JANUARY WASHINGTON REPORT
On January 13th, the Supreme Court put a stay on the Occupational Health and Safety Administration (OSHA)’s Emergency Temporary Standard (ETS). IBA was one of the first petitioners against the ETS and applauded the Supreme Court’s decision to protect small businesses from the undue burden of implementing vaccination-or-test requirements. The Court Confirmed what IBA argued: OSHA does not have the authority to implement this sweeping regulation that would burden American businesses with new costs and exacerbate the historic labor shortage. By issuing this stay, the Supreme Court freed small businesses to focus on bringing the economy back to its pre-pandemic peak.
In Congress, Democrats are finding very few wins as they try to implement the Biden administration’s agenda. Despite passing the Infrastructure Bill in November, other pieces of legislation continue to stall. Build Back Better (BBB) passed the House in November by a narrow margin and remains in the Senate, where it stalled due to failed negotiations between Senate Progressives and Senate Democratic Centrists. The bill is stalling further still as Senate Democrats try to push through legislation which would federalize the voting process. Republicans are holding Democrats accountable for the stalled legislative sessions and urging Democrats to turn their focus to the stalled economy and shortages.
As Senate Democrats do not have the numbers necessary to pass the voting legislation, they are now taking aim at the filibuster. This plan, however, seems to be going just as well as BBB and the federalization of voting. Despite President Joseph Biden visiting the Senate to advocate for changing the filibuster, Senators Joe Manchin (D-WV) and Krysten Sinema (D-AZ) made it clear that they will not vote to weaken the filibuster. Democrats will be unable to make any changes without all the Senate Democrats voting “yea”.
Supreme Court Puts Stay on Vaccine Mandate
On Thursday the Supreme Court blacked the enforcement of the Biden administration’s Covid-19 vaccine or test mandate. The mandate would have forced employers off 100 or more employees to require employees to either vaccinate or endure weekly testing. The IBA fought against the mandate since it was issued in November.
The Department of Labor (DOL)’s Occupational Safety and Health Administration (OSHA)'s mandate applied to more than 84 million workers. OSHA estimated it would cause 22 million people to get vaccinated. Several parts of the regulations, including the requirement for mask-wearing in the workplace by unvaccinated individuals, were set to take effect this week, though enforcement would not start until February. At oral arguments at a special session last Friday, members of the court seemed doubtful that the administration has congressional authorization to impose the requirements.
In an unsigned opinion the court wrote, “Although Congress has indisputably given OSHA the power to regulate occupational dangers, it has not given that agency the power to regulate public health more broadly.” Additionally, the court wrote, “Requiring the vaccination of 84 million Americans, selected simply because they work for employers with more than 100 employees, certainly falls in the latter category.” Liberal Justices Stephen Breyer, Sonia Sotomayor and Elena Kagan published a dissenting opinion in response.
IBA applauds the Supreme Court for standing up for small businesses by staying this illegal vaccine mandate. The court confirmed what IBA argued: OSHA does not have the authority to implement this sweeping regulation that will burden American businesses, especially small business, with new costs and exacerbate the historic labor shortage. By issuing this stay, the court freed small businesses to focus on bringing the economy back to its pre-pandemic peak.
The case heard by the Supreme Court did not consider the full extent of the administration’s mandates. Instead, the justices heard the case on an emergency basis to decide whether the regulations could go into effect right nor while more detailed litigation continues in the lower courts. IBA continues to fight on behalf of the nation’s small businesses against overreaching policies that put an undue burden on business owners.
What Comes Next for the Vaccine Mandate?
Written by Trent McCotter, Partner at Boyden Gray & Associates
The Supreme Court decided Thursday PM to stop the OSHA mandate from being enforced while the litigation plays out in the lower courts.
This is a huge win, and I wanted to thank all of you for your help in making it happen. The Court’s opinion adopted the argument that we led with in our briefing—that OSHA simply lacks the power to issue such a broad mandate, period. And the Court even cited some little nuggets that we had included in our briefing.
In terms of what happens next: the Sixth Circuit still has jurisdiction over the ‘merits’ of the case, meaning ‘whether the OSHA mandate is legal.’ Technically the Supreme Court was deciding only whether the mandate would go into effect while the Sixth Circuit considers the legality of the mandate.
BUT having said that, the Supreme Court’s opinion effectively kills the mandate even on the merits. By striking at the heart of the case and saying OSHA lacks power to issue such a broad mandate, the Supreme Court has effectively killed the mandate.
Now, the government can still go through the motions at the Sixth Circuit and argue that the Supreme Court was wrong—but that won’t go anywhere because the Sixth Circuit is obligated to follow the Supreme Court’s reasoning that OSHA lacks this power. And then the government could go back to the Supreme Court and ask it to change its mind—but again there’s no chance of that happening.
The right thing to do is for the government to just withdraw the mandate. I assume they are discussing internally now whether they will do so. But I wouldn’t be surprised if they insist on continuing the litigation anyway, as they have shown no signs in the past of letting up.
One other thing to remember: OSHA is still drafting a permanent rule (not a “temporary” one like the Supreme Court just stayed) on mandating vaccines and testing. It’s possible—I’d say it’s even likely—that OSHA tries to narrow the scope of that permanent rule so that it plausibly complies with the Supreme Court’s decision, and then OSHA will issue that one in a few months, which would lead to a whole new round of challenges. So, we’ve won a major victory, but it’s possible there are more battles to come.
USDA Adds Grain Foods Tax to Regulatory Agenda
The Grains Foods Tax is officially on the U.S. Department of Agriculture (USDA)’s Regulatory Agenda. The Office of Information and Regulatory Affairs Office of Management and Budget (OMB) released it on December 29th, 2021. The proposed rule will invite comments on the establishment of an industry-funded promotion, research and information program for wheat flour used for the production of grain foods.
The proposal is an industry effort to establish a national program to promote and strengthen consumer demand for bread-basket products such as sliced and unsliced bread, rolls, buns, bagels, naan, pita, and English muffins. The program would be administered by a board comprised of two millers and eight bakers appointed by the Secretary of Agriculture.
The proposed rate for bakers would be 13.6 cents per 100 pounds of wheat flour purchased for the purpose of producing grain foods and 8.2 cents per 100 pounds of grain foods purchased from a sub-baker for a baker to market. The provisional proposed assessment rate for millers would be 2.4 cents per 100 pounds of wheat flour sold for the purpose of producing grain foods.
The proposed order contemplates an initial (or upfront) referendum prior to any assessments beginning. To pass the referendum, the program would need to be approved by a simple majority of eligible millers and bakers who also represent much of the volume of wheat flour voting in the referendum. If passed, subsequent referenda would be conducted no later than 7 years after the program becomes effective and every 7 years thereafter to determine whether the industry favors the continuation of the program.
Since 1966, Congress has authorized industry-funded research and promotion boards to provide a framework for agricultural industries to pool resources and combine efforts to develop new markets, strengthen existing markets and conduct important research and promotion activities. AMS provides oversight to 22 boards. The oversight ensures fiscal accountability and program integrity and is paid for by industry assessments.
USDA Rebrands GMO as Bioengineered
Starting January 1st, 2022, food manufacturers, importers and retailers must comply with a new national Bioengineered Food labeling standard for food that’s genetically modified in a way that isn’t possible through natural growth. The rules apply to products “entering commerce.” Congress passed the National Bioengineered Food Disclosure Standard (BFDS) in 2016 which directed the U.S. Department of Agriculture (USDA) to establish a national mandatory standard for disclosing foods that are created through bioengineering. USDA Published BFDS on December 20, 2018.
USDA defines a bioengineered (BE) food as one “that contains genetic material that has been modified through certain laboratory techniques and for which the modification could not be obtained through conventional breeding or found in a nature.” However, for the purposes of the standard, the foods that require labeling are determined by the USDA’s official List of Bioengineered Foods, developed by the Agricultural Marketing Service (AMS). This list includes canola, corn, soybeans, certain apple varieties and other items.
Consumers will begin to see labels on some foods saying “bioengineered” or “derived from bioengineering,” as the new federal standard takes hold and replaces the former state-level requirements. USDA says that companies with products that qualify can comply with the new standard in several different ways. Companies can include text on food packages that say “bioengineered” or “contains a bioengineered food ingredient.” They could also use two logos approved by USDA or they could include a QR code to scan. Another option for manufacturers is including a phone number consumers can text that will provide more information about the food item.
USDA states that “foods that are primarily meat, poultry, or egg products, do not require a bioengineered food disclosure” – though they can voluntarily add one. Other groups that don’t need to use bioengineered label include very small food manufacturers (with sales below $2.5 million per year). Food service entities such as “restaurants, food trucks, trains, airplane, delicatessens and similar retail food establishments” are exempt as well.
Food companies say that the timing is terrible. Instituting this change in the middle of a pandemic and supply-chain crisis puts an undue burden on an industry already reeling. Along with the pandemic and supply-chain issues, the nation still faces decades high inflation.
Violations of the Standard as reported to USDA maybe subject to an investigation, require manufacturer documentation and could result in “finding of violation.” USDA would make such findings public. USDA lacks any authority to impose a recall or civil penalties. States, however, may adopt standards and impose remedies for violations of BFDS. Those remedies include, but are not limited to, monetary damages and injective relief to restrict or require actions by the violator.
California’s Ballot Prop 47 on BE Labeling last November received only 48.5% approval. Only three states (Connecticut, Maine and Vermont) presently have laws relating to BE disclosure. There is pending legislation in many states; Arizona, California, Colorado, Florida, Hawaii, Idaho, Illinois, Massachusetts, Michigan, New Jersey, North Carolina, Ohio, Oregon, Utah, Vermont, Virginia and Washington.
Economy Adds 199k Jobs in December
Unemployment fell to 3.9 percent in December from 4.2 percent in November, falling short of projections. Economists expected the U.S. to have added roughly 420,000 jobs last month after several weeks of low unemployment claims of signs of strength from private sector payrolls. Despite the added jobs falling short of projection, the report showed signs of competition for workers. The December job report likely reflects little of omicron’s full impact on the economy.
Along with the effects of the covid variant, the numbers show the effects of decades-high inflation. The consumer price index, a key gauge of inflation, increased by 6.8 percent in the year leading into November, the highest rate since 1982, and 0.8 percent over just the previous month. On January 11th, Federal Reserve Chair Jerome Powell said that if inflation continues at elevated levels for a longer period than expected the Federal Reserve will raise interest rates.
David Weil Gets Past HELP Committee
On January 4th, President Joseph Biden nominated Obama Administration-alum David Weil to serve as administrator of wages and hours division, the agency responsible for enforcing the minimum wage and overtime provisions of the Fair Labor Standards Act. Weil previously served in this position during the Obama administration and was nominated to return to the post in June 2021. His nomination stalled in the Senate, having failed to be voted favorably out of the committee, but got a do-over with the Senate Health, Education, Labor & Pensions Committee (HELP). The HELP Committee also voted to advance Jose Rodriguez to lead DOL’s Employment and Training Administration and Lisa Gomez to run DOL’s Employee Benefits Security Administration. These nominations must now be voted on by the full Senate to be confirmed.
Build Back Better Legislation Continues to Stall
Senate Democrats are starting to look for a Plan B as the Build Back Better (BBB) bill continues to stall in the Senate with o clear path forward. Despite doubts, House Speaker Nancy Pelosi (D-CA) said on January 9th that she believes a deal can still be reached with Senator Joe Manchin (D-WV). Senator Manchin pulled his support for BBB back in December due to concerns over inflation, the Covid-19 pandemic and the national debt.
Despite Speaker Pelosi’s optimism about reaching an agreement with Senator Manchin, other issues remain. Namely that the focus in the Senate shifted from BBB to legislation which would federalize the voting process. Senate Democrats said they planned to pass legislation on voting before turning their attention back to social spending. House Speaker Pelosi said she approved of this decision. Senate Democrats, however, are finding voting to federalize the voting process as difficult as passing social spending legislation. Republicans and Centrist Democrats argue that the legislation goes too far.
On January 11th, President Joseph Biden said he will endorse changing Senate rules to pass new legislation which with federalize the voting process during a speech in Atlanta. The visit is intended to invigorate a Democratic-led effort to pass new voting rights legislation in the 50-50 senate in the coming days, although chances are slim, he will be able to rally the necessary votes. Furthermore, the filibuster carve-out he is calling for requires all 50 Democrats to vote for it and both Senator Joe Manchin and Senator Kyrsten Sinema (D-AZ) expressed strong opposition to changing filibuster rules.
IBA Signs Letter Warning Against Build Back Better
IBA joined with business trade groups to urge Congress to the end efforts to pass the Build Back Better (BBB) bill. BBB was originally tied to the Infrastructure bill, but Democrats ultimately decided to separate the two to pass the Infrastructure Bill, much to the displeasure of Progressives. The fight over the bill continues months later as the Biden administration, Senate Democrats and Senator Joe Manchin (D-WV) cannot agree on the passage of the bill. The bill includes massive investments in childcare, healthcare and climate initiatives. It also includes a $1.8 trillion price tag. Businesses and trade associations worry that the bill will further exacerbate the issues the nation already faces. The letter can be read below:
The undersigned business trade groups call on Congress and the Administration to end efforts to pass the multi-trillion-dollar tax increase included in the Build Back Better (BBB) bill and focus instead on the challenges confronting American families and businesses today – rising prices, labor shortages, and ongoing supply chain constraints.
Last month’s Consumer Price Index report showing inflation rising at the fastest rate in forty years has our members understandably alarmed. Rapidly rising prices are a serious challenge to businesses of all sizes as they make purchasing inventory, supplies, and inputs such as heat and electricity more expensive. In many cases, our members are unable to pass these higher costs on to their customers. Some customers are unable to pay higher prices, while others are locked into long-term contracts that preclude price changes.
These challenges are amplified by today’s constrained labor markets. NFIB’s member surveys rank the ongoing worker shortage as the number one challenge employers face. When businesses do find suitable workers, they often need to offer them higher wages to entice them to come to work. In ordinary times, this would be good for the workers, but as we have seen in recent months, inflation eats away at these nominal pay increases and real wages are actually down this year.
The Administration argues that the Build Back Better bill will help to reduce prices, but those arguments are simply not credible. Our members believe the primary causes of the reemergence of inflation are the Federal Reserve’s continued easy money policies, massive amounts of deficit spending by Congress, and continued supply constraints, some tied to the Administration’s economic and Covid policies.
Raising taxes on America’s family businesses in this environment moves us in the wrong direction. Recent estimates show that more than $500 billion of the Build Back Better’s cost will be shouldered by family businesses and the bill would impose top rates on these businesses exceeding 50 percent. As with increased spending, voters believe these tax increases will be inflationary.
The Federal Reserve has recognized the challenge inflation poses to families and businesses and announced it will begin tapering its quantitative easing purchases in the coming months.
Congress needs to make a similar adjustment, beginning by ending efforts to sharply increase federal spending while raising taxes on America’s employers.
Independent Bakers Association
What is Happening to the Filibuster?
With Senate Democrats’ attempts to federalize the voting process not gaining the traction needed for them to pass legislation, they are looking to change the filibuster. Democrats have a few different ideas on what this change would entail. The first option would be a talking filibuster. In this system from the 1970’s, a senator from the minority party would be required to speak for as they want to block a bill. If a senator keeps talking the debate cannot end. Under a talking filibuster, 60 senators can vote to end the debate at any time, if a vote doesn’t happen then the debate continues until the minority leaves a vacancy on the floor. Republicans argue that this would hurt the rights of the minority.
Another filibuster style under consideration is reducing the votes needed to start the debate process from 60 to 50, a move that could potentially be paired with a talking filibuster. Democrats claim that they would pair their change with a guarantee that both sides would get an equal number of relevant amendments once debates begin. Along with this, Democrats are discussing the possibility of a “carve-out”, under which Democrats would change the Senate rules to allow for a one-time exception to pass the party’s legislation with a simple majority threshold. Despite the multiple conversations and ideas, major changes to the filibuster remains unpopular among both parties.
More Democrats Retire Ahead of Midterms
Representative Ed Perlmutter (D-CO) became the 26th House Democrat to announce he will not run for reelection in 2022. 18 of those lawmakers are retiring from politics entirely while eight are running for a different office. More Democrats have decided to leave Congress this year than any cycle since 1996, when 29 members newly in the minority decided not to run again. The same number of Democrats, 29, retired in 1994, the year Republicans reclaimed control of Congress for the first time in four decades.
Republicans appear poised to reclaim control of Congress in the 2022 midterm elections. This election cycle Democrats are defending seats in Georgia, Arizona, Nevada and New Hampshire while Republicans are defending seats in Pennsylvania, Wisconsin, North Carolina and Florida. This class of senators includes 14 seats currently held by Democrats and 20 seats held by Republicans. Republicans need a net gain of one seat to regain control of the Senate.