[Senate Report 115-218]
[From the U.S. Government Publishing Office]
Calendar No. 365
115th Congress} { Report
SENATE
2d Session } { 115-218
======================================================================
CONCRETE MASONRY PRODUCTS RESEARCH,
EDUCATION, AND PROMOTION ACT OF 2017
__________
R E P O R T
OF THE
COMMITTEE ON COMMERCE, SCIENCE, AND TRANSPORTATION
on
S. 374
[GRAPHIC NOT AVAILABLE IN TIFF FORMAT]
March 22, 2018.--Ordered to be printed
U.S. GOVERNMENT PUBLISHING OFFICE
WASHINGTON : 2018
SENATE COMMITTEE ON COMMERCE, SCIENCE, AND TRANSPORTATION
one hundred fifteenth congress
second session
JOHN THUNE, South Dakota, Chairman
ROGER F. WICKER, Mississippi BILL NELSON, Florida
ROY BLUNT, Missouri MARIA CANTWELL, Washington
TED CRUZ, Texas AMY KLOBUCHAR, Minnesota
DEB FISCHER, Nebraska RICHARD BLUMENTHAL, Connecticut
JERRY MORAN, Kansas BRIAN SCHATZ, Hawaii
DAN SULLIVAN, Alaska EDWARD J. MARKEY, Massachusetts
DEAN HELLER, Nevada TOM UDALL, New Mexico
JAMES M. INHOFE, Oklahoma GARY C. PETERS, Michigan
MIKE LEE, Utah TAMMY BALDWIN, Wisconsin
RON JOHNSON, Wisconsin TAMMY DUCKWORTH, Illinois
SHELLEY MOORE CAPITO, West MARGARETWOODHASSAN,NewHampshire
Virginia
CORY GARDNER, Colorado CATHERINE CORTEZ MASTO, Nevada
TODD C. YOUNG, Indiana JON TESTER, Montana
Nick Rossi, Staff Director
Adrian Arnakis, Deputy Staff Director
Jason Van Beek, General Counsel
Kim Lipsky, Democratic Staff Director
Christopher Day, Democratic Deputy Staff Director
Calendar No. 365
115th Congress} { Report
SENATE
2d Session } { 115-218
======================================================================
CONCRETE MASONRY PRODUCTS RESEARCH, EDUCATION, AND PROMOTION ACT OF
2017
_______
March 22, 2018.--Ordered to be printed
_______
Mr. Thune, from the Committee on Commerce, Science, and Transportation,
submitted the following
R E P O R T
[To accompany S. 374]
[Including cost estimate of the Congressional Budget Office]
The Committee on Commerce, Science, and Transportation, to
which was referred the bill (S. 374) to enable concrete masonry
products manufacturers to establish, finance, and carry out a
coordinated program of research, education, and promotion to
improve, maintain, and develop markets for concrete masonry
products, having considered the same, reports favorably thereon
without amendment and recommends that the bill do pass.
Purpose of the Bill
The purpose of S. 374, the Concrete Masonry Products
Research, Education, and Promotion Act of 2017, is to enable
concrete masonry products manufacturers to establish, finance,
and carry out a ``check-off'' program, a coordinated program of
research, education, and promotion to improve, maintain, and
develop markets for concrete masonry products.
Background and Needs
Concrete block is a durable product used in the
construction of public infrastructure, commercial facilities,
and homes. Virtually every congressional district has at least
one concrete masonry producer, and nationwide the industry
employs thousands of workers. The economic downturn, however,
affected the industry.
Check-off programs are industry-wide, coordinated efforts
to promote research, marketing, and education regarding
specific categories of generic products. They allow producers
of commodities to collect funds from their members to support
promotion efforts. Promotion must be generic and cannot focus
on a particular producer. Ultimately, check-off programs seek
to improve the market position of commodities by expanding
markets, increasing demand, and developing new uses for these
products.
Currently, there are 35 commodity check-off programs in
place (e.g., the programs that sponsor campaigns like ``Got
Milk?'' and ``Pork, the Other White Meat,'' and ``The
Incredible, Edible Egg''). These programs allow entire
industries to pool their resources with non-branded
commodities. While most check-off programs are agriculture-
related, check-off programs for the propane and oil heat
industries also exist. Because check-off campaigns
traditionally involve agricultural commodities, the Department
of Agriculture has authorized most of them. The Department of
Commerce (DOC) would authorize the check-off program that S.
374 envisions. It would be the first commodity check-off
program to be administered by the DOC.
Summary of Provisions
S. 374 would build off of the long-established Federal
check-off program for agricultural goods and would establish a
similar program for concrete masonry products. The bill would
direct the Secretary of Commerce (Secretary) to create a
Concrete Masonry Products Board (Board). The Board's mission
would be to develop, finance, and carry out a collective
research, education, and promotion campaign to maintain,
strengthen, and expand the marketplace for concrete masonry
products. Mandatory fees assessed on concrete masonry
manufacturers would be collected by the Board and would finance
these activities. Further, S. 374 would authorize the Secretary
to issue other orders related to concrete masonry, subject to
simple majority votes in referenda, and would provide the
Secretary with numerous tools to implement and enforce the Act.
S. 374 includes limitations on the obligation of funds, a
Government Accountability Office (GAO) reporting requirement,
and a requirement that the DOC study and report on the
propriety of applying a commodity check-off program model to a
non-agricultural industry.
Legislative History
S. 374 was introduced on February 14, 2017, by Senator
Blunt (for himself and Senator Nelson). The measure is also
cosponsored by 10 other Senators and was referred to the
Committee on Commerce, Science, and Transportation of the
Senate. On August 2, 2017, in open Executive Session, the
Committee, by voice vote, ordered the bill reported favorably
without amendment.
Estimated Costs
In accordance with paragraph 11(a) of rule XXVI of the
Standing Rules of the Senate and section 403 of the
Congressional Budget Act of 1974, the Committee provides the
following cost estimate, prepared by the Congressional Budget
Office:
S. 374--Concrete Masonry Products Research, Education, and Promotion
Act of 2017
Summary: S. 374 would establish the Concrete Masonry
Products Board (board), upon approval of a referendum by
producers of masonry products made from concrete (CMP), such as
cinder blocks. The board would develop research and education
programs as well as efforts to promote CMP in domestic markets.
Funding for those activities would be derived from assessments
on CMP manufacturers based on the number of masonry units sold
each year. The bill would direct the Secretary of Commerce to
organize and hold the referendum; the agency's costs would be
reimbursed by the board from initial collections of
assessments.
CBO estimates that enacting S. 374 would increase net
revenues by $77 million and increase direct spending by $71
million over the 2018-2027 period, leading to a net decrease in
the deficit of $6 million over the 10-year period. Pay-as-you-
go procedures apply because enacting the legislation would
affect direct spending and revenues. In addition, CBO estimates
that implementing S. 374 would cost $2 million over the 2017-
2022 period; such spending would be subject to the availability
of appropriated funds.
CBO estimates that enacting S. 374 would not increase net
direct spending or on-budget deficits by more than $5 billion
in any of the four consecutive 10-year periods beginning in
2028.
S. 374 contains no intergovernmental mandates as defined in
the Unfunded Mandates Reform Act (UMRA) and would not affect
the budgets of state, local, or tribal governments.
S. 374 would impose private-sector mandates on CMP
manufacturers. On the basis of information from industry
experts, CBO estimates that the annual cost of the mandates
would fall well below the annual threshold established in UMRA
for private-sector mandates ($156 million in 2017, adjusted
annually for inflation).
Estimated cost to the Federal Government: The estimated
budgetary effect of S. 374 is shown in the following table. The
costs of this legislation fall primarily within budget function
370 (commerce and housing credit).
--------------------------------------------------------------------------------------------------------------------------------------------------------
By fiscal year, in millions of dollars--
--------------------------------------------------------------------------------------------------
2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2017-2022 2017-2027
--------------------------------------------------------------------------------------------------------------------------------------------------------
INCREASES IN REVENUES
Estimated Revenues................................... 0 0 6 8 8 9 9 9 9 9 10 31 77
INCREASES IN DIRECT SPENDING
Estimated Budget Authority........................... 0 0 6 8 8 8 9 9 9 9 6 31 73
Estimated Outlays.................................... 0 0 3 9 8 8 8 9 9 9 7 29 71
NET INCREASE OR DECREASE (-) IN THE DEFICIT FROM INCREASES IN DIRECT SPENDING AND REVENUES
Impact on Deficit.................................... 0 0 -3 1 * * * * * * -3 -3 -6
--------------------------------------------------------------------------------------------------------------------------------------------------------
Note: *= between -$500,000 and zero, components may not sum to totals because of rounding.
Basis of estimate: In CBO's view, the board that would be
established under S. 374 would be acting on behalf of the
federal government. While the board would be formed only upon
approval by a majority of the producers of CMP, once created,
the requirement to pay assessments would be compulsory and
could be enforced by the federal government's sovereign
authority, for example through a court order. Hence, in keeping
with guidance specified by the 1967 President's Commission on
Budget Concepts, the proposed board's cash flows should be
recorded in the federal budget.\1\
---------------------------------------------------------------------------
\1\For more information see, How CBO Determines Whether to Classify
an Activity as Governmental When Estimating Its Budgetary Effects,
Congressional Budget Office, June 2017.
---------------------------------------------------------------------------
Based on information from industry representatives, CBO
anticipates that the referendum would be approved by the
industry and that the board and supporting staff would be
appointed near the end of fiscal year 2018. We expect that
assessments would be collected beginning in the first half of
fiscal year 2019; the bill would require assessments to be paid
quarterly.
The bill would apply to producers of both concrete block
and concrete pavers, but CBO expects that only producers of
concrete block would participate in the referendum. Because
there is little differentiation among concrete blocks across
manufacturers, all producers of concrete blocks would benefit
from an industry-wide research and promotion program.
Manufacturers of concrete pavers, on the other hand, are able
to distinguish their products in ways that allow consumers to
recognize individual brands. Consequently, those producers have
little incentive to participate in an industry-wide marketing
effort. Based on information from manufacturers of concrete
pavers, CBO expects that those producers would not participate
in the referendum.
For this estimate, CBO assumes that the bill will be
enacted near the end of 2017, that the necessary amounts will
be appropriated each year. Estimated spending is based on
historical patterns for similar programs.
Revenues
S. 374 would authorize the Board to levy an assessment of
one cent on each concrete block product sold by all CMP
manufacturers in the United States. Based on information from
industry experts and historical sales information, CBO expects
about 1.1 billion concrete blocks will be sold in 2018 and we
expect sales to grow with inflation, yielding, on average,
estimated collections of about $12 million per year. Those
amounts would be recorded in the budget as revenues, because
payment of the assessments would be compulsory, and could be
enforced by federal courts. CBO estimates that enacting S. 374
would increase gross revenues by $105 million over the 2018-
2027 period.
Because excise taxes and other indirect business taxes
(such as assessments by the board) reduce the base of income
and payroll taxes, higher amounts of those indirect business
taxes would lead to reductions in revenues from income and
payroll taxes. As a result, gross assessments would be
partially offset by a loss of receipts of about 25 percent each
year. Thus, CBO estimates that enacting S. 374 would increase
net revenues by $77 million over the 2018-2027 period.
Direct spending
S. 374 would authorize the board to spend a portion of the
amounts collected, without further appropriation, on research
and education efforts as well as on programs to promote sales
of CMP. The bill also would authorize the board to borrow funds
to cover the board's start-up expenses and to invest
collections in interest-bearing securities issued by the
Treasury, thereby generating additional funding for its
activities. Expenditures of assessments and accrued interest
would be considered direct spending.
S. 374 would limit the board's authority to spend its
estimated collections throughout the 2018-2029 period and would
further limit the board's authority to obligate funds in 2027
and 2028. Over that period, the board would be authorized to
obligate 73 percent of its estimated collections. The bill also
creates a formula that authorizes the board to obligate more or
less than this amount depending on whether the board over or
under estimated its collections in previous years or did not
obligate the full amount it was authorized to obligate. For
this estimate, CBO expects the board to estimate its
collections accurately and to obligate the entire authorized
amount each year. In 2027 and 2028, the board would be required
to further limit obligations to 62 percent of the last actual
collection in those years. Based on historical spending
patterns for similar activities, CBO estimates that
expenditures by the proposed board would total $71 million over
the 2018-2027 period.
Beginning in 2030, the obligation limitations would expire
and the board would be authorized to spend the full amount of
its estimated collections. The board also would be authorized
to spend a portion of the amounts that were collected but
unavailable for obligation over the 2019-2030 period, as well
as the interest earned on any such amounts during that period.
CBO estimates that $52 million would be available to spend from
those amounts.
Spending subject to appropriation
S. 374 would direct the Secretary of Commerce to develop an
order to establish the board and set out its authorities, and
to conduct a referendum among eligible CMP manufacturers to
approve the order. After passage of the referendum, the
Secretary would be responsible for approving the board's
programs and budgets each year. The bill also would direct the
Secretary of Commerce and the Government Accountability Office
to prepare several reports for the Congress to explain the
effect the board has on the concrete masonry block industry and
the effectiveness of the referendum model on a nonagricultural
industry. Based on the cost of similar reports and activities,
CBO estimates that implementing those provisions would cost
about $2 million over the 2017-2022 period, assuming the
availability of appropriated funds.
Pay-As-You-Go considerations: The Statutory Pay-As-You-Go
Act of 2010 establishes budget-reporting and enforcement
procedures for legislation affecting direct spending or
revenues. The net changes in outlays and revenues that are
subject to those pay-as-you-go procedures are shown in the
following table.
CBO ESTIMATE OF PAY-AS-YOU-GO EFFECTS FOR S. 374, AS ORDERED REPORTED BY THE SENATE COMMITTEE ON COMMERCE, SCIENCE, AND TRANSPORTATION ON AUGUST 2, 2017
--------------------------------------------------------------------------------------------------------------------------------------------------------
By fiscal year, in millions of dollars--
--------------------------------------------------------------------------------------------------
2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2017-2022 2017-2027
--------------------------------------------------------------------------------------------------------------------------------------------------------
NET INCREASE OR DECREASE (-) IN THE DEFICIT
Statutory Pay-As-You-Go Impact....................... 0 0 -3 1 0 0 0 0 0 0 -3 -3 -6
Memorandum:
Changes in Revenues.............................. 0 0 6 8 8 9 9 9 9 9 10 31 77
Changes in Outlays............................... 0 0 3 9 8 8 9 9 9 9 7 29 71
--------------------------------------------------------------------------------------------------------------------------------------------------------
Note: Components may not sum to totals because of rounding.
Increase in long-term direct spending and deficits: Each
year beginning in 2030, the board would be authorized to spend
up to 20 percent of the amounts it previously collected but was
not authorized to spend over the 2018-2029 period, as well as
any interest accrued on those funds. CBO estimates that this
newly available balance would total $52 million and would be
spent without further appropriation in 2030 and later years.
Moreover, because the obligation limitation on the board's
authority to spend its estimated collections would expire in
2029 and because the board would be authorized to spend gross
assessments collected after 2029, rather than the net
collections after accounting for reductions in revenues from
income and payroll taxes, CBO estimates that, on net,
implementing S. 374 would increase the deficit in each year
beginning in 2030. However, CBO estimates that enacting S. 374
would not increase net direct spending or on-budget deficits by
more than $5 billion in any of the four consecutive 10-year
periods beginning in 2028.
Estimated impact on state, local, and tribal governments:
S. 374 contains no intergovernmental mandates as defined in
UMRA and would not affect the budgets of state, local, or
tribal governments.
Estimated impact on the private sector: S. 374 would impose
private-sector mandates on manufacturers of concrete masonry
products, such as cinder blocks. Those manufacturers would be
required to pay to the board an assessment of one cent per
masonry unit sold. CBO estimates that the cost of this mandate
would amount to about $12 million annually on average. The bill
also would impose mandates on CMP manufacturers by requiring
them to maintain records and make those records available for
inspection as required by the board. Based on information from
industry experts, the cost of complying with the recordkeeping
requirements would be small. Consequently, CBO estimates that
the aggregate cost of the private-sector mandates in the bill
would fall well below the annual threshold established in UMRA
($156 million in 2017, adjusted annually for inflation).
Estimate prepared by: Federal Costs: Stephen Rabent; Impact
on State, Local, and Tribal Governments: Rachel Austin; Impact
on the Private Sector: Logan Smith.
Estimate approved by: H. Samuel Papenfuss, Deputy Assistant
Director for Budget Analysis.
Regulatory Impact Statement
In accordance with paragraph 11(b) of rule XXVI of the
Standing Rules of the Senate, the Committee provides the
following evaluation of the regulatory impact of the
legislation, as reported:
number of persons covered
The legislation would apply to manufacturers of concrete
masonry products.
economic impact
The legislation is not expected to have an adverse economic
impact on the Nation.
privacy
S. 374 would not have a negative impact on the personal
privacy of individuals.
paperwork
S. 374 would require the Secretary to issue a proposed
order and allow for public comment and review before its
adoption to establish the Board. The Board would be required to
submit, for approval, to the Secretary any contracts or
agreements to carry out the Board's mission, and the Board
would be required to submit periodic audits and reviews to the
Secretary. S. 374 would require a study and report by the
Secretary to examine the propriety and efficacy of applying the
commodity check-off program model to a non-agricultural
industry. S. 374 also would require the Comptroller General of
the United States to submit to Congress and the Secretary a
report examining how the Board spends assessments collected,
among other things.
Congressionally Directed Spending
In compliance with paragraph 4(b) of rule XLIV of the
Standing Rules of the Senate, the Committee provides that no
provisions contained in the bill, as reported, meet the
definition of congressionally directed spending items under the
rule.
Section-by-Section Analysis
Section 1. Short title
This section would provide that the bill may be cited as
the ``Concrete Masonry Products Research, Education, and
Promotion Act.''
Section 2. Declaration of policy
This section would contain congressional findings that
concrete masonry products are important to the U.S. economy and
that nothing in the bill would be construed to control
production of concrete masonry products.
Section 3. Definitions
This section would define certain terms used in the Act.
Section 4. Issuance of orders
This section would require the Secretary to issue an order
to manufacturers of concrete masonry products, to publish the
order in the Federal Register within 90 days after receiving a
proposed order or a request for a proposed order, and to
provide for no less than a 30-day comment period.
Section 5. Required terms in orders
This section would set the terms for the order required
under section 4 of this bill. The order would include terms
establishing a ``Concrete Masonry Products Board'' to carry out
a generic promotion, research, and information program for
concrete products. The terms of the order would require
manufacturers and importers to maintain and make available
specified records.
Section 6. Assessments
This section would require concrete manufacturers to pay
assessments with respect to concrete manufactured and marketed
in the United States. No less than 50 percent of the
assessments paid by a manufacturer would be required to be used
to support research, education, and promotion programs and
projects in support of the geographic region of that
manufacturer.
Section 7. Referenda
This section would provide for a 60-day period preceding
the proposed effective date of an order, during which the
Secretary would conduct a referendum for order approval among
the manufacturers required to pay assessments. This section
also would outline referendum procedures.
Section 8. Petition and review
This section would allow a person, subject to the order, to
file a petition with the Secretary and would establish
jurisdiction in Federal district court for review of the
petition.
Section 9. Enforcement
This section would establish jurisdiction in Federal
district court for enforcement of the order.
Section 10. Investigation and power to subpoena
This section would confer upon the Secretary investigatory
powers, including subpoena authority, as necessary to
administer this legislation.
Section 11. Suspension or termination
This section would direct the Secretary to suspend or
terminate any order or provision that obstructs or does not
tend to effectuate the purposes of this Act or that is not
favored by a majority of persons voting in a referendum.
Section 12. Amendments to orders
This section would protect the petition and review
provisions of section 8 of the legislation from further
amendment.
Section 13. Effect on other laws
This section would contain an explicit non-preemption
clause concerning other Federal or State law authorizing
research, education, and promotion relating to concrete masonry
products.
Section 14. Regulations
This section would authorize the Secretary to issue
additional regulations as may be necessary to carry out this
Act consistent with the power vested in the Secretary under
this legislation.
Section 15. Limitation on expenditures for administrative expenses
This section would provide that funds appropriated to carry
out this legislation may not be used for the payment of the
expenses or expenditures of the Board in administering the
order.
Section 16. Limitations on obligations of funds
This section would prohibit the Board from obligating
excess funds, as determined by a formulation set forth in this
section. It would require that such excess funds be deposited
in an escrow account and would establish requirements for the
release of such funds from escrow.
Section 17. Study and report by the Government Accountability Office
This section would require a GAO study to examine how the
Board spends assessments collected, including the following:
the extent to which the Board's reported activities would help
achieve its annual objectives; the market impact of the Board's
activities, including changes in demand, market share of
competing products, overall market size, jobs, prices, cost to
the Federal Government; whether key statutory requirements are
met; and the issues regarding the program's oversight and
administration. The Study would be submitted to Congress and
the Secretary.
Section 18. Study and report by the Department of Commerce
This section would require a study and report by the
Secretary to examine the propriety and efficacy of applying the
commodity check-off program model to a non-agricultural
industry, no later than 3 years after the date of enactment of
this Act.
Changes in Existing Law
In compliance with paragraph 12 of rule XXVI of the
Standing Rules of the Senate, the Committee states that the
bill as reported would make no change to existing law.
[all]