or pay a fine), but also provide coverage for dependents of employees.

The rule offers clarification on a variety of key definitions that will impact which employers are subject to the law and what they must provide in the way of healthcare insurance. Some noteworthy aspects of the rule include:

§ For the purpose of identifying full-time employees’ status, the proposed regulations retain the 130-hour standard as a monthly equivalent of 30 hours per week. (Regulations apply to employers with 50 or more employees – most foundries.)

§ An applicable employer has the option to determine each ongoing employee’s full-time status by looking back at a measurement period (a defined time period of not less than three but not more than 12 consecutive months, as chosen by the employer).

§ For purposes of determining employee eligibility for the premium tax credit, coverage for an employee under an employer-sponsored plan is affordable if the employee’s required contribution for self-only coverage does not exceed 9.5 percent of the employee’s household income for the taxable year.

Employers may rely on these proposed regulations for guidance pending the issuance of final regulations or other guidance. The IRS Q&A bulletin on the subject can be viewed here: http://www.irs.gov/uac/Newsroom/Questions-and-Answers-on-Employer-Shared-Responsibility-Provisions-Under-the-Affordable-Care-Act. The complete Federal Register notice may be viewed here: http://www.gpo.gov/fdsys/pkg/FR-2013-01-02/pdf/2012-31269.pdf