SSTI Digest

Three states are holding gubernatorial elections this fall, with voters in one of those states (Louisiana) having already chosen a new governor to replace a term-limited incumbent. In the remaining states, Kentucky and Mississippi, elections will be held next week (Nov. 7), with the incumbents facing tough opponents in their reelection bids. Six states (Colorado, Maine, New York, Louisiana, Ohio, and Texas) will vote on 36 statewide ballot measures this fall. Of those measures, 30 of the 36 measures are legislatively referred constitutional amendments or statutes, while the other six are citizen initiatives. Many of this year’s measures are focused on taxes and state funds. At the same time, state legislative elections will be held in Mississippi, New Jersey, and Virginia.

The Appalachian Regional Commission (ARC) recently awarded new grants totaling over $16.4 million to boost green energy manufacturing and workforce development through its Appalachian Regional Initiative for Stronger Economies (ARISE) funding opportunity.  ARC’s Partnerships for Opportunity and Workforce and Economic Revitalization (POWER) Initiative recently awarded nearly $54 million to projects that will leverage entrepreneurship, workforce development, and infrastructure to bolster re-employment opportunities, create jobs in existing or new industries, and attract new sources of investment in communities and regions that have been affected by job losses in coal mining, coal power plant operations, and coal-related supply chain industries due to the changing economics of America’s energy production.

Projects funded through ARISE include:

As the U.S. does not have a “skilled worker” visa like many other countries, the H-1B program is one of the only accessible ways for domestic employers to hire foreign, nonimmigrant labor in specialty occupations. The current statutory limit on new H-1B visas is 65,000 per fiscal year, with an additional 20,000 available for foreign individuals who have graduated with a master’s or doctoral degree from an institution of higher education within the U.S. This limit has led to a much higher demand than can be supplied, leaving some industries with less H-1B workers than they may have hoped.

Since 2009, the industry with the most approved H-1B visas has been the Professional, Scientific, and Technical Services industry (NAICS 54), accounting for half of the total initial approvals each year on average. Educational Services (NAICS 61) and Manufacturing (NAICS 31-33) historically follow behind at an average share of 10% each per year.

Manufacturing in the U.S. accounts for 90% of private-sector R&D, employs 80% of the nation’s engineers, and contributes trillions to the economy—according to Deloitte—with every dollar spent in manufacturing leading to an additional $1.81 added to the economy. However, despite its key importance, the U.S. lags behind much of the world in its proportion of manufacturing value added—the difference between the price of a product or service and any associated production costs—to the economy, seeing less value added each year as a percentage of GDP.

Manufacturing value added as percentage of the GDP has remained virtually stagnant worldwide. Japan’s and India’s have stayed fairly consistent, while China, Germany, and the U.S. experienced regular declines. In 1997, the U.S. figure for value added by manufacturing to its GDP was 16%, while in 2021 this share had dropped to just under 11%. China saw nearly 28% value added in 2022—a drop from 32% in 2004.

The CHIPS and Science Act (Act) established guardrails to prevent funding recipients from using the money to support the development of semiconductor manufacturing and technology in foreign countries of concern, including North Korea, China, Russia, and Iran. On September 25, 2023, the CHIPS Program Office CPO published the final rules for preventing improper use of CHIPS Act funding. The guardrails in the legislation include the Expansion Clawback and the Technology Clawback. The Expansion Clawback restricts recipients from using CHIPS funding for material expansion of manufacturing capacity in a foreign country of concern; the Technology Clawback limits recipients from engaging in joint research or technology licensing with a foreign entity of concern.

The final rules clarify some points that were raised during the comments period about the clawbacks.

Changes in the final rule

A proposed Department of Homeland Security (DHS) rule could herald significant changes to the H-1B specialty occupation worker program. These proposed changes would bring about a revised definition of “specialty occupation,” install what DHS says would be a more equitable selection process, allow entrepreneurs to sponsor themselves for an H-1B Visa, and open more non-lottery options for nonprofits.

The H-1B nonimmigrant visa program allows U.S. employers to hire international workers temporarily. These positions must require a bachelor's degree plus specialization or their equivalent. Sixty-five thousand of these visas are awarded each year. Congress has described the program's purpose as "filling shortages and creating opportunities for innovation and expansion.”

The National Institutes of Health (NIH) announced last week that it is adopting modified criteria in its grant review process beginning on January 25, 2024. The new system will continue to focus on the scientific merit of proposals (i.e., importance, rigor, and feasibility), while de-emphasizing criteria that may introduce bias into the review. New grant applications will be evaluated for whether the applicant demonstrates sufficient expertise and resources, but without considering the reputation of the institution or the investigator.

The U.S. Department of Commerce’s Economic Development Administration (EDA) announced the designation of 31 Tech Hubs in regions across the country and 29 Strategy Development Grants. This announcement marks the first phase of the new Tech Hubs program, an economic development initiative authorized in the CHIPS and Science Act and designed to drive regional innovation and job creation by strengthening a region’s capacity to manufacture, commercialize, and deploy technology that will advance American competitiveness.

These Tech Hubs are located across 32 states and Puerto Rico and represent a cross-section of urban and rural regions. According to an EDA press release, the designation is an endorsement of the region’s plans to supercharge their respective technological industries to create jobs, strengthen U.S. competitiveness, and protect national security. The Tech Hubs announced today focus on industries ranging from autonomous systems, quantum computing, biotechnology, precision medicine, clean energy advancement, semiconductor manufacturing, and more.

The administration recently announced that seven regional clean hydrogen hubs have been selected to receive $7 billion in Bipartisan Infrastructure Law funding. The hubs are located in California, Delaware, Illinois, Indiana, Michigan, Minnesota, Montana, New Jersey, North Dakota, Ohio, Oregon, Pennsylvania, South Dakota, Texas, Washington and West Virginia.

The hubs aim to produce more than three million metric tons of clean hydrogen per year, achieving nearly one-third of the 2030 U.S. clean hydrogen production goal. The seven Hydrogen Hubs are expected to eliminate 25 million metric tons of carbon dioxide emissions from end uses each year—roughly equivalent to the combined annual emissions of over 5.5 million gasoline-powered cars.

This week’s announcement of seven regional hydrogen hubs and $7 billion in federal money significantly increases spending in a technology that has seen modest private sector investment in hydrogen-related companies. Since 2013, investors—including angel, seed, and early- and later-stage VCs—have invested across $7,849.59 million across 366 deals with 340 companies related to the hydrogen industry sector, according to an SSTI analysis of Pitchbook data. Figure 1 below shows deal counts and capital invested by investment stage, 2000-2023 Q3.

Figure 1: Deal counts and capital invested, by investment stage, 2000-2023 Q3

SBA has recently announced four contract awards to small businesses and entrepreneur support organization (ESO) partners, expanding the SBA’s Regional Innovation Clusters (RIC) to 16 hubs nationwide. Two contract awardees are new to the program in 2023, while two others are returning awardees, positioned with new contracts to continue and expand work in their respective regions.

SBA’s RIC Initiative launched in September 2010 to promote and support clusters, which are geographically concentrated groups of interconnected businesses, suppliers, service providers, and associated institutions in a particular industry or field across the U.S. The RICs act as a networking hub to convene several resources to help navigate the funding, procurement, and supply-chain opportunities in a specific industry.  

New awardees:

NIH recently announced awards for five Research Evaluation and Commercialization Hubs (REACH) to accelerate the creation of small businesses and the transition of academic research discoveries into products that improve patient care and enhance health. These new REACH hubs will support innovators from diverse personal, educational, and professional backgrounds across 76 non-profit research institutions spanning 12 states.

The new hubs are:

Chicago Biomedical Consortium Hub of Innovative Technologies for Entrepreneurship and Science (CBC-HITES) led by Northwestern University University of Maryland, Baltimore Life Science Discovery Accelerator (UM-BILD) University of Montana’s L.S. Skaggs Institute for Health Innovation (SIHI-REACH) Gulf Coast Consortia led by Texas A&M Health Mid-South REACH Hub led by Vanderbilt University