INSIGHT: US chemicals policy goals target Superfund taxes, tariffs, rail

HOUSTON (ICIS)–The new Superfund taxes, the re-authorisation of a chemical-security programme, rail service and the revival of two tariff-relief programmes are among the biggest areas of US policies affecting the chemical industry this year, and they rank as the top priorities of the National Association of Chemical Distributors.

• The chemical industry still lacks sufficient guidance on the two Superfund taxes that the US will start imposing this year on key chemical feedstocks and their derivatives
• The Chemical Facility Anti-Terrorism Standards (CFATS) will lapse mid-year if Congress does not re-authorise it
• The chemical industry remains concerned about rail service

GUIDANCE ON SUPERFUND TAXES
Chemical distributors still want more guidance about the two Superfund taxes that the US introduced in 2022 as part of the $1trn Infrastructure Investment and Jobs Act.

The levies are called Superfund taxes because they are intended to replenish the environmental fund that the US established to clean up waste sites.

The first of these Superfund taxes is levied on the sale or use of 42 chemicals. Many of these chemicals are fundamental building blocks such as ethylene, propylene, butadiene (BD), benzene, toluene, xylene and methane.

The second Superfund tax covers imported substances that are sold or used in the US. This second tax could cover imports that contain at least 20% of the 42 taxable chemicals. The taxable rate would depend on the proportion of the 42 taxable chemicals contained in the substance.

Companies had plenty of questions about the Superfund tax, especially about which substances were covered by the tax and what their tax rate would be.

The NACD is trying to get its members as much guidance about the new taxes as possible, said Eric Byer, president of the NACD. So far, the information that the NACD has received has been limited.

The lack of guidance is worrisome because of the widespread nature of the Superfund taxes. It will affect the US chemical industry, including producers, traders and consumers.

The danger is that the lack of guidance could require companies to spend more time than necessary to comply with the code. Even then, they could still face penalties if they get something wrong.

RE-AUTHORISE US CHEMICAL SECURITY PROGRAMME
The Chemical Facility Anti-Terrorism Standards (CFATS) programme is up for re-authorisation, and the NACD would like the US to approve it before it expires on 27 July 2023.

The programme administered by the Department of Homeland Security (DHS) and it addresses terrorism and other security threats to chemical plants.

If Congress allows CFATS to expire, then the staff associated with the programme will go to another part of the Department of Homeland Security, Byer said. The result would disrupt a security programme that helps keep the chemical industry safe from terrorism.

Because CFATS is so vital, re-authorisation is vulnerable to riders and other add-on bills that are unrelated to chemical security, Byer said.

NACD wants a clean re-authorisation to ensure that the CFATS programme remains focused solely on security at chemical sites.

RENEWING TWO TARIFF-RELIEF PROGRAMMES
The NACD and the American Chemistry Council (ACC) have both called on the US government to revive two tariff-relief programmes.

The Generalized System of Preferences (GSP) expired at the end of 2020, and it eliminated duties on thousands of products from more than a 100 developing countries. Prior to its expiration, the GSP had existed for decades, and other countries had similar programmes.

The NACD would like the US to retroactively renew the GSP programme, expand the list of qualifying imports and adopt other provisions that the group said would improve the programme.

The NACD and the ACC would also like the US to revive the Miscellaneous Tariff Bill (MTB). The MTB temporarily reduced or suspended import tariffs on specific products.

These products are either not made in the US or they are not produced in large enough quantities to meet demand, according to the National Association of Manufacturers (NAM), another supporter of the MTB.

RAILROAD PRIORITIES
The NACD would like railroad companies to grant paid sick leave to unionised workers, which the group said could help address concerns about freight-rail service, as highlighted by the recent derailment of a train near East Palestine, Ohio.

Even before that derailment, the chemical industry has complained about the quality of rail service and the proliferation of embargoes. One chemical company had declared force majeure because of a shortage of railcars.

“The first and foremost thing that needs to happen is you’ve got to take care of your employees so they have better work product. That would help a lot when it comes to some of the service issues that we are seeing – especially the safety side,” Byer said.

The matter of sick leave and worker benefits has wider implications. Sick leave was one of the main sticking point during labour-contract negotiations between unions and railroad companies in late 2022. Unions were about to strike before the US government intervened and imposed a labour contract – one without paid sick leave.

Such a strike would be incredibly damaging to the chemical industry and the rest of the US economy.

Since then and following the derailment, major railroad companies Union Pacific (UP), CSX and Norfolk Southern have reached paid sick-leave agreements with some of the unions. They are urging other railroad companies to do the same.

The NACD still has concerns about the railroad companies’ ability to provide safe and reliable service. Both it and the ACC have cited a deterioration of service since the widespread adoption of precision scheduled railroading (PSR).

The practice was intended to help railroad companies make better use of their employees and resources while providing customers with more consistent, predictable and reliable service, according to Union Pacific (UP).

Byer argues the cost-cutting has gone too far. Before PSR, the major railroad companies employed more than 150,000 unionised workers. Now, they employ 120,000.

Meanwhile, the length of trains now regularly exceeds 150 railcars, he said. If one goes back 15 years, the average length was 75-80 railcars.

Byer said PSR has worsened delays and customer service. He goes as far as to say that PSR should be dismantled.

For its part, the Association of American Railroads (AAR) said that in 2021, train accidents were down by 33% from 2000. Accidents involving hazardous materials (hazmat) are down by 55% since 2012. More than 99.9% of all hazardous materials moved by rail reach its destination without a release caused by a train accident. The rail employee injury rate in 2020 reached an all-time low.

As far as the conditions of the nation’s railroads, the AAR pointed to the infrastructure report card issued by the American Society of Civil Engineers (ASCE). In 2021, the nation’s rail infrastructure received a B grade versus the C- grade for US infrastructure as a whole.

In regards to crew sizes, the AAR said efforts to require at least two-person crews ignore what it characterises as decades of safe and successful use of a single crew member at some US freight railroads as well as in passenger and freight rail systems around the world.

Insight article by Al Greenwood

Thumbnail shows US capitol. Image by US government.