Technological watch
New Survey Finds Dramatic Rise in Regulations Undercuts American Manufacturing and National Priorities
WASHINGTON (January 17, 2024) – 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.”
Chris Jahn, President & CEO | American Chemistry CouncilThe 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. It’s quite simple - America’s success depends on American chemistry.Share:Risky BusinessU.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:
Share: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 the U.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 ReturnsOver 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.
Chris Jahn, President & CEO | American Chemistry CouncilWe want the Biden Administration and regulators to work with us not against us. We must find a better and more thoughtful way to regulate our industry that does not sacrifice America’s future.Share: Get survey details On BackgroundClean Energy: 67% of companies reported that current or forthcoming regulatory burden negatively impacts their ability to competitively manufacture inputs for clean energy priorities domestically.
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.”
Chris Jahn, President & CEO | American Chemistry CouncilThe 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. It’s quite simple - America’s success depends on American chemistry.Share:Risky BusinessU.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:
Share: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 the U.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 ReturnsOver 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.
Chris Jahn, President & CEO | American Chemistry CouncilWe want the Biden Administration and regulators to work with us not against us. We must find a better and more thoughtful way to regulate our industry that does not sacrifice America’s future.Share: Get survey details On BackgroundClean Energy: 67% of companies reported that current or forthcoming regulatory burden negatively impacts their ability to competitively manufacture inputs for clean energy priorities domestically.
- Ethylene oxide is used to produce ethylene carbonate, which is used in lithium-ion batteries to allow the electricity generated to travel more easily through the battery.
- Fluoropolymers are essential to lithium-ion batteries, fuel cells, power electronics, and textile materials and membranes.
- NMP is necessary for lithium batteries that are key to energy storage and electrification and in most cases, there is no replacement.
- Ethylene oxide is used in semiconductor manufacturing processes like wafer cutting, chemical mechanical planarization, and photoresist residue cleaner.
- Fluoropolymers’ uses include etching materials (photoresists), etching coolants, masks in photolithography processes, packaging materials that provide heat dissipation for the chip, and cleaning gases at various stages in the microchip production process.
- Formaldehyde in plating is the most widely used and efficient additive to make a uniform, smooth surface during copper plating. The resins manufactured with formaldehyde for lithography are industry standard and not considered to be replaceable.
- Formaldehyde and formaldehyde-based products provide critical applications for crop production, veterinary medicine, animal agriculture, and aquaculture. Formaldehyde helps protect against substantial, disease-induced economic losses across U.S. animal agriculture.
- Chlorine is used to make compounds that help conserve resources in the agricultural sector, including crop protection.
- Fluoropolymers are used in medical implants and devices such as catheters, ventilators, and X-Ray film as well as life-saving medications.
- Formaldehyde is used as a sterilizer and in medical devices such as pacemakers, artificial heart valves, and prostheses as well as the manufacture of certain viral and bacterial vaccines.
- Ethylene oxide is used to sterilize medical equipment including heart valves, pacemakers, surgical kits, gowns, drapes, ventilators, syringes, and catheters.
- Butadiene rubber emulsion provides construction projects with superior tensile durability.
- Formaldehyde is used in building and construction materials and formaldehyde-based resins are used to manufacture composite and engineered wood products used in cabinetry, countertops, moldings, furniture, shelving, stair systems, flooring, wall sheathing, support beams and trusses.
- Asbestos diaphragms are used to produce chlorine, and EPA has proposed an accelerated ban on this technology that manufacturers may not be able to meet without impacting the supply chain, particularly for water treatment.
This project has received funding from the Bio Based Industries Joint Undertaking under the European Union’s Horizon 2020 research and innovation programme under grant agreement No 837761.
