2022 SOCMA principles support competitiveness of North American specialty chemical value chain
By Robert Helminiak, Vice President, Legal & Government Relations
With a mission to foster growth for the North American specialty chemical industry, SOCMA’s Government Relations team met with companies across the industry at the Specialty & Custom Chemicals Show. This face-to-face dialogue is critical to SOCMA in advocating for and working hand-in-hand with companies to ensure they are informed and poised to act on regulatory and legislative changes impacting their businesses.
As the team walked the show floor, companies shared that in order to maintain competitive advantages to overcome supply chain disruption, they are seeking new solutions for tariff relief and bringing new chemicals to market. The Government Relations Steering Committee and SOCMA’s Board of Governors understand these growing needs and approved the following new policy principles for 2022:
- Strengthening U.S. competitiveness
- Worker health and safety
- Chemical regulation
- Facility security
Strengthening U.S. competitiveness
More than 100 years ago, SOCMA was founded on the principle of supporting international trade efforts for the specialty chemical industry. The association strongly advocates for the development of free trade agreements to allow U.S. specialty chemical manufacturers fair access to foreign markets. In 2022, SOCMA continues to work on behalf of specialty chemical manufacturers to ensure tariffs are properly applied to products manufactured and available for purchase in the U.S. Our team is also working to eliminate non-tariff barriers to trade.
Here are two key trade initiatives SOCMA continues to engage with on behalf of specialty chemical manufacturers.
Section 301 Tariff Exclusion Process
The 301 China Tariffs indiscriminately implement up to 25% tariffs on SOCMA member inputs and raw materials. The exemption and exclusion processes had no publicly stated criteria and were black box analyses.
301 Tariffs have a distinct business impact on SOCMA members and the industry because many of the products specialty chemical manufacturers require are only produced in China with no alternative. This increases the cost of raw materials and disadvantages U.S. chemical manufacturers in the global market.
SOCMA created a 301 Task Force, comprising of member companies, and is advocating for the U.S. Trade Representative (USTR) to re-open the entire 301 exclusion process. There is opportunity for resolution on both legislative and regulatory fronts. As a regulating authority, USTR can re-open the process. On the legislative side, there is a Senate bill – United States Innovation and Competition Act of 2021 (USICA) – which includes a mandate that USTR reopen the process.
Miscellaneous Tariff Bill (MTB) reauthorization
The Miscellaneous Tariff Bill (MTB) provides tariff relief on products not manufactured or available in adequate supply in the United States. Roughly half of the 3,000 products on the MTB list are raw materials and inputs for the chemical industry, thus posing a significant impact to manufacturers. Tariff relief through MTB provides significant savings for the specialty chemical industry that can be used to spur innovation and growth.
SOCMA supports both USICA and the America COMPETES Act, which include reauthorization and some retroactivity for MTB. SOCMA is also advocating that MTB be retroactive to December 31, 2020, when the previous bill expired.
Worker health and safety
The health and safety of employees is paramount to the chemical industry, and SOCMA supports a consistent regulatory system to guide the industry. This includes reasonable, responsible regulations that have a direct correlation to worker health and safety while avoiding overreach or conflicting regulations. SOCMA urges all manufacturers to continuously improve employee safety measures and the security of facilities.
Risk Management Program (RMP) rulemaking
The Risk Management Program (RMP), a rule under US EPA’s Clean Air Act, is a constantly shifting issue due to various proposed and final rules introduced since 2016. As EPA prepares a new proposed rule, SOCMA is advocating to keep out three problematic provisions, which were eliminated in the 2020 rule, but could return in a new draft.
- Safer technology and alternative analysis (STAA) is problematic because of its subjectivity, especially as it relates to batch manufacturing, making it nearly impossible for companies to comply with the regulation.
- Third-party inspections on incidents and near misses are a challenge for two distinct reasons:
- There may not be enough certified inspectors in the U.S. to complete the necessary inspections; and,
- Outside inspectors and auditors do not have the unique understanding of batch manufacturing facilities and operations like internal inspectors/auditors do, thus impacting the outcomes of audits and inspections.
- Unfettered information disclosures to local emergency response communities creates significant security risks to facilities.
SOCMA strongly advocated for and was successful in the removal and modification of these provisions and will continue to work with EPA to develop a strong, responsible RMP rule.
SOCMA supports a risk-based regulatory structure that allows manufacturers to innovate in a safe and swift fashion. Regulations on bringing new chemicals to market must consider the highly advanced nature of the specialty chemical industry, and the distinctiveness of the batch manufacturing process, while protecting health and mitigating environmental impacts. SOCMA also encourages the responsible manufacture and use of existing chemicals.
TSCA Fees Rule
The Toxic Substances Control Act (TSCA) Fees Rule, which levies fees for the New and Existing Chemicals programs at EPA, is in the process of being updated by US EPA.
This directly impacts specialty chemical manufacturers because it includes fees for Pre-Manufacture Notices (PMNs) and Low-Volume Exemptions (LVEs), which increases the cost of doing business.
A proposed rule was published in 2020 and included relatively flat fees for the New Chemicals program, which SOCMA supported. The new proposed rule is expected to have significant cost increases, and EPA Assistant Administrator, Michal Freedhoff, has said that companies should “expect sticker shock” when the new rule is in place.
SOCMA continues to advocate for flat fees for the New Chemicals program.
TSCA New Chemical Review
EPA’s New Chemicals program has specific review deadlines of 30 (or 60) days for Low Volume Exemptions and 90 (or 180) days for Pre-Manufacture Notices. Unfortunately, EPA habitually misses these deadlines, with some PMNs/LVEs remaining in the queue for multiple years.
This harms not only the specialty chemical industry, but every downstream industry along the value chain. Specialty chemical manufacturers need consistency in the review process and review period. To properly operate a business and meet manufacturing and contract commitments, manufacturers must be able to rely on the statutorily mandated timelines for TSCA review.
SOCMA continues to lobby EPA to meet their statutory obligations and is currently working with EPA on the development of the Collaborative Research Program, which promises to create efficiencies in the review of New Chemicals.
SOCMA is currently putting together a dedicated task force of members to work on the issue in the long-term.
SOCMA supports non-prescriptive regulations designed to protect facilities from diversion, attack and other intentional harms without impairing the industry’s ability to remain competitive and innovative. SOCMA encourages proactive cyber and physical security measures to further protect chemical facilities.
Chemical Facilities Anti-Terrorism Standards
Authorization for the Department of Homeland Security’s (DHS) Chemical Facilities Anti-Terrorism Standards (CFATS) program, which mandates that facilities meeting chemical and volume thresholds (among other criteria) develop a security plan to prevent other nefarious activities, expires in 2023.
SOCMA is working with coalition allies to ensure CFATS is extended and that the authority to manage these security issues continues to reside with DHS.
SOCMA is perpetually tackling new challenges impacting your businesses. One of the leading new issues the GR team is hearing most about is around the development of customer sustainability expectations. Downstream customers have established their own sustainability plans and are looking up and down the supply chain to help fulfill those goals.
These sustainability initiatives are often broad and include public-facing goals related to product development, emissions, waste, corporate responsibility, safety, and other individual categories. SOCMA is working with our members to understand how best to serve the industry as these demands continue to arise.
Additionally, SOCMA will be taking action on OSHA’s Hazard Communication Standard, EPA’s HFC phasedown and many other breaking issues expected to come up over the course of the year.
SOCMA needs the input of members on all policy-related matters. The best way to receive updates and ensure your company is informed on these critical issues is through participation in Government Relations activities by joining SOCMA’s EHS Committee and/or International Trade Committee. The level of participation can vary from company to company and individual to individual. Some members simply receive email updates on new laws and regulations, while others work directly with the GR team to develop SOCMA policy direction and activity, and to educate legislators and regulators.
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