AFPM ’24: INSIGHT: Biden ending term with regulatory bang for US chems

HOUSTON (ICIS)–The administration of US President Joe Biden is proposing a wave of regulations before its term ends in 2025, many of which will increase costs for chemical companies in the US and persist even if the nation elects a new president later this year.

The prospect of such consequential policies comes as delegates head into this year’s International Petrochemical Conference (IPC), hosted by the American Fuel & Petrochemical Manufacturers (AFPM).

• Changes to the Clean Waters Act, the Risk Management Program (RMP) and the Hazard Communication Standard are among the most consequential policies being considered by US regulators.
• Electric vehicles (EVs) could receive more support from federal and state governments. This would increase demand for plastics used in EVs while discouraging refiners from making further investments, which could limit US production of benzene, toluene and mixed xylenes (MX).
• The failure of Congress to re-authorize the nation’s chemical site security program could spell its end.

REGULATORY PUSH DURING ELECTION YEAR
Such a regulatory push by the Biden administration was flagged last year by the Alliance for Chemical Distribution (ACD), the new name for the National Association of Chemical Distributors (NACD). The group was not crying wolf.

The next nine months could rank among the worst for the chemical industry in terms of regulatory change and potential issues, said Eric Byer, president of the ACD. “Whatever it’s going to be, it will come done fairly aggressively.”

The Biden administration has proposed several consequential policies.

• For the Clean Water Act, the Environmental Protection Agency (EPA) is developing new requirements, which will require chemical producers and other companies to develop plans to address the worst possible discharge from their plants. The ACD warned that the new requirement would raise compliance costs while doing little to reduce the already small number of discharges by plants. The final rule is scheduled to be published in April 2024.
• For the RMP, changes could require chemical companies to share information that has been off limits since the 9/11 terrorist attacks, according to the American Chemistry Council (ACC). The concern is that the information will fall into the wrong hands, while significantly increasing costs to comply with the new requirements, according to the ACD.
• The Occupational Safety and Health Administration (OSHA) is introducing changes to its Hazard Communication Standard that could create more burdens for companies. The ACD warned that some of the changes will increase costs without providing a commensurate improvement in safety.
• The EPA has started the multiyear process that, under the regulator’s current whole-chemical approach, will lead to restrictions imposed on vinyl chloride monomer (VCM), acrylonitrile (ACN) and aniline, a chemical used to make methylene diphenyl diisocyanate (MDI). This is being done through the nation’s main chemical safety program, known as the Toxic Substances Control Act (TSCA).

MORE POLICIES PROPOSED FOR EVs
The Biden administration is proposing additional polices to encourage the adoption of EVs.

For chemical producers, more EVs would increase demand for plastics, resins and thermal management fluids that are designed to meet the material challenges of these automobiles.

At the same time, the push towards EVs could limit sales of automobiles powered by internal combustion engines (ICEs), lowering demand for gasoline and diesel. Refiners could decide to shut down and repurpose their complexes if they expect demand for their main products will stop growing or decline. That would lower production of aromatics and other refinery chemicals and refined products.

The Biden administration is moving on three fronts to encourage EV sales.

• The EPA is expected to decide if California can adopt its Advanced Clean Car II (ACC II), which would phase out the sale of ICE-based vehicles to 2035. If the EPA grants California’s request, that would trigger similar programs in several other states.
• The EPA’s light-duty vehicle proposal would impose stricter standards on tail pipe emissions.
• The US Department of Transportation (DOT) is proposing stricter efficiency standards under its Corporate Average Fuel Economy (CAFE) program.

The AFPM opposes these measures. It said the EPA’s light-duty vehicle proposal and DOT’s new CAFE standards are so demanding, it would force automobile companies to produce a lot more EVs, plug-in hybrids and fuel-cell vehicles to meet the more ambitious requirements.

LAX OVERSIGHT OF SHIPPING RATES IN WAKE OF HOUTHIS
The ACD raised concerns that the US is not doing enough to address the possibility that shipping rates and delays have increased beyond what could be justified by the disruptions caused by the drought in Panama and by the Houthi attacks on vessels passing through the Red Sea to the Suez Canal.

The ACD accepts that costs will rise, but it expressed concerns that shipping companies could be taking advantage of the situation by charging excessive rates on routes unaffected by the disruptions.

These include routes from India and China to the western coast of the US, Byer said. “Why are you jacking up the price two or threefold?”

LABOR NEGOTIATIONS FOR US EAST COAST
The work contract will expire this year for dockworkers and ports along the East Coast of the US. Byer warned of a possible strike if the talks become too contentious.

On the West Coast, dockworkers and ports reached an agreement on a six-year work contract.

CFATS ON LIFE SUPPORT
Byer expressed concerns about the future of the main chemical-site security program, called the Chemical Facility Anti-Terrorism Standards (CFATS).

CFATS is overseen by the Cybersecurity & Infrastructure Security Agency (CISA), which is under the Department of Homeland Security (DHS).

CISA lost authority to implement CFATS on 28 July 2023, when a bill that would have re-authorized it was blocked from going to a vote in the Senate.

Without CFATS, other federal and state agencies could create their own chemical-site security regulations.

This process has already started in the US state of Nebraska, where State Senator Eliot Bostar introduced LB1048.

Other nearby states in the plains could introduce similar bills, because they tend to follow each other’s lead, Byer said. Many of these state legislatures should wrap up sessions in the next couple of months, so lawmakers still have time to propose chemical-site security bills.

The ACD is most concerned about larger states creating chemical-site security programs, such as California, Illinois, New Jersey and New York.

SENATE RAIL BILL REMAINS PENDING
A Senate rail safety bill has been pending for more than a year after a bipartisan group of legislators introduced it following the train derailment in East Palestine, Ohio.

Congress has about 10 months to approve the bill before it lapses, Byer said. For bills in general, action during an election year could happen around the Memorial Day holiday in May, the 4 July recess, the August recess or before the end of September. After September, legislators will be focused on campaigning for the 5 November election.

TEXAS BRINGS BACK TAX BREAKS FOR INDUSTRIAL PROJECTS
Texas has revived a program that granted tax breaks to new chemical plants and other large industrial projects.

The new program is called the Texas Jobs and Security Act, and it replaced the lapsed Chapter 313 School Value Limitation Agreement.

The old program was popular with chemical companies, and their applications were among the first public disclosures of their expansion plans.

The new program has already attracted applicants. Summit Next Gen is considering a plant that would convert 450 million gal/year of ethanol into 256 million gal/year of sustainable aviation fuel (SAF).

Hosted by the AFPM, the IPC takes place on March 24-26.

Insight article by Al Greenwood

Thumbnail shows a federal building. Image by Lucky-photographer