The latest on legislative & government affairs

During the 2019 Pit & Quarry Roundtable & Conference in Coral Gables, Florida, Michael Johnson, president and CEO of the National Stone, Sand & Gravel Association (NSSGA) reflected on 2018, looked ahead to this coming aggregate season and offered additional thoughts and insights.

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P&Q: The aggregate industry is coming off yet another year of good growth, and forecasts are calling for continued growth in 2019 and even 2020. Still, headwinds are surfacing. There is new uncertainty about the economy, and there are real concerns about how the Trump administration and the now-Democrat-controlled House will fare over the next two years. What is your 2019 expectation for the industry considering some of these recent developments?

Johnson: The industry [was] about 5 percent up across the country in 2018 and [had] some pretty strong headwinds as it relates to some pretty tough weather. [It was] one of the rainiest years we’ve seen, certainly in the [Washington], D.C. metropolitan area. We had about six feet of rain – that’s a lot of water. It had a dampening effect on the marketplace.

I think we’re seeing state and local road and infrastructure projects continuing at a certain level. It’s driving some growth along with some commercial construction. What I hear in most places is that the residential market is still soft [with] not a lot of movement. I think the further you get from metro areas, you probably saw less than the 5 percent [in 2018]. So we’re still not back to where we should be, as it relates to the recovery of our economy or the recovery of our industry.

The only way we’re going to get that is to get the federal government back to doing its primary job, which includes funding infrastructure growth.

P&Q: Looking back on 2018 and even the first two years of the Trump administration, how would you characterize the effect it has had on the aggregate industry?

Johnson: The greatest achievement so far with the Trump administration is the rollback of the overregulation from the Obama administration. What we’ve been able to do in working with the Trump administration and their agencies to roll back that overreach has been very good for the industry.

You look at what happened with WOTUS (Waters of the United States) – that would have been a significant rule for our industry to try to accommodate. Anything that can float a pencil on any given day of the year could have been defined as a federally protected wetland area. That’s being rolled back.

Pit waters in quarries could have been defined as federally protected waters. The entire WOTUS rule is being rewritten, and NSSGA worked very hard to address that. We’re very happy to see that the newly proposed rule protects water but regulates sensibly in a way with which our members can comply. We believe the EPA (Environmental Protection Agency), under Administrator [Andrew] Wheeler will be a very different EPA going forward as it relates to water regulation.

Looking at MSHA (Mine Safety & Health Administration), we’ve seen some dramatic changes there. Ed Elliott, a veteran of the aggregates industry, is a senior adviser at MSHA. I was there for a meeting with the administrator, the two deputies and Ed. It was a very different conversation than I used to have with Joe Main and his staff – much more collaborative, much more interested in working with our industry. We share the same goal: zero injuries, zero fatalities.

Joe Main and the Obama administration thought the way to get there was through citation after citation. You can’t write paper your way to zero. You’ve got to do it in collaboration with the industry.

One of the things we’re working on with MSHA right now is a new seat belt initiative. You would think it’d be common sense that everyone would put their seat belt on in a piece of powered haulage, but they don’t always.

P&Q: How much do the midterm election results impede the Trump administration’s ability to have a positive impact on industries like ours? Are there legislative opportunities now present that may not have been there with a Republican-controlled House and Senate?

Johnson: I actually think what just happened in Washington (midterm election results) is the best of all possible scenarios for our industry as it relates to infrastructure investment. Republicans are supportive on regulatory oversight and rollback. But we’ve had no progress over the past decade on getting significant infrastructure past the FAST Act.

I think our industry is in a better place on infrastructure with a Congress in Democratic hands in at least one chamber and a Republican in the White House. We still have to worry about regulatory overreach, but the Democrats have shown they are going to pursue a much more progressive agenda on infrastructure investment.

We were with [Transportation & Infrastructure Committee] Chairman [Peter] DeFazio (D-Oregon) recently, and he assured us that there will be an infrastructure bill put through his committee this spring, and he intends to pass it through the House sometime before June. I’d like to see him get it done before Memorial Day. It’s going to be a big bill. It will be a trillion to a trillion and a half dollars.

[House] Speaker [Nancy] Pelosi (D-California), in her campaign to win the vote to be elected Speaker, promised infrastructure legislation to a number of Democratic freshmen in the largest class the Democrats have ever had. A number of those freshmen campaigned on infrastructure. So there’s a lot of interest in moving an infrastructure bill through Congress – at least through the House.

Where we’re going to have more work to do is in the Senate, but I do see some glimmers of hope there. There are 20 Republican senators up for re-election in 2020, and a number of those are in states where Trump did not win or that reversed their support for Republicans in 2018. They know they have to show they can get something done.

It’s a short window. I think it’s got to be done by the summer, and certainly by the August recess, because the presidential campaign will begin in earnest in August.

P&Q: Enthusiasm was high early last year for passage of a major infrastructure bill. The president released a 10-year, $200 billion plan in early 2018 that unfortunately didn’t go far. What factors ultimately derailed infrastructure last year when hopes were so high coming into the year? Do you see the Trump 10-year, $200 billion plan, which is designed to spark another $800 billion in private-sector investments, as the starting point for anything to get done on infrastructure?

Johnson: The more important number at this point is not the $200 [billion] you’re talking about. Remember, the Trump original [proposal was] $1 trillion. People were talking about $200 billion being federal money, $800 billion being money from states.

I think what you will see is the number of $1 trillion to $1.5 trillion. That’s the number that’s going to get the most attention. The bulk of that will be federal funding rather than saying states have to engage in asset recycling or other creative ways to come up with the bulk of that money.

P&Q: While the federal government continues to drag its feet on infrastructure, we’ve seen a number of states step up and enact measures in support of surface transportation projects. From your seat, how much is the nature of funding highways changing when some states are taking drastic steps to keep their infrastructure funded?

Johnson: The nature has changed by necessity right now with the federal government not doing the job that it needs to do. The states have had to step up. These 28, 29 [states] have passed infrastructure-funding measures at the state level. In California, Proposition 6 failed on the ballot, meaning the public voted to preserve the gas tax.

Across the country, there were 20-something initiatives on the ballot funding infrastructure … where they had to vote to pay more to get infrastructure investment. Eighty-plus percent of those passed, and they passed by large margins. So a lot of the fear over a revenue raiser to do infrastructure funding is just unfounded.

If you’re telling people ‘I’m doing this for you, to better our economy, to improve your quality of life, to improve conditions in our community,’ all of that sells to the voters.

P&Q: You touched on this briefly already, but the industry received some positive news toward the end of 2018 about the WOTUS rule, which has a definition that offers a clearer distinction between federal and state waterways. What more can you tell us about this latest development? Is NSSGA focused on any other key regulations these days?

Johnson: We’ve been doing a lot of work to make sure our voice and the voice of the aggregate industry is heard on Capitol Hill when hearings are held about going back to a stronger WOTUS rule or going to a tougher Endangered Species Act rule.

We were just talking to [Rep.] Richie Neal (D-Massachusetts) last week. Neal is the new chairman of the Ways & Means Committee. [He’s a] great guy [and] great friend to our industry, and really supports infrastructure investment. He says we’re going to pass an infrastructure-funding measure.

But along the way he’s also looking at how he’s going to do that. He’s looking at a number of business tax provisions that he may add with an increase in the gas tax. By the way, the U.S Chamber [of Commerce] came out and doubled down on 25 cents – 5 cents a year over five years in gas tax increase. The U.S. Chamber, not a bastion of liberal policy by any means, came out and endorsed a 25-cent increase. They realize how important an infrastructure investment is to their business and also to our economy.

[U.S. Chamber of Commerce President and CEO] Tom Donohue stood at the podium as part of his state of the American business address, and the thing he talked about most during that entire speech was infrastructure investment. So we’re seeing that really be a focal point.

Making sure we do that with a regulatory system that allows us to produce the amount of material we’re going to need, when the funding is there, is a key part of what we’re focused on at the regulatory side.

Specifically at MSHA, I think it’s crazy we have operators experiencing the worst day of their career when they have an injury or fatality, and then they’re getting insult added to injury when MSHA cites them for violating the 15-minute notice rule while they’re still trying to rescue or save the life of a team member. That’s ridiculous. That’s not the way this should work. We should complete the rescue and then give MSHA notice.

The point was received well. I think you’re going to see them talk to their inspectors about it. That’s the kind of collaborative stuff we hope we can continue to drive through conversations with them.

As we think about silica, right now Ed Elliott and others are working on policy on how the OSHA (Occupational Safety & Health Administration) silica rule and the reduction of that exposure limit should be handled at MSHA. We’re cautiously optimistic that they’re going to do that in a way that won’t be as bad on the industry as maybe we feared it would be.

Last but not least on the MSHA regulatory front, Assistant Secretary [David] Zatezalo is pursuing his “One MSHA” concept. We will work with him to show the differences between coal and metal/nonmetal mining.

We spent a lot of time with Joe Main and the previous administration at MSHA talking about the difference in how we operate versus a coal operation. On the surface, there are a lot of aggregate operations, and you may only have five, six or seven people on site at any one time when that operation is going. You may even have fewer [people]. A coal operation is going to have 25 or 30 – a very different look and feel to what we’re doing.

P&Q: The National Industrial Sand Association joined NSSGA toward the end of 2018, leading to the creation of a new Industrial Sand Division within NSSGA. How did the agreement with NISA come about? How many unique members does this organization bring to NSSGA? Is NSSGA actively exploring any other synergy opportunities with related organizations?

Johnson: We’re always pursuing synergy opportunities. It’s great when you’re part of something that others want to be part of, too. That’s the best possible review of what you’re doing. The National Industrial Sand Association approached us about a year ago and said ‘we like what we’re seeing at NSSGA. We would like to look at whether or not we could come in as a new division of NSSGA.’

When you look at what they do with industrial sand, when you’re talking about the production piece of it, it’s exactly the same as what any of our sand and gravel operators do, so there is a natural fit.

On their production side with regulatory policy, there is not a single thing where we don’t have unanimity – on silica, on safety, on a number of environmental issues. There is great synergy.

We’re excited. It could be 28 new members of our association. So we love it. We think it’s a vibrant new part of our family. We welcome them and look forward to years of working together with them.