New Survey Finds Dramatic Rise in Regulations Undercuts American Manufacturing and National Priorities

WASHINGTON, Jan. 17, 2024 /PRNewswire/ -- Today, the American Chemistry Council (ACC) released the results from a new survey on the ballooning regulatory burden on chemical manufacturers in the United States and its harmful impact on achieving the Biden Administration's national priorities.

In addition to undercutting national priorities, companies reported that the growing number of regulations is negatively impacting expansion in the U.S. and could lead to a decrease in hiring, spending on capital replacement and investing in research and development.

According to the new survey, 86% of responding chemical manufacturers said the overall level of regulatory burden has risen, particularly at the federal level, and they expect the volume of new regulations to rise even further across all levels of government a year from now. Fifty-eight chemical producers participated in the survey and 38% of survey participants are classified as "small businesses."

"The results of this survey should serve as a wakeup call to policymakers. Unless the Biden Administration takes a different approach to how it creates and implements regulations, the availability of critical chemistries will dwindle—and the country's climate, infrastructure and supply chain priorities will suffer as well," said Chris Jahn, President & CEO of the American Chemistry Council. "It's quite simple - America's success depends on American chemistry."

Risky business

U.S. chemical producers provide the foundation needed to achieve many of the priorities of the Biden Administration, including the manufacturing of computer chips and electric vehicles (EVs), producing clean energy, rebuilding the country's infrastructure and supporting healthcare and biotechnology. A surge in new restrictions and lack of coordination within the Biden Administration, however, is jeopardizing the ability to produce and develop chemistries critical to America's future and U.S. competitiveness. 

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%)

Clean Energy – Ethylene oxide, fluoropolymers, and N-Methylpyrrolidone (NMP) are examples of chemicals needed for lithium-ion batteries which are critical components to the manufacture and transition to electric vehicles (EVs). The Biden Administration champions the Infrastructure Investment and Jobs Act (IIJA) which allocates billions of dollars to the development of the domestic EV industry. The Administration also promotes the Inflation Reduction Act (IRA) which incentivizes the purchase of EVs with a tax credit. The regulations that agencies like EPA are proposing, however, could hamper chemical manufacturers' ability to produce products to support the Administration's clean energy goals.

Semiconductors – Ethylene oxide, fluoropolymers, and formaldehyde are examples of chemicals necessary for semiconductor manufacturing. The Administration also considers the CHIPS Act as one of its signature initiatives which appropriates nearly $53 billion toward U.S. fabrication of the most advanced computer chips. Proposals like EPA's Hazardous Organic National Emission Standards for Hazardous Air Pollutants (HON) for ethylene oxide, overly broad PFAS restrictions at the federal and state levels, and a flawed EPA Integrated Risk Information System (IRIS) assessment for formaldehyde could restrict chemical manufacturers' ability to produce the inputs needed to bolster domestic semiconductor manufacturing, continue as a leader in technological innovation, and enhance America's edge in the global economy.

Biotechnology/Biomanufacturing Products – Formaldehyde, formaldehyde-based products, and chlorine are examples of chemicals vital to biotechnology/biomanufacturing products. These chemistries help conserve resources in the agricultural sector and provide critical applications for crop production and animal agriculture.

Health Care – Chemistry is integral to manufacturing medical equipment for diagnoses and treatments, maintaining the sterile environment required in hospitals, and being prepared for the next health crisis. For example, fluoropolymers and formaldehyde are used in medical devices such as ventilators and pacemakers. Formaldehyde is also used in the manufacture of certain viral and bacterial vaccines. Approximately 50% of all medical devices are sterilized with ethylene oxide, and for many of those it is the only option known to modern science. The Administration is committed to protecting and expanding Americans' access to quality, affordable health care. But proposals like EPA's sterilizer rule, which could result in significant disruption to the supply chain leading to decreased sterilization capacity and supply availability across the country.

Infrastructure – Butadiene, formaldehyde, and asbestos diaphragms used to produce chlorine are examples of chemistries critical to manufacture products for infrastructure needs. During its first year, the Administration signed the IIJA into law and called it a "once-in-a-generation investment in our nation's infrastructure and competitiveness." Proposed restrictions from its agencies could limit or de facto ban chemicals that are needed to build resilient and more sustainable infrastructure.

Big Stakes, Big Returns

Over the past year, 65% of companies have been negatively impacted due to government delay in making a regulatory decision and/or acting on a permit, license, or product approval in the United States. And 12% report that the current regulatory climate has 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, and the volume of regulations has doubled in the past 20 years," Jahn added. "America must not fall into the same deindustrialization trap as Europe or be held back from competing with countries like China when it comes to creating new chemistries and the products and technologies that come with it."

To compound the problem, there has been a reduction of oversight of the rulemaking process as the number of regulations rises. The Office of Management and Budget has reviewed 30% fewer regulations than during the last Democratic administration. This is not a recipe for success and requires a better approach.

Embracing a smarter regulatory process can yield substantial benefits both in terms of better results and supporting U.S. leadership. For example, if regulatory compliance costs were reduced significantly, most companies (79%) reported they would increase investment in R&D, new technologies, and new products.

"We want the Biden Administration and regulators to work with us not against us," said Jahn. "We must find a better and more thoughtful way to regulate our industry that does not sacrifice America's future."

View the ACC Member Survey: "Impact of Rising Regulations on Chemical Manufacturing & American Priorities" here.

American Chemistry Council
The American Chemistry Council's mission is to advocate for the people, policy, and products of chemistry that make the United States the global leader in innovation and manufacturing. To achieve this, we: Champion science-based policy solutions across all levels of government; Drive continuous performance improvement to protect employees and communities through Responsible Care^®; Foster the development of sustainability practices throughout ACC member companies; and Communicate authentically with communities about challenges and solutions for a safer, healthier and more sustainable way of life. Our vision is a world made better by chemistry, where people live happier, healthier, and more prosperous lives, safely and sustainably—for generations to come.

SOURCE American Chemistry Council