All Wait, No See
A Midwest congressional wannabe who somehow has me on his list sent an outraged e-mail today regarding the 5-week vacation that Congress has embarked on having done pretty much nothing this session. This politician is right—I would get fired if I did nothing all year and took five weeks off. I shared his outrage. And I called Lawrence D. Sloan, president of the Society of Chemical Manufacturers and Affiliates, the trade association representing fine and specialty chemical firms in the U.S., to see how this morass in Congress is impacting the fine chemical sector.
You might recall that Sloan told C&EN in our forecast issue published in January that there is a distinct air of wait-and-see hovering over an otherwise optimistic sector. The sequester had just been postponed, heading off an immediate tax increase for S-corporations, privately-held companies where income taxes are paid by individual shareholders. The sequester kicked in a couple of months later, of course, causing taxes for many of these companies to shoot up to 39%. Meanwhile, there is no resolution on lowering the corporate tax rate from 35% to the proposed 25%. And Congress is gone until the end of September.
“At this point," says Sloan, “we are not sure this will be a front burner issue when Congress comes back.” Immigration reform and gun control, if re-introduced, could dominate the rest of the session, he says. “Then there is the overall 2014 fiscal budget and the debt ceiling. There are so many issues now in the coming months, I just wonder if this whole tax reform is going to get lost.”
SOCMA members are also in limbo, says Sloan, over the renewal of the Miscellaneous Tariff Bill (MBT), which allows a reduction or elimination of tariffs on raw materials that cannot be supplied from within the U.S. This is of major importance to fine and specialty chemical firms. SOCMA has for some time offered a service to help members navigate the rather arcane system of filing separate bills for each chemical and having these amalgamated into a single tariff bill that comes before the House of Representatives and the Senate. The MTB is up for renewal every three years, and this is a renewal year, and it hasn’t been renewed. One of the problems, Sloan points out, is that Republicans in Congress have begun classifying the MTB as earmarks.
Sloan says there may be a ray of light in a new bill in the House, the U.S. Job Creation and Manufacturing Competitive Act of 2013 (HR 2708), sponsored by Dave Camp (R-Mich) who chairs the House Ways and Means Committee, and Sander Levin (D-Mich). The bill includes provisions from more than 2,000 separate bills introduced in Congress over the last year, and would, in effect, renew the MBT.
Sloan characterizes the process as “a bit convoluted,” noting that a bill had been introduced in Congress that would have transferred MTB to Department of Commerce oversight. But that bill has been killed.
While federal departments and agencies have been a bit more responsive than Congress lately, an inexplicably languishing Definition of Solid Waste (DSW) rule at the Environmental Protection Agency has become another wait-and-see nightmare for U.S. fine chemical producers, says Sloan. EPA said last December that it would finalize a rule by the end of April—the month that EPA, instead, moved DSW into its “Long-Term Action” category, where things have no deadline. Sloan notes that the uncertainty is likely keeping some states from adopting the 2008 version of the rule, which, among other things, impacts the recycling of waste from toll manufacturing. Sloan hopes for some action within six months on DSW.
Can the overall picture in Washington be characterized as the worst it’s been? “It’s very bleak,” says Sloan. “I’m still optimistic that things will brighten by the end of the year, but it’s very frustrating to see the lack of real dialogue in Congress.”