Chemical companies facing tougher EPA oversight

Congress is working to send President Barack Obama the biggest overhaul of rules governing chemicals in four decades, a change sought by an industry that has faced a hodgepodge of retailer bans, consumer boycotts and state regulations.

The Senate is near an agreement to pass a revised Toxic Substances Control Act that would  expand the Environmental Protection Agency’s oversight of chemicals used in products such as spot cleaners and paint strippers. The chemical industry, including lobbyists for DuPont Co. and Dow Chemical Co., pushed for the legislation to provide companies with consistent rules to follow.

Midland, Michigan-based Dow is the parent company of Indianapolis-based Dow AgroSciences, which has about 1,500 area employees.

"Chemical companies were finding their inability to satisfy their customers was starting to hurt their bottom line," Richard Denison, a senior scientist at the Environmental Defense Fund, said in an interview. "It was becoming the Wild West out there, and they needed a sheriff."

Plans to pass the measure Thursday hit a snag when Republican Senator Rand Paul of Kentucky objected, saying he wanted members to have more time to read the bill.

The Senate vote will mark the final step in Congress for the bill, H.R. 2576, which was approved May 24 by the House, 403-12. The White House and the EPA support the measure, saying it will give regulators crucial authority to ensure that chemicals used in products, including household goods, are safe.

The new measure would be the first overhaul of the Toxic Substances Control Act since it was enacted four decades ago. The EPA hasn’t banned a chemical since a federal court struck down asbestos restrictions in 1991 because the agency didn’t meet the existing law’s standards.

Company policies

With federal oversight of toxic chemicals stalled, chemical makers faced a variety of company policies. Target Corp. put almost 600 substances on a list it wanted suppliers to avoid; Macy’s Inc. banned a flame retardant in furniture as activists planned to target its stores; and Home Depot Inc. pledged to phase out a group of chemicals called phthalates from its vinyl flooring.

While there’s little surprise that a health advocate such as Denison is seeking greater authority for the EPA, the fact that the measure is being led by Republicans and groups such as the U.S. Chamber of Commerce is a Nixon-goes-to-China moment. Republicans and business groups ordinarily try to stop EPA rules aimed at curbing smog, greenhouse gases and other pollutants.

In this case, federal regulation is being heralded as a way to boost commerce.

"This bill represents a balanced and thoughtful compromise that makes long needed improvements to an outdated and ineffective law," Representative John Shimkus, an Illinois Republican, said after it passed the House earlier this week.

Reassuring the Public

The industry has sought a tougher federal law for the past six years, in part to avoid a patchwork of state rules, and in part to reassure the public about the safety of chemical products.

"Over time, confidence in EPA’s regulation of chemicals has eroded," the American Chemistry Council said on its website. "This lack of confidence has created pressure on individual state legislatures to create their own chemicals management laws and on retailers to pull products from the shelves, often based on the claims of activists rather than scientific conclusions."

In 2010, Linda Fisher, then a DuPont vice president, testified to the Senate Environment and Public Works Committee that there was a "growing public awareness" that exposure to chemicals through products is a health risk.

Without changes in the federal law, "we are seeing a plethora of state actions that are serving to create tremendous uncertainty in our markets," Fisher said. “It is not often an industry asks to be regulated in a more comprehensive way, but that is precisely what we are asking for.”

Smaller companies

Increased regulation also makes it harder for smaller companies to compete with established producers, said Jason Miner, a chemical industry analyst with Bloomberg Intelligence.

“These things increase the moat for bigger players,” Miner said. “When compliance costs go up, smaller players are squeezed.”

Among the chemicals on the EPA’s priority list for review are cyanide made by Chemours Co., and styrene made by Dow Chemical spinoff Trinseo SA. Bisphenol-A, an epoxy-based resin known as BPA and used to line cans and make polycarbonate plastics, also is on the EPA priority list, although its use has declined in recent years amid concern over potential health risks. That provided a business opportunity for companies such as Eastman Chemical Co., which has steadily expanded production of its BPA-free Tritan copolyester since 2007.

“The backlash against BPA was great for Eastman,” Miner said. “Anything that puts pressure on a commoditized old product creates a beneficiary at the forefront of innovation.”

The EPA called the bill “a clear improvement over current law.” Some safety advocates are less enthusiastic. The draft “contains several reforms that would empower EPA, but it also restrains EPA and especially state governments in new and unacceptable ways,” Andy Igrejas, director of Washington-based advocacy group Safer Chemicals, Healthy Families, said in a written statement.