January 10, 2011

The Honorable Darrell E. Issa

Chairman
Committee on Oversight and Government Reform
U.S. House of Representatives
2157 Rayburn House Office Building
Washington, DC 20515-6143

Dear Chairman Issa:

The Society of Chemical Manufacturers and Affiliates (SOCMA) appreciates the opportunity
to provide you, at your request, with existing and proposed regulations that have negatively
impacted job growth in our industry. SOCMA is the U.S. trade association representing
specialty, batch, and custom chemical manufacturers, which collectively employ over
100,000 workers in 2,000 sites and contribute $60 billion annually to our economy in
products manufactured. Our membership includes many small manufacturers but also some
multinational companies. U.S. batch producers are highly innovative and are at the cutting
edge of new technology, providing products often made nowhere else in the world. The depth
and expertise of this industry sector are vital components of the U.S. chemical industry and
contribute significantly to U.S. global competitiveness.

SOCMA welcomes Congress’ interest in examining existing and proposed regulations that
negatively impact the economy and jobs. In fact, last year SOCMA called on policymakers
and administration leaders to cease, for the remainder of the year, further consideration or
advancement of legislation that would add to the regulatory burden facing small
manufacturers. SOCMA’s request was spurred, in part, by the high unemployment rate, the
tendency in Washington to grow regulatory burdens, and evidence that smaller companies
bear a disproportionate cost to comply with federal laws. According to 2005 research by the
Small Business Administration (SBA), small companies face an annual regulatory cost of
$7,647 per employee, which is 45 percent higher than the regulatory cost facing large firms.
Compliance with environmental regulations, like those issued by the U.S. Environmental
Protection Agency (EPA) under the Toxic Substances Control Act, costs 364 percent more for
small companies.

Many of the job-impacting regulations our members face are implemented or have been
proposed by the U.S. EPA, including two of the three regulations that we highlight below.

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EPA’s Proposed Maximum Achievable Control Technology Rule for Industrial,
Commercial and Institutional Boilers and Process heaters. This proposed “Boiler MACT”
rule, which seeks to reduce emissions of certain hazardous air pollutants from major sources in
this category, could impose billions of dollars in capital and operating costs at thousands of
facilities across the country at a time when our already hurting manufacturing sector can least
afford such costs. An accompanying rule that targets smaller, “area” source boilers will affect
even more SOCMA members, and could impose a very significant regulatory burden if the
proposed exemption for natural-gas fired boilers is removed.

We at SOCMA support efforts to address significant health threats from air emissions in a cost-
effective manner, but also believe that this can be done while still protecting jobs and economic
growth.

Regarding the MACT rule, SOCMA shares the concerns of numerous other industry groups that
several of the standards proposed by EPA – such as those for dioxin, mercury, and carbon
monoxide, cannot be met in practice by even the best-performing boilers and process heaters.
These unachievable standards resulted from the agency’s improper pollutant-by-pollutant
approach and an inadequate database. We also believe the agency should adopt a health-based
emissions approach for qualifying low-risk emissions. The agency acknowledged that its initial
proposal was deeply flawed in its recent court request for an extension until April 2012 (from the
looming January 16 court-ordered deadline) so that it can repurpose the rule.

EPA’s Chemical Manufacturing Area Sources Final Rule. This rule, which was finalized in
response to a court order in October 2009, establishes national emission standards for hazardous
air pollutants from smaller, “area” chemical manufacturing sources. It will impact the vast
majority of SOCMA members.

While the final rule was an improvement from the initial proposal – a cost impact study
commissioned by SOCMA helped persuade the agency to alter some of the most egregious
provisions in the proposed rule – SOCMA believes that it still is excessively burdensome and
costly. For example, the rule incorporates a “family of materials” concept that unnecessarily
limits operational flexibility. The agency also refused to establish a comprehensive de minimis
threshold, which could have exempted some of our smaller emitters from the burdens of the rule.
Finally, the final rule includes numerous challenging provisions which were not contained in the
proposal rule, thereby depriving us of the opportunity to comment on those provisions. One
such provision would require certain area sources to get a costly Title V permit. The agency has
acknowledged the validity of our concerns about these “surprise” provisions; last summer, it
accepted our petition for reconsideration and will be proposing a revision to the rule.

OSHA’s Occupational Injury and Illness Recordkeeping Proposed Rule. This proposal
would require employers to record employee musculoskeletal disorders (MSDs) in their OSHA
300 recordkeeping log. SOCMA is concerned that this rulemaking is a backdoor way of reviving
the ergonomics rule that OSHA issued in 2001 and that Congress subsequently invalidated.
Because of the uncertainty about how MSDs should be defined and the difficulty of determining
when an MSD is workplace-related, OSHA underestimates the cost to employers to comply with
this additional recordkeeping. Specifically, OSHA has not sufficiently accounted for burdens on

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employers to (i) create a formal reporting system for employees to notify management, (ii)
conduct investigations when workers report potential MSDs, (iii) develop an action plan based
on the findings of these investigations, and (iv) create a follow-up system to track
recommendations. Overall, this seemingly innocuous recordkeeping proposal carries a costly
price tag that neither is captured in OSHA’s economic analysis nor necessarily correlates with a
more effective ergonomics program. Our recommendation is to remove from further
consideration this proposed revision to the OSHA 300 recordkeeping form.

* * *

When new regulations are proposed or implemented, they create much uncertainty among
chemical manufacturers, especially small companies. The more that they spend complying with
regulations, the less they have available to spend on conducting critical research and
development activities to develop innovative products that help companies expand their
businesses. Thus it is especially crucial that rules be crafted to address recognized problems and
do so in the least costly fashion possible. Otherwise, chemical manufacturers could be forced to
discontinue supplying a particular market or producing a specific product, either of which could
negatively impact jobs in the industry or elsewhere in the value chain.

Please feel free to contact me with questions or if I may be of further assistance in your effort to
examine regulations that impact our industry.

Sincerely,

William E. Allmond, IV
Vice President, Government Relations