“Innovation is critical to the survival and growth of our industry and the downstream industries we supply,” said Craig Morrison, president, CEO and chairman of Momentive Performance Materials Holdings LLC. “To remain a market leader, our process of research, development, product testing and introduction is nearly constant. That is why an efficient, effective process to evaluate and approve new chemical innovations is vitally important to the chemical industry.”
Morrison, who also serves as chairman of the American Chemistry Council’s (ACC) board of directors, recently testified on behalf of the ACC before the House Subcommittee on the Environment and the Economy. Morrison delivered the messages that effective chemical regulation must protect health and the environment while also promoting innovation, new product development, growth and competitiveness of U.S. manufacturers.
The hearing was part of a series to examine the Toxic Substances Control Act (TSCA), the current law that regulates industrial chemicals. The hearing took an in-depth look at sections 5 and 14 of the law, which pertain to the regulation of new chemicals and the protection of confidential business information. Morrison praised sections 5 and 14 of TSCA, urging Congress to preserve these critical elements of the law.
“These sections provide an important regulatory framework that protects health and the environment, and allows our industry’s innovative solutions to come to market,” Morrison said. “It is fair to say sections 5 and 14 have been partly responsible for the significant competitive advantage the business of chemistry has in the United States compared to other countries and regions.”
New chemicals and significant new uses
EPA’s New Chemicals Program implements section 5 of TSCA and according to Morrison, the program can rightfully be considered one of the major successes of TSCA. The business of American chemistry is a powerful engine for innovation and creativity.
“Our industry supplies virtually every manufacturing sector in the United States,” Morrison said. “Ninety-six percent of all manufactured goods are touched by chemistry at some point in the production cycle. Innovation is at the core of our industry’s drive to become the world’s preferred solutions provider.”
According to Morrison, this innovation can be measured in several ways:
• American chemistry has consistently been one of the largest private-sector investors in research and development (R&D). In the decade ending in 2011, the U.S. chemical industry (excluding pharmaceuticals) invested an average of nearly $11 billion annually in R&D, with companies typically allocating 1 to 3 percent of their annual sales to R&D. Major chemical companies are once again locating their R&D facilities in the United States, in recognition of the market potential and regulatory climate compared to other regions of the world. In 2012 alone, chemical companies invested nearly $15 billion in R&D.
• Patents play a key role in chemistry-related innovation. In general, one-fifth of all patents granted in the United States are chemistry related. One-half of those patents are granted to the companies directly involved in the business of chemistry, including basic and specialty chemical companies. Of course, not all innovation in the chemical industry is patentable, so this figure represents only a fraction of the technological developments in chemistry.
• The advent of reliable, affordable supplies of unconventional oil and gas in the United States has spurred significant investment in the industry. Chemistry is a major energy consumer, for both power and feedstock purposes. As of June, ACC identified more than 100 new plants and plant modifications that have been announced for the United States to take advantage of that important resource, worth over $72 billion.
Morrison said these factors would be less compelling without a regulatory structure that ensures innovation in chemistry can be reviewed for potential health and environmental impacts.
“TSCA section 5 plays that role,” he said. “Since TSCA was enacted, EPA has reviewed more than 50,000 new chemicals. Those substances account for virtually all of the innovation in chemicals over the past 30 years. In fact, three times more new chemical substances are brought to market in the United States compared to other regions of the world, in part because section 5 creates an efficient and effective mechanism for EPA to review new substances.”
TSCA section 5 also gives EPA the ability to require additional tests or other measures such as disposal controls and worker protection.
“Over the years, the new chemicals program has made wonderful efforts to inform the chemical industry about the criteria used to assess chemicals,” Morrison said. “These efforts have encouraged development of safer chemicals, and I believe have caused the industry to screen out ‘bad actors’ before presenting them to the EPA in the first instance.”
Morrison said the subcommittee should consider section 5 one of the key elements of TSCA — a provision for new chemicals review that has undoubtedly met many of the objectives Congress envisioned in 1976. According to Morrison, any effort to reform TSCA should be careful to preserve the essential elements of the new chemical review program that protect health and the environment and U.S. commercial and competitive interests.
Disclosure of data
The ability to protect commercial confidential information from disclosure is another key element in fostering innovation.
“For a company like Momentive, our status as a global leader in thermoset resins, silicones and advanced materials depends heavily on our ability to protect our trade secrets from disclosure,” Morrison said. “Trade secret protection is crucial to my company’s global competitiveness. It is crucial to our industry’s ability to innovate to produce cleaner, safer and more effective products.”
However, according to Morrison, the protection of confidential business information must be balanced by appropriate government and public access to health and safety information. Morrison said in section 14, Congress struck a fairly good balance of those interests.
“Much of the innovation in chemistry depends on protection of confidential chemical identities, which are among the most valuable intellectual property in the chemical industry,” he said. “Confidential chemical identities do not generally qualify for protection under patent, copyright and other forms of intellectual property protections; they are considered trade secrets under the Freedom of Information Act (FOIA). It is crucial this information receive appropriate protection under TSCA.”
As important as protection of confidential information is for the chemical industry and its ability to innovate, there are limits to that protection. ACC and its members also firmly believe data and information on the health effects of chemical exposures should not be eligible for protection as confidential business information.
Morrison also said ACC strongly opposes any change in EPA’s policy affecting claims of confidentiality in chemical identities because of the significant impact it would have on the industry’s ability to compete in the domestic and global markets.
“We have been clear in our support for upfront justification of confidential business information claims, including claims to protect chemical identity,” Morrison said. “EPA guidance already requires a manufacturer claiming a chemical identity confidential must provide a structurally descriptive generic name for the substance.”
Morrison explained a modernized TSCA must not create disincentives for companies to invest in the development of new chemicals and new applications of existing chemicals. TSCA must continue to strike a balance between the public right-to-know health and environmental effects information about chemicals and industry’s legitimate commercial intellectual property interests.
“The business of chemistry has a major stake in TSCA, and particularly in sections 5 and 14 of the act,” Morrison said. “The sound implementation of both sections is critical not only to protection of health and the environment from the unmanaged risks of exposures to chemical substances but to innovation, jobs and economic growth.
“Chemistry innovations have transformed modern life and are vital to the survival, growth and competitiveness of American manufacturers. As Congress examines TSCA, ensuring new chemicals can be evaluated, approved and brought to market in an efficient, timely way and that the intellectual property behind those innovations is protected should be top priorities.”
For more information, visit www.momentive.com or call (614) 225-4000, or visit www.americanchemistry.com or call (202) 249-7000.
