US chemical makers facing wide field of government hurdles

27 September 2012 16:13  [Source: ICIS news]

CAMBRIDGE, Maryland (ICIS)--The US chemicals sector is facing a wide range of government-related challenges over the next several years that could have profound effect on operations, growth and profits, an industry legislative authority said on Thursday.

Bill Allmond, vice president for government relations at the Society of Chemical Manufacturers and Affiliates (SOCMA) told a specialty chemicals business conference that the industry is facing an increasing regulatory burden that has accelerated in recent years.

Allmond noted that by law US federal regulatory agencies must certify a proposed rule as “economically significant” if the cost for business to comply with that requirement will exceed $100m (€78m).

“Over the last ten years, the number of economically significant regulations issued by the federal government has increased by 137%,” Allmond said.

“In the period of 1993 to 2008 there was an average of 36 economically significant regulations issued each year,” he said, “but in the period 2009-2011, the annual average has jumped to 72.”

Allmond said that over the next few years, SOCMA will be focused on trying to secure regulatory reform to lower the cost of doing business in the US and to get government to protect rather than jeopardise American business interests.

Among the areas to be pressed, he said, are concerns about energy and feedstock costs and avoiding government interference. 

For example, while shale gas development has significantly lowered the cost of that feedstock for chemicals producers, he said, the federal government has mounted more than a dozen regulatory initiatives regarding hydraulic fracturing (“fracking”), the technology that is crucial in shale gas production.

Regulatory issues affecting shale gas production not only raise concerns about the long-term availability of shale gas feedstocks, said Allmond, they also would put in jeopardy a downstream market for specialty chemicals manufacturers who are selling products to shale gas drilling and production companies.

Allmond said that efforts by the Environmental Protection Agency (EPA) to require broad disclosure of confidential business information (CBI) when producers register new chemical products with the agency will undermine chemical industry innovation.

He said that if the EPA prevails in its disclosure requirement, the advanced chemical technologies developed by US companies would essentially be given away to foreign competitors.

Allmond also said that there are areas where government policies could help business if policymakers were to take action. In particular, he said SOCMA was working to try to get Congress to restore the federal tax credit for research and development (R&D) spending.

He said some in Congress contend that the R&D tax credit, which expired last year, represents a subsidy to industry. But Allmond argued that the tax credit would indirectly generate more tax revenue to government by spurring the development and sale of new products and processes.

Allmond spoke on the concluding day of the two-day SOCMA Leadership Conference.  Sponsored by SOCMA, the conference drew about 90 participants.

($1 = €0.78)

Paul Hodges studies key influences shaping the chemical industry in Chemicals and the Economy

By: Joe Kamalick
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