LEGISLATIVE/REGULATORY SUMMARY OF ACTIONS
IN DECEMBER 2006
HIGHLIGHTS:
MDEQ Proposing New Solid/Hazardous Waste Fees
The Michigan Department of Environmental Quality has proposed raising several waste-related fees including: Solid Waste Surcharge, Hazardous Waste Disposal Fee and Hazardous Waste User Charge. The proposals were outlined in a letter from George Bruchman, Chief of the Waste & Hazardous Materials Division. Work groups for solid and hazardous fees are being created.
Revised Air Fees To Be Discussed
The Michigan Manufacturers has convened its Title V Air Fee subcommittee to discuss new Title V air fees for 2008.
Additional Counties Meet Ozone Standard/Qualify For Attainment
The USEPA has announced that it intends to re-designate 5 additional Michigan counties as in attainment with federal ozone standards. These additional counties include: Muskegon, Genessee, Berrien, Cass and Lapeer counties. Last month, the MDEQ announced that 11 counties had been reclassified as in attainment including: Ingham, Eaton, Kent, Ottawa, Van Buren, Clinton, Kalamazoo, Calhoun, Benzie, Mason and Huron.
ENVIRONMENTAL ISSUES:
“Penny Plan” Recycling Proposal Stalls/Dies With Session
A proposal to impose a one penny fee on certain retail transactions in excess of $2 has stalled out in the House Natural Resources, Great Lakes & Environment Committee and died with the 2005-2006 legislative session. The proposal was an attempt to thwart an expansion of the state’s Bottle Deposit Law to juices, water and other non-carbonated beverages. It would also help stall an increase in the state’s solid waste surcharge to fund recycling and deter the import of out of state waste. Expect the Penny Plan to be re-introduced in 2007.
MMA Comments on Part 111 Hazardous Waste Rule Amendments
The Michigan Manufacturers Association has submitted written comments on a set of draft rules amending the existing hazardous waste rules under Michigan’s Natural Resources & Environmental Protection Act (NREPA). The draft rules were previously sent out to a “short list” of people for initial comments. The MDEQ has sought broader comments prior to formally submitting the rules package for approval. The proposed rules can be found at: http://www.mma-net.org/content/pdf/hw_part111draftrules103006.pdf
Business Groups/Report Questions Mercury Standards
A proposal by Michigan to reduce mercury emission by 90% by 2015 is arbitrary and will do little to improve health or the environment according to the Mackinaw Center for Public Policy. The report notes that only 2% of the mercury deposited in the state annually comes from coal fired power plants that are targeted by the standard.
ENERGY:
Increased Power Supply Cost Recovery Factors Go Into Effect For 2007
For 2007, the Michigan Public Service Commission (MPSC) has approved a revised power supply cost recovery (PSCR) factor for Consumers Energy of 0.0160 per KWh for its commercial and industrial customers (Case #U-15001). This is a significant increase over 2006. For DTE, the MPSC approved a maximum power supply cost recovery (PSCR) factor of 9.73 mills per KWh (Case #U-15002).
Customer Choice Advocates/Utilities Differ On Legislative Agenda
The Customer Choice Coalition, a group of power customers and alternative electric suppliers, sees the need for greater competition and open access to meet Michigan’s future energy and business competitiveness needs. The group fears that the contents of an upcoming report from the MPSC (21st Century Energy Plan) may favor expansion of base load by incumbent utilities rather than allowing independent competitors to build plants at lower cost and greater efficiency. The group hopes to ensure equal financial footing for all power providers and equal access to the grid for alternative and renewable power suppliers.
DTE Submits Revised Renewable Energy Program Proposal (U-14569)
The Detroit Edison Company (DTE) has submitted a revised renewable resource program proposal after its initial proposal was rejected by the Michigan Public Service Commission. Under the proposed “Green Currents” program, customers can voluntarily opt to pay $2.50 per month for 100 kilowatts of renewable power or pay an extra 2 cents per kilowatt hour to have their entire load provided by renewables. The utility is pledging to work first with Michigan-based renewable energy sources. Comments on the revised proposal are being accepted until January 26, 2007.
TAXES & ECONOMIC DEVELOPMENT:
New Michigan Business Tax Proposal To Come In 2007
A new version of the Governor’s Michigan Business Tax proposal is expected to be announced in late January. The previous version, announced in December of 2006, included a 1.875 percent tax on profits measured by federal taxable income, .125 percent tax on gross receipts, .125 percent tax on assets, eliminating 24 mills of property tax on commercial/industrial property (46% cut), raising the tax on insurance premiums by .25 percent and create a research & development credit. The original proposal was expected to raise $2.5 billion, with an estimated $600 million being transferred back to the School Aid Fund from the general fund to make up for the loss in personal property tax income.
The Governor’s original proposal was billed as “revenue-neutral”---simply replacing the $1.9 billion previously generated by the SBT. However, business groups believe the proposal will generate far in excess of $1.9 billion. The Michigan Manufacturers Association has identified 10 issues with the proposal that it believes need to be addressed or clarified. Meanwhile, the Michigan Chamber is calling for three government restructuring initiatives to be part of the package. They include: 1. opening up school healthcare insurance to competition, 2. converting school pension programs to defined contribution plans, and 3. changing state corrections policies to allow shorter sentences for non-violent offenders.
After hearing feedback on her original proposal and assessing the new revenue forecast on January 18th, the Governor has indicated she may revise her proposal--- which may well not be revenue neutral.
LANSING POLITICS:
DeVos Spent $42.5 Million Versus Granholm’s $14.6 Million
Republican gubernatorial challenger Dick DeVos spent over $42 million (including over $35 million he gave his own campaign) and still lost by a 14 point margin to incumbent Granholm who spent a total of $14.6 million.
“Celebrating The Next Michigan” Is Inaugural Theme
Governor Granholm has established the theme “Celebrating The Next Michigan” for her second inaugural celebration. Inaugural events are being scheduled around the state.
Governor Signs “Michigan Promise”
Governor Granholm signed a measure that will increase the Michigan Merit Award for high school students who perform well on a standardized test from $2,500 to $4,000 and renaming it the Michigan Promise.
Lannoye Moves To Chief of Staff/Emerson To Budget Director
State budget chief May Lannoye has assumed the role of Chief of Staff To Governor Granholm replacing John Burchett who will return to Washington, D.C. Term-limited former senate minority leader Bob Emerson will replace Lannoye as budget director.
Group Looking At 2010 Constitutional Convention/Changes
A group of current and former public officials are testing the waters for a constitutional convention in 2010 aimed at amending term limits, gubernatorial appointment of certain elected offices, elimination of certain boards and commissions, etc.
NATIONAL INDUSTRY NEWS:
AFS Government Affairs Committee Meets December 7th In Schaumburg
The AFS Government Affairs Committee met at the AFS headquarters in Schaumburg, Illinois on December 7th to discuss national and regional issues including silica, mercury switch program, Part UUU, Washington, D.C. Government Affairs Conference and more. The next annual AFS Government Affairs Conference will be held March 28-30, 2007 at the L’Enfant Hotel Plaza. Highlighted speaker will be George Will.
OSHA Elevates Silica Regulatory Priority
Silica and global harmonization of chemical labeling were among 19 regulatory priorities in the U.S. Department of Labor regulatory agenda published in the December 11 Federal Register. Occupational exposure to crystalline silica has been a continuing subject in the agency's regulatory agenda and has now been elevated to a priority. However, a planned peer review has been delayed again and now is slated for completion by April 2007.A rule that would require employers to pay for employee personal protective equipment has been pushed back again by the agency after numerous delays. In the previous regulatory agenda, OSHA planned final action on the rule by September. Final action on the rule is now slated for May 2007.
By February 2007, the agency plans to complete its review of comments submitted in response to the Occupational Safety and Health Administration's (OSHA) publication of an advance notice of proposed rulemaking (ANPRM) regarding the adoption of the Globally Harmonized System (GHS) of Classification and Labeling of Chemicals. OSHA issued the ANPRM Sept. 12 and said the GHS provisions would simplify hazard communication requirements for manufacturers and employers that ship chemicals internationally. AFS provided comments on the ANPRM. Other activities on the regulatory agenda include a revision and update of electrical standards by January 2007, an ANPRM for walking and working surfaces and personal fall protection systems by October 2007, a direct final rule on updating OSHA standards based on national consensus standards by December 2006, a review of comments on a proposed rule that would incorporate updated National Fire Protection Association standards in shipyard protection by December 2006, and a request for information on emergency response and preparedness by May 2007.
AFS TRADE UPDATE – December 2006
Bipartisan Panel urges Currency Cases against ChinaIn November, the US-China Economic and Security Review Commission sent Congress its annual report, citing what it calls “troubling trends” as China fails to live up to its international obligations as a major economic power.
The bipartisan commission was created by Congress to investigate and analyze US relations with China and make recommendations to Congress and the administration with regard to economic and national security implications of the U.S.-China relationship.
The commission’s report contains 44 recommendations and pressed particularly hard for action to address China’s currency manipulation. In that regard, the commission recommended that Congress:
- Urge the administration to take to the World Trade Organization (WTO) and the International Monetary Fund a complaint about China’s manipulation of currency.
- Pass legislation to modify requirements for the Treasury Department’s biannual report on countries that practice currency manipulation, making it clear that countries that artificially peg their currency in order to gain a trade advantage are violating international trade rules.
- Urge Congress to pass legislation granting the U.S. Department of Commerce authority to impose countervailing duties against products imported from non-market economies.
We anticipate in that the new 110th Congress will hold hearings regarding the commission’s recommendations and hopefully include them in China Currency legislation. To review the U.S.-China Commission 2006 annual report, visit
http://www.uscc.gov/annual_report/2006/annual_report_full_06.pdf Yuan Advances to Highest Since End of Dollar Link in July 2005
Today, the yuan rose to its highest since China ended a fixed exchange rate to the dollar last year. The Chinese yuan gained as European and U.S. officials have called for a more flexible exchange rate to correct lopsided global trade. It also advanced as Asian currencies in a trade-weighted basket, used by the central bank to set policy, strengthened against the dollar. The yuan rose 0.13 percent to 7.8258 against the dollar as of 10:45 a.m. in Shanghai.
Paulson, Bernanke to visit China in December
Federal Reserve Chairman Ben Bernanke will accompany Treasury Secretary Henry Paulson and other cabinet officials to Beijing in mid-December to discuss global economic growth. The U.S. delegation will hold a number of meetings with Vice Premier Wu Yi and other Chinese counterparts to discuss a range of issues including assuring continued global growth, China's economic development and further integration into the world trading system, stable energy markets, and cooperation on the environment.
The 1-1/2-day visit from December 14 to December 15 would be the opening round of talks under a "strategic economic dialogue" announced in mid-September when Paulson visited China.
The Bush administration has come under pressure from Congress and some American business leaders to pressure China over its trade and currency practices. The National Association of Manufacturers' China Business Task Force will meet with Secretary Paulson, Commerce Secretary Carlos Gutierrez and U.S. Trade Representative Susan Schwab today before the officials leave for China.
China's Buyout Backlash Stalls InvestmentsNew takeover rules in China are crimping overseas buyout funds, such as Carlyle Group and Ewing Management, after lawmakers criticized the government for selling state assets too cheaply. Private equity and venture capital firms this year had raised $27.3 billion to invest in Asia as of Oct. 17, up from $23.2 billion in 2005, according to the Asian Venture Capital Journal.
Almost 70 percent of the $19.5 billion of acquisitions announced by overseas investors this year in China have yet to be completed, according to data compiled by Bloomberg. Last year, all but 25 percent of the $34.4 billion in purchases were cleared. Examples of acquisitions that are incomplete or have been scaled down include:
- Washington-based Carlyle in October scaled back its purchase of state-owned Xugong Group Construction Machinery Co., agreeing to buy 50 percent of Xugong for $228 million instead of the 85 percent it initially sought. The deal is awaiting approval.
- Arcelor Mittal, the world's largest steelmaker, may fail in its $266 million bid for Laiwu Steel Corp. because the offer lacks support from some government departments.
- The chairman of ALC Advisors earlier this year brokered the sale of a Chinese manufacturer to a U.S. buyout firm. Completion of the deal has been slowed because the company's products contain glass, which may be classified as a strategic material.
The Chinese government on Sept. 8 decreed that overseas investors would need Ministry of Commerce clearance to buy controlling stakes in key industries, well-known trademarks or ``old Chinese brands.'' Deals can be vetoed or scaled back if they affect the ``security'' of China's economy. The new investment rules come as the government attempts to slow the world's fastest-growing major economy, which expanded 10.4 percent in the 12 months through September, the third straight quarter above 10 percent.
China's tougher stance on international takeovers also may be linked to the aborted acquisition of El Segundo, California- based Unocal Corp. by Cnooc Ltd., China's biggest offshore oil producer. Cnooc backed out after the U.S. Congress threatened to veto the deal because of national security concerns.
STATE INDUSTRY NEWS:
METAL TECHNOLOGIES ANNOUNCES PROMOTIONS
(Auburn, Indiana) Metal Technologies, Inc., an Auburn, Indiana-based metalcasting company has announced a reorganization of its senior management structure aimed at supporting the company’s plans for continued growth.
CEO Rick James announced the changes to move MTI’s subsidiaries and affiliates to a unified group in all of its major activities. “MTI’s rapid growth in its first ten years has created the need to move everyday management closer to the manufacturing floor. This will allow our officer team to engage in more strategic activities for continued growth,” James said. “We have the best people in the business and this reorganization will keep us at the top of our game so that we can provide the best value to our customers wherever they need metalcastings,” he continued.
Matthew Fetter has been named Executive Vice President and will coordinate all of MTI’s sales, marketing and product engineering activities, which include facilities in the U.S., Europe, and Mexico as well as working on strategic planning.
Ronn Page has been named Senior Vice President of Operations and will oversee the Company’s global manufacturing activities. He was recently serving as Vice President of International and Non-ferrous activity and was formerly with Amcast Corporation.
Also named as Senior Vice Presidents are Chief Financial Officer Greg Riker, General Counsel Jeffery Turner, and Gerald Zitzer who leads the Company’s Human Resource function.
Metal Technologies, Inc. is headquartered in Auburn, Indiana and has manufacturing affiliates in Auburn; Three Rivers, Michigan; West Allis, Wisconsin; Ravenna, Michigan; Kitzingen, Germany; and Saltillo, Mexico. The privately-held company was founded in 1997 by James and Company President Keith Turner.
For more information visit www.metal-technologies.com.
