GlobalChem: Chemical resurgence ups muscle on Capitol Hill

27 February 2014 11:15  [Source: ICB]

The newly resurgent US chemicals sector has stimulated billions of dollars in new domestic investment. That growth helps the industry on Capitol Hill as legislators mull major and critical changes to industry regulations

“We have, I guess, one of the best news stories of any sector of our economy,” says Cal Dooley, president of the American Chemistry Council (ACC). “The chemicals industry is extremely well positioned to take advantage of the 
increased supplies of natural gas, especially the development of shale gas.”


 Copyright: Rex Features

As the US petrochemicals sector and downstream chemical makers historically have been heavily dependent on natural gas as both a feedstock and energy fuel, the flood of new gas supplies over the last few years has restored the cost advantage that the chemistry industry thought was lost forever. US chemicals manufacturers are now among the world’s low-cost producers, Dooley notes. “This is a once-in-a-generation opportunity we have, so it is exciting to see the flood of new investment.”

Dooley points out that when President Barack Obama gave his annual State of the Union speech on 28 January, he cited the approximately $100bn (€75bn) in new investments being made in the US, largely due to the nation’s new energy abundance and rapid re-growth of the chemicals sector.

“Of that $100bn, about 55% of it is coming from companies located outside the US,” Dooley says, adding that those investments represent “a significant amount of in-shoring of chemicals manufacturing, which in turn is making a significant contribution to broader economic growth here.”

“This gives us a great opportunity in a wide cross-section of policy issues when we are working with members of Congress,” Dooley explains, noting that many in Congress “just five years ago saw our industry in decline, and now they see the industry in such dramatic growth.” This, he says, “positions the chemicals industry as the high value and critical sector of our economy among policymakers”.

About 70% of the new $100bn in industry investments will be concentrated in the traditional chemicals-producing states bordering the Gulf of Mexico. But Dooley argues that the flood of investment among upstream industrial chemicals manufacturers has triggered a parallel and equally exciting expansion wave among the industry’s downstream customers.

“They too are seeing a tremendous expansion, among plastics manufacturers, formulators and many others, and this gives our overall industry a much wider footprint across the US than just in the Gulf region where most of the new crackers are being built. “Those investments, that growth will give us a sustained competitive advantage, we think, for at least 20 years – and that is a message that is well received on Capitol Hill,” Dooley says.

The new influence among legislators is all the more critical as Congress takes up what arguably will be the most significant revision to fundamental chemicals regulation in the US in half a century. That influence could not come at a more propitious time as Congress is now embarked on pending legislation to modernise the 38-year-old Toxic Substances Control Act (TSCA), a major reform that will shape the regulatory field for the next half-century at least.

That bill, titled the Chemical Safety Improvement Act (CSIA), would for the first time ensure that all chemicals are screened for safety for the public and the environment “while also creating an environment where manufacturers can continue to innovate, grow and create jobs”, according to the legislation’s principal authors, Senator David Vitter (R-LA) and the late Senator Frank Lautenberg (D- NJ).

Lautenberg, a long-time member of the Senate Environment and Public Works Committee, and Vitter, the ranking Republican on that panel, were joined by 12 other Democrats and seven Republicans in sponsoring CSIA.

US chemical sector officials have long held that any effort to modernise TSCA would need strong bipartisan support if it were to have any chance of getting approved by both the Democrat-controlled Senate and the Republican-majority House.


 Barack Obama: cited chemical investment

TSCA, enacted in 1976 and not substantially altered since then, has long been criticised by both environmentalists and the chemicals sector as needing to be updated to ensure the safety of chemicals in commerce and restore public and consumer confidence.

Dooley says the bipartisan CSIA “will put safety first, while also promoting innovation, economic growth and job creation”.

CSIA also has the support of former senior EPA officials from both parties, organised labour and some in the environmental community as a suitable vehicle for TSCA reform.

With TSCA reform and other pending regulatory issues, Dooley believes that “It is important for us to get the regulatory environment right so that we can totally capitalise on our new-found market advantage.”

The trouble is that TSCA and CSIA incorporate highly complex issues that can take months to sort out among multiple Senate and House committees that have jurisdiction – and time is getting short for action this year.

Because this is an election year, notes Bill Allmond, vice president, government and public relations at the Society of Chemical Manufacturers and Affiliates (SOCMA), there is a relatively small window of opportunity for getting CSIA passed through Congress. On 4 November this year, every member of the US House and a third of sitting senators will be facing re-election. Their re-election campaigns are already under way and by July those members of Congress facing the voters in November will be almost wholly focused on campaigning rather than legislating.

In addition to that lack of focus, campaigning members of Congress do not like to cast votes on controversial bills with the election only months or weeks away.

“We at SOCMA are hopeful that there will be real movement on CSIA this year – but it has to happen between now and summer,” Allmond says. “If not, it’s not going to happen this year,” he says, adding: “This is an election year, and we fully expect President Obama to pursue a very populist agenda 
between now and the election, and TSCA reform is not going to be one of his priorities.”

Allmond also says that he sees no indication of high interest in CSIA among either Republican or Democrat leaders in the Senate and House. “But we remain hopeful. The Senate has its bipartisan bill [CSIA], and the House is close to introducing its own bill, so we’re a lot closer now than we were six months ago.”

Dooley is more sanguine about the chances of CSIA passage this year. “I was thinking back to the GlobalChem conference last year, and at the time there was considerable scepticism about seeing much progress on TSCA reform in 2013,” Dooley says. “But I made the case that there was an opportunity to see bipartisan progress – and there has been.

“We have a strong bipartisan bill in the Senate, we have the support of labour and there is qualified support in the NGO community,” Dooley notes, referring to non-­governmental organisations (NGOs), such as ­environmental and health activists and lobbies. “In addition, we see an increased ­commitment by Democrats and Republicans in the House for ­legislation in the near future. And if you look at the progress that has been achieved in the last year, we are well-positioned now for completing it this year.”

A major concern about getting final Senate approval for CSIA has been opposition from Senator Barbara Boxer, the California Democrat who chairs the Senate Environment & Public Works Committee where CSIA must be approved. Boxer is said to oppose CSIA because of its preemption clause, and she worries that California’s own aggressive chemicals controls regulations might be swept aside by a strong federal pre-emption provision in a TSCA reform bill.

Dooley thinks that Boxer’s opposition can be met and resolved. He notes that at the State of the Union speech in January, Senator Vitter made a point of crossing the aisle that separates Republican and Democrat members to sit with Senator Tom Udall of New Mexico, who has taken up the mantle as lead Democrat on TSCA reform.

“I know that Udall and Vitter are still very much committed to engage with Senator Boxer to address her concerns,” Dooley says. “I think there’s an opportunity to resolve and respond to Senator Boxer’s concerns, and I guess I am cautiously optimistic that she can at least become less entrenched in her opposition” on the pre-emption issue.

Dooley argues that a strong federal pre-emption provision is essential to any legislation to modernise and replace TSCA. If you look at any major industry, and especially among those that are more consumer-facing, Dooley says, preemption has always been a high priority.

“Look at automobile manufacturing, information technology, the semiconductor industry, pharmaceuticals, medical equipment and devices; federal pre-emption is critical to their operations. There is an overwhelming majority among members of Congress that understands that need for pre-emption, perhaps with a provision for states to request waivers.”

But the bottom line is “this bill will not pass Congress without a strong pre-emption clause,” states Dooley.

Aside from the pre-emption issue, US chemicals sector officials want Congress to improve testing and data collection procedures as part of TSCA modernisation. In what might appear counter-intuitive, industry leaders have asked Congress to give EPA more flexible authority for testing chemicals already in commercial use.

But in exchange, they also ask that Congress require EPA to conduct a specific number of chemical evaluations each year to speed what has been a long-delayed process.

Beth Bosley, president of Boron Specialties of Pittsburgh, Pennsylvania, told the House Subcommittee on Environment and the Economy, that “The real problem with TSCA has been the treatment of existing chemicals”.

“EPA is required to go through a rule-making process [to evaluate existing chemicals], which has contributed to delays in EPA getting the data they need,” she said, speaking on behalf of SOCMA. She added that in some cases it has taken years to complete rule-making regarding some high-volume industrial chemicals “even though industry has strongly supported issuance of the rules.”

In reforming and modernising this part of TSCA with new legislation, Bosley said, Congress should consider giving EPA authority to issue orders instead of going through tedious rule-making procedures. However, she cautioned, “Congress should not authorise unnecessary blanket or one-size-fits-all testing requirements. Any testing approaches should be tiered and targeted.”

If EPA is given more timely authority to test existing chemicals, she said, testing “should start off at a screening level and focus on where exposures are most likely”. In addition, Bosley said, if EPA is given that broader testing authority, “EPA should have to abide by basic standards of scientific quality in specifying and accepting screening and testing data”.

Bosley also argues that the part of TSCA that authorises EPA to collect data from manufacturers about end uses and exposure scenarios of their products should be broadened to allow data-gathering from downstream users of chemical products, contending that those companies are more knowledgeable about exposure and use details than upstream manufacturers.

Under current TSCA policy, chemical producers are charged with obtaining end-use data about their products from downstream manufacturers – who usually are reluctant to give up that information for fear of compromising their formulations or trade secrets.

“It is understandable that downstream manufacturers are reluctant to provide that information,” says SOCMA’s Allmond. “Sharing their use information could compromise their competitive abilities,” he says, adding: “EPA should collect that data directly from the downstream users; they have the authority to do it and the mechanism to protect that proprietary information while upstream producers lack that ability.”

Also on the priority list for the ACC are ongoing concerns with the EPA’s Integrated Risk Information System (IRIS). The IRIS programme is supposed to evaluate the potential health effects of chemicals, findings that can form the basis for regulation by EPA and other federal and state agencies.

But the operation of the IRIS has come under widespread criticism by the science community, industry and even among members of Congress, with some on the Hill expressing concern about the quality of assessments produced by the programme and EPA’s failure properly to address fundamental issues identified by the National Academy of Sciences.

Dooley notes that Congress has even demanded that the EPA provide a report on reform of IRIS and its scientific integrity. “We are still very focused on that,” he says.

By: Joe Kamalick
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