INSIGHT: OUTLOOK: US chems may see revival of programs, UN plastic treaty

HOUSTON (ICIS)–The US chemical industry could see the return of some popular trade and chemical-safety programs later this year, and customers of the major railroads could get their first chance to switch carriers if they get bad service.

• The year is turning out to be a busy and potentially productive one despite the presidential election
• Key trade and security bills for the chemical industry could pass during the lame duck session, which falls between the November 5 election day and the January 20 inauguration
• Globally, the final round of negotiations for the UN plastics treaty should take place near the end of the year

UN PLASTICS TREATY
The concern of the chemical industry is that the ratified plastic treaty could include caps or curbs on the production of plastic.

Companies such as BASF have advocated that the treaty should focus on curbing pollution instead.

Chemical companies have noted a growing consensus around the industry’s views, leading them to be optimistic about the upcoming negotiations.

The next round of talks is scheduled for November 25 through December 1 in Busan, South Korea.

Formal ratification could take place in early 2025.

RECRIPROCAL SWITCHING MAY GET FIRST TRIAL
Reciprocal switching in the US will become effective in September, which will allow chemical companies to switch rail carriers if they can demonstrate substandard service.

Reciprocal switching will be limited to Class 1 railroad companies, which are the biggest carriers.

Redress for bad service is not automatic, and the process will require time, effort and legal fees on the part of chemical companies.

“The question is how laborious and costly will that process be when you file a complaint?” said Eric Byer, president of the Alliance for Chemical Distribution (ACD) the new name for the National Association of Chemical Distributors (NACD).

Still, it is possible that a chemical company upset with its rail service takes the plunge and files the first request for reciprocal switching.

NEW RAIL BILL AND POSSIBLE TANK CAR BAN
A rail safety bill that passed the Senate shortly after the Norfolk Southern train derailment in Ohio state has recently received momentum that could push it into law.

That momentum is coming from HR 8996, a sister bill that was introduced in the House of Representatives by Troy Nehls (Republican-Texas) and Seth Moulton (Democrat-Massachusetts).

Related to the bill is a possible ban on DOT 111 tank cars. The ban is also connected to the derailment, since it is part of a settlement agreement between the US and Norfolk Southern.

The agreement proposes that Norfolk Southern stop using its own DOT-111 tank cars and that it encourages its customers to do the same.

The ACD is concerned that the agreement could be the first step in an outright ban of DOT 111 tank cars.

Such a ban could take place before the industry has time to replace the tank cars. Hazardous materials would then be shipped by truck, which is more dangerous.

A ban would also disrupt the movement of chemicals if it happens too quickly.

REVIVAL OF CHEM SECURITY PROGRAM
Legislators could revive the nation’s main anti-terrorism program for chemical sites, which is known as the Chemical Facility Anti-Terrorism Standards (CFATS).

CFATS has been inactive for about a year, after a bill that would have re-authorized it was blocked by US Senator Rand Paul (Republican-Kentucky).

While CFATS has lost its authorization, it has not lost funding. Were Congress to re-authorize CFATS, employees who were associated with the program could be reassigned to it.

Senators could attempt to revive CFATS through an amendment to the National Defense Authorization Act (NDAA), Byer said.

That could happen later in September or during the lame duck legislative session, Byers said.

Another tactic would add an amendment to the appropriations bill, he said.

Congress will likely consider the appropriations bill during the lame duck session.

REVIVAL OF TRADE PROGRAMS
Two trade programs popular with the chemical industry could also be revived during the lame duck session.

The Generalised 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.

Byer said a bill could bring back the GSP program and make it retroactive to January 1, 2021. If such a bill becomes law, companies would receive rebates for the taxes they paid while the GSP program was inactive.

The GSP has typically been coupled with another expired trade program, known as the Miscellaneous Tariff Bill (MTB), Byer said. The MTB temporarily reduced or suspended import tariffs on specific products, and it could be packaged with any other legislative action that would revive the GSP.

ELECTION SEASON TO LIMIT NEW BILLS, POLICIES
Outside of the trade and security bills, Byer does not expect a lot of new legislation because of the elections.

Similarly, the pace of new policies and rulemaking at federal agencies should slow down.

Any regulatory relief would be a welcomed change because the first half of 2024 was the worst regulatory climate that the chemical industry has ever seen, Byer said.

The regulatory climate could change after the elections on November 5. Otherwise, the chemical industry may have to turn to the courts to challenge policies that have a questionable basis and a harmful effect on companies.

Insight article by Al Greenwood

Thumbnail shows plastic waste. Image by HOTLI SIMANJUNTAK/EPA-EFE/Shutterstock