Industry Anticipates Change Under Biden


Industry Anticipates Change Under Biden
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With razor-thin margins of control in both the United States House and Senate, the incoming presidential administration will be forced to lead from the middle, panelists agreed during the Independent Lubricant Manufacturers Association’s virtual town hall yesterday.

Speakers said that could mean a more favorable environment for electric vehicles, tighter health and safety regulation and infrastructure spending that could spur lubricant demand.

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President Donald J. Trump has yet to concede the race and has sued to overturn results in some key states, but growing numbers of his Republican party acknowledge that Democrat Joseph Biden Jr.’s victory will be sealed after a Dec. 8 deadline for states to certify their results. Speculation has already begun about changes that a Biden administration and the 117th Congress will bring. For example, ILMA General Counsel Jeff Leiter speculated that a House Democrat majority of just four voting members may temper the party’s agenda.

Much of the Biden administration’s first 100 days – a time period during which new presidential administrations are typically able to accomplish the most – will depend on what the current Congress is able to do during its “lame duck” session between now and January, said Derrick Morgan, senior vice president of federal and regulatory affairs for the American Fuel & Petrochemical Manufacturers. Potential agenda items include another COVID-19 relief package. Senate Majority Leader Mitch McConnell “would be willing to entertain a new COVID package if the liability protection is there and the numbers are right,” Morgan said.

“ILMA members and a number of other industries were considered essential businesses during the lockdown,” Leiter explained. The proposed legislation would protect businesses from legal claims by employees who believe they contracted COVID-19 on the job. “A number of states have put in place some liability protection,” he pointed out. “Federal legislation would preempt that.” ILMA has been advocating for its inclusion in any additional relief package.

There is a “real need” for more COVID-19 response, and it will be at the top of the next Congress’s list if it isn’t passed during the lame duck session, Morgan said. Climate issues are also important to the incoming administration, but he believes that initial actions will be mostly symbolic before any real changes can be accomplished.

The Biden administration is likely to adopt the “George Costanza rule: Do the opposite of whatever Trump did,” Morgan joked, referring to a well-known episode of the television sitcom Seinfeld. The U.S. will rejoin the Paris climate accord, the Iran nuclear deal and other multinational initiatives from which the Trump administration had withdrawn. Executive orders will reverse Trump administration actions on many climate-related rules such as weakened enforcement of the National Environmental Policy Act and easing of the New Source Review process for obtaining permits under the Clean Air Act.

“A highlight will be fuel economy regulations,” he continued. The current White House had eased the fuel economy mandate for automakers from an average of 54 miles per gallon across their fleets by 2025 to 40 miles per gallon by 2026. The re-tightened rules would likely go into effect for model year 2023 or 2024 vehicles, Morgan speculated.

If higher fuel economy targets are reinstated, they will “likely overtake what’s possible with the internal combustion engine,” he warned. “Even in 2014, you could see that the auto industry couldn’t keep up. At that point, it becomes an EV mandate” that would necessitate a 40% electric car parc. AFPM is fighting such legislation at the federal and state level, Morgan said. “We see a bright future for the internal combustion engine if it’s allowed to compete.”

Biden is also likely to rescind some deregulatory executive orders Trump had signed, Leiter said, and will strengthen enforcement of rules by the Environmental Protection Agency, the Occupational Safety and Health Administration and a number of other agencies.

In more positive news for the lubricants industry, Leiter foresees a “reasonable chance” of infrastructure investment within the new administration’s first 100 days. Morgan agreed, pegging the timeline at 6 months if the earlier timing isn’t met.

One important but unclear aspect of the new administration will be its approach to trade policy, particularly with China, said Leiter. That approach will have an effect on lubricants businesses not only through international trade of finished products, but also feedstock prices, he added.