FocusProposed US law could cost jobs, competitiveness

15 June 2010 23:12  [Source: ICIS news]

By Sheena Martin

HOUSTON (ICIS news)--US chemical industry executives will converge on the US capital to air concerns over legislation that they say would force them to disclose trade secrets at a cost of jobs and the industry’s competitive edge, a trade group said on Tuesday.

Executives from about 30 different chemical companies planned to meet on Wednesday with more than 50 members of Congress or staff members to address reform of the 1976 Toxic Substances Control Act (TSCA), along with other issues. The proposed legislation to revise the TSCA has caused an uproar within the chemicals industry.

“While we can’t predict what Congress will ultimately do - modification of the TSCA should be done carefully, deliberately and in consideration of all consequences,” said Jim Cooper, vice president of petrochemicals of National Petrochemical & Refiners Association (NPRA). “We firmly believe that TSCA can be modernised in a way that both effectively addresses chemicals risk management and preserves American jobs and the economy.”

The Senate measure (S 3209) and the House’s ‘discussion draft’ of the Safe Chemicals Act of 2010 both would require disclosure of processing information, which was not protected by patents.  

US Senator Frank Lautenberg (Democrat-New Jersey) sponsored the bill as the chairman of the Senate Subcommittee on Superfund, Toxics and Environmental Health. A staff member for Lautenberg said he believed that the toxic chemical laws were outdated and needed reform.

“America’s system for regulating industrial chemicals is broken,” Lautenberg said on 15 April when he announced the new bill. “Parents are afraid because hundreds of untested chemicals are found in their children’s bodies. EPA [Environmental Protection Agency] does not have the tools to act on dangerous chemicals.”

In April, the bill was referred to the Senate subcommittee on Environment and Public Works, which was still reviewing the bill. A staff member of Lautenberg said he was working closely with colleagues to move the bill forward. One trade group, however, does not think the bill will pass during this year’s legislative session.

“Many stakeholders see the bill as overreaching, so there is still a lot of work that would need to be done for it to gain the needed support to advance it,” said Dan Newton, government relations manager of the Society of Chemical Manufacturers and Affiliates (SOCMA). “On top of this, there is a very narrow window of time to actually move it forward.”

The primary concern of the industry surrounds the legality of publicly disclosing chemical manufacturing processes. Trade secrets are protected on a state level, therefore industry members say that this federal law would directly conflict with current state law. 

Cooper said: “As currently written, the drafts on the House and Senate side just don’t afford much protection for the chemical identity.”

In recent years, the EPA has limited claims of confidential business information (CBI), which allowed chemical companies to protect trade secrets.

The EPA said on its website that disclosure of chemical production processes would make more health and safety information available to the public and support an important mission of the agency to promote public understanding.

The EPA was contacted but did not respond to questions.

Newton said there was a problem with overuse of CBI in the chemical industry, which should be discouraged. However the disclosure of chemical identity – the exact makeup of a chemical – would create a competitive intelligence problem and cause irreparable harm to US business, Newton added.  

The National Association of Chemical Distributors (NACD) president Chris Jahn said: “The cost would be incalculable. So many chemical distributors are creating new and innovative products every day for a large and diverse customer base. That is threatened by the potential changes to CBI.”

Cooper said if an exact chemical identity was disclosed to the public from an innovative company exploring new chemistries then companies in China could copy the technology.

He added that this would make certain sectors of the chemical industry, such as "green chemicals," extremely competitive.

“This takes away a lot of the incentive to innovate, at least in this country,” Cooper said.

If a company’s chemistry was not protected in the US, then the chemical could be introduced in a country where protection was provided. After a client-base was built up, US consumers would be introduced to the chemical much later, Cooper suggested.

Newton said: “This would certainly hasten off-shoring of manufacturing and cost American jobs.”

However, families, environmentalists and Congress were concerned about the toxicity of household items.

Environmental Defense Fund (EDF) senior scientist Richard Denison said, “Chemicals are everywhere around us, and many are simply not safe.

“Countless items that we use on a daily basis are made with chemicals that science is linking to the rising rates of childhood cancers, infertility, learning disabilities and more.”

The EPA said that more than 80,000 chemicals now in use have not been fully assessed for toxic effects on human health and the environment. The US chemical industry has contended that less than 10,000 chemicals were in use and that the EPA’s list was inaccurate and outdated.

The Natural Resources Defense Council (NRDC) senior attorney Daniel Rosenberg said: “Besides the EPA not having enough information about these chemicals, the public doesn’t either.

“People do not know what chemicals are in products and there are not currently requirements for companies to disclose much information about their chemicals,” Rosenberg continued. “That’s a very important reform.”

Industry members claim there was no hazard to individual health under the current law, and the chemical identity was unnecessary for health and safety.

Newton said: “It is the hazards that need to be communicated, not necessarily the content or composition. OSHA [Occupational Health and Safety Administration] already provides for any trade secret information to be communicated to health officials, if there is an exposure incident. “Beyond competitors, it is unclear exactly who this disclosure [of the chemical identity] would serve.”

In the US, trade secrets are not protected by law in the same way patents and trademarks are. Trade secrets are protected by state law, not federal statutes. The Uniform Trade Secrets Act (UTSA) has been adopted by 45 states. Furthermore, trade secrets are only protected when the secret is not disclosed.

The US Department of Labor defines a trade secret as: “Any formula, pattern, device or compilation of information which is used in one's business, and which gives him an opportunity to obtain an advantage over competitors who do not know or use it. It may be a formula for a chemical compound, a process of manufacturing, treating or preserving materials, a pattern for a machine or other device,or a list of customers.”

To discuss issues facing the chemical industry go to ICIS connect

By: Sheena Martin
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