WASHINGTON (Jan. 30, 1:20 p.m. ET) — The amount of activity at the federal level affecting the plastics industry isn't expected to be high this year, as election-year politics are likely to slow things to a crawl.
“Anyone who predicts anything this year legislatively is taking an awful risk,” said Steve Russell, vice president of plastics for the American Chemistry Council in Washington. “Most folks don't sense an opportunity to get much across the finish line.”
But the industry has its eyes on several key issues, and is watching for new regulatory challenges and initiatives, particularly from the Environmental Protection Agency and the Occupational Safety and Health Administration.
There is also a pressing need to again extend the research and development tax credit for the 15th time since it was enacted in 1981. But everyone expects that to be done, possibly as part of a political deal to extend for another year the temporary cut in payroll taxes put in place in 2011.
“I'm pretty optimistic that an extension will go through, probably in the next month or two,” said Bill Allmond, senior lobbyist and vice president of government affairs for the Washington-based Society of Chemical Manufacturers and Affiliates. “Our members start to get antsy in late February if it hasn't been extended, because by then they are more than halfway through the first quarter.”
But other than the R&D tax credit, everything is up in the air.
“There is nothing that Congress and the administration are going to agree upon relative to the economy,” added Allmond. “There is going to be a lot of animosity between the president and the Congress. I don't see much that they can introduce that they can agree upon.”
“We definitely have scaled back our expectations and advocacy on issues — such as energy security, and reform of the toxic substances control — that we have focused on the past couple of years,” he said. “We are focused on issues such as the R&D tax credit, the extension of the … bill that suspends tariffs on certain imports, mostly chemicals, that are used in manufacturing, and we are engaged with the EPA on rules governing confidential business information.”
But that doesn't mean the industry won't be out in front, making sure lawmakers understand the possible impact of revising the Toxic Substances Control Act, tax reform, trade pacts and energy policies on the plastics and chemical industries.
“Three of the key areas we're focusing on where we would hope something would happen are energy policy, tax reform and growing overseas markets,” Bill Carteaux, president and CEO of the Society of the Plastics Industry Inc. in Washington, said in a phone interview Jan. 25.
In the energy arena, for example, SPI said it will work to enact legislation that would prevent EPA from regulating greenhouse gases from stationary sources — rules that are still pending, but have not gone into effect.
In energy, both SOCMA and ACC are focusing on shale gas because of its potential as a cheaper feedstock and because SOCMA members make the chemicals that go into the extraction of natural gas from shale oil deposits.
Plastics and chemical industry associations also will focus on activity at the agency level because “the regulatory framework is where the administration plans on getting things done,” said Carteaux.
Right now, for example, there are specific initiatives for oversight of PVC production, rules that would make it more difficult to claim chemical formulas as confidential business information, combustible workplace dust rules, rules governing reporting of workplace injuries and illnesses, and rules implementing provisions of the consumer product safety improvement act.
“EPA and OSHA are really going to drive their agendas,” said Allmond.
“One of the developing issues we're engaged in with EPA is confidential business information,” Allmond said. “They have a proposal currently being reviewed by the Office of Management and Budget that would require manufacturers to justify the confidentiality of information even before a chemical is manufactured.
“If that rule would go into place and companies can't claim the identity of chemicals as confidential, the information would immediately go overseas, and be manufactured,” he argued. “This could prove to be our biggest regulatory challenge, [as it is] part of their overall strategy to get companies to reveal more information about chemicals.”
SOCMA plans to go on the offensive and meet with OMB to “explain the problems with that, and give them examples of key products we have developed,” said Allmond. “Forty percent of our member companies make active pharmaceuticals that help fight leukemia or fight cancers at advanced stages” and they might not have been developed if there had been rules requiring release of confidential business information, he said.
“The EPA continues to pretty aggressively pursue chemical management and increase federal regulation at that level,” agreed Jon Kurrle, senior vice president of government and industry affairs for SPI, pointing, for example, to a planned rulemaking in 2012 on long-chain perfluorinated compounds.
In addition, he said SPI wants to make sure new Consumer Product Safety Commission regulations don't lead to “unreasonable third-party testing” for food or cosmetics packaging.
“Food packaging is already heavily and well-regulated at the federal level. We don't think that double regulation makes sense,” Kurrle said.
And even though TSCA reform isn't expected to gain traction in the election year, both SPI and ACC will continue to point out adverse potential impact from unreasonable changes.
“We want to make sure lawmakers understand how easy it would be to hurt the plastics industry” if TSCA reform includes mandates that would make it difficult to compete globally or innovate, Russell said.
“Confidence in EPA's regulation of chemicals ... has eroded to the point where individual states have legislated their own chemicals-management laws, and retailers have taken it upon themselves to ban products from their stores,” said Carteaux in a “Perspective” column published Jan. 16 in Plastics News.
“SPI supports prudent modernization of TSCA,” he wrote. “However ... we will work to defeat” a proposal by Sen. Frank Lautenberg, D-N.J., “because it ignores risk assessment and the significant socio-economic benefits of products made with chemicals, such as plastics.”
Still, for the most part, the plastics and chemical industries expect they will be doing more education than advocacy this year, even at their planned Fly-Ins to Capitol Hill, set for April 17-18 for SOCMA and July 25 for SPI.
“When you have Congress ignoring the issues from year to year, it makes senior officers at companies question expenditures because they have no certainty from year to year on how they will be regulated,” Allmond said.
Associations and business groups will also be pressing the administration and Congress on issues related to jobs and the economy.
“The state of American business is improving, but it is improving weakly, slowly and insufficiently to put our nation back to work,” said Tom Donohue, president and CEO of the U.S. Chamber of Commerce, in speaking to members and the media Jan. 12 for his State of American Business address. “We're still down 6 million jobs since the recession ended. And there are more than 23 million Americans who are either unemployed, working part time, or who have given up looking for jobs.
“Our nation's biggest priority must be to put these people back to work.”
But that might not occur unless there is significant regulatory and legal reform, Donohue said.
“The regulatory avalanche confronting our job creators is unprecedented. The Labor Department has 100 rulemakings in the pipeline. Dodd-Frank requires 447 rules, 63 reports and 59 studies. The health-care law established 159 new agencies, panels, commissions and regulatory bodies. EPA has some 200 regulations in the works,” he said.
“The chamber supports necessary, sensible and forward-looking regulations,” said Donohue. “But when we see regulatory activism that is based on bad data … we'll go to the court of public opinion to explain how a regulatory system run amok is needlessly driving American jobs out of the country or out of existence.
“2012 must not be a wasted year simply because it's an election year,” said Donohue, asserting that the country needs real leadership from its politicians, its administrators and the business community, and it needs the American people to step forward.
“Real leaders wouldn't wait another day without trying to solve the serious economic and financial challenges facing our country. They wouldn't tell us that the solutions will have to wait until after the election,” said Donohue. “Real leaders understand that Americans can have big differences in philosophy but still find common ground.”