The specter of health-care reform, and its potential impact, looms large over all other federal activity heading into 2010.
“Until the health-care issue is resolved, everything else is on hold” at the legislative level, said Jonathan Kurrle, vice president of government affairs for the Society of the Plastics Industry Inc. in Washington.
Cal Dooley, president of the American Chemistry Council in Arlington, Va., agreed. “health-care reform has sucked all the oxygen out of the political environment and a number of critical issues. Our highest priority this year is climate change. We need a climate change policy that effectively reduces greenhouse gas emissions, but protects our ability to be competitive in the international marketplace.”
How long the battle over health-care reform will drag on is anyone's guess, given the contentious nature between the two political parties, the wide differences between the House and Senate bills, and the controversial nature of several provisions, including how or whether to provide a public option and public funding for abortions.
Some suggest that passage of health-care reform is not guaranteed. But Mike Lynch, director of government affairs at Illinois Tool Works Inc. in Glenview, Ill., expects to “see something on the president's desk by the end of the first quarter. The Obama administration and congressional leaders need to have something signed by the time the primary season [for elections] gets under way.”
He called it “a high-stakes poker game” that could lead to employer mandates, more taxes for both employers and workers and could create disincentives that trigger workers to opt out of employer-sponsored health-care plans. “In many cases, the combination of premiums and deductible costs will exceed the cost of buying into a public-option plan for employees, and the changes in that dynamic could cause employers to say, 'I can't afford to provide this benefit to you.' “
Kurrle agreed. “We have three primary issues of concern related to health-care reform: the potential surtax, the potential erosion of [Employee Retirement Income Security Act] protection, and the 'pay or play' mandate to provide health-care benefits at a certain level or pay fines.”
But health-care reform is just one of a slew of legislative and regulatory initiatives that have emerged that could impact manufacturing, the plastics industry and the chemical companies that make the building blocks for plastics.
* The ongoing debate in Congress on climate change and how to reduce greenhouse gas emissions could negatively impact the price and availability of both feedstocks and fuel for chemical and plastic companies.
* A series of initiatives from the Environmental Protection Agency threatens to change how chemicals are regulated under the Toxic Substances Control Act.
* In addition, EPA has announced that it intends to regulate emissions from stationary sources, which could disrupt manufacturers' expansion and renovation plans.
“The key challenge in getting TSCA updated is that the industry supports a science-based approach to assessing the safety of chemicals for use and others say you should take a precautionary approach,” Dooley said. “So how do you develop a system that effectively assesses a chemical and its risk in a particular use and determine what is an acceptable level of risk?
“If you want to keep the chemical industry at the forefront, you can't just ban [some chemicals] because they might be harmful in some instances.”
After outlining its guidelines in late September for how TSCA should be reformed, EPA took its first step toward more aggressively regulating individual chemicals Dec. 30, when it issued Chemical Action Plans (CAPs) for regulating phthalates, long-chain perfluorinated chemicals, short-chain chlorinated paraffins and polybrominated diphenyl ethers. The EPA also said that it was developing similar action plans for benzidine dyes and pigments and bisphenol A.
BPA, in particular, has been under fire the past two years as a number of laboratory studies have linked it to birth defects, low birth weight, cancer, early puberty and other health problems in rats.
The Food and Drug Administration did not meet a self-imposed Nov. 30 deadline for determining whether to change its long-held stance that there is not enough data to support a ban on the use of BPA in food packaging. FDA has not said what its new timetable is for rendering a decision.
However, Connecticut, Minnesota, Chicago and Suffolk County, N.Y., have banned the sale of polycarbonate baby bottles, food containers and cups. The Suffolk County ban and Minnesota bans already are in effect; the Chicago ban goes into effect Jan. 31; and the Connecticut ban on Oct. 1, 2011. The Connecticut ban also applies to epoxy-lined infant formula cans and all reusable polycarbonate food and beverage containers.
“We are concerned with the lack of transparency” of the CAP process, Dooley said, adding that the initial chemicals chosen appear to have been selected based on their current high-profile nature.
“The chemical industry supports modernizing the way chemicals are managed in commerce, but the CAP process, to date, provides no evidence of a systematic, science-based approach,” Dooley said.
In particular, ACC pointed out that in suggesting the need for restrictions on eight types of phthalates, EPA failed to note that the exposure of the general public to phthalates is “below — in most cases, way below — safety limits established by the EPA and the European Union.”
EPA said it is considering initiating a rule-making procedure for phthalates in 2012.
Michael Walls, vice president of regulatory and technical affairs for ACC, hopes EPA will go forward with a stakeholder dialogue to develop priorities.
“We need some transparency about areas of concern so the industry can help provide the agency with information that is available,” Walls said.
ACC also is concerned with EPA's plans to regulate greenhouse gas emissions from stationary sources by the end of March. That news came in the aftermath of the agency's endangerment ruling in early December that six greenhouse gases “threaten the public health and welfare of current and future generations.”
Under its endangerment finding, EPA argues that the Clean Air Act gives it the authority to regulate any facility that emits more than 25,000 tons of carbon dioxide annually. The Competitive Enterprise Institute in Washington has said it will challenge the finding in federal court if EPA goes through with its plan.
“If EPA moves down the path of regulating stationary- source emissions, that could really grind this economy to a halt,” ACC's Dooley said. “Our concern with the EPA tactic is that it really is a sledgehammer approach. All of our members have reservations and oppose EPA's plan to regulate stationary sources.
“This issue is so complicated that if it is not done right, there could be a significant disproportionate impact on re-growing our economy. It has the potential to bring to a halt any investment by the manufacturing sector,” Dooley said.
“We need to balance the diverse needs of different regions and sectors of the economy” in regulating greenhouse gas. “I think we can make a very compelling case for EPA to delay action for a year to give Congress time to act.”
U.S. Sen. Lisa Murkowski, R-Alaska, the ranking Republican on the Senate Energy and Natural Resources Committee, agreed. Murkowski has said she will introduce a resolution of disapproval, which, if adopted, would force the EPA to withdraw its action.
“Having EPA advance climate policy is allowable, but not the best tool,” Murkowksi said. “I don't think we develop our best policy when we have a gun to our heads.” She also called the endangerment finding politically motivated as it was announced Dec. 7, the first day of the international climate-change talks in Copenhagen.
EPA's endangerment finding gives the agency the authority to regulate emissions from 6 million workplaces whenever they undergo an expansion and requires them to use the best available technology for controlling emissions.
“There would be 6 million facilities subject to permits, which, in EPA's own words, would be absurd,” Dooley said. “We have to be very careful about making policy decisions that would negatively impact the economy, jobs and the growth of green technologies and energy-efficient technologies.”
Dooley made it clear that ACC is not opposed to a climate-change policy — just the way EPA is approaching the issue.
“A comprehensive energy policy is critical to this industry, but it has to be done in a way that protects the environment and protects jobs in this country,” he said. “This industry is dependent on natural gas both as a source of power and as a feedstock and we think coming to a conclusion on climate change will bring some certainty to the marketplace.”
Copyright 2010 Crain Communications Inc. All Rights Reserved.
