Challenges Facing Foundries in the 112 th Congress

1. Challenges Facing Foundriesin the 112th Congress Stephanie Salmon American Foundry Society – Washington Office May 16, 2011

2. Pennsylvania Delegation • 2010 Election • Turned Red • Won Governorship • Picked up seat in Senate - Pat Toomey (R) • Gained 5 seats in House • Reps. Kelly, Meehan, Fitzpatrick, Marino, Barletta • Republicans take control of congressional delegation for 1st time since 2006 • House – 12 Republicans – 7 Democrats • Many serve on key committees

3. Most Important Issue to Voters • 80% of Americans surveyed say the economy is in poor shape* • Unemployment - 38% • Federal Budget Deficit - 28% • Rising Gas Prices - 21% • Mortgage and Housing Costs - 6% • Taxes - 4% *CNN/Opinion Research Corporation Survey – 5/9/11

4. 112th Congress: Issue Priorities • Jobs/Economy • Budget/Spending Cuts • Congressional Oversight & Regulatory Relief • Skyrocketing Gas Prices • Health Care • Tax Reform

5. Budget Cuts / Debt Ceiling • Issue: • Concern over long-term impact of the federal deficit and national debt • Debt Ceiling Looms as Next Big Battle • Status: • Working Group led by VP Joe Biden • Working on deficit reduction package with group of House & Senate lawmakers • Bipartisan Gang of Six Senators • Working on deficit-cutting plan – may release soon • Senate Budget Chair Kent Conrad (D-ND) • Mark up as soon as this week own FY 2012 budget resolution • New tax on millionaires • Restoration of income tax rates of up to 39% on top earners

6. Skyrocketing Gas Prices • Issue: • Vote on Oil Subsidy bill in Senate to repeal tax breaks on 5 major multinational oil companies • Adds approx $2 billion a year in tax revenue to the Treasury • Sponsors - Sens. McCaskillof Missouri, Tester of Montana, Menendez of New Jersey & Brown of Ohio – all up for reelection in 2012 • Status: • Unlikely to pass • All 47 Republicans expected to vote NO plus 2 Democrats, Sens. Landrieu - Louisiana and Begich- Alaska

7. Health Care • Issue:House Republican plan to overhaul Medicare & turn into a voucher system • Report released that shows Medicare’s hospital insurance fund will become insolvent in 2024 – 5 yrs sooner than previously estimated • Status: Democrats plan to continue hitting Republicans at home on their effort to revamp Medicare • House Republicans faced anger from seniors & other constituents at their town halls and other events during the last recess

8. Health Care • Issue: Republicans look to repeal and replace law passed last year to overhaul health care system – the Patient Protection Affordable Care Act • Passage of medical liability reform • Allow purchase of health care across state lines • Expand Health Savings Accounts • Use appropriations bills to prevent implementation of key programs – over 100 provisions require appropriations • AFS Priority Issue: • Seeking ways to mitigate impact of law on metalcasting industry

9. Tax Reform • Issue: Tax code is broken, burdensome, & complex • President’s Debt Commission Report calls for $961 billion in tax increases • Status: Congress examining comprehensive tax reform • Broad agreement across party lines that tax rates could stand to be lowered and has too many loopholes • Attempt to lower income tax rates for individuals & businesses through elimination or reduction of many of the tax deductions and credits • Timeframe: Major reform expected to take 2 years or more 

10. Unprecedented Regulatory Activity • Issue: Releasing Regulations on Unprecedented Scale • Existing Regulatory Burden Substantial • $1.75 trillion annual regulatory costs • Cost to average U.S. household - $15,000 each year • Cost to average U.S. business - $200,000+ ($13,000 per employee) each year • Nearly half of regulatory costs are associated with environmental compliance • Onslaught of Regulations from EPA, OSHA, HHS, DOL… • 29 major rules from EPA • Huge increase in number of Significant Rules - impact of $100 Million or More • $10 billion to implement new regulations • Significant job losses associated with new regulations (16,000 jobs/$1 billion) • Status: Oversight hearings, legislation to reform regulatory process

11. Regulatory Reform Legislation • REINS Act (Regulations from the Executive in Need of Scrutiny) - H.R. 10/S. 299 • Require Congress vote to approve new regulations with economic effects of $100 million+ annually before they could take effect • Regulatory Flexibility Improvements Act of 2011 - H.R. 527 • Require EPA and other federal agencies to review their rules’ indirect impacts on small entities • TRAIN Act (Transparency in Regulatory Analysis of Impacts on the Nation Act of 2011) • Interagency Panel to review the cumulative effects of various EPA rules on economic competitiveness, employment & energy prices • Vote expected in House • Comprehensive Assessment of Regulations on the Economy (CARE) Act – S. 609 • Interagency Federal panel undertake a “cumulative economic analysis” of EPA regulations • SnoweAmendment • Defeated - require EPA & other fed agencies to establish detailed plans for analyzing sm business impacts of each existing regulations

12. 112th Congress: Key EPA Issues • AFS Priority Issues: • Regulation of Greenhouse Gas Emissions Under the Clean Air Act • Revised National Ambient Air Quality Standards (NAAQS) • Particulate Matter Dust • Boiler MACT • AFS Actions: • Lobbying Congress to stop and/or delay these regulations • Submitted list of Burdensome Rules to key committees • Testified before House Committee • Lawsuits through NAM

13. Greenhouse Gas (GHG) Emissions • Issue: On January 2, 2011, EPA began regulating GHG emissions from stationary sources under Clean Air Act • Only largest facilities will be regulated first • Impact: • Sets the stage for future regulation of much smaller sources – including small foundries • States are unprepared for the new permitting requirements, which will cause significant delays • Permitting gridlock will discourage manufacturers from building new facilities or expanding their current facilities, hurting competitiveness and discouraging job creation

14. National Ambient Air Quality Standards (NAAQS) • Issue: EPA proposes to tighten NAAQS standard from existing 75 parts per billion (ppb) to range between 70 ppb and 60 ppb – Jan 2010 • Impact: • Significantly higher compliance costs • Unlikely to expand production/operations • New emissions controls, higher electricity prices • Nearly 80% of counties could be in non-attainment with 60 ppb • Study estimates if level reduced to 60 ppb result in loss of 7.3 million jobs by 2020 • Add $1 trillion in NEW regulatory costs per yr b/w 2020 and 2030 • Timeframe: • EPA delayed finalizing rule until July 2012 • Continue analysis of epidemiological & clinical studies

15. Particulate Matter Dust • Issue: Stop the EPA from lowering the PM 2.5 standards • Current level 15 ppb • EPA considering drastic cut to 11 - 13 ppb, represents a reduction of up to 27% relative to current standard • Impact: • Previous air dispersion models only had to account for filterable particulate • NEW air permits now require condensables to be included in total PM 2.5 emissions, making standard much more difficult to meet • If lower standards are implemented, it will be extremely difficult for foundries to expand and/or build new operations • Timeframe: • Release Summer 2011

16. GHG Legislation • Energy Tax Prevention Act - HR 910/S 482 • Block EPA from using CAA to create new regulations that curb greenhouse gases and impose backdoor energy tax • Passed House 255 to 172, all R’s + 19 Dems • Reps. Jason Altmire, Mark Critz, & Tim Holden • Next - Use debt-ceiling legislation as a vehicle to limit federal climate change rules? • EPA Stationary Source Regulations Suspension Act - S 231 • Delay EPA Regulation of GHG emissions for 2 years • 4 Senate GHG Amendments Defeated • McConnell/Inhofe - 50-50 • Total of 64 Senators voted for one or more of the amendments 

17. Boiler & Incinerator Emissions Rules • Issue: • On March 21, EPA published the final Boiler MACT rule setting strict emission standards from industrial boilers and process heaters and 3 other related rules. • Emissions standards for hazardous air pollutant standards for boilers used in major source commercial, industrial, and institutional settings • New source performance standards for solid waste incinerators for commercial and industrial use  • Impact: • Final rules still long way from being achievable or affordable for foundries • Although most boilers already are well controlled for key pollutants, the Boiler MACT rule will require more than 90% of boilers to make significant changes. • Thousands of power plants and facilities depend on affordable energy from boilers • This broad-reaching proposal could cost manufacturers more than $20 billion in compliance costs and place hundreds of thousands of jobs in jeopardy • Status: • Two lawsuits filed April 29 in D.C. Circuit challenging EPA’s Rules • Urge Congress to legislatively stay the Boiler MACT and the three related rulemakings to give EPA the time to properly develop the rules with stakeholder involvement

18. OSHA: Top Priority Issues 2011 • Enforcement • Comprehensive Inspections & Higher Penalties • Significant increase in $100,000+ penalties • Greater utilization of General Duty Clause • Continued focus on Manufacturing • Noise abatement, reducing fatalities in 4 leading causes of deaths –falls, electrocutions, struck by, & caught in equipment/machines • Increase awareness, health & safety risks of hazardous chemicals • Developing New Regulations

19. OSHA Enforcement Efforts: Plan, Prevent, Protect • Increase Deterrence with 4 Strategies: • Targeted Program for Recalcitrant Employers - Severe Violators Enforcement Program • Coordinated Multiple Site Inspections • Strengthened Penalty Structure • Increased Transparency • Public Access to Data • Use of Publicity/Media to Expose “Bad Actors”

20. OSHA Inspection Priority

21. Severe Violators Enforcement Policy • 4 Conditions that Triggers Enforcement: • Fatality/Catastrophe • Fatality or 3 or more employees are hospitalized, & where 1+ or more willful, repeat, or failure to abate citations issued • High-Emphasis Hazards • 1 or more specified high-emphasis hazards where 2 or more willful, repeat violations or failure to abate citations issued. Such as hazards for falls, amputations, combustible dust & airborne contaminants • Potential Release of a Highly-Hazardous Chemical • 3 or more willful potential release of highly-hazardous chemicals, repeat, or failure to abate citations are issued • Egregious Cases • Especially serious safety hazards for which OSHA opts to cite employers separately for every employee exposed

22. Changes to Penalty Structure • Examine: • History Reduction • Time frame for considering employer's OSHA history expanded from 3 to 5 yrs • History Increase • 10% increase in penalty if cited within past 5 yrs for serious, willful, repeat violations • Repeat Violations • Time period increased from 3 to 5 yrs • Severe Violator Enforcement Program • High gravity serious violations no longer grouped or combined & may be cited as separate violation

23. Changes to Penalty Structure continued… • Gravity-Based Penalty • Raise gravity-based penalties from Range of $1,500 to $7,000 to Range of $3,000 to $7,000 • Size Reduction • Reduce area directors' discretion for penalty reductions • Penalty reduction between 10 and 40% with less than 250 employees / No size reduction 251 or more employees • Good Faith • Continues UNLESS receive high gravity, serious, repeat violations • Additional Modifications to Penalty Calculation • Apply final penalties serially, start with the gravity-based penalty and deduct history, good-faith, size & quick-fix reductions

24. OSHA Enforcement: Additional Programmed Inspections • Other Programs • 15,000 letters to companies with twice the national average injury & illness rate – March 2011 • Site-Specific Targeted Inspections • National Emphasis Programs

25. Programmed Inspections: Site Specific Targeting (SST-10) • Focus on 4,000+ High Hazard Work Sites • Identify facilities from OSHA 2009 Data Initiative • Targets 3,300 Manufacturers • List not released to public • Primary = DART rate at or above7 OR a DAFWII case rate at 5 or above (only one of these criteria must be met) • Secondary = DART rates of 5 or greater but less than 7 OR DAFWII case rate of 4 or greater but less than 5 • Low-Rate Establishments in High-Rate Industries not included – since Recordkeeping NEP in-place • Effective 1 year – Expires – August 18, 2011

26. 2011 Regulatory Agenda: Top Rules Impacting Foundries • Potential Rules • Crystalline Silica • Combustible Dust • Injury & Illness Prevention Rule • New National Emphasis Program • Primary Metal

27. Crystalline Silica – NPRM • Key Issues: • High priority for OSHA • Change in Permissible Exposure • Lower standard will be challenging for many foundries to meet • Substantial non-compliance with current standard • Poor analytical capability - hard to measure levels lower than current PEL • Economic Feasibility • How much would it cost to meet a lower level? • Technological feasibility • AFS Top Priority Issue • Initiated AFS Silica Working Group – Feb 2011 • Working with economist / coordinating data collection • Meetings with lawmakers and Office of Management & Budget

28. Substantial Non-Compliance with Current PEL (100 mg/m3) From Yassin A., Yabesi F., and Tingle R. Occupational Exposure to Crystalline Silica Dust in the United States, 1988-2003. Environmental Health Perspectives 113:3 p.255-260. 2005

29. OSHA Silica Exposure Results by Occupation in the Gray Iron Foundry From Yassin A., Yabesi F., and Tingle R. Occupational Exposure to Crystalline Silica Dust in the United States, 1988-2003. Environmental Health Perspectives 113:3 p.255-260. 2005

30. Potential Elements of Crystalline Silica Standard • PEL – Three levels considered by OSHA • 100, 75 and 50 mg/m3 • Restricted Areas where Exposure over PEL • No eating, drinking, or smoking • Protective Work Clothing • Disposable or must change • Hygiene Facilities and Practices • Showers • Recordkeeping • Employee Health Screening • Timeframe • Pending at OMB • OSHA to release rule this summer

31. Combustible Dust • Preliminary rulemaking on Dust is underway • 281 incidents 1980 – 2005 • Concerns with significant cost and feasibility of a “one size fits all” rule • KSt Test • Hazard assessment must not rely solely on a positive “explosion severity” - Positive KSt alone is not necessarily indicative of a hazard • OSHA should consider reasonable threshold KSt value or adopt sophisticated test that considers variety of factors • AFS Priority Issue • Urging cost effective regulatory solutions • Filed comments in 2010 • Participated in 2010 Stakeholder Meetings • Small Business Panel – Fall? • AFS member company participating

32. Injury & Illness Prevention Program • #1 Priority for OSHA • Required to develop / implement comprehensive workplace safety & health program • Proactively find & fix workplace hazards - both “real and potential” • Effectively amend EVERY OSHA standard to require hazard assessments to detect non-compliant conditions or practices • Concerns • Easy for employers to be found noncompliant • Open door to areas not covered by rules – i.e. ergonomics, indoor air, combustible dust and multi-employer worksites • AFS Priority Issue • Participated in OSHA stakeholder meetings – Summer 2010 • Small Business Panel (SBREFA) – June 2011 • AFS member to participate in Panel

33. Enforcement: National Emphasis Programs • OSHA conducts thousands of national & local emphasis program inspections • Crystalline Silica • Combustible Dust • Hazardous Machinery/Amputations • Hexavalent Chromium • Lead • Recordkeeping • Primary Metal

34. National Emphasis Program for Primary Metal • Wall-to-Wall Inspections • Material handling and storage, cranes & forklifts • Lockout/tagout and machine guarding • Hazard assessments, including PPE, fire explosion hazards with molten metal and emergency action plans • Air Contaminants (List of 41 substances) • Review all safety and health programs • Ergonomic hazards • Primary Target List • SIC Code 33 - Iron, Steel, Aluminum & Copper Foundries • Status • Under Final Review with OSHA Administrator

35. Concluding Thoughts • Press for Sound Science and Data Driven Decisions • Economic Impacts and Jobs • Environmental Justice • Regulatory Agency Funding • Elections - November 6, 2012 • Presidential • House • Senate – 1/3 up for re-election

36. For additional information, please contact: • Stephanie Salmon – AFS Washington OfficeVice President, Government Affairs202/842-4864 • ssalmon@afsinc.org • www.afsinc.org