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ACC AM July 3

Industry and Association News

(ACC Mentioned) PS Prices Drop 5 Cents, PP Up 1 Cent
Jul 2, 2015 | Plastics News
By Frank Esposito

North American polypropylene makers in June got back the penny they had lost in May, while polystyrene makers saw their two-month increase streak come to an end as prices fell by a nickel. The 1-cent PP increase for June evened out a similar drop in May and ended a streak in which prices for the material had fallen five times in six months.

Chemical Management News

(ACC Mentioned) More Transparency Needed for Deciding Contaminant List, Draft SAB Report Says
Jul 3, 2015 | BNA Daily Environment Report
By Matthew Berger

A draft Science Advisory Board report on the Environmental Protection Agency's Draft Fourth Contaminant Candidate List of possible drinking water contaminants calls for greater transparency in the process for deciding which substances to include and says the agency should give a better sense of the relative priority of evaluating substances...
EPA Bans Certain Uses of HFCs in Push To Limit Potent Climate Change Contributors
Jul 3, 2015 | BNA Daily Environment Report
By Anthony Adragna

The Environmental Protection Agency will phase out use of some hydrofluorocarbons in favor of substances with less climate impact as part of the latest effort in President Barack Obama's plan to reduce greenhouse gas emissions. The final rule, signed by EPA Administrator Gina McCarthy July 2 and issued under Section 612 of the Clean Air Act...
EPA Seeks To Drive Replacement Of High Climate-Impact HFC Refrigerants
Jul 2, 2015 | InsideEPA
By Stuart Parker

EPA in new final rules is moving to curb the global warming impacts of hydrofluorocarbon (HFC) refrigerants, widely used in consumer products, cars and commerce, and is approving other chemicals with much lower climate impacts, part of the Obama administration's policy to limit short-lived climate pollutants.
EPA Finalizes Rule Restricting HFC-Emitting Chemicals
Jul 2, 2015 | PoliticoPro - Whiteboard
By Alex Guillén

EPA on Thursday finalized a rule phasing out a number of chemicals that emit hydrofluorocarbons, a potent greenhouse gas.The rule will affect many retail refrigerators, vehicle air conditioners and vending machines, as well as aerosol propellants and a number of "foam" products such as polystyrene and polyurethane.
In Spinoff, New Company Chemours Inherits Pollution Liabilities From Parent DuPont
Jul 3, 2015 | BNA Daily Environment Report
By Tiffany Kary and Jack Kaskey

When DuPont Co. announced plans to spin off its major chemical operations in October 2013, it said the move would create a cash-generating dynamo with the leading market share in most of its businesses. The spinoff would let DuPont focus on higher-value products such as solar-panel materials and genetically modified crop seeds, as well...

Chemical Security News

After French Attack Experts Call For Better Chemical Plant Safety
Jul 2, 2015 | Chem.Info
By Andy Szal

Security experts said the chemical industry should take another look at its safety risks in light of an attempted attack on a French gas plant last week. Last Friday, a delivery driver beheaded his boss and set off an explosion at the Lyon plant owned by Air Products of Allentown, Pennsylvania. wo others were injured when the driver’s truck collided...

Energy and Environment News

There Will Be Blood
Jul 3, 2015 | The Economist

Wall Street loves a good scrap almost as much as the wildcatters who drill for oil do. No wonder that the fight over the finances of America’s shale-oil industry has turned nasty. In one corner are shortsellers, including David Einhorn, a hedge-fund manager whose scalps include Lehman Brothers. They argue that “fracking”—the business of blasting...
California Oil, Gas Well Stimulation Rules Take Effect, Require Permits
Jul 3, 2015 | BNA Daily Environment Report
By Carolyn Whetzel

New regulations for oil and gas well stimulation activities in California took effect July 1 and require —for the first time—permits for hydraulic fracturing and other high pressure treatments. The Department of Conservation's Division of Oil, Gas and Geothermal Resources (DOGGR) issued a statement July 1 announcing the permanent regulations the...
Water Quality Good in Fracking Region, Susquehanna River Commission Reports
Jul 3, 2015 | BNA Daily Environment Report
By Leslie A. Pappas

Water quality in 58 watersheds in the Marcellus shale region of northern Pennsylvania and New York remains good overall and shows no apparent change during three years of continuous monitoring, the Susquehanna River Basin Commission (SRBC) said in a report. The report, released June 30, is the third since the commission established...
What BP's $18.7 Billion Spill Settlement Means for Environment, Company
Jul 3, 2015 | BNA Daily Environment Report
By Paul Barrett

BP's announcement that it's wrapping up legal hostilities over the 2010 Gulf of Mexico oil spill brought cheers from all sides. Here's what it means. Everyone's talking about records. The $5.5 billion portion of the $18.7 billion settlement is a “record” under the federal Clean Water Act. Fine. The real number to keep an eye on—from the...
With 114 Ideas to Consider, Work Begins In Earnest on Senate Energy Legislation
Jul 3, 2015 | BNA Daily Environment Report
By Ari Natter

After months of listening sessions, hearings and negotiations, now comes the hard part for Senate Energy and Natural Resources Committee Chairman Lisa Murkowski (R-Alaska): whittling down more than 100 energy bills and weaving the rest into a comprehensive package. Members of the committee introduced 114 bills ranging from...
Supreme Court Blocks EPA Limits On Power Plant Mercury Emissions
Jul 2, 2015 | Chemical & Engineering News
By Glenn Hess & Michael McCoy

In a 5-4 decision, the Supreme Court last week struck down the Environmental Protection Agency’s first-ever national standards for limiting emissions of mercury and other toxic air pollution from coal- and oil-fired power plants. The ruling was a blow, at least temporarily, to chemical companies that hoped to sell pollution control reagents to the utility ...
Oklahoma Files Another Legal Challenge To EPA Clean Power Plan in District Court
Jul 3, 2015 | BNA Daily Environment Report
By Andrew Childers

The Environmental Protection Agency exceeded its statutory and constitutional authorities when it ordered states to restructure their power sectors as part of a proposed rule to limit carbon dioxide emissions from power plants, Oklahoma said in a lawsuit (Oklahoma v. McCarthy, N.D. Okla., No. 4:15-cv-00369, 7/1/15).
EPA Argues Court Lacks Jurisdiction To Rehear Permitting Program Challenges
Jul 3, 2015 | BNA Daily Environment Report
By Andrew Childers

A federal appellate court lacks jurisdiction to rehear challenges to the Environmental Protection Agency's greenhouse gas permitting program because it has already issued its mandate in the underlying decision, the agency said (Coal. for Responsible Regulation v. EPA, D.C. Cir., No. 09-1322, response filed, 7/1/15).
Ex-Sierra Club Official To Raise Questions On U.S. Climate Plan At EPW Hearing
Jul 2, 2015 | PoliticoPro - Whiteboard
By Andrew Restuccia

A former Sierra Club official will tell members of Congress next week that President Barack Obama's 2025 climate change target is unattainable based on the plan the administration outlined to the United Nations earlier this year. David Bookbinder, who served as the Sierra Club's chief climate counsel, will testify before the Senate Environment...
EPA Agrees to Deadline to Review Standards For Publicly Owned Treatment Works
Jul 3, 2015 | BNA Daily Environment Report
By Andrew Childers

The Environmental Protection is seeking comment on a proposed consent decree that would require it to review and, if necessary, revise the hazardous air pollutant standards for publicly owned treatment works by December 2016.The EPA will accept comments on the proposed consent decree until Aug. 5, according to a notice to be published in ...
OMB: Factor Climate Change In Budget Requests
Jul 2, 2015 | The Hill - E2 Wire
By Rebecca Shabad

The Office of Management and Budget (OMB) for the first time is asking agencies to submit budget plans next year that consider the effects of climate change on the construction and maintenance of federal facilities. The OMB issues a revised playbook for budgeting each year and is now including this explicit requirement.
Major Criticisms Prompt EPA To Adjust Water Quality Criteria Calculations
Jul 3, 2015 | InsideEPA
By Amanda Palleschi

EPA has modified its calculation of drinking water intake rates in newly updated water quality criteria for 94 chemicals, responding to criticism from states and water industry groups that the agency's proposed calculation was not reflective of actual health risk -- although EPA left unchanged other calculations that commenters also opposed.
WOTUS Lawsuit Filed By Industry Groups
Jul 2, 2015 | PoliticoPro - Whiteboard
By Jason Huffman

EPA and the U.S. Army Corps of Engineers have been slapped with yet another lawsuit over their Waters of the United States final rule, this time from industry groups. The American Farm Bureau Federation, American Petroleum Institute, National Association of Manufacturers and the National Association of Home Builders are among...

Transportation News

Train Hauling Flammable Liquid Derails; Tank Car Catches Fire, 5,000 Evacuated
Jul 3, 2015 | BNA Daily Environment Report
By Rachel Leven

Roughly 5,000 people have been evacuated following the midnight derailment of a train carrying a flammable and toxic gas near Maryville, Tenn., a local sheriff's office spokeswoman told Bloomberg BNA July 2. At least one tank car that held acrylonitrile, the Class 3 flammable liquid in the most hazardous packing group, caught...
Train Hauling Acrylonitrile Derails, Burns Near Knoxville
Jul 3, 2015 | Chemical & Engineering News
By Glenn Hess

A CSX train carrying acrylonitrile partially derailed and caught fire late July 1 in eastern Tennessee, prompting officials to evacuate 5,000 residents within a 2-mile radius of the incident. No fatalities have been reported. Ten law enforcement officers were taken to a hospital for treatment Thursday morning after exposure to fumes from the...
Crude-by-Rail Lawsuits Consolidated in D.C. Circuit
Jul 3, 2015 | BNA Daily Environment Report

Several environmental groups re-filed their petition for a federal appeals court to review the Transportation Department's rule governing crude-by-rail and nearly immediately had their lawsuit consolidated with other challenges against the rule (Am. Petroleum Institute v. United States, D.C. Cir., No. 15-1131, 7/1/15). This time the Sierra Club's cohort...
Company's Batteries Pose Transport Dangers: DOT
Jul 3, 2015 | BNA Daily Environment Report

Roughly 1,800 recalled lithium batteries used in one company's electric bikes are still in transportation and, without proper packing, are unsafe for shipment, the Transportation Department recently warned industry members. The lithium ion rechargeable battery packs used by PEDEGO Electric Bike Co. were recalled by the U.S. Consumer Product...

Full Text of Stories Below

Industry and Association News

(ACC Mentioned) PS Prices Drop 5 Cents, PP Up 1 Cent

Jul 2, 2015 | Plastics News

By Frank Esposito

North American polypropylene makers in June got back the penny they had lost in May, while polystyrene makers saw their two-month increase streak come to an end as prices fell by a nickel.
The 1-cent PP increase for June evened out a similar drop in May and ended a streak in which prices for the material had fallen five times in six months. Even with that increase, regional PP prices are down a net of 14 cents per pound so far in 2015. Prices also had taken a 10-cent plunge in December 2014.
The June PP increase also could be a sign that strong North American demand is finally having an impact on the market. Through May, sales in the region were up 6.4 percent, according to the American Chemistry Council in Washington. Domestic sales growth of almost 7 percent was dampened a little by a drop of 4.5 percent in export sales.
Higher demand drove regional PP producer inventories for May down almost 2 percent to less than 1.46 billion pounds, according to ACC. Regional PP demand growth through May was led by a gain of almost 17 percent in injection molded consumer and institutional products, including furniture and housewares. Regional sales of PP into sheet also were up 13 percent in those five months.
The domestic PP market “is entering a new era,” according to Scott Newell, PP market analyst with Resin Technology Inc. in Fort Worth, Texas. “Monomer is plentiful and at the lowest price around the globe, which is very different from recent history.”
PP “is seeing growth and high utilization rates and producers have pricing power,” he added. “Again, this is all very different from recent history.”
The 5-cent PS price drop for June came as benzene feedstock prices tumbled 60 cents per gallon. Benzene prices had jumped a total of 77 cents in April-May, but whipsawed back down, taking PS prices down with them. The April-May benzene hike had lifted PS resin prices a total of 8 cents per pound. With the 5-cent drop, prices for the material now are down a net of 8 cents since Jan. 1.
North American PS sales grew 1 percent in the first five months of 2015, according to ACC. Sales of PS into the market’s leading food packaging/food service end market were up almost 4 percent in that period. Food packaging/food service accounted for almost 60 percent of regional PS sales in those five months.
Regional sales of PS to resellers and compounders also were up 11 percent through May. That category accounted for almost 12 percent of PS sales in the region.

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Chemical Management News

(ACC Mentioned) More Transparency Needed for Deciding Contaminant List, Draft SAB Report Says

Jul 3, 2015 | BNA Daily Environment Report

By Matthew Berger

A draft Science Advisory Board report on the Environmental Protection Agency's Draft Fourth Contaminant Candidate List of possible drinking water contaminants calls for greater transparency in the process for deciding which substances to include and says the agency should give a better sense of the relative priority of evaluating substances for possible regulation.
In the June 30 draft report, the SAB also recommends the agency reconsider not listing anaerobic and non-endemic pathogens on the current draft list and look into adding more disinfection byproducts.
The draft Fourth Contaminant Candidate List was published Feb. 4 and lists 100 chemicals or chemical groups and 12 microbial contaminants (80 Fed. Reg. 6,076; (25 DEN A-10, 2/6/15).
Issued every five years, the CCL identifies compounds that are known or anticipated to occur in public water systems but which are not currently regulated. The health risks and prevalence of the listed compounds are studied to determine whether regulatory action is needed.
The EPA requested that the advisory board review the clarity of the documents presenting its listing approach, additional sources of information the agency should rely on and the specific contaminants the agency has added to or deleted from the list.
More Transparency
In its draft report, the SAB calls the process for evaluating contaminants for inclusion “conceptually clear” and more transparent than when the previous list, the CCL3, was finalized.
“But the documentation lacks specific details to enable a reader to thoroughly understand and follow the decision process for listing contaminants in the draft CCL,” its says.
To increase clarity, the board is currently recommending that a summary table be developed for comparing the CCL3 and CCL4 lists, explicitly outlining the scoring schemes for the included contaminants, providing a few detailed examples to show how the inclusion/exclusion process worked and describe the process for removing contaminants carried over from prior CCL lists.
Priority-Setting
In public comments on the draft CCL4, several groups, including the American Water Works Association, Clean Water Action and the American Chemistry Council, criticized the EPA for automatically carrying over from the prior list all the substances that had not received a regulatory determination (68 DEN A-16, 4/9/15).
They argued in separate comments that a smaller list would allow the agency focus its work on the highest priority contaminants and make faster regulatory decisions.
The draft SAB report appears to somewhat echo that concern over a large CCL and the need for priority-setting.
“With respect to the chemical contaminants on the CCL 4, the SAB notes that the list includes a number of contaminants carried forward from the CCL 3 but without providing a sense of the relative priority or ranking of the listed chemicals,” it says.
The report goes on to encourage the EPA to develop “more health advisories for contaminants where occurrence is known to be sporadic but where the Health Reference Level/water concentration ratios are at a level of concern” and to use the frequency of occurrence of contaminants as a guide to deciding when to add or remove them.
“The SAB report offers recommendations that we hope EPA will consider,” Lynn Thorp, national campaigns director at Clean Water Action, told Bloomberg BNA. “Given that the Contaminant Candidate List is growing, the recommendation to consider prioritization is timely.”
Thorp also said that the recommendation of a summary table comparing the current and prior CCL “would help address our concern about whether or not the ‘carryover’ process was too abbreviated.”
Inclusions and Exclusions
The draft recommendations also advise the agency to include on the CCL4 “pathogens of emerging concern, including those associated with biofilms and drinking water distribution systems” and to not include pathogens that are already addressed through conventional water treatment techniques.
They also push the agency to consider adding more disinfection byproducts, “considering their toxicity and the fact that drinking water is (in most cases) the sole source of exposure.”
The report is still a work in progress and has not yet been reviewed by the EPA or other agencies. A note at the top of the report also cautions that it does not yet “reflect consensus advice or recommendations” or been “reviewed or approved by the chartered SAB.”

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EPA Bans Certain Uses of HFCs in Push To Limit Potent Climate Change Contributors

Jul 3, 2015 | BNA Daily Environment Report

By Anthony Adragna

The Environmental Protection Agency will phase out use of some hydrofluorocarbons in favor of substances with less climate impact as part of the latest effort in President Barack Obama's plan to reduce greenhouse gas emissions.
The final rule, signed by EPA Administrator Gina McCarthy July 2 and issued under Section 612 of the Clean Air Act, would list as unacceptable certain hydrofluorocarbons (HFCs) previously permitted for use by chemical and equipment manufacturers in aerosols, foam blowing, motor vehicle air conditioning, retail food refrigeration and vending machines. The EPA concluded other chemicals are available for the same uses but pose less risk to human health and the environment, according to the final rule.
HFCs represent a small, but especially potent, portion of overall greenhouse gas emissions from the U.S. In his June 2013 Climate Action Plan, Obama said the U.S. “can and will lead both through international diplomacy as well as domestic actions” to reduce HFC emissions.
Overall, the EPA said the final regulation (RIN 2060-AS18) will reduce greenhouse gas emissions of 54 million to 64 million metric tons of carbon dioxide equivalent in 2025. HFC emissions in the U.S. are projected to double by 2020 and triple by 2030 without action to curb their use, the administration said.
“Today's action delivers on the president's Climate Action Plan and the administration's commitment to acting on climate. And it is in line with steps leading businesses are already taking to reduce and replace HFCs with safer, climate-friendly alternatives,” McCarthy said in a July 2 statement. “This rule will not only reduce harmful greenhouse gas emissions, but also encourage greater use and development of the next generation of safer HFC alternatives.”
The rule will take effect 30 days after its publication in the Federal Register.
Phase Out Dates Vary
The final rule changes the listing status of several HFCs, including HFC-134a, HFC-125 and flexible polyurethane, because the EPA has identified substitutes posing lower risks to the environment and human health.
Despite the findings, the dates after which such uses are unacceptable vary. HFC-125 will no longer be acceptable after Jan. 1, 2016—the quickest phaseout—while HFC-134a would no longer be acceptable one year after the rule's publication in the Federal Register.
Some foams covered under the new rule would not be fully phased out until January 2021, according to a fact sheet. The EPA said it staggered some of the phase-out dates to provide manufacturers with the time and flexibility to smoothly move to safer alternatives.
Upfront compliance costs to businesses would be an annualized $28.0 million to $50.6 million, using a 7 percent discount rate, according to the final rule, but total annual savings are estimated to be $19.3 million.
“EPA recognizes that transitioning to other alternatives is likely to require capital costs and investments in research, updated equipment, and their related financial impacts,” the agency said in the rule, but also concluded “this is well below the $100 million per year threshold to consider this an economically significant rule on economic grounds.”
The agency formally proposed (79 Fed. Reg. 46,126) banning certain HFCs in August 2014 and received approximately 7,000 public comments on the proposed rule (133 DEN A-3, 7/11/14).
‘Big Move’ Hailed
Environmental advocates hailed the final rule's release as the latest sign of Obama's dedication to implementing regulations to combat climate change.
“The EPA's welcome move is another critical step to cut the heat-trapping pollution that drives dangerous climate change,” David Doniger, climate and clean air program director at the Natural Resources Defense Council, said in a statement. “With safer coolants, foam-blowing agents, and aerosol propellants already on the market, it's time to stop using the most damaging HFCs.”
The Association of Home Appliance Manufacturers also expressed satisfaction with the administration for working with industry to ease compliance timeframes and reduce financial burdens.
“AHAM applauds the EPA decision in its final SNAP rule to adjust certain compliance deadlines, which demonstrates the Administration's flexibility and desire to work with the appliance industry to make the most impactful environmental gains,” Joseph M. McGuire, president of the association, said in a statement.

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EPA Seeks To Drive Replacement Of High Climate-Impact HFC Refrigerants

Jul 2, 2015 | InsideEPA

By Stuart Parker

EPA in new final rules is moving to curb the global warming impacts of hydrofluorocarbon (HFC) refrigerants, widely used in consumer products, cars and commerce, and is approving other chemicals with much lower climate impacts, part of the Obama administration's policy to limit short-lived climate pollutants.
In two rules signed by EPA Administrator Gina McCarthy July 2, EPA approves new refrigerants for use in various applications under the Significant New Alternatives Policy (SNAP), which aims to phase out chemicals with ozone-depleting properties and replace them with more environmentally-friendly substances. The agency also begins a phaseout of some commonly used HFC refrigerants with high global warming potential (GWP).
“Today's action delivers on the President's Climate Action Plan and the administration's commitment to acting on climate,” McCarthy said in a statement accompanying the rules' release.
The SNAP program was originally intended to phase out chemicals with stratospheric ozone-depleting properties, in line with the international Montreal Protocol on reduction of ozone-depleting substances. HFCs, which do not damage high-level ozone, were developed as replacements for older refrigerants, but have high GWP.
The U.S. government is seeking to reduce HFC use domestically as well as internationally, through EPA rules and a negotiated change to the Montreal Protocol that would explicitly aim to phase the chemicals out. To that end, the administration recently announced an agreement with Brazil to push for a phaseout.
HFCs that are being replaced in many applications are HFC-125, HFC-134a, HFC-227ea, and blends of HFC-134a and HFC-227ea. New chemicals being approved in the replacement rule are R-450As, R-448A, R-513A, R-449A, Hydrofluoroolefin1 (HFO)-1336mzz(Z) and Methoxytridecafluoroheptene isomers, in a variety of uses including vending machines, air conditioning and refrigeration.
The dates from which chemicals are being disapproved for use vary according to the specific application, with EPA in some instances treading a middle path between demands from some industry users for later disapproval dates than the agency proposed, and from others such as manufacturers of alternative refrigerants and environmental groups who pressed the agency for a faster phaseout.
For example, EPA has delayed by around seven months its proposed disapproval date for aerosol uses of HFC 134(a), resisting calls from some to delay the phaseout until 2018 or even 2021 because of supply constraints, the lead time necessary to develop new products or other factors.
Originally, EPA proposed a Jan. 1, 2016, disapproval date for HFC-134(a) in this context, but will now set the date at one year after forthcoming publication of the phaseout rule in the Federal Register. For car air conditioning, a phaseout deadline for HFC 134(a) of model year (MY) 2021 will apply, in contrast to the MY 2025 date sought by some carmakers and the my 2017 deadline sought by the Natural Resources Defense Council.
While various groups such as the Institute for Governance and Sustainable Development, which petitioned EPA for the changes, welcomed the rules, congressional opposition to the disapproval rule exists in the form of an EPA appropriations rider in the House. The House rider would block funding for any measure that would disapprove “any hydrofluorocarbon used as a refrigerant or in foam blowing agents, applications or uses.” The White House has specifically objected to the rider in its statement of administration policy threatening to veto the bill. The bill's Senate counterpart does not contain such a rider.

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EPA Finalizes Rule Restricting HFC-Emitting Chemicals

Jul 2, 2015 | PoliticoPro - Whiteboard

By Alex Guillén

EPA on Thursday finalized a rule phasing out a number of chemicals that emit hydrofluorocarbons, a potent greenhouse gas.

The rule will affect many retail refrigerators, vehicle air conditioners and vending machines, as well as aerosol propellants and a number of "foam" products such as polystyrene and polyurethane.

The new standards go into effect with dates ranging from January 2016 to as late as 2021, depending on the product. The rule will save between 54 million and 64 million metric tons of CO2 equivalent in 2025, according to EPA.

The rule is part of EPA’s Significant New Alternatives Policy, which looks for alternative substances to use in products in place of HFCs.

HFCs have emerged as a major target for climate activists, particularly internationally. China and the U.S. agreed in 2013 to work together to phase out HFCs.

HFC emissions began increasing decades ago as refrigerators and air conditioners switched over from substances that released chlorofluorocarbons and hydrochlorofluorocarbons, which damage Earth’s ozone layer. HFCs do not hurt stratospheric ozone, but do contribute significantly to climate change.

The Obama administration has partnered with a number of companies, including Honeywell, DuPont, Arkema, Johnson Controls, Coca-Cola, PepsiCo, Red Bull, Target and Kroger on pledges to reduce HFC emissions.

Click here for the pre-publication final rule, and here for a fact sheet.

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In Spinoff, New Company Chemours Inherits Pollution Liabilities From Parent DuPont

Jul 3, 2015 | BNA Daily Environment Report

By Tiffany Kary and Jack Kaskey

When DuPont Co. announced plans to spin off its major chemical operations in October 2013, it said the move would create a cash-generating dynamo with the leading market share in most of its businesses. The spinoff would let DuPont focus on higher-value products such as solar-panel materials and genetically modified crop seeds, as well as alternatives to fossil fuels.
The new company, Chemours, created on July 1, inherited 37 active plants globally that produce materials such as titanium dioxide, a pigment that adds opaqueness to paints, and fluorochemicals such as Teflon nonstick coatings. DuPont investors have been given one Chemours share for every five DuPont shares they own. Chemours will owe DuPont a $4 billion dividend for share buybacks, too. Chemours shares, which have been trading since June 19, have fallen 21 percent.
Chemours is also on the hook for something uglier: potential liabilities at 171 sites in the U.S., not all of which have been identified. These may include as many as 25 active U.S. factories. Investors don't know how much more will be required to respond to Environmental Protection Agency cleanup demands at those sites or whether additional personal-injury lawsuits will arise.
Cleanup of the 171 sites, DuPont says, will cost from $295 million to $945 million. “In general, the experience is cleanups cost more than anyone ever thinks,” says Ronald Gilson, a professor of law and business at Stanford and Columbia law schools. One site alone, in Pompton Lakes, N.J., where for 97 years DuPont made explosives that polluted the soil with mercury and lead, could cost $116 million, Chemours says. (The EPA is still investigating the property around the inactive plant.)
Parkersburg Site
Environmental costs for a site in Parkersburg, W.Va., that produced perfluorooctanoic acid (PFOA) used in Teflon could reach $1 billion, according to Keep Your Promises DuPont, an activist group in the mid-Ohio Valley. The chemical, which DuPont phased out in 2013, has been linked to cancer. In trials beginning later this year, Chemours faces 3,500 personal-injury and 32 wrongful death claims involving Parkersburg. Chemours estimates the cost to remove PFOA pollution at its sites will be $14 million. It is also required to fund up to $235 million for medical monitoring in the Parkersburg community and pay whatever liabilities come from the personal-injury suits.
Chemours executives and shareholders are betting the new company will be profitable enough to pay for the environmental liabilities, says Edward Adams, a professor of finance and law at the University of Minnesota and a DuPont shareholder. Chemours products accounted for 19 percent of DuPont's sales last year. The company, however, has inherited 62 percent of DuPont's environmental liabilities.
Tronox Bankruptcy
DuPont isn't the first corporation to try to transfer liabilities through a spinoff. Isolating liabilities is “not an insubstantial reason for doing spinoffs,” says law professor Gilson. Companies want to isolate uncertainties, he says.
In 2009 the EPA and the Department of Justice sued Anadarko over the environmental obligations of Tronox, a chemical maker spun off by Kerr-McGee in 2005. (Anadarko bought Kerr-McGee after the spinoff.) Tronox made most of its income from titanium dioxide. It filed for bankruptcy and in the trial was found liable for cleanup costs at 2,800 sites. The EPA demanded $25 billion to clean up the sites and eventually settled for $5.15 billion from Kerr-McGee and Anadarko. Amer Tiwana, a credit analyst at CRT Capital, says Chemours bears some similarities to Tronox. “With four times leverage on the business, they certainly seem to be loading up Chemours with debt,” he says.
‘Dirty Part.’
Credit ratings company Moody's said in an April 27 report that Chemours has a “high financial leverage” compared to its peers, with a debt-to-earnings ratio of 4.7. Moody's analyst Joseph Princiotta also cited “significant near-term litigation risk” from two trials over PFOA scheduled to begin this fall and four in 2016. DuPont may not be able to untangle itself from Chemours's liabilities, if the new company can't pay them. “The parent is not going to be able to strip itself of liability. There is no way a court can allow that,” says Adams.
“We're a very well-capitalized company,” says Mark Vergano, Chemours's chief executive officer. “We have the leading position in the marketplace and the lowest-cost position. I feel confident in our ability to compete well.” DuPont and Chemours “are committed to continuing to fulfill all of their environmental and legal obligations,” says DuPont spokesman Dan Turner.
The market for titanium dioxide may improve before Chemours faces any big payouts for environmental cleanup. Titanium dioxide prices are at a three-year low because of oversupply, with dim prospects for an imminent recovery. Declining demand probably won't change soon, according to CRT's Tiwana.
Sales of the pigment could recover, says Jim Sheehan, a SunTrust Robinson Humphreys analyst. Chemours's business lines, he says, are “the real dirty part of DuPont” and “just happens to be where a lot of the liabilities are.”

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Chemical Security News

After French Attack Experts Call For Better Chemical Plant Safety

Jul 2, 2015 | Chem.Info

By Andy Szal

Security experts said the chemical industry should take another look at its safety risks in light of an attempted attack on a French gas plant last week.

Last Friday, a delivery driver beheaded his boss and set off an explosion at the Lyon plant owned by Air Products of Allentown, Pennsylvania.

Two others were injured when the driver’s truck collided with gas canisters, an attack that occurred on the same day as terrorist attacks in Tunisia and Kuwait.

Air Products officials said the company was "deeply saddened by the loss of life" in Lyon and said it would increase security at all of its facilities worldwide as a precautionary measure.

Experts, however, told the Royal Society of Chemistry's Chemistry World that the attack should be a wake-up call to the industry as a whole.

"Better security is a good thing, but the really important thing is inherently safer chemicals," said former U.S. National Security Council staffer David Halperin.

Chemical safety consultant Paul Orum added that, "It's time for the industry to take seriously the need to reduce both the attractiveness of facilities as terrorist targets and the potential consequences of successful attacks."

A report earlier this year said most chemical facilities in the U.S. had not yet conformed to federal safety standards established following the Sept. 11, 2001 terrorist attacks.

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Energy and Environment News

There Will Be Blood

Jul 3, 2015 | The Economist

Wall Street loves a good scrap almost as much as the wildcatters who drill for oil do. No wonder that the fight over the finances of America’s shale-oil industry has turned nasty. In one corner are shortsellers, including David Einhorn, a hedge-fund manager whose scalps include Lehman Brothers. They argue that “fracking”—the business of blasting oil out of rocks using water, sand and chemicals—is a bottomless pit into which too much cash has been thrown.
In the other corner are America’s oil pioneers, who say that shale can thrive even though the benchmark American oil price has dropped from over $100 a barrel last year to $57 today. The oilmen are backed by plenty of other investors who are still pumping money into shale firms: some $35 billion of equity and bonds has been raised since December.
Both sides have a point. It makes sense to be cheery about the long-term prospects for shale energy—and to be queasy about today’s bunch of fracking firms (see article).
Shale matters. The industry has become huge—listed firms have invested over half a trillion dollars of capital. Much of that money has been raised through junk bonds: if you include privately held companies, shale firms owe almost as much debt as Greece. After drilling beneath much of Texas and North Dakota, they account for 5% of global oil output. The health of shale firms affects people around the world, from Western drivers and Saudi Arabia’s sheikhs to Asia’s consumers.
The reason to be optimistic about shale energy is that the industry has responded cleverly to the falling oil price. Output surged in 2011-14 because of a spending boom. Bosses borrowed like mad, bid up land rights and drilled indiscriminately. But gone are the days when roughnecks were fed lobster in luxury camps and Texan towns were circled by Learjets. Instead, the new mantra in America’s shale basins is thrift. Since December, costs have been cut by a fifth, mainly by squeezing suppliers. Texas has suffered 20,000 job losses. Shale bosses say their firms are concentrating on the very best prospects and sucking more oil from them. Production has held up even though the number of drilling rigs has fallen by half.
Economies of shale
Lower costs and more selectiveness mean that new investments should make money. Most firms boast potential annual returns of 25% or more on new wells when oil costs $60 a barrel. The industry’s agility to date suggests costs will fall further.
If only shale firms could escape their past and concentrate on this bright tomorrow. Alas, every corporation is the sum of its existing, depleting assets and the promise of its future ones. Many shale firms made rotten decisions in the boom. This legacy means a dose of pessimism about them is in order.
The top 60-odd shale firms are making a return of roughly zero on the swollen stock of capital they employ. Despite this, investors value them at well above book value, which suggests their share prices are frothy. Many firms are juicing up the cash they can crank out of their old wells. In the first quarter of 2015, 31% of the cashflow reported by the top firms came from derivatives bets placed when the oil price was high. These hedges will expire over the next year or so; cashflow will fall.
That puts cracks in the shale barons’ claim that they can ramp up production without further borrowing. With less cash flowing in, shale firms need to slash their investment by over two-thirds if they are to balance their books. If spending falls, production will follow. And the capital markets may not always remain open: about half of shale firms, owing $85 billion of debt between them, have distressed balance-sheets. The pace of capital-raising has slowed in the past few weeks.
The wild card is the oil price. Many shale bosses are betting that they will be bailed out by higher prices. Oilmen are optimists by nature—why else would you drill holes in the ground? But if prices do not rise there will be a reckoning, with more firms defaulting, being bought or selling their assets. That would lead to short-term losses among banks and investors. America’s shale industry needs to drill through its past if it is to emerge leaner and meaner than ever before.

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California Oil, Gas Well Stimulation Rules Take Effect, Require Permits

Jul 3, 2015 | BNA Daily Environment Report

By Carolyn Whetzel

New regulations for oil and gas well stimulation activities in California took effect July 1 and require —for the first time—permits for hydraulic fracturing and other high pressure treatments.
The Department of Conservation's Division of Oil, Gas and Geothermal Resources (DOGGR) issued a statement July 1 announcing the permanent regulations the state's Office of Administrative Law approved in January are now in force (03 DEN A-9, 1/6/15).
In the same statement, DOGGR said it has certified an environmental impact report that found oil and gas well stimulation treatments “could have significant and unavoidable” environmental impacts, but most of the impacts to air and water quality, biological and other resources could be reduced to “less than significant” with the recommended mitigation measures.
Required under legislation (S.B. 4) enacted in 2013, the permanent rules replace interim regulations that have been in place since Jan. 1, 2014.
“The regulations now in effect in California are comprehensive, and will protect the environment, drinking water and public health and safety,” State Oil and Gas Supervisor Steven Bohen said in a written statement.
Permitting Process
DOGGR will oversee the permitting process, but the rules require the State Water Resources Control Board to also review all the applications. All well stimulation activities must be performed in compliance with state and local air and water quality rules and hazardous materials rules, according the permanent regulations.
Permit applications must include an engineering review and well integrity evaluation. Also, applicants must provide detailed information about the fluids to be used and groundwater monitoring and water management plans.
Under the rules, oil and gas well operators must notify neighboring property owners and tenants of planned well stimulation activities and, if requested, to test neighboring water wells.
The regulations establish criteria for monitoring and testing water quality, impose reporting requirements for well stimulation treatments, require pressure testing of wells, monitoring for seismic activity near wells and reporting of water use and disposal methods.
Environmental groups have been critical of DOGGR's rules and implementation of the regulations before completion of both the environmental impact report and an independent study on the impacts of oil and gas well stimulation.
State officials are set to release July 9 additional volumes of the scientific assessment on well stimulation treatments mandated by S.B. 4.
Gov. Jerry Brown (D) “has recklessly given fracking the thumbs up before scientists can finish studying this toxic technique,” Hollin Kretzmann of the Center for Biological Diversity said in a July 1 written statement. “Oil regulators can't protect us from oil industry pollution if they won't wait for experts to explain the dangers. The state's weak fracking rules focus on notification and do almost nothing to safeguard California's air, water or public health.”
As for the regulations, the Center for Biological Diversity said they do nothing to address the oil industry's production of toxic wastewater or limit the harmful air emissions from fracking activities.

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Water Quality Good in Fracking Region, Susquehanna River Commission Reports

Jul 3, 2015 | BNA Daily Environment Report

By Leslie A. Pappas

Water quality in 58 watersheds in the Marcellus shale region of northern Pennsylvania and New York remains good overall and shows no apparent change during three years of continuous monitoring, the Susquehanna River Basin Commission (SRBC) said in a report.
The report, released June 30, is the third since the commission established the Remote Water Quality Monitoring Network in 2010 in an effort to evaluate whether natural gas drilling in the region, including hydraulic fracturing, was affecting water quality in small headwater streams.
The project includes 59 monitoring stations, 58 of which have monitored pH, conductance, temperature, dissolved oxygen and turbidity for at least one year, according to the report.
Each station is equipped with sensors that detect changes in water quality, collect measurements at five-minute intervals and transmit the data to SRBC headquarters every two to four hours, the commission said in a statement accompanying the report.
The report found that the chemistry of the water was good with few exceptions, and aquatic insects did not appear to be affected by the density of drilled wells or well pads upstream. The distance between the monitoring station and natural gas wells also did not appear to be a good predictor of biological integrity and water quality, the report said.
The commission is an interstate agency formed by the federal government, Maryland, New York and Pennsylvania to manage watershed resources in the 27,510-square-mile drainage area of the Susquehanna River Basin.

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What BP's $18.7 Billion Spill Settlement Means for Environment, Company

Jul 3, 2015 | BNA Daily Environment Report

By Paul Barrett

BP's announcement that it's wrapping up legal hostilities over the 2010 Gulf of Mexico oil spill brought cheers from all sides. Here's what it means.
Everyone's talking about records. The $5.5 billion portion of the $18.7 billion settlement is a “record” under the federal Clean Water Act. Fine. The real number to keep an eye on—from the perspective both of BP shareholders and of people who care about the environment and corporate accountability—is $53.8 billion.
That is BP's new internal budget for its total liability related to the disaster that resulted in the death of 11 rig workers and spewed millions of barrels of crude into Gulf of Mexico waters. The company has already paid out about half of that amount and will keep paying for years to come.
By settling the Clean Water Act litigation and other federal, state and local environmental claims, the company bought certainty—and it bought time.
That's because BP has agreed to pay over 18 years. The Economics 101 concept “time value of money”—cash promised in the distant future is worth much less than cash today—makes the settlement manageable for an oil company whose annual revenue exceeds $300 billion.
The money won't start to flow from the settlement until a year after signing; annual installments will then come to about $1 billion. Bob Dudley, BP's chief executive officer, sounded justifiably relieved in his official statement: “This is a realistic outcome which provides clarity and certainty for all parties.”
Payment Over Time Good Idea
BP has already spent about $25 billion cleaning up oil and paying damage claims. Federal, state and local officials actually need time to figure out how to spend additional money wisely.
Moreover, while the environmental and economic damage from the 2010 spill didn't turn out to be as apocalyptic as some initially predicted, all of the long-term effects still aren't known. Scientists are continuing to monitor the Gulf of Mexico, and billions of dollars will be held in reserve for future recovery and restoration projects.
Fred Krupp, president of the Environmental Defense Fund, praised the agreement as promising “real hope for the future of the Gulf Coast.” Krupp added an implicit warning about wasting money: “Now it is up to all of us,” he said, “to work together to make the largest environmental settlement in our nation's history also the most meaningful.”
Sadly, Boondoggles Coming
Spacing out payments for restoration will deter some of the fraud, waste, and foolishness that would follow from a massive, immediate money dump. But it won't eliminate the problem.
On the ground in Gulf Coast Louisiana, Alabama, Mississippi and elsewhere, there is already preliminary evidence that local officials will use BP money for dubious public works projects with little or no connection to preserving the environment or promoting the marine economy.
Some of those projects are already planned or under way. As the years go by, this temptation will grow. Ballparks and beach pavilions and parking lots will sprout up—not necessarily bad things in and of themselves but not obviously related to nurturing the delicate Gulf ecosystem. And there will be out-and-out graft. Environmentalists and good-government advocates should celebrate today and then keep a keen eye on the money trail.

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With 114 Ideas to Consider, Work Begins In Earnest on Senate Energy Legislation

Jul 3, 2015 | BNA Daily Environment Report

By Ari Natter

After months of listening sessions, hearings and negotiations, now comes the hard part for Senate Energy and Natural Resources Committee Chairman Lisa Murkowski (R-Alaska): whittling down more than 100 energy bills and weaving the rest into a comprehensive package.
Members of the committee introduced 114 bills ranging from measures that would allow big trucking rigs to qualify for the Energy Department's automotive loans program to legislation that would give states instead of the federal government the lead role for regulating hydraulic fracturing, in hopes that their measures would make it into the committee's final bill.
“See this book right here?” Murkowski said, holding up a binder several inches thick, after the committee held the last of four hearings on the bill in June. “I've got three more that are probably equal in size, and I'm going to have to figure out how to put them all in one binder here. We've got a lot of work to do now.”
The bill, which Murkowski is aiming to move through the committee prior to the August recess, would be the first comprehensive update of national energy policy since 2007 and could be a vehicle for lifting the 40-year-old ban on crude oil exports, easing existing restrictions on offshore drilling, advancing renewable energy projects and authorizing funding to modernize the U.S. electricity grid.
The challenge for Murkowski, who is working closely with ranking member Sen. Maria Cantwell (D-Wash.), will be hashing out a bill that can muster enough support to pass Congress and avoid being vetoed by President Barack Obama.
“We've got a long ways to go until we get to the thing that we can move through the Senate,” Cantwell said in a recent interview. “I think the key thing is, we both want to see something happen, not just a committee process. We both want to see a floor process.”
Cantwell to Release Minority Version
Cantwell, in coordination with the Senate Democratic Caucus, plans to release a minority version of energy legislation after the Fourth of July congressional recess “to emphasize our priorities as we go into the discussions,” she said (123 DEN A-6, 6/26/15).
“Obviously, we are very big supporters of clean energy and reauthorization of the tax credits and a plethora of energy efficiency efforts we think really grow jobs,” Cantwell said. “We've got a long way to go, but a process is happening.”
In a June 29 letter to governors, Cantwell, along with the rest of the caucus, laid out the Democrats' energy policy goals, offering a preview of what they are likely to push for in the bill (125 DEN A-7, 6/30/15).
Among the priorities spelled out in the letter were clean-energy investment, increased physical and cyber security, updating “energy infrastructure,” reducing pollution and waste and investing in research and development.
Time for Energy Update
“We believe it is time for the U.S. Senate to consider the first update to our nation's energy policies in almost a decade,” the senators wrote.
Committee staff have been intensifying efforts to see where they can find common ground between the majority and minority, said Colin Hayes, the committee's majority deputy staff director.
“The hope is we will be in a position to circulate legislation that has both the support of the chair and ranking member and represents, at least as a starting point, what is possible within the Energy and Natural Resources Committee,” Hayes said during a conference call held by the American Council on Renewable Energy earlier in June. “We are spending this month determining what we can agree to and perhaps setting aside the things we cannot.”
Bill to Look at Cross-Border Projects
Among the specific issues Hayes highlighted was legislation (S. 1228) from Sen. John Hoeven (R-N.D.) that would expedite the federal permitting process on future cross-border energy projects such as oil and gas pipelines and electricity transmission lines (88 DEN A-14, 5/7/15).
“What is a reasonable amount of time for people looking to invest in the United States to wait around on the answers regarding their permit applications, for example?” Hayes said. “This is encountered not only for pipelines in Canada that carry oil, but for transmission lines that would deliver renewable power.”
Among the more “controversial or hot topics in the debate” is the issue of expediting natural gas exports and lifting the ban on exporting crude oil put in place during the 1970s Arab oil embargo, said Chris Rauscher, an energy policy adviser for committee member Sen. Angus S. King (I-Maine).
Support, Opposition to Both Ideas
Both ideas are supported by trade groups representing major energy companies such as Exxon Mobil, Chevron and Shell but opposed by some Senate Democrats and environmental organizations such as Friends of the Earth and the Sierra Club.
The addition of a tax title to the bill, which would be written by the Senate Finance Committee and likely added to the bill on the Senate floor, is the “giant elephant in the room,” Rauscher said, also speaking during the ACORE event.
Cantwell, who also serves on the Senate Finance Committee, has said she is “very interested” in having a tax component in the energy bill, and Murkowski has expressed an openness to doing so as well.
Master Limited Partnership Extension?
Such a move could be used to reinstate and extend a slew of energy tax credits that were allowed to expire at the end of 2014, such as the 2.3-cent-per-kilowatt-hour renewable production tax credit and an extension of the solar investment tax credit that would step down from 30 percent to 10 percent at the end of 2016.
Analysts such as ClearView Energy Partners have said the inclusion of a tax title in the bill is likely the best vehicle for legislation
Legislation (S. 1656) from Sen. Chris Coons (D-Del.) would give the renewable energy industry the right to form master limited partnerships, a tax break that has been limited to the fossil fuel industry. The bill, which is co-sponsored by Murkowski, is supported by companies such as NRG Energy and wind turbine manufacturer Vestas.
Sen. Orrin Hatch (R-Utah), the chairman of the Senate Finance Committee, has said in public that he has yet to formulate an opinion on the idea adding a tax title to the energy bill. Other analysts, such as Mark W. Menezes, a former congressional staff member and partner at law firm Hunton & Williams LLP, said the matter is up in the air.
Tax Title Still Up in Air
“It still remains to be seen whether or not the House Ways and Means Committee or the Senate Finance Committee will seek to move any tax provisions on this bill,” he said.
Murkowski's effort to draft a broad energy bill is in tandem with counterparts on the House side, where Energy and Commerce Committee Chairman Fred Upton (R-Mich.) and Energy and Power Subcommittee Chairman Ed Whitfield (R-Ky.) are drafting a broad energy bill of their own.
That bill is expected to be released and marked up in July, and House Majority Leader Kevin McCarthy (R-Calif.) has cleared floor time for the legislation (127 DEN A-11, 7/2/15).

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Supreme Court Blocks EPA Limits On Power Plant Mercury Emissions

Jul 2, 2015 | Chemical & Engineering News

By Glenn Hess & Michael McCoy

In a 5-4 decision, the Supreme Court last week struck down the Environmental Protection Agency’s first-ever national standards for limiting emissions of mercury and other toxic air pollution from coal- and oil-fired power plants. The ruling was a blow, at least temporarily, to chemical companies that hoped to sell pollution control reagents to the utility industry.
The Court ruled that EPA erred by not taking into account the costs placed on the electric utility industry in determining whether it was “necessary and appropriate” to regulate the pollutants under the Clean Air Act.
The decision sends the case back to the U.S. Court of Appeals for the District of Columbia Circuit, which will instruct EPA to reconsider its rule. Meanwhile, the 2012 regulation remains in effect.
Federal agencies have “long treated cost as a centrally relevant factor when deciding whether to regulate,” Justice Antonin Scalia wrote on behalf of the Court in the majority opinion.
Although agencies have some leeway to use their expertise to interpret laws, Scalia said EPA “strayed well beyond the bounds of reasonable interpretation in concluding that cost is not a factor relevant to the appropriateness of regulating power plants.” Scalia was joined by Chief Justice John Roberts and Justices Anthony Kennedy, Clarence Thomas, and Samuel Alito.
EPA said it considered costs at a later stage of the process when it crafted the emission standards. It pegged those costs at about $9.6 billion per year.
But the agency argued that a provision of the federal law required it to initially decide whether there was a need to protect the public from utility emissions. EPA eventually concluded that the public health benefits, which it estimated at $37 billion to $90 billion in 2016 alone, far outweighed the costs.
The standards would have applied to roughly 600 plants, cutting mercury pollution up to 90% and preventing an estimated 11,000 deaths each year, according to EPA.
Justice Elena Kagan said EPA appropriately considered costs. “Over more than a decade, EPA took costs into account at multiple stages and through multiple means as it set emissions limits for power plants,” Kagan wrote in a dissenting opinion joined by Justices Ruth Bader Ginsburg, Stephen Breyer, and Sonia Sotomayor.
The ruling was bad news for chemical companies that were gearing up to sell activated carbon and bromine to utilities for use in mercury abatement. When injected into a power plant’s flue gas, highly porous activated carbon absorbs the mercury that is released by burning coal. Bromine can be combined with activated carbon or used on its own to oxidize mercury into a more easily captured and less harmful form.
“We are, of course, disappointed with the result of this ruling, which will cause a delay in the control of mercury and other hazardous pollutants,” said Patrick M. Prevost, CEO of Cabot, a major activated carbon producer. Cabot says the decision will likely lower the earnings it will achieve in its activated carbon business in the next two years.
Following the ruling, analysts at the investment firm Jefferies lowered their stock price forecast for Cabot from $56.00 per share to $52.00 per share.
Randy S. Dearth, CEO of Calgon Carbon, the world’s largest producer of granular activated carbon, said he’s also disappointed with the ruling, but he noted that many states and Canada already have mercury control regulations. “We continue to expect to increase our activated carbon mercury removal market revenues by approximately 50% this year,” Dearth said.
Robert G. McIlvaine, who runs the power industry consulting firm McIlvaine Co., said he expects the rule that emerges from EPA’s reconsideration to be as stringent as the one being sent back to the appeals court. McIlvaine noted that the cost of mercury reduction has turned out to be far less than was anticipated at the time EPA first drafted the regulation.

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Oklahoma Files Another Legal Challenge To EPA Clean Power Plan in District Court

Jul 3, 2015 | BNA Daily Environment Report

By Andrew Childers

The Environmental Protection Agency exceeded its statutory and constitutional authorities when it ordered states to restructure their power sectors as part of a proposed rule to limit carbon dioxide emissions from power plants, Oklahoma said in a lawsuit (Oklahoma v. McCarthy, N.D. Okla., No. 4:15-cv-00369, 7/1/15).
In its latest legal attack on the EPA's proposed Clean Power Plan, Oklahoma July 1 filed a lawsuit asking the U.S. District Court for the Northern District of Oklahoma to find that the rule violates the Clean Air Act and enjoin the EPA from regulating carbon dioxide emissions from power plants.
Oklahoma argues that the rule exceeds the EPA's statutory authority because Section 111(d) of the Clean Air Act bars the agency from regulating industrial sources under that section that are already subject to hazardous air pollutant emissions standards under Section 112, as are power plants. Oklahoma also argues that the proposed rule forces states to restructure their power sectors to comply, something outside of the EPA's statutory authority. States are forced to take action now to begin compliance with the rule even though it hasn't been finalized, causing states such as Oklahoma irreparable harm.
“The entire point of this unprecedented approach is to evade judicial review by forcing states to take burdensome and expensive actions that will be difficult or impossible to reverse even when defendants’ assertion of authority is ultimately rejected—as it inevitably will be,” Oklahoma said.
The EPA is expected to issue its final Clean Power Plan in August along with performance standards for carbon dioxide emissions from new power plants. The EPA's proposed Clean Power Plan (RIN 2060-AR33) would set a unique carbon dioxide emissions rate for the power sector in each state. State regulators would develop their own plans on how best to achieve those emissions goals. The rule is currently at the White House Office of Management and Budget for review.
Challenges Premature
The U.S. Court of Appeals for the District of Columbia Circuit had rejected similar lawsuits against the Clean Power Plan because the rule is a proposal and not final agency action (In re: Murray Energy Corp., 2015 BL 180996, D.C. Cir., No. 14-1112, 6/16/15; West Virginia v. EPA, 2015 BL 180996, D.C. Cir., No. 14-1146, 6/16/15; 111 DEN A-1, 6/10/15).
Oklahoma had joined those lawsuits. Gov. Mary Fallin (R) has already said her state won't comply with the proposed rule.

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EPA Argues Court Lacks Jurisdiction To Rehear Permitting Program Challenges

Jul 3, 2015 | BNA Daily Environment Report

By Andrew Childers

A federal appellate court lacks jurisdiction to rehear challenges to the Environmental Protection Agency's greenhouse gas permitting program because it has already issued its mandate in the underlying decision, the agency said (Coal. for Responsible Regulation v. EPA, D.C. Cir., No. 09-1322, response filed, 7/1/15).
The U.S. Court of Appeals for the District of Columbia Circuit issued its mandate in lawsuits challenging the EPA's greenhouse gas prevention of significant deterioration permitting program April 10. That means the court can't entertain petitions to rehear argument in lawsuits because it has relinquished jurisdiction, the EPA said in a response filed July 1.
The EPA also argued that business and industry groups seeking rehearing in the lawsuit incorrectly interpret a U.S. Supreme Court decision limiting the scope of the greenhouse gas permitting program to only those sources that trigger prevention of significant deterioration permitting requirements for emissions of conventional pollutants Util. Air Regulatory Grp. v. EPA, 2014 BL 17297378 ERC 1585134 S. Ct. 2427, U.S., 2014).
The Supreme Court has ordered the EPA to set a de minimis threshold for greenhouse gas emissions below which industrial sources wouldn't need to obtain permits. However, the EPA argued that the petitioners incorrectly read that requirement to bar the agency from applying the best available control technology (BACT) to greenhouse gas emissions during the permitting process until that level has been set.
“Petitioners misconstrue a single sentence in UARG v. EPA that merely recognizes EPA's discretion to avoid applying the BACT requirement to de minimis levels of greenhouse gas emissions,“the EPA said.
D.C. Circuit Vacated Parts of Tailoring Rule
Following the Supreme Court decision, the case was returned to the D.C. Circuit. In April, the court vacated provisions of the EPA's tailoring rule, which had limited permitting requirements to only the largest stationary sources, to the extent they require industrial sources to obtain prevention of significant deterioration or Title V permits solely due to their greenhouse gas emissions.
It remanded the remainder of the rule to the agency to determine if further revisions were necessary, including addressing the de minimis issue.
The Coalition for Responsible Regulation, the Southeastern Legal Foundation and Competitive Enterprise Institute petitioned the D.C. Circuit May 26 to rehear argument in its decision to remand and not vacate the EPA's greenhouse gas permitting requirements.
They asked that the new argument be heard either by the same panel that had previously decided the case or by the full D.C. Circuit. The groups argued that the D.C. Circuit's decision to remand the rule to the EPA for further action was inconsistent with a U.S. Supreme Court decisions limiting the scope of the agency's permitting program (102 DEN A-4, 5/28/15).

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Ex-Sierra Club Official To Raise Questions On U.S. Climate Plan At EPW Hearing

Jul 2, 2015 | PoliticoPro - Whiteboard

By Andrew Restuccia

A former Sierra Club official will tell members of Congress next week that President Barack Obama's 2025 climate change target is unattainable based on the plan the administration outlined to the United Nations earlier this year.

David Bookbinder, who served as the Sierra Club's chief climate counsel, will testify before the Senate Environment and Public Works Committee as a majority witness during a July 8 hearing on international climate change negotiations, an aide told POLITICO. The hearing, which has not been previously reported, is scheduled to start at 10 a.m.

Bookbinder left the green group in 2010 and is now a partner at the consulting firm Element VI. He has represented the natural gas industry "in a variety of federal regulatory matters, including several challenges to EPA rules," according to his biography on Element VI's website.

In an email, Bookbinder said his testimony will be based on an April blog post he and a colleague published on the Niskanen Center's website that argues that the measures the Obama administration submitted to the UN earlier this year fall "dramatically short" of those needed to meet the U.S. target of cutting emissions 26-28 percent below 2005 levels by 2025.

Other majority witnesses at the hearing will include: Jeremy Rabkin, a professor at George Mason University School of Law, and Jeff Holmstead, a partner at Bracewell & Giuliani.

Minority witnesses will include: Karl Hausker, senior fellow at the World Resources Institute's Global Climate Program, and Sarah O. Ladislaw, senior fellow at the Center for Strategic & International Studies.

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EPA Agrees to Deadline to Review Standards For Publicly Owned Treatment Works

Jul 3, 2015 | BNA Daily Environment Report

By Andrew Childers

The Environmental Protection is seeking comment on a proposed consent decree that would require it to review and, if necessary, revise the hazardous air pollutant standards for publicly owned treatment works by December 2016.
The EPA will accept comments on the proposed consent decree until Aug. 5, according to a notice to be published in the Federal Register July 6.
The proposed consent decree would resolve a lawsuit brought by the Sierra Club and California Communities Against Toxics to compel the EPA to review its national emissions standards for hazardous air pollutants (NESHAP) and conduct the required residual risk and technology review for those standards. The proposed consent decree was filed June 12 (Sierra Club v. McCarthy, D.D.C., No. 13-cv-01639, consent decree proposed, 6/12/15).
The proposed consent decree would require the EPA to complete its review of the existing standards by Dec. 8, 2016, and finalize any proposed revisions to the emissions limits by Oct. 16, 2017.
The EPA issued its hazardous air pollutant standards for publicly owned treatment works in 1999, but the agency has not reviewed the standards since. The Clean Air Act requires the agency to review the standards every eight years and, if necessary, propose updated control requirements. The current standards (RIN 2060-AF26) require publicly owned treatment works to control emissions of xylenes, methylene chloride, toluene, ethyl benzene, chloroform, tetrachloroethylene, benzene and naphthalene.
The proposed consent decree must still be approved by a district court judge following the comment period. Comments can be made at regulations.gov and should reference Docket No. EPA-HQ-OGC-2015-0430.

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OMB: Factor Climate Change In Budget Requests

Jul 2, 2015 | The Hill - E2 Wire

By Rebecca Shabad

The Office of Management and Budget (OMB) for the first time is asking agencies to submit budget plans next year that consider the effects of climate change on the construction and maintenance of federal facilities.
The OMB issues a revised playbook for budgeting each year and is now including this explicit requirement.
“Specifically, OMB is asking all Federal agencies to consider climate preparedness and resiliency objectives as part of their Fiscal Year 2017 budget requests for construction and maintenance of Federal facilities,” Ali Zaidi, associate director for natural resources, energy and science at the OMB, wrote in a blog post.“Why? Because making our Federal facility investments climate-smart reduces our fiscal exposure to the impacts of climate change,” Zaidi added.
The Defense Department, for example, manages more than 560,000 facilities around the world, the blog post said, and they can be prone to extreme weather like hurricanes, wildfires, floods and droughts.
“Just last week, the National Park Service identified more than $40 billion in national park infrastructure and historic and cultural resources put at risk by sea level rise,” OMB said.
This requirement would apply to the fiscal 2017 budget request, which President Obama would submit to Congress next winter.

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Major Criticisms Prompt EPA To Adjust Water Quality Criteria Calculations

Jul 3, 2015 | InsideEPA

By Amanda Palleschi

EPA has modified its calculation of drinking water intake rates in newly updated water quality criteria for 94 chemicals, responding to criticism from states and water industry groups that the agency's proposed calculation was not reflective of actual health risk -- although EPA left unchanged other calculations that commenters also opposed.
EPA June 29 released its updated national recommended water quality criteria for human health for 94 chemical pollutants, including agricultural and industrial chemicals. The updated recommendations are intended to apply new scientific information and EPA policies such as updated body weight, drinking water consumption rate, fish consumption rate, bioaccumulation factors, health toxicity values and relative source contribution (RSC), which accounts for pollutants coming from sources not regulated by the Clean Water Act (CWA), the agency says in a fact sheet.
Under the Clean Water Act (CWA), EPA adopts risk-based water quality criteria that set a safe level of concentration for contaminants in surface water to protect human health and aquatic life. States then use the criteria to craft their own enforceable water quality standards, although states can, with EPA approval, modify the criteria or adopt other measures using scientifically defensible methods.
State water regulators and water industry groups broadly criticized the methods EPA used in its proposed update as overly stringent and complex. The groups said the proposed changes do not allow enough site-specific flexibility for states and are too complex, with water industry groups suggesting the changes will lead to more stringent permit limits.
In the initial May 2014 proposal, EPA sought to change the default drinking water intake rate from 2 liters a day to 3 liters a day, a decision which the agency says in its June 29 response to comments document, was based on a “consumer-only” estimate of combined direct and indirect water ingestion rates.
But the American Water Works Association (AWWA), representing drinking water utilities, called the 3 liters per day figure an “overly conservative exposure scenario for most of the population.”
“AWWA's fundamental concern regarding the draft methodology is the basic exposure scenario -- that there is a substantial population in the United States routinely drinking untreated surface water as a primary drinking water source. In EPA's draft criteria, there is a drinking water intake exposure pathway for ambient surface waters,” the group wrote in their August 2014 comments, adding that the change to 3 liters per day could “confuse” the public about the “numerous safeguards in public water supply delivery.”
Other groups said that because most of the population does not drink water from untreated surface water sources, the water intake figure should not be based on ambient surface waters, and they mentioned that the new goals does not “represent a consideration of the actual health risk but rather were selected in support of larger goals related to pollution prevention and maintenance of designated uses.”
Drinking Water Intake
In response to these comments, EPA revised the drinking water intake rate in its final ambient water quality criteria to 2.4 liters per day -- a rate which it says represents the per capita estimate of combined direct and indirect community water ingestion at the 90th percentile for adults. EPA says in its response to comments document that it chose to depart from its initial 3 liters per day proposal after reading comments and determining that the “consumer-only” approach it had initially used was not appropriate in this case.
“Consumer-only estimated intake rates may be appropriate for more site-specific or local-scale assessments, such as those conducted by EPA Office of Solid Waste and Emergency Response, because they represent the quantity of water consumed only by individuals who reported water intake during the survey period, resulting in a higher (more conservative) intake rate,” the agency wrote, adding that its new updated rate of 2.4 liters per day is consistent with its original 2000 water quality criteria methodology.
EPA in its response to comments document also explains its decision to shift from using a bioconcentration factor (BCF) approach for measuring concentrations of certain pollutants in fish to using a bioaccumulation factor (BAF) and its decision-making process behind its RSC calculation.
The Association of Clean Water Administrators (ACWA), representing state water regulators, had asked EPA in its comments for “more discussion” of the change from BCF to BAF. Specifically, ACWA asked EPA to consider whether BCF is still an appropriate model for some pollutants that may be “less suited for model-derived BAFs.”
EPA had said in the proposal that it made the change because a BAF better represents the amount of contaminant accumulating in an organism” since it accounts for exposure sources from food and for the transformation of a pollutant due to metabolic processes.
And in the response to comments, the agency explains that BAF focuses on the uptake and retention of a chemical by an aquatic organism from all “surrounding media, such as water, food and sediment” while BCF “refers to the uptake and retention of a chemical by an aquatic organism from water only.” The agency adds that it has provided its peer-reviewed, publicly available data it used to classify each of the 94 chemicals to derive the BAFs and explains that this framework also provides six alternatives to the BAF procedure, resulting in up to four possible methods for each chemical based on its properties.
Relative Source Contribution
On RSC, EPA provides information on how it derived the RSC for each chemical included in the update, after ACWA said “it is unclear whether EPA considered whether chemical-specific data are available to support RSC values that differ from the default” RSC of 20 percent for non-carcinogenic contaminants.
The agency's 2000 guidance outlining the methodology to develop water quality criteria includes the 20 percent default, though some states have urged EPA to drop the approach, suggesting it may not be lawful. And the guidance also used a “decision tree approach,” which allowed for selecting RSC factors to account for exposures other than through drinking water and consumption of freshwater aquatic organisms so that an RSC value that is less stringent than 20 percent could be used of supported by chemical-specific data.
ACWA in its comments encouraged EPA to "evaluate" whether there is scientific basis for the 20 percent factor and include "further discussion of the evidence" it used to support the 20 percent RSC value.
Industry groups were more strongly opposed to the RSC change and called on the agency in their comments to drop the approach.
In response to these comments, EPA outlines how it derived the RSC for each chemical included in the update and references the “exposure decision tree” from the 2000 guidance, noting that using this approach still results in a recommended value of 20 percent.
“This 20 percent value for the RSC may be replaced where sufficient data are available to develop a scientifically defensible alternative value,” the agency writes. “When appropriate, if scientific data demonstrating that sources and routes of exposure other than water and fish from inland and nearshore waters and not anticipated for the pollutant in question, the RSC may be raised to 80 percent based on the available data.”
On the increased fish consumption rate, EPA justifies its decision to change the default from 17.5 grams per day to 22 grams per day after several commenters, including the National Association of Clean Water Agencies, asked the agency to provide more transparency as to how it arrived at “more stringent” numbers. EPA says it used peer-reviewed scientific methods to arrive at the 22 grams per day rate, which represents the 90th percentile consumption rate of fish from inland and nearshore waters for the U.S. adult population 21 years of age and older.

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WOTUS Lawsuit Filed By Industry Groups

Jul 2, 2015 | PoliticoPro - Whiteboard

By Jason Huffman

EPA and the U.S. Army Corps of Engineers have been slapped with yet another lawsuit over their Waters of the United States final rule, this time from industry groups.

The American Farm Bureau Federation, American Petroleum Institute, National Association of Manufacturers and the National Association of Home Builders are among the 14 groups behind the 107-page complaint filed in a federal court in Galveston, Texas. The suit, which challenges the legality of the final rule published Monday in the Federal Register, follows several other lawsuits filed against the two agencies by a combined list of 27 state’s attorneys general.

The latest suit charges the federal agencies with exceeding their authority under the Commerce Clause and violating the Administrative Procedure Act. Unlike the previous suits, it also alleges violations of federal anti-lobbying and small business protection rules.

Other industry groups identified as complainants in the lawsuit: the American Road and Transportation Builders Association, Leading Builders of America, Matagorda County Farm Bureau, National Alliance of Forest Owners, National Cattlemen’s Beef Association, National Corn Growers Association, National Mining Association, National Pork Producers Councils, Public Lands Council and the Texas Farm Bureau.

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Transportation News

Train Hauling Flammable Liquid Derails; Tank Car Catches Fire, 5,000 Evacuated

Jul 3, 2015 | BNA Daily Environment Report

By Rachel Leven

Roughly 5,000 people have been evacuated following the midnight derailment of a train carrying a flammable and toxic gas near Maryville, Tenn., a local sheriff's office spokeswoman told Bloomberg BNA July 2.
At least one tank car that held acrylonitrile, the Class 3 flammable liquid in the most hazardous packing group, caught fire around midnight July 2, according to CSX Corp., the railroad that owns the track where the train derailed. The car was still burning as of about 10:30 a.m., said Marian O'Briant, spokeswoman for the Blount County Sheriff's Office.
About 10 law enforcement workers were sent to the hospital for monitoring after breathing in fumes at the scene, O'Briant said. The air quality is being tested, and individuals within a certain vicinity have been asked not to use their well water until further notice, she said.
Acrylonitrile is used to produce plastics, acrylic fibers and other materials, according to the Environmental Protection Agency. The chemical poses several environmental risks, including potentially leaching into groundwater or being transported into water runoff, according to the agency.
Maryville, according to a 2013 U.S. Census estimate, has a population of roughly 28,000 people.
Cause, Prevention Questions Remain
It isn't clear what caused the accident or whether it could have been prevented under a recently finalized Pipeline and Hazardous Materials Safety Administration rule regarding the movement of large amounts of flammable liquids, such as crude oil, by rail.
Railroad and hazmat personnel are at the scene and will begin investigating the cause “once it is safe,” according to a Federal Railroad Administration statement.
CSX didn't respond to Bloomberg BNA's message requesting additional information regarding the type of tank car used, how many tank cars held the chemical or whether the tank cars that held the chemical were back-to-back in the train.
These are some of the questions that could have determined whether the final rule would have been applicable and altered requirements for this tank car. The rule is currently being challenged administratively and in court.

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Train Hauling Acrylonitrile Derails, Burns Near Knoxville

Jul 3, 2015 | Chemical & Engineering News

By Glenn Hess

A CSX train carrying acrylonitrile partially derailed and caught fire late July 1 in eastern Tennessee, prompting officials to evacuate 5,000 residents within a 2-mile radius of the incident. No fatalities have been reported.
Ten law enforcement officers were taken to a hospital for treatment Thursday morning after exposure to fumes from the accident, according to the sheriff’s office in Blount County, Tenn.
Acrylonitrile is a highly flammable and hazardous liquid. The chemical is used in a variety of industrial processes, including the manufacture of acrylic fibers and plastics. If inhaled in high levels, acrylonitrile can cause membrane irritation, headaches, nausea, and kidney irritation, according to the Environmental Protection Agency. When burned, it can form toxic hydrogen cyanide.
A single tank car loaded with acrylonitrile had a broken axle that punctured the car and sparked the fire in the city of Maryville, about 18 miles south of Knoxville, says the Tennessee Emergency Management Agency.
CSX says the train was traveling from Cincinnati to Waycross, Ga., and consisted of two locomotives, 45 railcars carrying mixed freight, and 12 empty railcars. Twenty-seven cars in the train carried hazardous materials.
CSX is working with first responders and relief agencies “following the derailment of a tank car that is on fire,” the company says. “CSX personnel are on hand at an outreach center. Displaced residents are being offered assistance, including lodging,” the freight rail company adds.

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Crude-by-Rail Lawsuits Consolidated in D.C. Circuit

Jul 3, 2015 | BNA Daily Environment Report

Several environmental groups re-filed their petition for a federal appeals court to review the Transportation Department's rule governing crude-by-rail and nearly immediately had their lawsuit consolidated with other challenges against the rule (Am. Petroleum Institute v. United States, D.C. Cir., No. 15-1131, 7/1/15). This time the Sierra Club's cohort of environmental and public interest groups joined with Riverkeeper in challenging the rule June 30 in the U.S. Court of Appeals for the D.C. Circuit. The D.C. Circuit July 1 consolidated the Sierra Club lawsuit and one filed by Scenic Hudson with other challenges to the same rule filed by the American Petroleum Institute and others (127 DEN A-2, 7/2/15). These challenges all center on the Pipeline and Hazardous Materials Safety Administration final rule that made tank car and operational control requirements for certain trains carrying crude oil and other Class 3 flammable liquids more stringent. The environmental groups' petition is available at http://op.bna.com/env.nsf/r?Open=rlen-9y2jpg. The Sierra Club court order is available at http://www.bloomberglaw.com/public/document/American_Short_Line_and_Region_v_Pipeline_and_Hazardous_Materia_e/1. The Scenic Hudson court order is available at http://www.bloomberglaw.com/public/document/American_Short_Line_and_Region_v_Pipeline_and_Hazardous_Materia_e/2.

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Company's Batteries Pose Transport Dangers: DOT

Jul 3, 2015 | BNA Daily Environment Report

Roughly 1,800 recalled lithium batteries used in one company's electric bikes are still in transportation and, without proper packing, are unsafe for shipment, the Transportation Department recently warned industry members. The lithium ion rechargeable battery packs used by PEDEGO Electric Bike Co. were recalled by the U.S. Consumer Product Safety Commission after some of the batteries overheated or caught fire, but now these batteries are in transit to consumer recycling center drop-off sites, according to the department's June 30 safety alert. The department's Pipeline and Hazardous Materials Safety Administration warned the drop-off sites and transporters that these 36-volt and 48-volt packs are likely to overheat or catch fire unless they are appropriately packaged. PHMSA's alert, which details how to identify and properly package these batteries, is available at http://phmsa.dot.gov/pv_obj_cache/pv_obj_id_32FDBE81F7FBE1E6A6CCE8CC242C7E1421DD0800/filename/PEDEGO_Safety_Alert.pdf.

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