|Legislative Outlook 2012: Even in an Election Year, Plastics’ Progress Will Prevail on Federal Issues|
|by William R. Carteaux|
|Industry Winter 2012|
While there are some legislative prognosticators who believe the plastics industry should
patiently wait out 2012 due to next November’s presidential election, I respectfully
disagree. Though our resilient industry fared significantly better than other US
manufacturing sectors during the tough economic times of the past few years, we cannot
afford to wait on the challenges that remain. I am hopeful that the presidential
candidate who emerges victorious next year will have a sound plan for economic growth and
the skills to break the gridlock on Capitol Hill. In the meantime, SPI’s advocacy team
will continue to aggressively navigate several legislative avenues of importance to
plastics processors. Here is an overview of what I believe are opportunities to advance
positive policy initiatives for the benefit of our industry in 2012.
Risk-Based Chemical Regulation
SPI supports prudent modernization of TSCA to take into account 21st century advances in science. However, in the coming year we will work to defeat Senator Lautenberg’s (D-NJ) proposed “Safe Chemicals Act of 2011” (S.847) because it ignores risk assessment and the significant socio-economic benefits of products made with chemicals, such as plastics. Plastics play an important role in a sustainable society, and overly rigid mandates would be detrimental. Specifically, Lautenberg’s proposed bill would
Increased Congressional Oversight of Federal Agencies
EPA continues to expand its regulatory reach in areas such as chemicals management (under its existing TSCA authority), as well as manufacturing sector-wide issues such as regulation of greenhouse gas (GHG) emissions. The “Energy Tax Prevention Act of 2011,” for example, would prevent the EPA from regulating GHG emissions from stationary sources under the Clean Air Act. Our organization will advocate for this legislation in order to lift burdensome regulations on plastics industry facilities, reduce their energy costs and bolster their competitiveness.
We also will advocate for modifications to an OSHA-proposed rule entitled “Occupational Injury and Illness Recording and Reporting Requirements—NAICS Update and Reporting Revisions.” Proposed changes include requiring employers to report to OSHA, within eight hours, all work-related in-patient hospitalizations. In addition to concerns about the rule’s lack of clarity on classifications and interpretations, SPI also believes that many companies will not have the ability to fully comply with the 8-hour requirement.
I am hopeful that Congress will move on a handful of other “agency oversight” bills that we support (including “The EPA Regulatory Relief Act of 2011,” “The Regulatory Accountability Act” and “The Regulatory Flexibility Improvements Act of 2011”) in 2012. Currently pending in Congress, these three bills would provide our industry with regulatory relief and improve the rule-making process in the future.
Energy Policy: Development of New Resources and Fair Access
The plastics industry is particularly concerned with a House legislative proposal called the “New Alternative Transportation to Give Americans Solutions Act of 2011” (H.R. 1380/S. 1863). Also referred to as the “Nat Gas Act,” this bill would grant $5 billion in unfunded subsidies for the use of natural gas in vehicles and the attendant infrastructure through 2016. Skewing the marketplace for industrial natural gas users such as the plastics industry, the bill would cause natural gas demand to increase by seven percent. This would be a profound threat to our industry, which relies on natural gas to power our plants and create our product, and which depends on stable natural gas supply and pricing. We will certainly oppose the “Nat Gas Act” in 2012, as well as any similar subsidies that would artificially increase natural gas demand and suppress the market-driven emergence of other energy technologies.
Tax Reform: Fair, Comprehensive and Growth-Friendly
SPI supports the “last-in/first-out” (LIFO) inventory accounting method. LIFO is used heavily by companies in the manufacturing sector to match their current sales revenues with current inventory replacement costs. By taking into account the cost of replacing inventory, LIFO results in a more accurate measure of the financial condition of a business and the amount of income that can be taxed. Unfortunately, the Obama Administration proposes to abolish LIFO – which would amount to a tax increase for our industry. We worked diligently to keep this measure out of debt limit extension legislation in 2011, but it will be back in 2012 as the White House will once again propose it to Congress in its 2013 budget recommendations. Because preservation of LIFO is critical to the plastics industry – to the tune of $72 billion saved over five years – we will be pressing for it in 2012.
Since I became president of SPI in 2006, I have spoken and written about the need to preserve and extend the R&D credit. I should not have to do this annually. Originally enacted in 1981, the R&D tax credit has been extended 15 times. It continues to be critical to US plastics manufacturers because it helps boost industry investment in research done in the United States and is essential for sparking innovation of new products and competitiveness in world markets. The credit is a sure way to stimulate both growth and jobs. At the end of 2010, Congress extended the credit through 2011. The President’s mid-February Fiscal Year 2012 budget proposal to Congress calls for making the R&D tax credit permanent and expanding it by nearly 20 percent. In March 2011, Representative Kevin Brady (TX-8) introduced H.R. 942 which would extend the credit through December 31, 2012. A similar measure has recently been introduced by Senator Max Baucus (MT). We will continue our advocacy efforts aimed at making this tax credit permanent, and we are confident that Congress will once again extend the credit (though perhaps retroactively).
The final tax proposal that we will oppose in 2012 is the Superfund tax – a monster we thought had died for good in the mid-90s. The Obama Administration hopes to reintroduce the Superfund tax. SPI opposes the reintroduction of Superfund taxes, elements of which include a per barrel tax on crude oil and petroleum products, as well as an excise tax on feedstock chemicals and a general corporate tax rate increase.
Growing Markets Overseas
These FTAs will create billions of dollars in new exports within a few short years. The US Trade Representative’s office has estimated that together these three agreements will generate 250,000 jobs. South Korea is the 10th largest export market for US plastics. Since 2000, plastics exports to South Korea have increased by 44 percent. Colombia is the 16th largest export market for U.S. plastics. Since 2000, plastics exports to Colombia have increased by 163 percent. Although not presently a top market for the US plastics industry, Panama has shown tremendous growth potential as well. Since 2000, plastics exports to Panama have increased by 107 percent.
In 2012, we will continue to support pro-growth measures that increase opportunities for US plastics manufacturers overseas. The Trans-Pacific Partnership (TPP) Agreement, which involves 10 countries (Australia, Brunei Darussalam, Chile, Japan, Malaysia, New Zealand, Peru, Singapore, the US and Vietnam), may be in play this year. In addition, a US- European Union FTA also is being explored in an effort to deepen bilateral trade, investment ties, economic growth and jobs. Europe is a key market for the US plastics industry, so the possible impacts of a US-EU FTA would be significant. For 2011, industry exports to the 27 member states of the EU total $6.2 billion and are up 9.2 percent over this time last year.
As you see, federal legislative challenges to the plastics industry will not rest just because it is a presidential election year. Our advocacy team, therefore, will not rest either. Our advocacy efforts in 2012 (SPI’s 75th anniversary year!) will implement all of our organization’s resources – staff and member expertise, grass roots networks and coalitions – to successfully lobby on these critical issues. We will not wait to see how the elections pan out.
William (Bill) Carteaux is president and CEO of SPI: The Plastics Industry Trade Association (www.plasticsindustry.org). Celebrating its 75th anniversary in 2012, SPI’s member companies represent the entire plastics industry supply chain, including processors, machinery and equipment manufacturers and raw materials suppliers. Visit the SPI blog at www.inthehopper.org.