S3E12: Navigating US politics and its impact on the industry with ReMA's Kristen Hildreth

In this episode, I chat to Kristen Hildreth, AVP of Government Relations and Strategic Partnerships at ReMA.

Drawing on her extensive policy expertise from the National Conference of State Legislatures, Kristen provides a front-row perspective on the expected impact of the newly elected Trump administration on the metal recycling industry. 

This is a two-part series, with the focus of this week's episode on how these changes could affect the US domestic market. 

In today's episode, we talk about:

👉 Possible funding rescissions
👉 Anticipated policy changes
👉 Likely regulatory rollbacks
👉 New trade regulations
👉 And so much more!

Listen to the full episode. Wherever you stream your podcasts.

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WHO IS STU KAGAN ANYWAYS?

25 years in the metal recycling game and still learning and growing...

I learnt from the best and worked my way up from yard labourer to Executive Director of Trading and Operations for the largest metal recycler in sub-Saharan Africa. Responsible for 4,500 employees, 85 sites, and the overall profitability of a multi-billion dollar operation.

I brought my breadth and depth of knowledge to bear and co-founded the fastest growing, most-loved, and most awarded metal recycling company in New Zealand. No small feat in a country where people are outnumbered 4:1 by sheep (spoiler alert: sheep don’t produce much metal waste).

I thought it was time that tech worked for our industry, so I took all of my experience as an operator and trader and leveraged that to build THE killer scrap app, Buddy. That’s right - built for scrappies, by scrappies.

Father of two crazy-awesome boys. Husband to Lisa. Under 9 rugby coach. YPO member. Lifelong learner. Mentee. Mentor. Chief dog walker. Committed Stoic. Undefeated dance-off champion.

COME SAY HI ON LINKEDIN

https://www.linkedin.com/in/stukagan/
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Transcript

0:00

Hi, I'm Stu Kagan and welcome to Born Scrappy, the podcast for scrap metal exporters and traders. Join me in conversation with some of the most experienced traders and operators that have helped shape this incredible industry. In today's special two part episode, we're discussing the impact the newly elected Trump administration will have on our metal recycling industry. In part one, I chat with Kristen Hildreth. Kristen is the AVP of Government Relations and Strategic Partnerships. She's the perfect person to explain the effect this election will have on the U. S. domestic market. And next week, we'll discuss the global effect with Rima's Adam Schafer. So let's go and get political with Kristen. But first, intro. Hi, Kristen. How are you? Hey, Stu. Doing well. How about you? Yeah, I'm awesome. Thank you. Thanks for joining us on, uh, on a masterclass in US politics. So, uh, this is going to be fun. This is, uh, going to be hopefully adding a lot of value for everybody out there. That's unsure what's coming. Um, we're a couple of weeks out from the election. So, uh, before we jump into it though, cause I think everybody's probably wanting to know. Your take on everything as well as Adam. We'll have Adam on next, which we'll talk about a bit later, but, um, let's just get a bit about, about you, Kristen, your background and how you landed up in Rima and what you do for Rima at the moment. Yeah, I took a bit of a path. So I started my career doing human rights work and then decided I wanted to broaden my portfolio and spent eight years at the National Conference of State Legislatures where I was their lobbyist for all things energy, environment, transportation, agriculture, and agriculture. Infrastructure, you name it, it was in my portfolio. Um, and I had the opportunity to lead a actually funded at the time. A group on recycling policy and priorities for states. And I fell in love with recycling policy and was offered the opportunity to join the team about a year ago. So about a year in now, and it's been. Really excited time as we close out the Biden administration and lead into the 2nd Trump administration. There's really no, nothing, no downtime. So if you wanted to be quiet, you're in the wrong industry. Um, but here I am, I'm 1 of our federal lobbyists, so I split my time really between our federal portfolio and then making sure that. Our industry, their cycle materials industry, and our priorities are really understood by stakeholders and the government relations. And broader space as well. Um, so my official title is our a VP of government relations and strategic partnerships, but truly a jack of all trade working with our entire advocacy, safety and sustainability team here. Um, they're truly great and I'm really excited that you're going to get to hear from Adam later on. Well, I think on behalf of everybody, thank you because, um, we don't necessarily, um, know our way around as metal recyclers around, um, you know, all the stuff you do for us. So thank you from everybody because, uh, without you guys, um, it would be even harder out there. And we know that you're always advocating for us. So let's jump into what happened in the last few weeks. Where do we stand at the moment? Right. We are a few weeks out. The counts should be finishing now. You know, What is the federal landscape looking like? So, as we know, former President Donald Trump, now President elect Donald Trump, won his re election, um, joined by, uh, Vice President Vance, Vice President elect Vance, and, you know, the Cabinet is really starting to shape up. Um, I think some appointments are really taking some folks by surprise, so I'm not going to run through the entire list of Cabinet appointments. Nominations that we've seen thus far, but some of those that will interact pretty significantly with in the recycled material space include those for the environmental protection agency. So, we see Lee Zeldin was appointed, he formerly represented a Long Island, New York district and served on the house for an affairs community and house financial services. He's a veteran. It's really a little bit unclear on what his primary role will be at outside of deregulation. In in my time, and it has not been a very long time, I'd say I've been in this career area for around 8 to 10 years, but EPA really does tend to take 1 of the larger pendulum shifts when changing hands between Democrats and Republican administrations. I think we've seen that more so, especially recently. So, under Democrats, the EPA has really taken a leading role in addressing. Climate change, but I think a new Trump administration is going to seek to undo a lot of the regulations that were promulgated under the by the administration, um, that they have, you know, restricted or constrained more extraction based industries. Now, when I look at some of the biggest targets there, and this is really dependent on Congress's role as well, um, but we've heard across the entire campaign and even after the campaign that there are efforts to. Rescind funding from some of the major, um, climate or green legislation that has been passed under the Biden administration. So that includes the infrastructure investment and jobs act and the inflation reduction act. Uh, now it is nearly impossible to restrict or rescind any funding that has been obligated. Most of that funding has been obligated now, but there is a good chance that we look to scale back a fair chunk of that funding that has not made it its way out the door just yet. Um, on the energy side of the house, which we really rely on the Department of energy leads a significant amount of research and development. In the sustainable materials management space, they have a number of grants and other programmatic opportunities that fund really innovative technologies that help us bolster and expand the recycle materials industry. And they've been really active over the last couple of years. Chris, right? Who. Is a CEO of Liberty Energy base out of Colorado and also Republican fundraiser, um, has really supported sort of this campaign promise to rescind those those clean or those green climate agenda sort of fundings and. Restart or reinvigorate. The Department of Energy's extraction based industry support, so helping to issue export permits, liquid and natural gas permits that have been paused by the President Biden earlier this year and some other provisions. Uh, we'll really see where that goes. Um, a lot of the funding. Within the inflation reduction act and the infrastructure investment and jobs act were. Or, and have been really key to expanding manufacturing and workforce development within the United States. So, I just don't know the likelihood of that when we get to some of the other. Cabinet agencies, Department of Homeland Security, which is really key in trying to secure an essential designation of the recycle materials industry. You know, Christie gnome. Her rhetoric so far has been very heavy on border security and immigration focus. So it's a little unclear of where she stands, you know, related to the industry. Um, Department of Labor has not yet been nominated, although I haven't checked X in a minute. So it might be on there. Um, it's not an incredibly sought after spot typically, but I think. Okay. The, the real mission for whoever's coming in to fill that role is likely going to be to undo some of the regulations that were implemented, or that they've proposed over the last few years. Including those that I think on their face could be seen as shifting power to labor unions or more enforcement of. Your individual business entity, and so 1 of those that could be on the block is their worker walk around rule that was promulgated recently. I don't know what happens to the OSHA federal heat standard. That's going through rulemaking periods. That seems to be. Generally a rule that folks tend to be a little quiet on, but the worker walk around rule has been challenged and. And folks are concerned with the provisions contained within it, allowing Union individuals to enter a site Department of Commerce, which I know enough to be dangerous about an Adam will tell you a little bit more later, but we're still waiting. On that appointment, um, whoever fills that role is going to be really critical because the Department of Commerce itself has, they have like a jack of all trades or have had on, right? They have weather underneath them, but they also have business development and trade. Um, they house the International Trade Administration, so that sets any duties on goods that the U. S. has determined have been unfairly priced or subsidized and they also house the Bureau of industry and securities. That helps to impose any export controls that may keep sensitive or desired U. S. technologies out of reach of our more adversarial. Nations, um, You know, the last administration, the last Trump administration, they were key in enacting tariffs on steel and aluminum that hit our adversaries, but also our allies obviously impacted the industry to a degree. So it's careful to to watch who gets appointed or who gets nominated. I should say to these, these cabinet positions and 1, that's not a cabinet position. I think we've all heard about the Department of government efficiency. Um, it's a planned presidential advisory commission, uh, Elon Musk and Vivek Ramsuri are planned to be appointed to lead it. It is very unlikely. And I say very unlikely because I hate to say never because I'm always proved wrong at some point, but it's very unlikely that that department has any regulatory teeth of its own. In my opinion, there's. There's very little doubt that it can, or it can, or it will, have influence on the upcoming administration and how their budgets are determined. But it's not going to have any regulatory teeth, in my opinion, maybe I'll be proved wrong. But the primary goal of it, at least, according to President elect Trump is to help to dismantle some of that government bureaucracy that is being seen in DC to cut any excess regulations or what's believed to be excess regulations. Reduce any expenditures that may or may not be necessary and then to restructure some of the existing federal agencies that we have. So, it's a, it's a moving target on a day to day Congress. We, we finally got clear numbers on. Um, so we knew the Senate was going to flip. We've got 53 Republicans, 47 Democrats on in there with our new majority leader, Senator John Thune of South Dakota. Um, Tom Cotton is coming in as conference chair. He's in Arkansas and then. Democrats have not yet had their leadership elections. They'll have them tomorrow, November 19th. So when those come out, we'll know who will be leading for them. But house elections, we know that Republicans now have a majority. They've hit 218. We have, I think it's 5 seats that are still sort of razor thin right now and have yet to been called. So we're sort of waiting on that. Last I checked, it seems like we'll have another 3 or 4 of those seats go to Republicans and then maybe 1 or 2 head to the Democrats. So it's really a razor thin majority here and bipartisanship is going to be key. So that's what we're looking right now. It's. Again, Congress has sort of decided leadership elections are playing out. We're still waiting on those last couple of seats. But the administration is. Is a moving target. Yeah. It's, um, there's so, there is so much to take in, um, when it comes to US politics, obviously I've mentioned to you previously, um, very new to me. I'm trying to get my head around it. There is, you know, so much that you're talking about now. Then I'm also learning about, you know, this, this lame duck period, this period now that we sit here and we wait until January, is Congress going to do anything during this period? I mean, what do you usually see and what are you expecting to happen? So, I think this will 1 be 1 of the lamer duck periods that we've seen so far. Um, although again, again, anxiously scrolling X and checking my phone for political or Bloomberg government alerts. This is not an ad, but to see who is coming out and when, um. Speaker Mike Johnson of Louisiana has said that there will be no on the buses this year. He said that last week. Will that change? I don't know. In my opinion, that means that Congress isn't likely not going to enact any of those omnibus or an appropriation bills that we have seen in the past. It's likely that we see FY 25 appropriations push to quarter 1 of 2025, and that we see a continuing resolution or keeping the status quo of funding. Through probably quarter 1 through March, if I had to guess. Um, as that current continuing resolution that is funding the government right now expires December 20th. I don't think again, not going to say 100%, but I don't think we're going to see any of those expired or expiring tax provisions. During the 118th, I don't see, and we'll see any of them renewed. They'll wait till the 119th. You know, outside of the appropriations bills are potentially continuing resolution that we could see funding the government past December 20th. I think there's chance for. 2 last ditch pieces of legislation that are very bipartisan. We've seen them and 117th as well. Um, but the recycling and composting accountability act that has been. Introduced by now retiring chairman, Tom Carper of Delaware and longtime advocate for the industry and recycling caucus chair in the Senate. And the recycling infrastructure accessibility act has been introduced by the environment public works committee ranking member. Senator of West Virginia, the 2 bills in itself, I would say are pretty residential focus. So they'll. Increase access to recycling services and help to improve any sort of tracking of recycled materials that are essential to our supply chain security, the economy and serve our manufacturing bases. Um, both have incredibly strong bipartisan support. They made it out of 117. Senate, they made it out of the 118th, 118th Senate as well, both on unanimous consent. Um, they really have a, a broad coalition of support from manufacturers to consumer brands. Trade associations, environmental orgs. Other industry groups and businesses, so they are very bipartisan. They've been. Held up to a degree in the house. And so. I think there are some member meetings that hope to resolve that within the next couple of weeks, and there's potential that they move. But I think we're holding out some hope for last chance effort for those on these sort of feel good. Recycling pieces of legislation, um. I don't think there'll be any movement on. The recent chemical recycling bill that dropped earlier this fall, the accelerating the circular economy for plastics and recycling innovation act. Which has benefits and incentives to grow chemical recycling. I think that was sort of introduced and introduced in name only. So I don't envision that moving through this Congress. We'll have to see where it goes in the next. So let me just understand, where do you think federal priorities, where do you think they'll shift when it comes to environmental policy or circularity incentives? I talk about this cloudy crystal ball that I'm looking through where I can occasionally get glimpses and I go, oh, maybe and then it gets covered right over. Um, so I'm going to give you my best guess and. When we watch this in in 5 months, we'll see if I was right, or if I was wrong. You know, the previous Trump administration didn't oppose recycling. We have former EPA Administrator Wheeler hold 1 of the 1st America recycles day summit. They issued a national recycling goal of 50 percent by 2030. we had then President Trump sign the save our seas 2. 0 act to address marine debris and marine pollution all of that. To say. The previous Trump administration also really heavily favored extraction based industries on the front end. And wanted to really near shore a friend, shore our investments and more and Adam can talk more about that. But. Uh, when we explicitly get into environmental policy and and circularity. My take is, is that this administration is going to engage in rollbacks though. I think they'll renew some aggressive deregulatory efforts. So whether that's them. Ceasing rulemakings that are currently being promulgated or encouraging Congress to use the Congressional Review Act to eliminate those that have been finalized after the August 1st deadline is a potential. I mentioned earlier when I was going through the cabinet appointment picks that we could see a. Um, resistant of any unobligated funds under the 2 major climate packages that we pass the infrastructure investment jobs act and the inflation reduction act. Um, you know, a lot of those funds, especially within the IRA are going towards investment and electric vehicles, the electric vehicle supply chain. ev battery production and recycling. Some of that, including the tax credits that are provided for EV battery or EV manufacturing, I would say within the US have explicit benefits for those who are using recycled material or using material from the us. Oftentimes that material has been recycled. Um, so if those unobligated funds are rescinded or if we see a rollback in any of those tax credits, that could be. Pretty significant to certain players in the space. President elect Trump has made a number of comments over the sort of campaign trail. So the number of his cabinet members that. Environmental social governance investments could be stalled or halted altogether. I think I've heard that there's been thoughts to ban them. I don't know if I necessarily see that, um, but maybe a less intense reliance on corporate responsibility and corporate sustainability there. Um, for EPA. When we look at aggressive sort of regulatory rollbacks, or potentially smaller budgets to decrease the size of an agency. I can see them potentially rolling back some of their regional enforcement initiatives. Rolling back some of the environmental justice programming that they've. They funded over the last four years. I think it's really anyone's guess where we go from here. I think we're, we're counting on campaign promises and looking to the last administration and last Trump administration to see what they've done while also keeping in mind that that may not necessarily see be the playbook that we see this upcoming year. So what do you anticipate the 119th Congress is going to do? So if I, again, back to my cloudy crystal ball. And I'm only going to focus in on quarter 1, because if I try to go past quarter 1, it's going to be, no one's, it'll be entirely off base, but I think quarter 1 will be all about. Taxes and government spending, I think our Republicans that now have control over both chambers are likely going to use reconciliation. So reconciliation for your viewers who may or may not know. Um, it's a budget process that Congress can use if it typically has control over both chambers. So this will allow. Republicans to pass and maybe just reiterate entirely a tax cut and jobs act. And other measures with simple majorities, so long as their revenue neutral. So, within the task and jobs act itself, the recycled materials industry had a number of benefits from that measure. So that included the immediate full expensing of purchase business assets, including the reduction of the corporate tax rate. The deduction for pass through businesses, that allowance of a full and immediate expensing of any purchase equipment through 2023. Has really been incredibly important for many of those within our industry that are either heavy equipment operators, or those who are heavy equipment manufacturers or sellers. That expensing provision allows us to invest in new and innovative technologies, benefiting not only us and our industry and helping us to be more efficient in our day to day, but also the sustainability industry as a whole. Now, with this Congress, if we see reconciliation used, you know, President elect Trump has called to build on the tax cut and jobs act. So, lowering that corporate income tax rate from 21 percent to 15 percent for domestic production. I've heard that there have been a number of players on the house ways and means committee. And then again, this is all unfolding late last week, but they haven't entirely shied away from discussing using tariffs as a way to pay for the tax cut and jobs act that's anticipated, making it revenue neutral and allowing them to use reconciliation and move through with a simple majority. But Congress has not used legislation to raise tariffs. In almost 100 years, and so the last time they did that was in the 19 thirties. So I think that's led to some confusion as to how these tariffs or how lawmakers should potentially handle the tariff issue as a part of this larger tax package that could move through during reconciliation. Otherwise, but I think it's a, a wait and see sort of period on what actually happens for quarter 1. Adam can go more into the tariffs that we're going to see and what we're anticipating. I know enough to be dangerous and to make you go, oh no. Yeah, we'll, we'll turn to Adam. Adam can give you the true 101. Yeah, no, absolutely. Well, tell us a little bit about how the state elections are going to impact the industry. Much of recycling policy in itself is just so decentralized. So state and local governments really have a lot of control here. Yeah. In my opinion, we're going to see the same that we saw during the last Trump administration where. Blue states are going to get bluer. They're going to double down. On legislation that spans the gamut from end of life product management, either. So, for packaging batteries or other materials, we could potentially see more product bands. Increased recycled content requirements, requiring requiring a percentage of. Recycle material be used in a packaging or product sold in the state. I look also maybe broader beyond just our blue states at material theft legislation. So, as we know, when commodity prices rise, unfortunately, so do thefts. There are bad actors throughout the world. Um, and we see when we see an increase in those steps happening, we see states looking to revise material theft laws and regulations. It's trying to make it more cumbersome or burdensome for those thieves to resell what they have stolen. I think the industry has done a fantastic job in thwarting those thieves through scrap theft alert that Rima uses and our Director of Law Enforcement Todd Foreman just rolled out a new. Revamped to it most recently, allowing you to search by material type. So that's great. I think it's that that shift will really increase its use among law enforcement and the ease to search and not and also within our members as they search before they purchase. But do I potentially see material theft legislation increase? Probably, and that's, that's likely sort of in line when we look at copper, um, some states, I think, could expand their market development programs as they look to find new markets for hard to recycle items. Um, or support existing markets, you know, it was a huge push back in the late 90s, early 2000s. We sort of saw see a rollback of that. Um, really like 2005 to 2015, but they are starting to ramp up a little bit more. Um, with some states looking to expand their tax credits and grant opportunities for recyclers or for the industry as a whole. And then when I look to environmental compliance and regulatory efforts, and that's not. We're not looking at state legislation there. We're looking at the regulatory side of the House and if we see enforcement decrease from EPA, we will see states pick that up. We will see blue states pick that up. And so that's something for us to all just sort of keep in the back of the minds and make sure you're following your best practices. Let's, let's say back to federal on the federal side. Um, With, you know, to relate to our industry, what do you anticipate changes in the business operations and in the workforce arena to be sure this administration as I sort of, as they're working to come online has signaled really high support for domestic manufacturing. Uh, workforce, reskilling and workforce development, not just collegiate level, but everyone across the board. Um, immigration and tax. Um, I think that. With this, the, the next couple of months from this new administration, sort of coming on board could really be a time for regulatory reset. And a lot of those arenas, especially in light of the Supreme Court's decision and local right earlier this year. That made it clear that federal agencies could not go beyond congressional authorization or intent and they could not interpret. Beyond what Congress says that they could do, um, I think that the second materials industry could potentially see a period of. More engagement and stakeholder input with the federal government. Um, the previous Trump administration, from my own experience. Really tried to make sure that entities across the board had a round table in which they were heard. Um, really wanting to make sure that they had the full access to any data analysis or expertise that industry had to offer. So I anticipate that, you know, coming coming forth this time again. Um, I think it's really key that. When we were talking to the administration going in and supporting, you know, regulatory certainty to make sure that we can continue to make the long term investments that allow us as a recycled materials industry to drive supply chain resiliency. Um, sustainability across the board and and really helping supplier manufacturing supply chain when I look to sort of the workplace and worker policies and how that's going to evolve. I, myself, I'm going to sort of be keeping my eyes out to see how Department of Labor related rulemakings, including the worker walk around rule that I talked about those develop over time. Um, and while I'm not an immigration policy wants by any means. Um, and again, no, enough to be dangerous. We are keeping an eye at how the administration and the incoming Congress. Are anticipated to sort of play hardball on immigration that could potentially impact our workforce. Mandatory verify and policy measures like that. Are likely verify while it is technically free does have some costs associated with training new employees, how to use it, getting folks on boarded appropriately. Um, there's about 10 states, I think that require it for all new employees, but it has not been widely adopted across the entire nation. So that could be something new. And. So, the, the borders are that has been chosen Tom Holman, I think it's advocated for a number of years for workforce enforcement. So, targeting undocumented workers and their employers again, something just to keep in the back of the mind is. As we sort of see immigration play out across the next couple of months, um, back to another business operation impact. And I talked about it a little bit on potential state increasing of enforcement, but. When we look at the federal level enforcement actions related to emissions, air emissions or water may or may not increase in 2021 under the administration, we did see an enforcement alert published for clean air act violations at metal recycling facilities. Specifically, for those who operate treaders, it is really unclear as to where. The new administration is going to go in terms of environmental enforcement, the federal level, and that may be decentralized to state and local governments. Again, just encourage everyone who is in the industry to follow your best pollution prevention practices and engage in environmentally responsible recycling. Yeah, absolutely. What? Before we get into my chat with Adam, we will talk more about the global impact. I'm going to ask you the question about the trade policies. And how do you see, um, you know, there's a lot of talk about the trade policies and what's going to come now. How do you see this affecting import and export of recycled material with this new, the new election happening? So, Stu, I think this is a great time that we hand off to Adam, um, because if there's anything that I am the most dangerous on, it is trade policy. Now, I can tell you, right? There's this continued desire to onshore or French for materials and shore up our supply chains. Sort of in a trend that not just the United States is following, but nations around the world are sort of trying to do so, especially in light of the coven 19 pandemic. That's how supply chains sort of shudder. Um. I think this administration is taking that and they are running with it. Now, what they do in terms of import or export policies, Adam will share more on. I talked about how we could potentially see terrorists being used in the reconciliation process. I think that tells you. Where this administration is likely to go, but that's Adam's wheelhouse. I'm sure he'll guide you appropriately. That's awesome. Um, Kristen, thank you so much for being on Born Scrappy. This was hugely, um, informative. Everybody I'm sure is going to, didn't know a lot about what was going on and this is really going to help a lot of people. So thank you so much. Thanks so much, Stu. I appreciate it.