INSIDE VIEW: US chemical industry poised for growth

Editor’s note: This article is an opinion piece, and the views expressed are those of the author and do not represent those of ICIS.

By Cal Dooley
President, American Chemistry Council

The new political landscape in Washington following November’s midterm elections is a welcome development for US manufacturing and the domestic chemical industry. Over the past two years, the American Chemistry Council (ACC) and our members have cultivated strong relationships with Democratic leadership and many of the incoming Republican committee chairs. Through our robust political programs, we have made it a point to publically thank members of the House and Senate, both Republicans and Democrats, highlighting their commitment to policies that grow the economy and create jobs.  In the coming year, we are looking forward to bringing lawmakers from both sides of the aisle together to make meaningful progress on our core policy priorities in 2015.

Our mission critical priority continues to be with chemical management and reforming the 38-year-old Toxic Substances Control Act (TSCA). Following closely behind are energy, air regulations, rail transportation, chemical safety and security, and US chemicals exports growth.

Chemical Management
The ACC is committed to working with lawmakers and stakeholders to reform our nation’s chemical management system. Our top goal for 2015 is to bring TSCA into the 21st Century so that Americans can have confidence in the safety of chemicals used to make the products they rely on every day. We also plan to make sure that the law allows businesses to operate under a clear set of regulations that promotes growth and protects the safety of employees and customers.

In a few weeks, Senator Jim Inhofe will assume the chairmanship of the Senate Committee on Environment and Public Works. With continued leadership from Senator David Vitter and Senator Tom Udall in negotiating a bipartisan TSCA reform package, I believe we could see committee action on a bill in the early part of 2015. We also expect to see further action from Chairman Fred Upton, Representative John Shimkus and their colleagues in the House on a potential reform bill.

The ACC will continue to lead on this issue. We look forward to building on the significant progress we made over the past two years, and we are optimistic the new Congress will be better positioned than ever to finally pass a bipartisan TSCA bill that President Obama can swiftly sign into law.

Energy
Thanks to our country’s rich supply of affordable natural gas and natural gas liquids (NGLs) from shale, the US chemical industry is experiencing unprecedented growth. The number of announced projects is rising virtually every month. To date, 215 projects valued at $133bn are slated to come to fruition by 2023. Fully 60% of the investment is by companies based abroad.

This kind of growth is only possible with smart policies and regulations. That is why we will continue to urge Congress, governors, and state legislators to enact a comprehensive, all-of-the-above energy strategy. Such a strategy will maximize responsible production of all energy sources—conventional and shale natural gas, oil, wind, nuclear, solar and others—while promoting energy efficiency and alternative sources such as energy recovery.

Air Regulations
The chemistry industry is a national leader when it comes to creating many of the solutions that help save energy. We are concerned that the Environmental Protection Agency’s (EPA’s) proposed greenhouse gas (GHG) regulations for the electricity sector will affect factories and other significant power users—not just electric generators—and they fail to recognise the potential of technologies like combined heat and power (CHP) and policies to enhance energy efficiency. We are urging the EPA to exclude industrial CHP from regulation under the final plan, which will help boost adoption, include energy efficiency building codes as a compliance option for states, and give states more time to comply by including only the 2030 emission reduction targets.

We are also troubled by the EPA’s proposal to lower the National Ambient Air Quality Standards (NAAQS) for ozone. Much of the US will be unable to meet the proposed lower standard of 65-70 parts per billion (ppb), and manufacturing growth could slow or stop in states that find themselves in non-compliance. In these “nonattainment” areas, facilities face regulatory requirements that make projects far more costly and complex.

Rather than move forward with a lower ozone standard, the ACC is calling on EPA to fully implement the current ozone standard of 75 ppb, which is the most stringent ever.  With air quality improving, that approach would enable further emissions reductions while supporting US manufacturing growth. We do appreciate that the EPA recognises there are concerns about the implementation process for revised NAAQS and that it will accept comment on retaining the current standard.

Rail Transportation
In 2014, ACC strengthened our rail advocacy by recruiting a broad coalition of shippers to present a strong case for reforming the Surface Transportation Board (STB) in order to improve the nation’s freight rail system. Publicly available data from the railroad industry shows that rail rates have increased more than 93% between 2002 and 2012, about three times the rate of inflation. The chemistry industry – the second-largest commodity sector in terms of annual rail tonnage and railroad freight revenue – has been hit hard by this rate spike.

According to a recent survey, more than a quarter of ACC members report that rail transportation issues have hindered domestic investments. That’s why efficient rail service, competitive rates, and – when necessary – a timely, effective and equitable way to resolve disputes between freight rail companies and shippers are critical to our success and to our economy.

In a major development, Senate Commerce, Science, and Transportation Committee Chairman John Rockefeller and Ranking Member John Thune—poised to be the next chairman of the committee­­—introduced the bipartisan “Surface Transportation Board Reauthorization Act of 2014,” which would require the STB to adopt a more timely, effective and equitable process to resolve freight rail issues.

The ACC will continue working with the committee and the STB in the coming year to advance a series of meaningful reforms that will improve the nation’s freight rail system and help grow our economy.

Chemical Safety & Security
Chemical manufacturers this year reaffirmed their commitment to safety and security. In November, the ACC signed a memorandum of understanding with the National Association of Chemical Distributors (NACD) to advance Responsible Care and Responsible Distribution principles within our industry. Looking ahead, the ACC and NACD will continue to promote the value of third-party verification to chemical companies across the country and encourage them to join us in making the industry safer than ever before.

On the security front, the ACC is fully engaged with the interagency Working Group established by President Barack Obama’s executive order on improving chemical facility safety and security. Our goal is to ensure security approaches that identify and incentivise industry best practices, reduce any unnecessary regulatory duplication and strengthen cooperation and collaboration between government and the private sector. Combined, these measures would enhance overall safety, including the best approach for the promotion of safer alternatives.

We also worked closely with lawmakers to approve a long-term extension of the Department of Homeland Security’s Chemical Facility Anti-Terrorism Standards (CFATS).  The ACC led the way among stakeholders to ensure passage of HR 4007, the “Protecting and Securing Chemical Facilities from Terrorist Attacks Act of 2014”. Following nearly a decade of year-to-year extensions, this multi-year authorisation importantly provides Congress with appropriate oversight, while giving the DHS the operational stability it needs to make CFATS successful.  The bill also addresses industry concerns regarding full implementation of the CFATS program, approaches to personnel surety, and the successful completion of site security plans. It gives covered facilities a more efficient process to submit site security plans through an alternative security program and establishes an expedited approval program for lower-risk facilities. These and other provisions will serve to ensure timely, streamlined processes for industry compliance and incentivize continued investments in the safety and security of our facilities. We look forward to the President signing this milestone bill into law.

US Chemicals Exports Growth
Finally, identifying new foreign markets and reducing or eliminating trade barriers is a critical priority of US chemical manufacturers. The ACC forecasts that chemical exports will surpass $190bn in 2014 and expand nearly 8% per year through 2019, reaching $282bn. To help realise our industry’s true growth potential, we will continue to push for Congress to grant President Obama Trade Promotion Authority so he can put the proposed Trans-Pacific Partnership (TPP) and Trans-Atlantic Trade and Investment Partnership (TTIP) on a fast-track. An ambitious TPP and TTIP will contribute to economic growth, job creation, enhanced US competitiveness and greater consumer choice.

On behalf of the ACC, our member companies and the nearly 800,000 Americans employed in the business of chemistry, I wish again to congratulate those elected to serve in the 114th Congress and in state capitals. We look forward to working with lawmakers in Washington and across the country to make our industry and our country stronger, safer, more secure and more sustainable than ever before.