Chemical Industry Seeks More Regulation:

For years the chemical industry has fought additional federal regulation. They argued that existing laws, such as the Toxic Substances Control Act (TSCA) were sufficient. Now, however, it appears they’ve changed their tune. The Washington Post reports:

For the first time, chemical manufacturers said they are willing to furnish the Environmental Protection Agency with health and exposure data they have gathered that are related to their chemicals, and to allow the agency to determine whether the chemicals are safe to use.

They said tougher government regulation is the best way to reassure consumers about the health impact of various chemicals.

“The fundamental duty of the chemical industry and government that regulates it is to make sure those products are safe,” said Cal Dooley, president and chief executive of the American Chemistry Council. . . .

Dooley and top executives from several companies, including Dow, said the industry wants Congress to give the EPA new authority and resources to ensure the safety of chemicals used in such things as furniture, cellphones and grocery bags.

What explains the about face? Does this mean the chemical industry has suddenly turned over a new leaf? I don’t think so. Rather, I think there are several reasons that some chemical companies, particularly the larger players, may believe that supporting additional federal regulation is in their interest.

First, the chemical industry is likely responding to the current political environment. With a Democratic President, Democratic Congress, and an EPA hostile to cost-benefit analysis, the industry may believe it is better to have a “place at the table” where it could influence potential regulations and perhaps seek a compromise. By supporting new regulatory efforts, industry officials may believe they are heading off something that could be worse for their interests.

Second, many of the larger firms within the chemical industry believe federal regulation is preferable to state and local regulation. As the Post reports:

The industry leaders said they want a strong federal policy because, in its absence, states and even localities are passing laws to restrict certain chemicals, making it nearly impossible for national companies to comply with a patchwork of rules.

“You’re seeing more and more activity at the state level in terms of bans of certain chemicals or states trying to institute their own chemical management systems,” Dooley said. “It’s a reflection of their lack of confidence in the current regulatory system to assess the safety of those chemicals.”

For companies with operations in multiple states, a single federal standard may be easier to meet than a patchwork of state standards. No doubt the industry hopes that new federal rules will preempt more stringent state requirements. If so, increased federal regulation will actually ease regulation in some jurisdictions, and possibly prevent the adoption of more stringent measures in the future. Even if new rules aren’t preemptive, they will still place downward pressure on more stringent rules. As I explain in this article (see pp. 94-106), even non-preemptive federal regulation can have the effect of reducing the stringency of state-level regulation, particularly over time.

Third, it’s possible that some in the chemical industry see a competitive advantage in more stringent federal regulation. Regulation tends to have a more onerous effect on smaller firms. As this Small Business Administration study reports, per-employee regulatory costs are significantly higher at smaller firms. Other research has shown that regulation, including environmental regulation, tends to disadvantage smaller firms, discourage new entrants, and increase industry concentration. Federal regulation, in particular, can also advantage national firms over smaller, local or regional firms and eliminate any comparative advantage a smaller firm may have in complying with local rules tailored to local conditions and concerns.

None of this means that new regulations are good or bad. The merits of each specific regulatory proposal need to be evaluated independently. But it is yet more reason to reject the simplistic “business vs. environmental regulation” narrative that so often dominates coverage of environmental policy. In reality, as I explained here:

the traditional framing of the environmental debate is a false one. There is no corporate monolith that opposes regulation across the board, and one can never assume that support for more regulations comes primarily from those who have the public’s
well-being at heart. Environmental policy conflicts are not epic struggles between white hat public interest crusaders and greedy black hat corporate interests. Indeed, in the environmental arena, as in most policy debates, there are few black hats or white hats-most are shades of gray.