Chemicals Industry Spending Millions To Kill Proposed Plastics Tax
Part of Democrats' budget reconciliation package, the REDUCE Act would tax the production of virgin plastics. The chemicals industry wants it gone.
10/30/21-This article has been updated to include new information regarding the current state of the reconciliation bill
Back in August, Rhode Island Senator Sheldon Whitehouse (D) introduced the Rewarding Efforts to Decrease Unrecycled Contaminants in Ecosystems (REDUCE) Act, a proposed excise tax on the production of virgin plastics for single-use products, with the intent being to incentivize companies to move toward using more recycled materials. While the legislation has picked up steam among environmental groups recently after being included in Democrats’ budget reconciliation bill, it was almost immediately denounced by the nation’s largest chemical companies, most of whom represented by the industry’s leading trade association, the American Chemistry Council. Now, new lobbying disclosures show the plastics industry spent over $11 million on lobbying congress in the hopes of killing it.
The REDUCE Act of 2021 would levy a $0.10 tax on every pound of virgin plastics produced by manufacturers, and would gradually increase to $0.20 per pound over time. In September, the American Chemistry Council (ACC) authored a letter in opposition to the proposed tax, signed by the CEOs of 38 of the leading chemical companies in the world, such as BASF, Dow Chemical, Chevron-Phillips, ExxonMobil, and Dupont de Nemours. In the letter, the ACC called the tax “punitive, discriminatory, and regressive”, while also indicating that while the tax is being imagined as an incentive to curb corporate pollution, the cost would simply trickle down to the average consumer. “Economic analysis of the Senate Committee’s proposal calculates this will be a $120 billion tax on items consumers use every day, increase cost on materials by up to 26% and put nearly 92,000 American jobs at risk.” the letter stated, closing with a plea to lawmakers to “ensure this misguided provision is not included in the reconciliation package”.
To that end, the industry, led by the American Chemistry Council, has taken matters into their own hands, with the companies represented in the letter spending over $11 million combined in lobbying efforts from July through September, with a strong focus on influencing Democrat’s budget plan, and with it, eliminating the REDUCE Act. The ACC spent $3,930,000 on in-house lobbying, making them one of the larger individual spenders for the quarter overall. For outside help, the trade group turned to powerhouse lobbying firm Mehlman, Castagnetti, Rosen, and Thomas, whom they paid $100,000. Lobbyists for Mehlman, Castagnetti, et al have already contributed tens of thousands of dollars to federal campaigns in the 2022 cycle, with founder Bruce Mehlman traditionally giving to Republicans. However, firm partners David Thomas and Dean Rosen have contributed the DCCC and DSCC, respectively.
The American Chemistry Council also reached out to Invariant LLC, the public relations firm run by Heather Podesta (ex-wife of lobbyist Tony Podesta), who has deep ties to Democratic circles, being a top bundler for the party’s congressional fundraising arms to the tune of roughly $291,000 reported so far this cycle. Podesta herself has reported donating over $73,000 evenly split between the DCCC and DSCC, and several of the lobbyists employed by her firm have combined to donate tens of thousands more, mostly to Democratic politicians. The ACC also hired Ogilvy Government Relations for $50,000 to lobby the REDUCE Act—another firm that has collectively donated substantial amounts to mostly Republicans, though some conservative Democrats have been keen to take their money as well.
Ten of the 38 companies that signed on to the ACC’s letter also reported spending heavily on lobbying over the past few months. ExxonMobil, who while known for its oil and gas subsidiaries, also produces a wide array of plastics such as packaging materials, plastic bottles, automobile bumpers, synthetic rubber, solvents and countless consumer goods. Exxon spent $1,660,000 on in-house lobbying during Q3, partly on the REDUCE Act, slightly more than Chevron (owners of Chevron-Phillips Chemicals, who produce piping, plastics, aromatics, and other synthetic materials), which spent $1,350,000. Chevron also hired Mehlman et al, paying the firm $50,000. One of the world’s largest producers of plastics, polyurethane, and synthetic rubbers, Dow Chemical spent $1,160,000 on in-house lobbying expenses, outsourcing some of the load to Fierce Government Relations and FTI Consulting (two firms on opposite ends of the aisle as reflected by their campaign contributions), whom they paid $60,000 each during the period.
Several more of the world’s top chemical companies also open their wallets to lobby the bill, such as:
BASF—$280,000
Celanese—$160,000
Covestro—$260,000
Covestro also hired megafirm Greenberg Traurig for outside counsel, paying them $30,000
DuPont de Nemours—$410,000
Eastman Chemicals—$620,000
Eastman also contracted lobbying firm Ingram Group for help, for which they paid $20,000
LyondellBassell—$700,000
LyondellBassell also hired Miller & Chevalier to lobby the REDUCE Act, paying the firm $50,000. Though not a lobbyist on the bill, one of the firm’smost esteemed members, Leonard Bickwit, has donated $39,500 to the DSCC this cycle, as well as donating to Democratic Senators Gary Peters (MI) and Kyrsten Sinema (AZ).
Solvay—$110,000
Hanwha Q Cells (via Boundary Stone Partners)—$120,000
Mosaic—$290,000
Evonik (via Capitoline Consulting)—$30,000
A recent report from Beyond Plastics at Bennington College found that plastic could be a larger source of greenhouse gas emissions than coal by the year 2030. According to the report, one year’s worth of plastics emissions is the equivalent of “116 average coal-fired power plants” because of the manufacturing process—leading environmental advocacy groups to position plastics as the “new coal”. The American Chemistry Council wants autonomy in how its member companies regulate their emissions, and have argued that the proposed tax in the REDUCE Act would do little, if nothing, to actually curb plastics pollution or significantly decrease emissions. Part of the reason why, however, is that it appears the position the chemical industry is simply to raise prices to counteract it. The ACC has appeared to do the math on what they claim to be a $120 billion tax, but referred to it as taxing “the American people”, indicating that the industry will attempt to pass the extra cost along to the consumer, a rhetorical viewpoint they reiterated in online ads which began circulating the internet around October 13.
The third quarter was just the beginning of the budget lobbying battle. While the bill was introduced in early August, the reconciliation package the REDUCE Act is attached to is still being hotly debated and stripped down—and lobbyists are all over DC trying to influence the legislation for the myriad of clients they represent. To that end, it’s very likely that fourth quarter lobbying numbers will be as high—if not higher—than what has been recorded for the previous three months. There’s also a high degree of uncertainty of what the final budget reconciliation will look like, and if the REDUCE Act makes it into the final draft.
UPDATE: On Thursday 10/28, President Biden unveiled what he described as a framework for his Build Back Better reconciliation package—billing it as one that will get past the finish line. With it, the White House also released a 1,684 page draft of the bill's text, in which there is no mention of the REDUCE Act, or a plastics tax in general. In fact, the word “plastic" does not appear in the text of the bill at all, indicating that if the bill continues as currently constructed, the chemicals and plastics industry, led by the American Chemistry Council, will have walked away with a massive victory.