This article was written by Dennis Deziel, Senior Director of Federal Affairs at the American Chemistry Council.
The United States has long been a beacon of innovation, particularly within the chemical industry. U.S. chemical manufacturing generates over $600 billion annually, directly employs over half a million Americans, and supports 25% of our national GDP. The U.S. chemical sector consistently exports more than it imports – underscoring our competitive edge and unique strengths in the global market. Thanks to our abundant resources, like natural gas, we can produce a wide variety of chemicals to support every segment of our economy.
Unfortunately, a growing problem is putting our competitive advantage at risk. According to a recent survey by the American Chemistry Council, 86% of chemical manufacturers said the overall level of regulatory burden has risen, particularly at the federal level. And the problem is not getting better – respondents said they expect the volume of new regulations to increase even further across all levels of government a year from now.
Looming regulatory changes from the Biden administration are already in the works, and they will challenge U.S. chemical manufacturers and threaten America’s economic potential.
Many in the industry, and beyond, have raised alarms about the potential repercussions of these regulations. Some proposals could jeopardize manufacturing facilities, limit access to essential materials needed for American manufacturing, or make companies not want to expand in the United States. In fact, according to the survey, 12% reported that the current regulatory climate led their company to decide not to expand their operations in the United States.
An earlier survey of ACC members examining EPA’s New Chemicals Program exposed its stifling impact on U.S. innovation. The survey found that 70% of companies decided to introduce new chemicals outside the U.S. given the uncertainties and challenges with EPA’s program, including systemic delays, disregarded company-submitted data, and inconsistent reviews.
Chemical manufacturing is the most heavily regulated subsector of manufacturing with the total number of regulations that apply to the industry doubling in the past 20 years. The administration’s current proposals could impose nearly $7 billion in additional annual costs on our economy due to a nearly seven-fold increase in “economically significant rules” affecting the chemical industry, with an annual economic impact of more than $100 million.
Concurrently, there’s been a reduction in oversight over the rulemaking process. This oversight helps ensure that new regulations serve societal interests, are science-based and align with the broader federal agenda. Notably, the Office of Management and Budget has reviewed 30% fewer regulations than during the last Democratic administration. This reduced oversight means that new rules may cause significant unintended hurdles during implementation, not actually serving their intended purpose and possibly even causing harm that offsets their intended benefits.
The Biden administration’s goal of bolstering domestic manufacturing and enhancing our competitive advantage is commendable. However, the influx of new regulations, compounded by an insufficient review process and lack of sound scientific basis, could inadvertently undermine that goal.
Companies reported the current and future regulatory burden puts their ability to manufacture critical chemistries at risk for:
- Clean Energy (67%)
- Semiconductors (57%)
- Biotechnology/Biomanufacturing Products (56%)
- Health Care (48%)
- Infrastructure (42%)
This isn’t about resisting oversight but advocating for well-informed, growth-oriented regulation. Effective policymaking understands the intricate relationships across industries and the essential role that chemicals play, reducing unintended consequences and providing clarity for all involved.
Chemicals are fundamental to many parts of the U.S. economy, from infrastructure to health care. To foster innovation, energize domestic chemical production, and decrease our reliance on imported goods, we need a supportive regulatory environment that understands the interconnectedness of so many industries today.
The path forward is clear: Embrace smart, evidence-based regulation. Engage all stakeholders – industry experts, the administration, and others – to craft a protective yet forward-thinking regulatory framework.
Additionally, Congress must be more assertive in overseeing these regulatory shifts. It’s imperative that Congress consider legislation that enhances the regulatory process, streamlines permitting procedures, rejects onerous regulations, and introduces flexible policies that prevent similar challenges in the future.
Over the past year, 2 in 3 chemical producers (65%) have been negatively impacted by delayed government decisions about proposed regulatory activities or late approvals of permitting, licensure, or products. Before it gets worse, let’s address this regulatory problem now – and anchor our choices in a nuanced understanding of science and chemistry – without sacrificing national priorities or innovation.
