Industry Groups Support EPA’s Pleas for Funding While Agency Weighs Whether to Freeze Existing Chemical Risk Evaluations

EPA Officials have spent the month of May persistently pleading Congress for more Office of Chemical Safety and Pollution Prevention (OCSPP) funding so it can implement Congress’ 2016 overhaul of TSCA, including the mandate to review the risks of “existing” chemicals already on the market. The urgent funding problems prompted EPA’s chemical chief Michal Freedhoff to sound the alarm to industry leaders on May 11 that the agency is considering freezing work on some of the TSCA-mandated evaluations for existing chemicals because it “simply cannot” complete them at its current levels of staff and funding. The Biden administration is requesting that the TSCA office’s FY23 appropriations be increased from $60 million to $124 million so it can  increase its staff from 300 to 449 full-time equivalents (FTE).

Speaking at the Household & Commercial Products Association’s (HCPA) mid-year meeting, Freedhoff said: “I hope to share more chemical-specific information on timing when we have worked through the implications of our financial picture—just like a business that has to give its shareholders a realistic picture of what milestones they will and won’t meet, I feel very strongly that if we come to the conclusion that we simply cannot do 20 risk evaluations without more resources, we’ll let everyone know which ones we’ll continue to work on and which ones we’ll hit the pause button on until our financial picture improves.”

The OCSPP has been unable to recover from the backlog of existing chemical evaluations, new-chemical reviews, and determinations mandated by TSCA. Freedhoff continues to reiterate that Congress has been unresponsive in increasing OSCPP’s budget to account for implementing the new duties under TSCA, and the agency expects to miss every single deadline for the final risk management rules for these first 10 evaluations and every single deadline for the next 20 risk evaluations.

In a rare move, chemical industry groups have come out in support of EPA ‘s request to double the agency’s TSCA program budget, but have also called for greater congressional oversight, transparency, and a reversal of several Biden administration policies that contradict congressional intent in TSCA reform. These include the administration’s “whole chemical” approach to TSCA risk determinations and other questionable decision-making criteria that do not meet the best scientific standards. The American Chemistry Council (ACC) listed some of these needed changes in its “State of the TSCA” report released on May 10. Industry officials argue that the delays and backlogs can lead to supply constraints and prevent companies from offering new and innovative products.

EPA Administrator Michael Regan defended the agency’s need for increased funding when he appeared before the House Energy and Commerce Committee on May 17, and the next day before the Senate Appropriation’s Subcommittee on Interior, Environment and Related Agencies hearing on the FY23 request.

Energy and Commerce Ranking Member Cathy McMorris Rodgers (R- WA), shared general concern about EPA’s overreach beyond its statutory authority and ignoring Congressional intent. She narrowed down some of her concerns to the new chemicals program and its “consistent backlog” of chemical reviews, a proposed increase in user fees, and the agency’s inefficiencies and delays are preventing companies from being able “to develop and utilize innovative new materials.” She asked whether EPA will continue to complete its premanufacture notices (PMN) reviews in the order it receives the applications, or instead give “preference” to “preferred technologies.” Commissioner Regan responded that EPA staff are working “day and night” on new chemicals to bring products ready to go out, however, he could not confirm whether decision-making is done in chronological order, and promised that staff will follow up with her on the matter.

 

Surface Transportation Board Testifies Before the House Transportation Committee

On May 12, 2022, all five members of the Surface Transportation Board (STB) testified before the House Transportation Subcommittee on Railroads, Pipelines, and Hazardous Materials on how to improve the STB’s efficiency and authority to better resolve freight rail conflicts. Members are concerned about Class I carriers’ problems with reliable rail service, which has a significant impact on rates and transit times for shippers, as well as strains already fragile supply chains and overburdens remaining workers. Chemical shippers are enduring 78% longer transit times, and service days have been cut nearly in half.

Several Democratic lawmakers and STB members expressed frustration that the main reason for declining services is a lack of workers. The carriers themselves blame the labor shortage, which they say stems from COVID, but Subcommittee Chair Donald Payne (D-NJ), Peter DeFazio (D- OR), and STB Chairman Marty Oberrman say the labor shortage is the result of the Class I railroads’ own policies. Payne said their decision to implement precision scheduled railroading (PSR) has resulted in a cut by nearly one-third of the Class I railroad workforce compared to 2015, with reductions beginning years before the pandemic. Chairman Oberrman called the rail industry’s problems “self-inflicted,” estimating that Class I railroads have cut 45,000 rail workers over the last six years. “They’ve cut labor to the bone, really,” Oberrman told the committee.

The STB had held a hearing two weeks earlier that “revealed beyond any debate that rail service is unacceptably poor, with acute issues in many regions,” and earlier assurances by the four largest railroads about having sufficient employees, locomotives, and rail cars were incorrect. The STB ordered several proposed rules last week that aim to restore reliable services. Oberrman also testified that the board is working on updating the reciprocal switching rules, which he said would improve rail service by enhancing competition. He hopes the board will act on it before the end of the year.

Committee Chairman Peter DeFazio (D-OR) also lamented “the destruction” that PSR and rail industry consolidation has brought to U.S. freight rail, saying the situation has reached a “point of crisis.” DeFazio blamed carrier CEOs for the cuts, which have impacted shippers, put current workers at risk, and allowed companies to “rake in” record profits and increase dividends for shareholders. DeFazio said he was pleased that the STB was taking the matter seriously and had held the hearing but said the board was not moving fast enough and urged them to act more “decisively” and “quickly.”

Several Republican lawmakers were wary about new regulatory burdens on the rail industry. They questioned whether the STB’s actions could worsen rather than improve the situation, especially given the complexity of supply chains. “The supply chain has been so bollixed up by the railroads that anything we can do I think would only improve the situation,” Oberrman said. But he assured lawmakers that if the Board enacts new regulations, such as reciprocal switching, it is “done with care to solve the problems, not create them.” Oberrman told Rep. Troy Balderson (R-OH) that he believes railroads are “vastly overstating” that reciprocal switching could impact future infrastructure investments by railroads. “I believe in letting the market decide, but for the market to decide, there has to be a market,” he said, “And in many, many parts of this country, there simply is no market, shippers are captive to one railroad. And that’s what the reciprocal switching concept is aimed at.”

The Transportation Committee plans to advance legislation to reauthorize the STB this year. Lawmakers will examine many possible new authorities for the board. DeFazio raised whether the common carrier obligation, which requires rail carriers to provide reasonable service, needs to be better defined. Oberrman said coming up with language that would be enforceable in court would be a challenge, but he would work with Congress on it.