23 December 2011 22:33 [Source: ICIS news]
By Lawrence D. Sloan
President & CEO
Society of Chemical Manufacturers and Affiliates (SOCMA)
Editor’s note: US chemical industry association leaders were given the opportunity to express their views on the challenges and opportunities for 2012.
Washington DC--With 2012 being an election year, the Society of Chemical Manufacturers and Affiliates (SOCMA) realizes it will be almost impossible for any chemical industry-related legislation to muster enough interest in the House or the Senate to pass, creating a virtual paralysis in Washington. The Joint Committee on Deficit Reduction’s inability to agree on budget cuts is just one example of what the climate is like on Capitol Hill these days, creating concern for the chemical industry when the automatic budget cuts take hold in 2013.
The legislative front for 2012 will also be hindered by political uncertainty. No one knows at this point who will take over the House and Senate or executive office. While there will be a lot of posturing in Washington next year in anticipation of the elections, there will not be a lot of movement. Simply put, many of SOCMA’s legislative priorities will likely have to wait until 2013.
SOCMA believes there are only two topics that will get much attention on the legislative side in 2012, regulatory reform and taxes. But the paralysis in Washington could still cause problems when it comes to progress on these issues. For example, this month the House passed a bill that would extend the payroll tax cut, but President Obama and Senate Democrats will likely block the bill over language regarding the Keystone XL pipeline project, as well as its language that would curb federal workers' pay and benefits.
(Editor’s note: Obama on Friday signed legislation extending the payroll tax cut for two months. The legislation also requires Obama to act on the Keystone XL pipeline project in 60 days.)
There are two competing philosophies about how to make the tax code work for businesses and individuals, and these concrete proposals to reform the tax code are expected in January and February and will be a top priority for Congress in 2012. This will affect SOCMA members both individually as well as their businesses. But just as Congress’ position on tax reform is emerging, so is SOCMA’s.
Therefore, it is important for SOCMA members, who are small and mid-sized chemical companies, to spend this downtime educating members of Congress about the importance of the specialty chemical industry to the economy and job growth.
Advocacy to Education
Given the stagnant state of affairs in Washington, SOCMA is shifting its focus mid-year from advocacy to education. SOCMA plans to accomplish this by increasing its grassroots efforts to get members of Congress into member facilities for site visits and making its annual Washington Fly-In a top priority. During SOCMA’s 2011 Fly-In, almost 80 meetings with members of Congress or their staffs took place on Capitol Hill, and that number is expected to increase next year. This effort also fits perfectly into the association’s “112 in the 112th by 2012” campaign – an effort to have at least 112 SOCMA members contact their Congressional representatives during the 112th session of Congress, which ends December 31,2012.
Several member companies host site visits each year, and they have found their Congressional representatives know very little about the batch chemical industry, or they have been misinformed. During these tours, members have pointed out various pieces of equipment in their facilities and asked these members of Congress if they know how many regulations and laws govern them. Very few, if any, know the answers, and some are amazed when they learn just how much these regulations affect the operation of these facilities.
These site visits are essential because they give members of Congress a better understanding of not only chemical regulations that affect the batch chemical industry but also chemical manufacturing and processes. SOCMA members use this opportunity to discuss their sustainability efforts as well. Armed with this information, policymakers in Washington can develop smart regulations that will be beneficial to the industry and not hamper their ability to do business.
Despite a continuous uphill battle on SOCMA’s legislative priorities, the association had a big legislative achievement this year with the approval of the free trade agreements with market-rich nations of South Korea, Colombia and Panama. SOCMA is thrilled to have played a hand in seeing these agreements through.
But what does this mean for chemical makers going forward? Specifically, these agreements will reduce or completely eliminate over a short amount of time hundreds of millions of dollars each year in tariffs imposed on American chemical exports. Additionally, chemical companies that currently don’t conduct business with these three countries will now be encouraged to do so. Notably, many small- and medium-sized chemical manufacturers will benefit. For example, more than 73 percent of U.S. chemical exports to Korea in 2008 were from small and medium-sized chemical companies, representing $1.2 billion in sales.
Next year, SOCMA will work with Congress to identify additional countries, particularly those in developing countries, for expanding free trade agreements.
SOCMA also will work with the industry and members of Congress on passage of the Miscellaneous Tariff Bill (MTB). MTB legislation suspends duties imposed on imports, so it is essentially a tax break for companies that import a product for which there is no domestic manufacturer and which then uses the chemical in their manufacturing process. Many SOCMA members rely on this duty suspension to effectively compete in the global marketplace.
SOCMA has already started meeting with members of Congress to educate them on the benefits of the MTB, get it on the radar of those staffers and Congressmen that are new to the process and engage with relevant committees that will deal with the legislation.
SOCMA looks for action on two of its top priorities, the long-term extension of the Chemical Facility Anti-Terrorism Standards (CFATS) and reforming the Toxic Substances Control Act (TSCA), to likely come to a halt by June, as Congress turns much of its focus to elections.
However, SOCMA will continue to push for permanent reauthorization of the Chemical Facility Anti-Terrorism Standards (CFATS) by supporting H.R. 901, H.R. 908 and S. 473 – legislation that would extend reauthorization of existing chemical facility standards for three or more years. The association also opposes any legislation mandating facilities’ use of inherently safer technology. SOCMA supports the use of safer technologies as a well-established process safety measure, but it has no place in security standards. Any federal chemical security policy should be risk-based, include a set of performance standards, and be codified in law rather than tied to an annual appropriations process.
SOCMA continues to be concerned about the possibility of dismantling the areas of TSCA that have worked well and has voiced its concerns during hearings with Senators Frank Lautenberg (Democrat, New Jersey) and James Inhofe (Republican, Oklahoma) during the past year. SOCMA will continue to oppose the Safe Chemicals Act of 2011 (S. 847). The law can and should be improved in some respects, but it is adequate in others. Any proposed enhancements to TSCA should be evaluated on how the costs and delays associated with increased data submission or review requirements could impair innovation or the sustainability of the industry.
Despite the widespread agreement on the need for TSCA reform, misinformation continues to be one of the drivers; therefore SOCMA developed a webpage – www.ChemicalsInCommerce.com – to educate the public on the issue. Many of the TSCA statistics commonly heard are unqualified or simply false. It is not surprising that, as a result, fear is unnecessarily invoked. Misinformation threatens to dismantle the aspects of TSCA that have worked well. This webpage sheds light on some of the more common statistics.
The Regulatory Front
SOCMA believes new federal regulations will slow next year, and in most cases, come to a halt, especially environmental rules. But there is still plenty of work to be done when it comes to efforts on existing and proposed regulatory issues.
Regulatory reform has been a top priority of Congress in 2011, and it is expected to remain that way in 2012. A variety of measures have been introduced to reform the regulatory process in general or target specific Environmental Protection Agency (EPA) regulations, and SOCMA is expanding its advocacy efforts in this area.
There is a lot of activity in the House that will spill over into the first half of next year to relieve regulatory burdens on small businesses, an issue SOCMA has been outspoken about. In 2010, SOCMA called on Congress to “cease further consideration of legislation that could have a negative financial impact on small- and mid-sized chemical manufacturers by adding to the burden of regulatory compliance.”
Regulatory reform is such an important issue for SOCMA and its membership that the Board of Governors passed a policy statement on the issue at its Annual Meeting in December. SOCMA believes the economic impacts of regulations on small and medium-sized businesses, in particular, should be given more consideration during these challenging economic times. And the association feels legislation such as the Regulations from the Executive in need of Scrutiny (REINS) Act (H.R. 10, S. 299) and the Regulatory Flexibility Improvements Act of 2011 (H.R. 527) should be given serious consideration.
SOCMA is also taking the lead in launching a new regulatory reform coalition comprised of several small trade associations who will meet with members of Congress and their staffs, submit letters and lobby on behalf of certain broad regulatory reform principles and goals.
As SOCMA shifts from advocate to educate in 2012, this is a great opportunity to educate members and the industry about SOCMA’s own definition of sustainability: “Meeting the needs of the global economy and improving the quality of life through developing and/or continuously improving chemical products and processes while practicing environmental and human health stewardship for current and future generations.”
SOCMA’s idea of sustainability pertains specifically to the batch industry and will serve as a guiding component of the ChemStewards program. In 2012, members will also report greenhouse gas metrics to ChemStewards based on EPA’s Greenhouse Gas Calculator Tool; however, this may be modified in the future to better reflect the unique needs of batch companies.
Developed at the request of SOCMA’s Board of Governors, the definition was approved at SOCMA’s Annual Meeting on December 5 in New York.
While the legislative front appears to be in paralysis, SOCMA is not writing off Washington in 2012. Rather, SOCMA is encouraging members to engage Congress, as it shifts its strategic focus from “advocate to educate” and make the most out of a bad political situation. By helping our nation’s legislators become more knowledgeable about the chemical industry, SOCMA’s goal is to foster development of smart regulations that become the norm and not the exception.
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