Facing new Superfund taxes, chemical lobby boosted spending

Restoration of Superfund taxes on chemicals and a proposed tax on plastics set the industry lobby into motion

The Newtown Creek in Brooklyn was declared a Superfund site in 2010. (Robert Nickelsberg/Getty Images)
The Newtown Creek in Brooklyn was declared a Superfund site in 2010. (Robert Nickelsberg/Getty Images)
Posted February 23, 2022 at 5:00am

A major lobbying arm for the chemical industry boosted its spending by nearly 92 percent at the end of last year, compared with the same period in 2020, as Congress considered and passed legislation raising taxes on 42 chemicals. 

In the last quarter of 2021, the American Chemistry Council, or ACC, spent $7.32 million lobbying Congress and federal agencies, up from $3.81 million in the fourth quarter of 2020, records show. For the full year, the council increased its spending by 19 percent to $16.57 million, compared with $13.92 million in 2020.

“The increase in spending was driven by a number of challenges and opportunities that came to the fore late in the year, specifically, the reimposition of Superfund Taxes on chemical manufacturers and a proposed tax on plastics,” Jennifer Scott, a spokesperson for the group, said in an email.

“Both proposals represent bad policy that penalize the very industry and creation of products that will make many of the Administration’s climate goals possible, while taking money out of the hands of consumers,” Scott wrote.

That fourth-quarter total is the largest sum the ACC has reported in the Senate’s official lobbying database since 1999, the earliest quarterly record available for the trade group, and it excludes any money the organization spent to hire outside lobbying firms.

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The chemical lobby’s increased spending came as Congress debated and passed a roughly $1.2 trillion infrastructure bill, which President Joe Biden signed into law in November. The law reinstated taxes on chemicals to pay for the cleanup of toxic waste sites nationwide through the Superfund program.

The chemical industry opposed the taxes when lawmakers debated the bill and opposes them today, as Republicans are trying to exempt from the new taxes some or all of the chemicals that the infrastructure law covers.

Beyond the Superfund taxes, the council said it lobbied against a 20-cent-per-ton tax on virgin plastic resin. Legislation from Sen. Sheldon Whitehouse, D-R.I., and Rep. Tom Suozzi, D-N.Y., would impose that tax, although neither has gotten a vote in committee.

Jennifer Ohayon, a research scientist at Silent Spring Institute, which studies links between chemicals, the environment and women’s health, said the new taxes came after years of advocacy.

“Under the tax, any company that manufactures, produces or imports chemicals that are on that list has to pay a per-ton tax,” Ohayon said in an interview. “It was really established in order to fund hazardous waste cleanup.”

Taxes expired

Established in 1980, the Superfund was paid for primarily by a tax on the manufacture and importation of chemicals and a separate tax on petroleum products. Those taxes expired in 1995. The Superfund, which the EPA oversees, has since been largely funded with money transferred from the Treasury Department.

“We didn’t have a Superfund tax for a long time,” Raúl García, legislative director for the healthy communities division of Earthjustice, an environmental advocacy group, said in an interview.

“There’s been a lot of people pushing for them, like activists in Congress, to be reinstated,” Ohayon said of the taxes. “But Congress, until now, has never reinstated it.”

There are more than 1,300 Superfund sites nationwide, and a 2021 report from the U.S. Public Interest Research Group found one-sixth of Americans live within 3 miles of a toxic site either proposed or approved for Superfund cleanup.

The new infrastructure law reestablished the taxes on chemicals at double the rates of 1995, through 2031. The Democrats’ reconciliation bill would permanently reauthorize the Superfund tax on petroleum products, something the infrastructure law does not do.

Dow Chemical Co. spent $1.14 million in lobbying last quarter, including on the Superfund taxes, up from $1 million in the final period of 2020. Likewise, Chemours, another American chemical firm, spent $270,000 on lobbying, a jump from $180,000 during the same period in 2020.

The U.S. division of LyondellBasell, a Dutch multinational chemical company, spent $700,000 on lobbying in the final quarter of 2021, versus the $560,000 in the same window the year before.

One of the biggest trade groups for corporate America, the National Association of Manufacturers, spent $4.37 million on lobbying in the fourth quarter of 2021, a significant rise from the $1.35 million it spent during the same period the previous year.

All four organizations listed Superfund taxes as topics they lobbied on, although NAM, like other business lobbies, spent much of last year opposing the reconciliation legislation.

The new taxes, projected to bring in $14.45 billion in revenue through 2031, according to a Joint Committee on Taxation estimate, are scheduled to take effect on July 1.

GOP response

Six Republican senators — Ted Cruz of Texas, James M. Inhofe of Oklahoma, John Kennedy of Louisiana, Patrick J. Toomey of Pennsylvania, Mike Lee of Utah and John Barrasso of Wyoming — introduced legislation to strike the tax increase.

The American Petroleum Institute, the Association of Battery Recyclers and the ACC asked the IRS for guidance about how the tax will be applied.

“This short implementation window is made more challenging given the general lack of institutional knowledge about how this tax operated procedurally when it was last effective some 25 years ago,” Robert Flagg, senior director of federal affairs at ACC, wrote to IRS officials on Jan. 28.

The ACC represents more than 190 companies, half of which it says are small or medium-sized. Member companies also include large manufacturers 3M, Dow, DuPont and Merck & Co.

After Biden signed the law, Chris Jahn, the chemistry council’s CEO, said Congress targeted his industry.

“This misguided ‘pay-for’ singles out the chemical industry, which has been a driver of U.S. investment and job creation over the past decade,” Jahn said.

Records show the ACC lobbied last quarter on the Senate Republicans’ bill, Democrats’ bills to raise Superfund taxes, the bipartisan infrastructure bill, the reconciliation legislation and legislation that Reps. John Moolenaar, R-Mich., and Dan Meuser, R-Pa., introduced to exempt one chemical, ethylene, from the new taxes.

With Reps. Billy Long and Vicky Hartzler, both Missouri Republicans, Moolenaar and Meuser also introduced legislation to remove lead oxide, antimony and sulfuric acid from the list of chemicals subject to the new Superfund taxes.