Over 70 AFS members convened on Capitol Hill for the 2024 Government Affairs Fly-In, where they shared their top concerns in meetings with lawmakers and advocated for a pro-growth tax code, avoiding a massive tax increase on the horizon, and cutting excessive regulation.

“During the Fly-In, AFS members had the opportunity to speak with lawmakers directly about the importance of restoring the 100% bonus depreciation, as well as the full deduction for R&D and Small Business Deduction, as well as policy affecting workforce shortages and the negative impact of a host of new regulations on their everyday business operations,” said AFS CEO Doug Kurkul. 

The wave of unbalanced regulations coming out of the current administration threatens to undermine the U.S. metalcasting industry’s ability to grow and compete. According to the study, “The Cost of Federal Regulation to the U.S. Economy, Manufacturing and Small Business,” the annual cost of complying with federal regulations has risen by $465 billion since 2012 and now totals over $3 trillion. For this reason, dozens of AFS members took time away from their businesses June 11–12 to come to Washington, D.C., gather facts about key issues, and personally engage with lawmakers across the six congressional office buildings on Capitol Hill.

Their incentive was clear: If members of Congress don’t hear our voices, they most certainly will be hearing those from opposing, anti-business, and anti-manufacturing groups. To greatly amplify the impact in 2025, AFS asks every Corporate Member to begin planning now to send a senior executive or owner to the Fly-In next June. 

The focus of this year’s AFS Fly-In was to deliver strong, unified messages to lawmakers and their staffs, urging them to: (1) Put the brakes on ill-advised new regulations. (2) Combat trade cheats by adopting H.R. 2667/S. 805 and H.R. 3883/S. 1856. (3) Restore a pro-growth tax code. (4) Fix the broken permitting process. And (5), modernize workforce development by adopting the Freedom to Invest in Tomorrow’s Workforce Act and the Skills Investment Act.

Organized by AFS Vice President of Government Affairs Stephanie Salmon, a policy program on Day 1 featured five experts who dissected the key topics of: the U.S. economy, energy, foreign trade, plus EPA and OSHA regulations. Following are highlights and excerpts from the Fly-In’s presenters.  

Rob Jennings
Vice President, Natural Gas Markets
American Petroleum Institute
“Energy Outlook––Road Ahead for Natural Gas and Electricity”

Don’t be deceived by mainstream media headlines declaring the demise of natural gas, Jennings said. “It’s important to remind ourselves of the actual data and the facts, and the fact is that natural gas consumption in the United States has never been higher than it is today. We continue to set record after record.” In the last two decades, consumption has increased about 71%, enabled by the “shale revolution.” The U.S. is the world’s largest producer of natural gas, with output of about 103 billion cubic feet per day, roughly a quarter of total global natural gas production. 

“One of the most remarkable things about the continued increase in our use of natural gas every year is the fact that we’re doing it despite one of the most challenging regulatory environments in history,” said Jennings. This includes restrictions and curtailment of building new pipelines.

He demonstrated energy demand is multiplying and load growth will increase due to manufacturing reshoring, the building of energy-intensive data centers to support AI, and the proliferation of manufacturing projects in the U.S. Yet the regulatory landscape––for example, the tailpipe rule, the power plant rule, the methane rule, and onshore/offshore access––continues to challenge the natural gas industry. Another concern: The canceled and delayed pipelines in Appalachia could drive electricity prices higher, especially in the Northeast.

Jennings noted that in recent decades, load growth had slowed due to increased energy efficiency in this country. It was in the period of plateaued load demand that climate goals were pushed into the public policy spotlight. 

“All of these targets were set when demand for electricity wasn’t growing,” he said. “They will be much harder to achieve now that we are in an era of high and growing demand.” 
Jennings affirmed the general belief that a Trump administration would bring regulatory relief and would ease permitting and federal land leasing; conversely, he expects a “doubling down” on the last three-and-a-half years if a Biden 2.0 term occurs.  
“But the biggest thing we’re watching right now is the power plant rule,” Jennings said. “Phase one was just finalized, which covers new natural gas plants. But the Biden administration has already begun the process of a second phase of the rule that would cover all existing natural gas plants … Again, natural gas accounts for 43% of the electricity produced in the U.S. So, we’re watching very closely at how strict a rule they promulgate.”

 With electricity demand on the rise, API, which supports hydrogen and carbon capture, believes the timing couldn’t be worse for regulation that curtails the ability to build new gas plants. 

Curtis Dubay
Chief Economist, U.S. Chamber of Commerce
“U.S. Economic and  Manufacturing Outlook”

The economy is growing at a decent pace right now, Dubay said. “In 2023, most of us were anticipating a recession––that the economy at best would slow down and at worst go into a recession. And yet by the end of 2023, the economy grew close to 3.5%.” 

The economy grew 1.3% in the first quarter of 2024, below expectations because of volatile trade and inventory flows. Consumer spending and business investment were up about 3%–– still very strong. Toward the close of the second quarter, key data from consumer spending and business investments indicate the economy is still doing well. According to the Atlanta Fed’s real-time tracker of the economy, there has been 3% growth for Q2. “Our economy continues to be the envy of the world,” he said. “I think growth this year will be 2.5%.”

Dubay noted that while data tells a positive economic story, it’s not a tale people are feeling or believing. Evidence lies in three areas: (1) Manufacturing has been in a recession for two years. (2) According to surveys, small business optimism is low. (3) Consumer confidence is also down. Bottom line, he says: Inflation remains a major issue, and it’s why people are sour on the economy. As of April, it was 3.4%––“much too high.” And where it’s hitting hardest is the necessities: food, housing, and energy.

“It’s making everyone feel like the economy is not anywhere near as strong as the data tells us,” he said. Prices are squeezing families––they’re making ends meet, but they can’t get ahead. They can’t save for their retirement, they can’t save for their kids’ education. So, they feel the economy is not doing well as it did pre-COVID.”

In summary, prices will not return to 2019 levels, he said, and the labor shortage will not be remedied any time soon. “There are 1.6 million more job openings than there are unemployed workers.” Annual wage growth is 4%, and in order to continue paying higher wages, employers have to achieve productivity that exceeds labor costs. They will do this through automation. Finally, Dubay thinks the Fed is done raising rates, but admits he’s not certain.

Heather MacDougall
Partner, Morgan, Lewis & Bockius LLP
“The Biden Administration’s Whole Government Approach to Regulating Workplace 
Heats Up”

OSHA’s new walk around rule sets a new NLRB precedent for this pro-union administration: For the first time, the worker representative in an OSHA inspection does not have to be an employee. Essentially, it can be a union representative seeking to gain a foothold among the workers in your company. 

A legal challenge to the Worker Walk Around Final Rule has been filed in the Western District of Texas; however, the rule became effective May 31.

“So that means it’s time to think about your inspection policy,” said MacDougall. “You need to really think about what you are going to do when OSHA shows up and says there is a third party requesting to participate in the inspection. How are you going to handle it? Are you going to have a policy that requires the decision (of allowing the third party) to go through certain people, such as your safety team or your legal counsel? Do you want to challenge it in any way? 

Foundries have options, MacDougall said. First, she advises taking the matter to the local OSHA area director, which is the protocol recommended by OSHA. If you’re not satisfied, you have the right to request a warrant to do an inspection. It remains to be seen whether OSHA will include the rights of that third party on a warrant, she said. 

Employers have the right to enforce their internal policies equally to include these third-party participants––such as safety policies and PPE, prohibiting visitors from entering certain areas, or signing confidentiality agreements. And set ground rules at the beginning, when the third party first arrives in your conference room. You are entitled to ask questions to clarify their role. According to OSHA’s FAQ page––https://www.osha.gov/worker-walkaround/final-rule/faq––the third party should not be taking photos or videos, and they’re not allowed to hand out union authorization cards. You should also make sure the third party doesn’t wander off from the inspection area into other parts of the plant. 
“This is an open door for them to have access to your worksite and your employees,” MacDougall said. “So, make sure you don’t give them anything more than they’re entitled to.”

Brittany Bolen
Counsel, Sidley
“Top 2024 EPA Regulations and Impact on Metalcasters"

The number of rules issued under this administration has exceeded all prior administrations, and in the last six months, a record number of rules were finalized, said Bolen. The big hitters are four final rules for fossil fuel-fired power plants announced on April 25:

1) Greenhouse Gas (GHG) Standards and Guidelines for existing coal-fired electric generating units (EGUs) and for new, modified, and reconstructed natural gas-fired Electric Generating Units (EGUs). 

2) Updated Mercury and Air Toxics Standards (MATS) for coal- and oil-fired EGUs. 

3) Revised Effluent Limitation Guidelines (ELG) and Standards for water pollutants discharged from coal-fired power plants.

4) Coal Combustion Residuals (CCR) Rule for “Legacy” CCR Surface Impoundments, including at inactive power plants. 

On April 18, the agency’s final Multi-Pollutant Emissions Standards for Model Years (MY) 2027 and Later Light-Duty and Medium-Duty Vehicles was published in the Federal Register.  
On April 22, 2024, EPA published its final GHG emissions standards for heavy-duty vehicles (“HDV”), phasing in over (MY) 2027 through MY 2032.

On May 9, EPA moved to further reduce GHG emissions from fossil-fuel-fired power plants, imposing severe emissions reductions on both existing and new coal-fired EGUs.

On March 3, EPA’s final PM 2.5 National Ambient Air Quality Standards (NAAQS) were published in the Federal Register. “No. 1, this rule arguably has the broadest impacts across all industries,” Bolen said, “and has sweeping implications all across sectors. No. 2, they reduced the annual standard down to single digits for the first time––it’s like, how low can you go? Single digits––this is not achievable.”

Bolen said the catalyst behind the rush to finalize rules was the May 22 deadline to avoid regulation repeal under the Congressional Review Act. All rules could be subject to litigation, but it can take many years for these cases to trickle through the courts, by which time the damage to industry and economy can already be done.

Looking ahead to 2025: “If it is a second Biden administration, my crystal ball is a little cloudy because they haven’t really articulated what exactly will happen at EPA,” Bolen said. “There will still be the Paris climate commitments, of course, and continued implementation of the Inflation Reduction Act through the tax credits. In the air office, it’s going to be GHG standards for existing natural gas-fired plants and potentially other sectors to be subjected to GHG standards under Section 111, which is the same one regulating the power plants and the oil and gas sector. The other one to watch for is a new ozone standard on the horizon.

“If the administration changes, it’s kind of like rinse and repeat––we’ve been through this before. On Day 1, executive orders will probably call for the review of a whole slew of regulations. You’re going to see a Day 1 regulatory freeze, where any regulation that’s not been published in the Federal Register or has not taken effect will be frozen. And then I think then you’ll start seeing a review of regulations, which could mean withdrawal, rescission, or modifying of rules.

Michael Stumo
CEO, Coalition for a Prosperous America
“Trade Cheats––China Using Mexico to Flood the U.S. Market with Oversupply & Other Key Trade Issues”

The notion that the U.S. can grow off of cheap consumption is false––rather, Stumo asserts, growth results from production, from which jobs and consumer consumption follow. 
“We have been the great absorber of global overcapacity for years, even as our elite sent thank you notes to those sending it over … now we’re having a reversal of it, and both parties are kind of coming around.” His organization, which has worked closely with Former U.S. Trade Representative Bob Lighthizer, supports restoring manufacturing and rebalancing trade.

Stumo said the U.S. manufacturing trade imbalance, has gotten worse, as the country imports far more than it exports. “It’s hit over a trillion-dollar trade deficit––that’s lost opportunity in which foreign imports have displaced your market where most of you make your living.” The U.S. continues to absorb the products of oversupplier nations, chief of which are the EU, China, Vietnam (which he calls a suburb of China), and Japan. Among the big trade deficit countries, which also include Mexico, Canada, South Korea, and Taiwan, some are allies and some are not––but foreign trade policy is an economic management tool, and if foreign policy allies are industrial competitors, they must be treated that way. “It doesn’t mean you have to be enemies, but realize that you all have your national economic goals,” he said.

U.S. domestic market share has been declining over the last 20 years, which means your share of the market in which you live has gone down––“we’re losing in our home field,” he said. That loss in our market is equal to the gross aggregate exports of the U.S. to China, Mexico, Germany, and Canada. “People talk about export opportunities––I say, hey, what about right here and regaining our home field advantage, because that’s what other countries do. The net exporters, they dominate their own market. They use their profitability and scale it to build and do new predatory activity in other countries––to take market share on the away team field.”

Tariffs––which were the foundation for America’s growth from a colony to a world power–– appear to be back in vogue after a period of negative sentiment. Democrats still like incentives and subsidies, while the Trump wing of the Republican Party likes tariffs more; Coalition for a Prosperous America believes the two tools should both be employed. Stumo added that the dollar exchange rate must be managed to balance trade.

“If you want to balance trade, that’s how you do it. If you want to unbalance it, you devalue,” he said. “It’s hard to have a successful industrial policy with an overvalued exchange rate; it’s pretty easy to have one with an undervalued rate––that’s the game. It’s a long-standing macroeconomic management tool the U.S. has gone away from … but we’ll probably have to get into that game if we’re going to rebalance and reshore manufacturing, and get those jobs back.”