Featured Articles

• Bipartisan Infrastructure Package Contains Much-Needed Funding for Water Infrastructure Projects – PMI remains a strong supporter of the bipartisan Infrastructure Investment and Jobs Act that Congress passed, and President Biden signed into law in November 2021 to address decades of underinvestment in the nation’s infrastructure system. Alongside major investments in transportation, electric vehicles, internet, and roads, the legislation earmarks $55 billion for clean water and water infrastructure projects. It represents some of the most significant investments from the federal government in the water sector in decades.

     — Much of the funding will be coming through the Clean Water State Revolving Fund (CWSRF) and the Drinking Water State Revolving Fund (DWSRF). These programs are federal-state partnerships that provide communities with low-cost financing for water infrastructure projects and each program will receive $11.7 billion over five years. A good portion of the funding being distributed come from the state revolving funds. Each state will have a priority list of projects up for SRF funding

— It is estimated that there are between 6 million to 10 million lead service lines in the United States. Much of the drinking water infrastructure in older U.S. cities was built before 1950. The new infrastructure law also includes $15 billion to support lead removal projects, with $3 billion being distributed to states and cities in 2022. Forty- nine percent of the state revolving funds must be provided to disadvantaged communities. PMI strongly supported this funding, and not placing matching or cost-share requirements on the states or local governments. Money can go toward direct removal of lead pipes, as well as efforts like identification of lead pipes, as well as the planning and design of new projects.

     — While this funding is a good start, industry experts estimate the actual cost of fully replacing all lead pipes in the U.S. could be $60 billion. Additional investments will be needed from the federal government and state authorities.

— PMI also supports full funding for the Water Infrastructure Improvements for the Nation (WIIN) Act. Within WIIN funding is the Voluntary Lead Testing in Schools and Child Care Drinking Water grant program for states, territories, and tribes to test for lead in schools and childcare facilities.

• Get the Lead Out of Assisted Housing Act (S. 4047) – This bill recently introduced in the Senate directs the Department of Housing and Urban Development (HUD) to update its standards to include inspecting for lead in service lines and lead in plumbing, creates a Healthy Homes Lead in Drinking Water Grant Pilot Program to provide grants to states and local governments to be used to create a lead service line inventory, testing for lead in the drinking water at childcare centers and schools, and testing for lead at public facilities like public water fountains and remediation. In addition, it requires notification of tenants of the level of lead in drinking water found and must offer interim controls, such as the installation of water filters known to remove lead.

• Addressing Disruptions in Domestic and Global Supply Chains – Port congestion, the truck driver shortage and COVID-19 related disruptions are just a few of the challenges plumbing manufacturers are facing in producing and getting products to their customers.

     — Congress is on the verge of passing the Ocean Shipping Reform Act of 2022 (H.R. 4996/S.3580), which was recently approved by both chambers (multiple times in the House) and part of the competition legislation which is part of a House-Senate conference. The legislation is aimed at decreasing ocean transportation costs, reducing shipping delays, and decreasing shipping delays through the improvement of shipping standards, and implementation of better oversight mechanisms. PMI is meeting with lawmakers and staff urging passage of the measure and participates in the Ocean Shipping Reform Coalition.

— Another key piece of legislation that PMI supports and actively engaged on is the DRIVE-Safe Act, which would allow younger truck drivers to participate in interstate commerce after completing thorough training. Passing this legislation would help alleviate both current and future trucking shortages.

• Advocating for Policies that Strengthen Manufacturing Competitiveness – As members of the House and Senate enter a conference process to reconcile differences between the House- passed America COMPETES Act of 2022 (H.R. 4521) and the Senate-passed United States Innovation and Competition Act (USICA) (S. 1260) PMI is urging conferees to include these key provisions in a final competition bill:

     — Enhancing Research and Cybersecurity Initiatives – PMI is urging conferees to include the National Institute of Standards and Technology (NIST) for the Future Act. It is included in the America COMPETES Act. The bill reauthorizes NIST for five years. It establishes innovative programs to support U.S. global competitiveness and makes crucial investments including funding for the Manufacturing Extension Partnership, cybersecurity vulnerability research initiatives, and premise plumbing research to promote new and innovative technologies that can improve the safety and water efficiency of our plumbing systems in buildings, hospitals, and homes. PMI, its members, and key stakeholder were successful in including the NIST Plumbing Research Act into the NIST for the Future Act, which would re- establish a federal laboratory to conduct research of premise plumbing and to promote new and innovative technologies that can improve the safety, water efficiency and reliability of our plumbing systems. NIST is a critical agency that supports U.S. competitiveness through precision measurement research, partnership with industry, facilitating and developing standards, and support for U.S. manufacturing.

     — Increasing Supply Chain Resilience – PMI supports the creation of the Manufacturing Security and Resilience Program and the $45 billion investment to support supply chain resilience included in the America COMPETES act.

— Lift Tariffs and at a Minimum Establish a Broad Section 301 Tariff Exclusion Process – PMI supports provisions to immediately reinstate a comprehensive, fair, and transparent exclusion process that will give manufacturers in the United States a strong voice on China Section 301 tariff relief on a case-by-case basis as included in USICA. While the best solution would be to lift the tariffs and take a more strategic approach to address China’s unfair trade practices, we believe reinstituting this exclusion process is a critical interim step to providing relief to U.S. businesses. PMI continues to call for the elimination of the China Section 301 tariffs. The tariffs in place since 2018 and 2019 are essentially a tax paid by U.S. businesses and consumers.

     – PMI testified before the International Trade Commission (ITC) and supplied testimony in opposition to dozens of tariffs on a variety of plumbing fixtures and fittings. Since 2018, PMI has actively participated with nearly 200 trade associations, as part of the Americans for Free Trade coalition and advocated on this issue.

     — Ensuring the Tax Code Continues to Support Innovation – The U.S. tax code has allowed companies since 1954 to immediately deduct 100% of their R&D expenses in the year in which they are incurred. However, starting this year, companies must amortize or deduct their R&D expenses over a period of years, which makes R&D more expensive to undertake. This harmful change in the tax treatment of R&D expenses comes at a time of increasingly fierce global competition for research dollars. Due to this tax change, the U.S. is now just one of two developed countries with an amortization requirement (the other one is Belgium). While not included in the base text of the competition legislation, a bipartisan group of 28 senators and 102 House members have signed on to legislation to address this change to R&D policy, and a Senate motion to instruct conferees on this issue was adopted in a 90–5 vote. Failing to reverse the amortization provision will hurt U.S. R&D jobs, innovation, and competitiveness, which is why PMI supports a final bill that addresses this harmful tax change.

• Fighting Retail Crime and Counterfeiting – The rise in organized retail crime over the past two years is a troubling development. Retailers, including home improvement stores, report losing over $700,000 per $1 billion in annual sales volume due to this organized theft activity. Counterfeiting, particularly from China, hits manufacturers of all shapes and sizes.

     — PMI strongly supports the INFORM Consumers Act legislation currently pending and part of the America COMPETES Act (noted above). The bipartisan bill modernizes the nation’s consumer protection laws, with a particular focus on addressing the sale of counterfeit and stolen merchandise on e-commerce platforms. It would require online marketplaces to verify the identity of high-volume third-party sellers to make it more difficult to fence stolen merchandise online and also address the sale of counterfeit goods.

• SEC Climate Rule – 2022 will be an important year for Environment, Sustainability and Governance (ESG) regulatory activity. Investors, customers, and the public demand to know more about companies’ environmental policies. They may soon get that additional transparency with a new proposed Securities and Exchange Commission (SEC) rule mandating public companies track and report carbon emissions and climate-related risks throughout their entire supply chains.

The proposed SEC rule would require public companies, including plumbing manufacturers, to invest heavily in creating and maintaining systems for tracking carbon emissions – even those produced by their distributors and suppliers. Smaller plumbing manufacturing companies that supply parts to larger publicly held manufacturers will eventually need to disclose their carbon emission and climate-related risks as well. The SEC proposed rule amendments would require public companies to include certain climate-related information in their registration statements and periodic reports, including oversight and governance, material impacts (operational and financial), risk identification and management, and Scope 1, 2 and 3 emissions. For large companies, the Scope 1 and 2 emissions disclosures would require attestation from a third party. PMI is actively engaged with the National Association of Manufacturers to monitor the proposed rule, which affects PMI member companies. Those companies already disclose emissions and reduction targets under voluntary standards set by the business community.

PMI members have been making solid progress in their sustainability efforts. They have long been leaders on climate solutions. Many also regularly provide climate-related information to their investors, including via corporate sustainability reports, third-party reporting frameworks and SEC filings.

In the meantime, we’re keeping a close eye on the proposed SEC rule. It’s anticipated that some companies and trade groups will challenge the rule saying it goes too far. These new SEC requirements, if adopted, would at the earliest take effect in fiscal year 2023 and begin to apply to SEC filings in 2024. SEC is accepting comments on the proposed rule.