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CONGRESSIONA L OUTLOOK
CONGRESSIONAL OUTLOOK FOR 2012
CHEMICAL REGULATION: TSCA REFORM, WATER PERMIT DEBATES LIKELY TO CONTINUE
Election year, partisan politics likely to leave little room for action on KEY CHEMICAL-RELATED ISSUES
Reform of the 1976 law that regulates the manufacture of commercial chemicals—the Toxic Substances Control Act (TSCA)—remains on the legislative agenda for 2012. There is broad support for modernization of TSCA among the chemical industry, businesses that use chemicals, environmental and health activists, and labor. These groups disagree, however, on the details. Observers agree that a pending bill, S. 847, to update TSCA is unlikely to move through both houses of Congress this year. The sponsor of S. 847, Sen. Frank R. Lautenberg (D-N.J.), at the end of 2011 promised action on the bill. Lautenberg chairs the Senate Environment & Public Works Subcommittee on Superfund, Toxics & Environmental Health. The panel, however, has given no indication of when the bill might be called up for a vote. Thus far, there has been “no meaningful accommodation” of the views of the American Chemistry Council, a major industry group, in any of the proposed changes to Lautenberg’s bill, says Calvin M. Dooley, ACC president and chief executive officer. Without accounting for ACC’s concerns, Dooley says, bipartisan support for a TSCA reform bill is unlikely. And without bipartisan support, the bill has virtually no chance of passage in this Congress. Andy Igrejas, campaign director of Safer Chemicals, Healthy Families, says ACC has
THE INABILITY of the Republican-
House has passed some 27 bills that Recontrolled House of Representatives publican leaders identified as key “jobs and Democrat-controlled Senate to find bills.” The measures received little support common ground will continue to plague from Democrats, who classified them as the second session of the 112th Congress, antienvironmental and a threat to health as partisan fighting shows no sign of deand safety. The legislation, none of which creasing. As a result, important chemicalhas cleared the Senate, would have, among related issues, such as curbing greenhouse other things, eliminated air pollution gas emissions, modernizing the Toxic regulations for coal-fired power plants Substances Control Act, and reforming and cement manufacturers, sped drilling chemical plant security regulaoff Alaska’s coast, and ended tions, will face an uphill battle. the Environmental Protection BIG PLAYERS Another confounding factor is House Speaker Agency’s authority to regulate (from that this is an election year, which Boehner greenhouse gases. right) and GOP means Congress is likely to spend colleagues Issa and This is the situation in which much of its time grandstanding. Upton will square several key science and techoff against their Members will want to spend as nology issues will be competing much time on the campaign trail Democratic Senate for attention. On top of pushes counterparts as possible, as opposed to stayto make permanent the R&D Bingaman, Boxer, ing on Capitol Hill and working and Majority Leader tax credit for businesses and Reid this year. through legislation. set up various user fees at the Any bills that do pass are likely Food & Drug Administration, to be cast in terms of jobs. MemCongress will also be working bers of both the House and the Senate have through what promises to be a very tight already spun much of the legislation intro2012 federal budget. The budget will imduced in the first session of this Congress pact all aspects of science and technology. in terms of creating jobs if they support it, The following is C&EN’s annual outlook or killing jobs if they oppose it. of what to expect from Congress in the year For example, over the past year, the ahead. WWW.CEN-ONLIN E .ORG
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shut the door on any legislative action this year to update the chemical control law. “ACC has been withholding the kind of constructive engagement that would allow lawmakers to accommodate concerns,” he says. Igrejas’ group is a coalition of environmental and health groups and businesses that are seeking reform of TSCA. Even though the bill may not make it to the Senate floor, Igrejas says he expects Lautenberg’s subcommittee to take up S. 847 in late February or March. The panel’s efforts could lay the groundwork for legislation to rewrite TSCA in a future Congress, he adds. Mike Wright, director of health, safety, and environment for the United Steelworkers, also is doubtful that legislation to modernize TSCA will move this year. S. 847 is caught in the partisan gridlock that has curtailed legislative action on Capitol Hill during this session of Congress. The standoff is likely to get worse as the November elections near, he says. The union, which represents many workers in chemical plants, sees eventual overhaul of TSCA as critical to maintaining U.S. jobs in this sector, Wright says. Also looking forward to an eventual overhaul is the Society of Chemical Manufacturers & Affiliates. The trade group says in a statement that in 2012 it will “actively educate members of Congress and staff on how S. 847 would negatively impact specialty-batch chemical manufacturers, and will continue to share our vision for TSCA reform with them.” Meanwhile, Congress is expected to continue to actively work on legislation that would eliminate a 2009 court-ordered requirement that pesticide applicators obtain a permit under the Clean Water Act (CWA) when spraying in or near U.S. waters. Those in favor of such legislation say the CWA permit is duplicative because the effects of pesticides on aquatic environments are already considered under the Federal Insecticide, Fungicide & Rodenticide Act (FIFRA). The House passed the Reducing Regulatory Burdens Act of 2011 (H.R. 872), a bill that would eliminate the court-ordered permit requirement, last March. The Senate Agriculture, Nutrition & Forestry Committee passed the same bill in June, but the bill has yet to come to the Senate floor for a vote because Senate Environment & Public Works Committee Chair Barbara Boxer (D-Calif.) and fellow committee member Benjamin L. Cardin (D-Md.) have blocked its consideration. The senators argue that EPA’s
standard for assessing aquatic effects of pesticides under FIFRA is insufficient to protect wildlife and possibly humans from harm. Discussions by lawmakers about the permit requirement this year will likely focus on the ability of pesticide users to get permits in time and the possibility of users facing citizen suits under CWA, according to predictions by the Washington, D.C.based law firm Bergeson & Campbell. Also likely to be on the agenda this year for Congress is the reauthorization of the Pesticide Registration Improvement Act (PRIA). This law, which allows EPA to collect registration fees from pesticide manufacturers, is set to expire on Sept. 30. If PRIA is not renewed, it could have a “severe and adverse impact on the ability of EPA’s pesticide program to make timely decisions on pending registration activities,” Bergeson & Campbell wrote in a recent commentary. The law firm predicts that reauthorization of PRIA may encounter difficulties because of the budget deficit and “gridlock in Congress.”—CH & BEE
CONSUMER PROTECTION: DRUG SHORTAGES, IMPORT SAFETY DOMINATE DISCUSSIONS Lawmakers are expected to resume deliberations regarding reauthorization of the Prescription Drug User Fee Act (PDUFA) early this year. The law, which allows the Food & Drug Administration to collect fees from pharmaceutical manufacturers to help speed up drug reviews, is set to expire on Sept. 30. Industry-paid user fees are critical for FDA because they make up about 60% of the agency’s drug review budget. PDUFA was first signed into law in 1992 and has been reauthorized every five years since. Drug companies and FDA reached a deal last fall to increase user fees by 6% above fiscal 2012 levels, bringing the projected total amount to $693 million for fiscal 2013, in exchange for increased communication and more consistent drug approvals (C&EN, Sept. 12, 2011, page 17). It is now up to Congress to decide whether to go along with those recommendations. Industry groups and FDA are urging Congress to reauthorize PDUFA quickly, without tacking on additional FDA-related mandates to the legislation. Additional provisions “could create excessive regulatory burdens” or “delay the
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legislative process,” said David E. Whea don in testimony at an FDA public meeting last fall. Wheadon is a senior vice president for scientific and regulatory affairs at the Pharmaceutical Research & Manufacturers of America (PhRMA). “Failure to reauthorize PDUFA in a timely manner would have an extraordinarily disruptive effect on the agency and impede patients’ access to new treatments,” he stressed. A clean bill without additional provisions, however, is unlikely. Lawmakers in both the House and Senate have already signaled their intent to use PDUFA reauthorization to address other FDA-related concerns. For example, at a hearing last month held by the Senate Health, Education, Labor & Pensions (HELP) Committee to address the growing problem of prescription drug shortages in the U.S., Sen. Barbara A. Mikulski (D-Md.) called for measures to alleviate drug shortages as part of PDUFA reauthorization. “President [Barack] Obama issued an executive order on Oct. 31 to immediately take action to reduce shortages; but we can and must do more,” she said. Mikulski is a cosponsor of the Preserving Access to Life-Saving Medications Act (S. 296), introduced last year by Sen. Amy Klobuchar (D-Minn.). The bill would require all drug manufacturers to give FDA at least six months’ notice when they plan to discontinue or interrupt drug production or make adjustments that could lead to drug shortages of medically necessary drugs. Currently only companies that are the sole manufacturer of a drug are required to notify FDA when they make such changes. S. 296 would also require FDA to establish monetary penalties for companies that fail to notify the agency of production changes. Currently there is no penalty if a company does not comply. Members of the Senate HELP Committee have also hinted at introducing initiatives into the PDUFA reauthorization that would help secure the safety of the pharmaceutical supply chain, which is becoming increasingly globalized. After a hearing last fall on government oversight of the drug supply chain, Mikulski and HELP Committee Chairman Tom Harkin (D-Iowa) suggested using PDUFA as a vehicle to pass provisions that would modernize the drug supply system. Some members of the House Energy & Commerce Committee are also eyeing PDUFA reauthorization as an opportunity to examine and improve FDA’s regulatory process. At a subcommittee hearing
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last summer on PDUFA reauthorization, lawmakers discussed how FDA regulations affect innovation, job creation, and access to critical drugs. They also brought up concerns that FDA is focusing too heavily on risk in its risk-benefit analysis of drug approvals and that current conflict-ofinterest provisions limit who can serve on FDA drug review advisory committees. “These problems at FDA appear to be stifling American innovation, costing American jobs, and hurting American patients,” said Fred Upton (R-Mich.), chairman of the committee. The committee is expected to examine such concerns again this year as PDUFA reauthorization moves ahead. For the first time, Congress is also set to take up the Generic Drug User Fee Act (GDUFA) this year; a hearing is already scheduled for next month in the House Energy & Commerce Committee. Although the last several budgets have contained a generic drug user fee program, new legislation is needed to put such fees into place, according to FDA. At next month’s hearing, the Energy & Commerce Committee is also planning to address user fees for biosimilars, genericlike versions of complex biological drugs. A consideration of biosimilars fees is also a first for Congress.—BEE
ENERGY: FOCUSED BILLS MORE LIKELY TO CLEAR CONGRESS In the energy arena, the combination of an election year and an extremely partisan Congress will present ample opportunities for oversight hearings and the introduction of legislation. But it is likely to doom passage of actual energy bills. Crafting a successful law calls for compromise, statesmanship, and willingness to put aside partisan differences—all of which are in short supply in this Congress. That said, as in years past, House and Senate leadership have again discussed broad energy bills. In the House, Speaker John A. Boehner (R-Ohio) and top House Republicans early this month resurrected discussion of a sweeping energy and transportation bill—called the American Energy & Infrastructure Jobs Act—pushed by the same Republicans last year. However, they’ve yet to introduce the actual bill or provide specific details of what it will contain. “In the coming weeks and months, the
House will take action on the American Energy & Infrastructure Jobs Act, which will link expanded American energy production to high-priority infrastructure projects like roads and bridges in order to create more jobs,” Boehner said, as he left for a Latin American trade visit on Jan. 9. The timing of “weeks and months” was identical to Boehner’s statements last November when he discussed the same bill. To date, the speaker’s office staff has provided only a conceptual description with such a heavy emphasis on fossil-fuel development that it is unlikely to gain traction with Democrats in the House or Senate.
PARTY SPLIT Republicans outnumber Democrats in the House …
According to the conceptual description, the bill would open portions of the Arctic National Wildlife Refuge to oil drilling, promote oil shale development and technological R&D, and require President Barack Obama to lease offshore oil and gas lands. It would use federal income generated through these oil and gas leases to improve bridge and highway infrastructure and would block spending of these funds for nonhighway transportation issues. On the Senate side, Majority Leader Harry Reid (D-Nev.) has said he is considering energy legislation too, possibly in the summer, but he has presented no details other than saying that any such energy bill must encourage jobs and development of clean energy. Several experts in and out of Congress say it is more likely that small, tightly focused bills could clear Congress this year. Focused energy legislation could include proposals to modernize and secure the electricity grid as well as to encourage and support energy efficiency in homes and industry. More than a dozen such bills have been proposed that address these issues, but an agenda for their introduction and movement has not been put forth. Another source of energy-related action is expected to come from the Senate Energy
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& Natural Resources Committee, led by Sen. Jeff Bingaman Jr. (D-N.M.), who will retire at the end of his term later this year. The committee, however, is just now putting together an agenda for the upcoming year, says Bill Wicker, committee communications director. Topping the probable committee activity will likely be action on legislation Bingaman intends to introduce that would require utilities to generate a portion of their electricity from clean energy sources, thus limiting emissions of carbon dioxide and other greenhouse gases. For years, Bingaman has supported such a bill, and he is expected to try again to … but Democrats hold a slight majority in the Senate.
move it in his final year in the Senate. Clean energy sources targeted in the legislation could include wind and solar, as well as nuclear and coal-fired power plants with carbon capture and sequestration systems. Bingaman is considering several options that derive from a study by the Energy Information Administration as the base for his plan. In any case, the resulting legislation is expected to include a CO2 trading scheme. Beyond his yet-to-be introduced bill, Bingaman’s committee last year cleared nearly 20 stand-alone energy bills, Wicker notes, but Reid has brought none of them before the full Senate. A push to bring at least some of these to the Senate floor is likely. In the Republican-controlled House, the investigation of the support of clean energy by the Department of Energy and other parts of the Obama Administration will continue. The investigation has put a spotlight on programs that support renewable energy, and key among these investigations has been the House Energy & Commerce Committee’s examination of the failed loan guarantee to solar energy company Solyndra. On Jan. 9, Rep. Cliff B. Stearns (R-Fla.), chairman of the Energy & Commerce Sub-
“In its current form, the GRANT Act poses a significant threat to the research and innovation system of the United States.” committee on Oversight & Investigations, again criticized the Administration for not supplying all of the documents related to Solyndra that were subpoenaed by committee Republicans. House Republicans also say they will up the pressure on Obama to approve the Keystone XL pipeline that would bring heavy crude oil from tar sand production sites in Canada to U.S. refineries. Environmental activists and many Democrats oppose the pipeline because of greenhouse gases emitted from tar sand oil production and possible environmental damage from pipeline leaks, but it is strongly supported by Republicans and their business allies, particularly in the petroleum industry. Provisions added by Republicans last month to a tax bill gave Obama until Feb. 21 to decide the fate of the oil pipeline; the decision came on Jan. 18 (see page 21). Republicans call this a jobs issue and are mounting a campaign for the pipeline. They have promised congressional hearings, legislation, and more anti-Obama publicity should the pipeline not be approved.—JJ
ENVIRONMENT: HOUSE CONTINUES FOCUS ON REINING IN EPA AUTHORITY A top priority for the House Committee on Science, Space & Technology this year, a committee aide says, is improving science at the Environmental Protection Agency by renewing the law that authorizes R&D at the agency—the Environmental Research, Development & Demonstration Authorization Act. A number of Republicans on the committee said last year that changes to the agency’s science program are needed to halt what they view as economically harmful regulations from EPA. “The right reforms to EPA R&D programs will not only improve trust in the science that informs regulatory decisions, it will also provide a framework to prioritize the most important functions and reduce unnecessary and wasteful spending elsewhere,” says Rep. Andy P. Harris
(R-Md.). Harris chairs the Science, Space & Technology Subcommittee on Energy & Environment. In addition, the House science committee will continue holding oversight hearings this year on EPA’s Integrated Risk Information System (IRIS), a research program that assesses the hazards from exposure to chemicals. “The committee continues to have serious concerns regarding the quality of the assessments produced and transparency of the IRIS process,” the panel’s aide tells C&EN. Lawmakers will closely monitor EPA’s implementation of the National Academy of Sciences recommendations, made last year, for improving the program, he says. Congress will also face pressure from chemical manufacturers to pass legislation that would delay new EPA rules governing toxic air emissions from industrial boilers. To meet a court-ordered deadline, the agency in March 2011 issued a set of control standards for mercury and other air pollutants from boilers. But in May, shortly before the rules were to enter into force, EPA announced that it would delay the effective date of the standards until after it revised the regulations to address cost and feasibility concerns raised by various industries. In December, EPA proposed tweaks to the rules that agency officials say will make implementation 50% less costly for industry than the original proposal. EPA plans to finalize the changes in April. But on Jan. 9, the U.S. District Court for the District of Columbia overturned EPA’s decision to delay the start date for the standards, saying the action was not legally justified. By requiring the rules to take effect now, the order creates uncertainty for business and puts U.S. investment at risk, says Calvin M. Dooley, president and chief executive officer of the American Chemistry Council, a chemical industry trade group. “The decision reaffirms the need for legislation to ensure industry has adequate time to comply,” he remarks. The Senate, Dooley asserts, should “quickly approve” the EPA Regulatory Relief Act (S. 1392), which would direct EPA to
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develop new rules that are easier to implement and delay the compliance deadline for industry until at least 2018. The Republicandominated House passed a companion bill (H.R. 2250) on Oct. 13, 2011. However, the measure faces an uphill fight in the Democrat-led Senate, and the White House has threatened a veto. Meanwhile, three bills are pending in the Senate that would restrict federal agencies’ ability to regulate. The House passed the measures last month (C&EN, Dec. 12, 2011, page 6). Chances are fairly slim, however, that the Senate will take up two of those measures, H.R. 10 and H.R. 527, says Jessica Randall, federal regulatory program analyst at OMB Watch, a watchdog group that focuses on regulation and the White House Office of Management & Budget (OMB). H.R. 10 would require Senate and House approval of major regulations—those with an annual impact on the economy of $100 million or more—before they could take effect. H.R. 527 would require agencies to conduct more analysis of the impact of planned regulations on small businesses than is currently required. But a number of senators have expressed interest in debating the third bill, the proposed Regulatory Accountability Act (H.R. 3010), Randall tells C&EN. This measure would add to the numerous procedures that agencies must follow before issuing a rule. The legislation would also provide more opportunities for industry and activists to challenge federal regulations. OMB Watch and other groups say H.R. 3010 would essentially halt federal rule-making for public health, workplace safety, and environmental standards. The White House has indicated that President Barack Obama would veto any of the three regulatory reform bills, should the Senate pass them.—CH & GH
HOMELAND SECURITY: DEBATE OVER CHEMICAL PLANT REGULATIONS REMAINS Chemical manufacturers will continue to lobby for permanent authorization of the Chemical Facility Anti-Terrorism Standards (CFATS), the federal chemical plantsite security program. Under the nearly five-year-old initiative, the Department of Homeland Security (DHS) requires more than 4,700 high-risk facilities to conduct
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vulnerability assessments, develop site security plans, and implement protective measures to meet DHS-defined risk-based performance standards. CFATS is currently authorized as an add-on to a DHS funding bill, and the chemical industry has been urging Congress to pass a long-term authorization of the program, which it strongly supports. Because CFATS is tied to the annual appropriations process, it is currently funded through September. Several pieces of legislation pending in Congress—H.R. 901, H.R. 908, and S. 473—would extend authorization of the existing chemical facility standards for three to seven years. “We were very pleased when committees in both the House and Senate passed proposals last year to reauthorize CFATS,” says Calvin M. Dooley, president and CEO of the American Chemistry Council, which lobbies on behalf of the nation’s largest chemical companies. “This was one of the few issues where we saw bipartisan support, which gave us hope that legislation would be acted upon before the end of the year. Unfortunately, it didn’t get across the finish line in the first session, but we’re hopeful that we will see congressional action this year,” Dooley says. “At the minimum,” he adds, “we’re pleased that there has been bipartisan support for a one-year reauthorization of the CFATS program as part of the appropriations process.” On the other side of the debate, environmental activist group Greenpeace and other members of an environmental-labor coalition will continue to urge Congress to pass legislation that gives DHS the power to order the highest risk facilities to adopt so-called inherently safer technology (IST), such as switching to safer processes or using less toxic substances. In November 2009, the then-Democrat-controlled House passed such a bill (H.R. 2868), but the measure died in the Senate. With Congress bitterly divided and the chemical industry adamantly opposed to any legislation that mandates facilities’ use of IST, reform of the CFATS program or even long-term authorization will most likely have to wait until 2013. “A bill with IST provisions is extremely unlikely to make it through a Republican House,” points out a Senate homeland security committee staff member. “And a bill without it is
tough to get through a Democratic Senate.” CFATS authorization many not be going anywhere this year, but an investigation of problems within DHS’s Infrastructure Security Compliance Division (ISCD), the office that oversees CFATS, may be. Sen. Susan M. Collins of Maine, the top Republican on the Senate Homeland Security & Governmental Affairs Committee, says an internal DHS assessment has found that “serious management problems, wasteful spending, insufficient and untrained personnel, and union demands are hindering the department’s implementation” of CFATS (C&EN, Jan. 9, page 6). The internal report hasn’t been publicly released, but members of Congress have been briefed on its contents. The assessment, Collins says, also notes that the lack of a longer term authorization by Congress has had a negative impact on the program. In 2006, Congress gave DHS limited authority to create a chemical facility security program. However, lawmakers have been unable to reach consensus on how to structure CFATS and make it a permanent part of DHS. Collins notes that Rand Beers, the head of DHS’s National Protection & Programs Directorate, has vowed to fix the management, personnel, and other problems identified in the report. Signaling that oversight hearings will be held, Collins says Congress “will play a critical role in holding DHS accountable and ensuring the program is advancing our shared goal of securing America’s chemical facilities against terrorism.” Any changes to CFATS should focus on the challenges at DHS that have slowed the pace of implementation, says William E. Allmond IV, vice president of government relations at the Society of Chemical Manufacturers & Affiliates, a trade group representing mostly small and midsized chemical companies. “CFATS is a fundamentally sound security policy that needs better administration by the department,” he says. But Rick Hind, legislative director of Greenpeace’s toxics campaign, says many of the program’s failures stem from “the vague, contradictory, and loophole-ridden language in the 740-word CFATS statute.” DHS, he notes, lacks the authority to require a facility to implement any specific security process or tool. WWW.CEN-ONLIN E .ORG
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“Right now, DHS is hamstrung in what they can require. As a result, they have been reduced to the role of pleading and cajoling industry to cooperate, with little legal authority to make things happen,” Hind says.—GH
SCIENCE POLICY: OPEN ACCESS, PEER REVIEW BILLS MAKE WAVES Scientific societies and publishers are paying close attention to two bills active in the House—the Grant Reform & New Transparency Act (GRANT Act, H.R. 3433) introduced in mid-November by Rep. James Lankford (R-Okla.) and the Research Works Act (H.R. 3699) introduced last month by Rep. Darrell E. Issa (R-Calif.), chairman of the House Oversight & Government Reform Committee. The GRANT Act is controversial because it would require public disclosure of peer reviewers. In addition, it would direct federal agencies to post all proposals and applications that support awarded grants on a website. Earlier this month, Reps. Rush D. Holt (D-N.J.) and David E. Price (D-N.C.) sent a letter to other members of the House, asking for their support in urging Speaker of the House John A. Boehner (R-Ohio) and House Democratic leader Nancy Pelosi (D-Calif.) to address “troubling provisions” in H.R. 3433. The lawmakers are particularly concerned that posting grant proposals on a website would reveal proprietary intellectual information and place unnecessary burdens on the federal agencies. They also believe that disclosure of peer reviewers will undermine the peer review process. “In its current form, the GRANT Act poses a significant threat to the research and innovation system of the United States,” the lawmakers wrote in the letter. “Increased accountability and transparency are valuable goals which can be achieved without sacrificing intellectual property rights and the peer review process,” they stated. The GRANT Act was passed by the House Committee on Oversight & Government Reform just one day after it was introduced. But because of concerns swirling around the bill, it has yet to come up for a vote by the full House. Observers do not think it will move quickly this year. The Research Works Act is also stirring up debate in the scientific publishing world, particularlyamongadvocatesofopenaccess
“We were very pleased when committees in both the House and Senate passed proposals last year to reauthorize CFATS.” to results of federally funded research. The bill would require federal agencies to obtain consent from publishers prior to disseminating research articles that are published by the private sector, even if the research was funded by the federal government. The Association of American Publishers and its Professional/Scholarly Publishing Division welcome the introduction of the bill, saying it will “reinforce America’s leadership in scholarly and scientific publishing in the public interest and in the critical peer-review system that safeguards the quality of such research.” Supporters of public access to results of federally funded research are opposed to the legislation, saying it would roll back the National Institutes of Health policy on public access to federally funded research results and prohibit other federal agencies from adopting similar policies. H.R. 3699 is awaiting action by the House Committee on Oversight & Government Reform. It is unclear whether the bill will move swiftly this year. Elsewhere in the House, oversight of basic science within the federal government is expected to be on the agenda of the Committee on Science, Space & Technology, an aide to the panel tells C&EN. As part of this, the committee plans to hold hearings to review recent federal findings on science, technology, engineering, and mathematics education.—BEE & CH
search & Competitiveness Act (H.R. 942). “It’s time we get back on the playing field by modernizing the R&D tax credit and keeping American jobs and innovation here at home.” H.R. 942 would increase the value of the credit from 14% to 20% and make the tax break permanent. A companion measure (S. 1577) is pending in the Senate. A key aspect of the R&D tax credit is that only research conducted in the U.S. qualifies. Without this incentive, advocates say, firms are likely to locate new R&D operations—and the associated jobs—in other countries where tax regimes are more favorable. The Society of Chemical Manufacturers & Affiliates “has long supported using the R&D tax credit to encourage U.S.-based chemical production of innovative new products, which is unique to SOCMA’s membership base of specialty chemical manufacturers,” says William E. Allmond IV, the trade group’s vice president of government relations. The tax credit was originally enacted into law in 1981 as an incentive for spurring private-sector investment in R&D, fueling new product development, and ultimately creating new jobs. Congress, however, has been reluctant to permanently authorize the credit given its high cost, which is now estimated at $6 billion to $8 billion per year.—GH
TRADE: FUTURE OF TARIFF BILL UNCLEAR
TAXES: PUSH CONTINUES FOR PERMANENT R&D CREDIT Congress is expected to take up legislation early this year to retroactively renew a variety of tax breaks that expired at the end of 2011, including the R&D tax credit. The tax package will likely extend the credit for another year. But a bipartisan group of legislators in the House and Senate is expected to push to include provisions from bills they introduced in the first session of the 112th Congress that would increase the value of the R&D credit and make it permanent. “America is the world’s leading innovator, but we’re losing ground to competitors around the world,” says Rep. John B. Larson (D-Conn.), cosponsor of the American Re-
The most pressing trade issue for the chemical industry is the scheduled expiration at the end of 2012 of the U.S. Manufacturing Enhancement Act (H.R. 4380), which allows manufacturers—large and small—to import duty-free raw materials, propriety inputs, and other products that are not made in the U.S. “It is essentially a tax break for companies that import a product for which there is no domestic manufacturer,” says Lawrence D. Sloan, president of the Society of Chemical Manufacturers & Affiliates, a trade group representing specialty chemical manufacturers. “Many SOCMA members rely on this duty suspension to effectively compete in the global marketplace.”
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Although miscellaneous tariff bills have enjoyed broad bipartisan support in the past, it’s unclear how a new proposal will move forward. Republican leaders in the House have said they will no longer allow earmarks, including duty suspensions, as a matter of policy. Earmarks are defined by the Congressional Research Service as legislative provisions that specify certain congressional spending priorities or are included in revenue bills and apply to a very limited number of individuals or entities. “SOCMA has already started meeting with members of Congress to educate them on the benefits of the miscellaneous tariff bill, get it on the radar of those staffers and congressmen who are new to the process, and engage with relevant committees that will deal with the legislation,” Sloan says. Rep. Kevin P. Brady (R-Texas), chairman of the House Ways & Means Subcommittee on Trade, says that “bipartisan, thoughtful, well-vetted projects” should be able to make their way through Congress. Bills to suspend duties on a variety of imported chemicals have been introduced over the past year, but Brady says it’s unclear what the prospects are for consolidating them and passing a miscellaneous tariff bill before the end of 2012. Members of Congress and industry lobbyists will also be closely following the Obama Administration’s efforts this year to move forward with a proposal for a Trans-Pacific Partnership, a vast free-trade zone spanning the Pacific. In November, President Barack Obama announced that the U.S. and eight other countries—including Australia, New Zealand, Singapore, and Vietnam—had agreed on the “broad outlines” of a framework to increase trade and investment in the AsiaPacific region. Last month, Deputy U.S. Trade Representative Demetrios Marantis told the House trade subcommittee that the Administration hopes to wrap up negotiations and put a formal proposal on the table by the end of the year. The pact is expected to offer the prospect of lower tariffs and improved market access for chemical manufacturers and other U.S. industries in the fast-growing nations of the Pacific Rim.—GH
