AFPM ’23: Top chem policies cover energy bill, Superfund taxes

Al Greenwood


HOUSTON (ICIS)–Some of the biggest areas of US policy that could affect chemical companies this year include an energy bill, the need for more clarity on a new batch of Superfund taxes and the prospects of reforming the nation’s permitting process for pipelines, energy infrastructure and other large projects.

These are among the significant policy issues facing the industry as it heads into this year’s International Petrochemical Conference (IPC), held by the American Fuel & Petrochemical Manufacturers (AFPM).

Republicans announced that their first bill in the House of Representatives will address energy, and it will include provisions to increase production, streamline energy infrastructure and broad permitting reform, said Representative Kevin McCarthy (Republican, California), speaker of the house.

Another opportunity for permit reform could come from the nation’s debt ceiling. Republicans in the House will need to vote on increasing it and allowing the federal government to stay open.

The Farm Bill provides another opening for permit reform. The last one was enacted in 2018.

The Farm Bill is a must-pass piece of legislation, and it includes energy policy.

Permit reform has bipartisan support. A 2022 proposal by Senator Joe Manchin (Democrat, West Virginia) received 47 votes from Republicans and Democrats.

Oil, gas and midstream producers have long complained about the time and effort needed to receive permits for pipelines and other energy infrastructure.

However, the cumbersome permitting process of the US could threaten the ambitions of recent legislation passed during the administration of US President Joe Biden. These call for projects that will require pipelines to transport carbon dioxide (CO2) and hydrogen, wells to sequester CO2 and large products to produce renewable energy and green hydrogen.

US chemical companies are still trying to make sense of the new Superfund taxes that the US introduced in 2022 as part of the $1tr Infrastructure Investment and Jobs Act.

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 batch of taxes applies to substances that contain at least 20% of the 42 taxable chemicals. In addition, the taxable rate would depend on the proportion of the 42 taxable chemicals contained in the substance.

Some of the updates provided by the US Internal Revenue Service (IRS) remain vague. In some cases, they do not distinguish between isomers. Another update mentioned acrylic-acid resins without specifying the resins.

The National Association of Chemical Distributors (NACD) asked that the IRS assign chemical abstract service (CAS) registry numbers (RN) to each taxable substance. Such numbers would eliminate any ambiguity about which substance falls under the tax.

The NACD also asked the IRS to prescribe specific rates for the taxable substances and to spell out how companies can calculate the rate for any unlisted substances.

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), 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, the NACD 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.

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

US chemical companies have had persistent problems with rail service that date before the derailment at East Palestine, Ohio.

Late in 2022, the chemical industry testified before the main US rail regulator about railcar shortages, embargoes and ongoing service issues.

The response to the derailment in Ohio could lead to polices that could address some of these shortcomings. The danger is that the response will create more regulations that do little to address safety or service while making it more troublesome and expensive to ship chemicals by rail.

One provision of a proposed bill calls for new safety requirements and procedures for all trains carrying hazardous materials, including those that are not subject to regulations covering high-hazard flammable liquids. The danger is that the new requirements could make it more expensive to ship such materials by rail.

Other provisions call for more detectors that would flag possible mechanical failures. This could increase shipping costs without a corresponding increase in safety or service.

Hosted by the American Fuel & Petrochemical Manufacturers (AFPM), the IPC takes place on 26-28 March in San Antonio, Texas.

Focus article by Al Greenwood


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