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(ACC Mentioned) Stable Third Quarter for U.S. Specialty Chemicals Market
Oct 20, 2015 | Powder & Bulk Solids
The Specialty Chemicals Market Volume Index, a tool created by the American Chemistry Council (ACC) ended the third quarter on a steady note, rising 0.2 percent on a three-month moving average (3MMA) basis in September. -
California Extends Alternatives Analysis Guidance Consultation
Oct 20, 2015 | Chemical Watch
California's Department of Toxic Substances Control (DTSC) has extended the consultation deadline of its draft alternatives analysis guidance to 16 November (CW 25 September 2015). -
US Congressman Calls for Synthetic Turf Safety Review
Oct 20, 2015 | Chemical Watch
By Kelly Franklin
Congressman Frank Pallone, Jr (D-NJ), ranking member of the US House Energy and Commerce Committee, has called on Congress to examine the safety of synthetic turf playing fields containing crumb rubber infill. -
US EPA Extends Flame Retardant Consultation
Oct 20, 2015 | Chemical Watch
The US EPA has extended the comment period on the initial assessments of three flame retardant clusters, due to “numerous requests from various stakeholder groups” (CW 17 August 2015). -
US Agency Consults on Toxicological Profiles
Oct 20, 2015 | Chemical Watch
The US Agency for Toxic Substances and Disease Registry (ATSDR) has initiated a consultation aimed at informing the development of toxicological profiles for a set of priority hazardous substances. -
Board Member Files Complaint with OPM Over Suspension
Oct 20, 2015 | E&E - Greenwire
By Ariel Wittenberg
A suspended Chemical Safety Board member is asking that the Office of Personnel Management reinstate him following an extended administrative leave. -
Urgent Need for Cybersecurity Legislation
Oct 20, 2015 | The Hill - Congress Blog
By Ann Beauchesne
A few years ago, cyberattacks against the government and corporations were on the margins of news stories. However, now a day doesn’t go by that we don’t hear about a data breach or cyberattack. -
Highways Could Be Flooded with Traffic if Rail Safety Deadline Isn't Extended, Officials Warns
Oct 20, 2015 | NJ.com
By Larry Higgs
More traffic could be forced on to already congested New Jersey highways if a Dec. 31 deadline to install a rail safety system isn't extended, commuter and freight railroad officials warned. -
Railroads Warn of Widespread Shutdowns Unless Brake System Deadline Extended
Oct 20, 2015 | Pittsburgh Post-Gazette
By Daniel Moore
Major rail companies on Monday intensified their demands that Congress give them more time to roll out a complex accident prevention technology that can take control of trains to help mitigate human error — or warned that they could face major service shutdowns around the country. -
Washington State Lawmakers Urge EPA To Drop Water Toxics Proposal
Oct 20, 2015 | InsideEPA
By Amanda Palleschi
Republican lawmakers from Washington state are urging EPA to withdraw its proposed Clean Water Act (CWA) human health water quality criteria for toxics in the state, arguing that EPA's proposed criteria are too restrictive and that the agency is attempting to overhaul what should be a state regulatory process. -
State Regulators, Utilities See Advantages in Mass-Based Approach to EPA Rule
Oct 20, 2015 | E&E - Energywire
By Jeffrey Tomich
U.S. EPA's draft Clean Power Plan prompted concerns last year about a "dash to gas" -- a wide-scale, costly build-out of natural-gas-fired generation to replace retiring coal plants.
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(ACC Mentioned) Stable Third Quarter for U.S. Specialty Chemicals Market
Oct 20, 2015 | Powder & Bulk Solids
The Specialty Chemicals Market Volume Index, a tool created by the American Chemistry Council (ACC) ended the third quarter on a steady note, rising 0.2 percent on a three-month moving average (3MMA) basis in September.
This followed a downwardly revised 0.2 percent gain in August and a weak first half of the year. Weakness in 2015 is centered in oilfield chemicals and a few other segments that combined weighed on overall volumes. Of the twenty-eight specialty chemical segments included in the index, 20 expanded in September, six declined and two were flat.
The overall specialty chemicals volume index was off 1.0 percent year-over-year (Y/Y) also on a 3MMA basis. Year-earlier comparisons were generally in the 4 percent to 6.8 percent range during 2012-2014 but since February of this year they have fallen below that range as the downturn in the oil and gas sectors affected headline volumes. In addition, the strong U.S. dollar has adversely affected a number of export-oriented customer industries. Still, on a Y/Y basis, gains are fairly widespread among most market and functional specialty chemical segments, and, in some cases, they are improving. Compared to last year, September volumes were up in 18 segments and down in 10 segments. That said the year-earlier comparisons have been moderating.
Specialty chemicals are materials manufactured on the basis of the unique performance or function and provide a wide variety of effects on which many other sectors and end-use products rely. They can be individual molecules or mixtures of molecules, known as formulations. The physical and chemical characteristics of the single molecule or mixtures along with the composition of the mixtures influence the performance end product. Individual market sectors that rely on such products include automobile, aerospace, agriculture, cosmetics, and food, among others.
Specialty chemicals differ from commodity chemicals. They may only have one or two uses, while commodities may have multiple or different applications for each chemical. Commodity chemicals make up most of the production volume in the global marketplace, while specialty chemicals make up most of the diversity in commerce at any given time, and are relatively high value with greater market growth rates. Some areas where specialty chemicals are used include adhesives, cleaning materials, cosmetic additives, construction materials, food additives, fragrances, and detergents
This data is the only timely source of market trends for 28 market and functional specialty chemical segments. Chemistry directly touches over ninety-six percent of all manufactured goods, and trends in these specialty chemical segments provide a detailed view of trends in manufacturing. The data also sheds light on how various consumer end-use markets are performing compared to others in the marketplace. -
California Extends Alternatives Analysis Guidance Consultation
Oct 20, 2015 | Chemical Watch
California's Department of Toxic Substances Control (DTSC) has extended the consultation deadline of its draft alternatives analysis guidance to 16 November (CW 25 September 2015).
The document will be the first of two issued by the agency to assist companies subject to the Safer Consumer Products Regulations.
Under the legislation, priority products will be identified via formal rulemaking. This will require manufacturers of designated products to submit a draft alternatives analysis within 180 days of the rule's finalisation.
As announced during a DTSC webinar on 7 October, the first formal rule making is expected in late 2015 or early 2016 for children's foam-padded sleeping products with the flame retardants TDCPP or TCEP.
Rulemakings for paint strippers with methylene chloride and spray polyurethane foam with unreacted MDI will follow closely afterwards, it said.
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US Congressman Calls for Synthetic Turf Safety Review
Oct 20, 2015 | Chemical Watch
By Kelly Franklin
Congressman Frank Pallone, Jr (D-NJ), ranking member of the US House Energy and Commerce Committee, has called on Congress to examine the safety of synthetic turf playing fields containing crumb rubber infill.
Crumb rubber, made from recycled tyres, is often used as loose infill beneath synthetic turf or in children's playgrounds. The NGO Center for Environmental Health says that it “contains a cocktail of toxic chemicals” and has called on schools to use natural materials instead.
Last year, Mr Pallone requested the US Agency for Toxic Substances and Disease Registry (ATSDR) initiate a study to determine the effects that exposure to chemicals may have on turf users, and “whether repeated exposure to crumb rubber increases the risk of lymphoma, leukaemia and other blood cancers”. But, he said, “a year later, we still do not have any answers.”
The ATSDR and the Center for Disease Control (CDC) has responded by saying that more data is "necessary to evaluate the health risks that may exist from exposure to recycled rubber tire crumbs in athletic turf.”
The agency says that it is coordinating with the EPA and the Consumer Products Safety Commission (CPSC) “to gain a better understanding of the work being done to investigate health effects from exposure to [the material] and determine if and how we can support these efforts”.
Shifting federal stance
In a CPSC meeting held in May, the agency's chairman Elliot Kaye fielded questions from Mr Pallone on whether it stood by its 2008 press release that called turf fields “OK to install, OK to play on.”
Mr Kaye said: “The 2008 report does not reflect my views of the state of play, and I think it is important to note that the 2008 release didn't even reflect, as far as I understand it, the technical staff's views at the time.”
Earlier this year, the CPSC told Chemical Watch that theirs “reflects a position of not being in favour or against the fields at this time.” It does not regulate the use of crumb rubber in synthetic turf fields or in playgrounds.
Communities take up efforts
However, local ordinances in towns in New York, California, Maryland, and other states have banned the use of recycled tyre materials for infill. Bills introduced in several states would place a moratorium on the construction of new synthetic fields until more studies have been conducted.
In California, the state's Office of Environmental Health Hazard Assessment (Oehha) has initiated a three-year study to examine the potential health effects of waste tyre in playgrounds and synthetic turf fields.
Industry backs safety
The Synthetic Turf Council (STC), the industry trade group representing synthetic turf and tyre crumb manufactures, says that the available science indicates that the playing surface presents “no elevated health risks”.
Bob Ensinger, a spokesperson for the Institute of Scrap Recycling Industries (Isri), says there is a “mountain of scientific evidence ... showing no connection between recycled rubber and any health risk.”
Mr Ensinger adds, “The recycling industry encourages the EPA to take a stand on this issue, based on its own scientific study, and give parents, coaches, and communities the peace of mind they deserve.”
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US EPA Extends Flame Retardant Consultation
Oct 20, 2015 | Chemical Watch
The US EPA has extended the comment period on the initial assessments of three flame retardant clusters, due to “numerous requests from various stakeholder groups” (CW 17 August 2015).
Comments will be accepted on the following TSCA work plan substances until 18 November:brominated bisphenol A cluster;chlorinated phosphate esters cluster; andcyclic aliphatic bromides cluster.
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US Agency Consults on Toxicological Profiles
Oct 20, 2015 | Chemical Watch
The US Agency for Toxic Substances and Disease Registry (ATSDR) has initiated a consultation aimed at informing the development of toxicological profiles for a set of priority hazardous substances.
Comments will be accepted until 14 January on the potential health effects of substances included in Set 27. These are:N,N-diethyl-meta-toluamide (DEET);toluene diisocyanate (mixture);methylenediphenyl diisocyanates;nitrates/nitrites;toluene;polybrominated diphenyl ethers (PBDEs); andmolybdenum.
ASTDR profiles include a review and interpretation of toxicological data, along with an assessment of whether adequate information is available on each substance.
The agency is required to collaborate with the National Toxicology Program (NTP) to initiate additional research for substances without adequate health effect information.
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Board Member Files Complaint with OPM Over Suspension
Oct 20, 2015 | E&E - Greenwire
By Ariel Wittenberg
A suspended Chemical Safety Board member is asking that the Office of Personnel Management reinstate him following an extended administrative leave.
CSB placed Managing Director Daniel Horowitz on administrative leave in June after a U.S. EPA inspector general report found CSB officials had violated the Federal Records Act by using private emails to conduct agency business (E&ENews PM, Feb. 3). The report also came under fire in the House Oversight and Government Reform Committee (Greenwire, July 30).
Horowitz was initially placed on leave for 45 days to allow an investigation into misconduct. His leave has been extended twice, with Public Employees for Environmental Responsibility writing to OPM on his behalf saying that CSB Chairwoman Vanessa Sutherland "refused to identify" when he can return to his post.
"The period of leave endured by Dr. Horowitz is too long and there is no applicable exception to the general rule requiring that such leave be brief," the complaint says.
In a statement, CSB said that while it does not comment on pending employment matters out of privacy concerns, Chairperson Sutherland extended Horowitz’s administrative leave "because the investigative efforts were ongoing."
"They are now close to completion," the statement said.
Horowitz alleges that his suspension violates OPM guidelines for administrative leave.
"This guidance provides that administrative leave should not be used for indefinite, extended or recurring periods," the complaint says.
The complaint cites OPM guidance regarding placing employees suspected of misconduct on leave.
The guidance provides three reasons for administrative leave: if the employees pose a threat to themselves or others, if the suspected misconduct resulted in damage or loss of government property, or if the misconduct endangered "legitimate government interests."
The guidance also "strongly recommends" that agencies avoid using administrative leave and seek alternative solutions such as assigning the employee "duties where he or she is no longer a threat to the safety, the agency mission, or government property."
"Dr. Horowitz poses no threat to safety, property or agency mission," the PEER complaint reads.
In a press release, PEER accuses Sutherland of "improperly politicizing the civil service" in punishing Horowitz for following the direction of former CSB Chairman Rafael Moure-Eraso, who resigned in March.
The release describes Horowitz's leave as a sort of "bureaucratic house arrest" in which he is unable to use his agency email, speak to agency employees or work on agency projects but "must be on call during working hours."
PEER Executive Director Jeff Ruch said in a statement that Horowitz's leave is disproportional to his suspected misconduct.
"If every federal employee under any sort of investigation was sent home, the halls of government would soon be an echo chamber," he said. "If it takes more than four months and $100,000 to discover possible misconduct, you are looking too hard."
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Urgent Need for Cybersecurity Legislation
Oct 20, 2015 | The Hill - Congress Blog
By Ann Beauchesne
A few years ago, cyberattacks against the government and corporations were on the margins of news stories. However, now a day doesn’t go by that we don’t hear about a data breach or cyberattack. Nation states, or their proxies, and cyber criminals steal our login credentials, payment card data, trade secrets, and much more on a daily basis. Cyber criminals have been hacking away with impunity—and that has got to stop.
According to a recent Gallup poll, Americans are more concerned about having their computers or smartphones hacked or credit card information stolen than they are about other crimes. The scary part is that recent high-profile cyberattacks represent just a fraction of the criminal activity happening in the shadows of cyberspace. Every day, cyber criminals are launching attacks that are growing in sophistication and frequency.
Being the victim of a cyberattack is not cheap. The average cost of a breach for a company is $3.8 million and is increasing. Cybercrime costs the global economy about $445 billion in a typical year. Aside from the monetary costs, businesses may suffer a loss of consumer confidence and reputation.
The business community and most lawmakers agree that federal legislation is required to create a powerful sea change in the current information-sharing practices between the public and private sectors. The Cybersecurity Information Sharing Act of 2015 (CISA) is a step in the right direction, and we need the Senate to bring it to the floor for consideration now.
Congressional action cannot come soon enough. It’s an unacceptable privacy risk that hackers are hard at work stealing the Social Security numbers, bank account information and credit card information of hundreds of millions of Americans. It’s an unacceptable privacy risk that nation states, and their proxies, steal the intellectual property and trade secrets of our small businesses every day. All of this results in an unacceptable privacy risk to our national and economic security. However, what is really unacceptable is that a minority of “so-called” privacy advocates threaten to stall action on this important cybersecurity bill.
CISA has earned the support of the U.S. Chamber of Commerce and its Protecting America’s Cyber Networks Coalition, a coalition of 51 businesses and associations. White House support of CISA has put wind behind the sails of a smart and workable bill that reflects compromises among many stakeholders.
The Senate needs to send the president a good cyber bill this year. The business community should not be left alone to counter extraordinarily fast-paced threats from foreign powers and their cyber surrogates. We urge the Senate to take up and pass CISA now.
Beauchesne is the senior vice president for National Security and Emergency Preparedness at the U.S. Chamber of Commerce.
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Highways Could Be Flooded with Traffic if Rail Safety Deadline Isn't Extended, Officials Warns
Oct 20, 2015 | NJ.com
By Larry Higgs
More traffic could be forced on to already congested New Jersey highways if a Dec. 31 deadline to install a rail safety system isn't extended, commuter and freight railroad officials warned.
The officials made the statement Monday as they lobby for a congressional extension of a 2008 law that mandates installation of Positive Train Control by Dec. 31.
PTC uses computers and radio frequencies to slow or stop a train if the operator fails to obey a speed limit or signal. Rail industry officials said they'll begin the eight week process to shut down the railroads at the end of October if Congress fails to pass legislation extending the deadline to 2018.
"We move 500,000 carloads of traffic a week, three times the number of trucks would be required (to move it)," said Edward Hamberger, President and CEO, Association of American Railroads.
One freight train hauls 300 containers, which has the potential to put 300 more tractor trailers on the highways, if a shut down happens," he said.
Officials of major commuter railroads in Chicago, Virginia and California said there aren't enough buses available or space on highways to replace trains.
Railroads that operate trains after the deadline could face fines of $25,000 per occurrence. For a commuter line like Chicago's Metra that runs 700 trains a day, daily fines could hit $1.8 billion, said Donald Orseno, Metra Executive Director.
Senate legislation passed in July gave railroads up to three more years to install PTC. The House and Senate are still negotiating a bill and there could be movement as early as next week, said a house committee aide.
"Waiting until Dec. 30 won't work," Hamberger said.
PATH officials previously said they could shut service down rather than face hefty fines for operating after Dec. 31. Because NJ Transit runs trains on tracks owned by Amtrak and a freight railroad, officials said its unclear if it's trains will run on Jan.1.RELATED: Ten things rail commuters love and hate about NJ Transit
A transit advocate told NJ Transit officials last week that commuters need an update.
"You have a deadline coming up and the public has to know," said Orin Getz, a New Jersey Association of Railroad Passengers director.
NJ Transit is in a demonstration period of testing PTC on lines it owns, but needs additional time to complete the job, Veronique Hakim said last week.
"I think we'll see an extended deadline through 2018," she said, adding passengers are now protected by other safety systems. -
Railroads Warn of Widespread Shutdowns Unless Brake System Deadline Extended
Oct 20, 2015 | Pittsburgh Post-Gazette
By Daniel Moore
Major rail companies on Monday intensified their demands that Congress give them more time to roll out a complex accident prevention technology that can take control of trains to help mitigate human error — or warned that they could face major service shutdowns around the country.
Companies have been working for seven years to develop and install the multi-faceted technology — called positive train control — since receiving a federal mandate in the Rail Safety Improvement Act of 2008.
That legislation contained a deadline of Dec. 31, 2015, to fully implement the computer system that, most prominently, can automatically brake locomotives when traveling over the speed limit or approaching a work zone or misaligned switch.
Following an Amtrak accident that killed eight people in May outside Philadelphia, some officials said such systems could have slowed the train as it sped to 100 miles an hour in a less-than-50-mph zone.
But in a conference call with reporters Monday, industry officials called rolling out the technology a massive undertaking. They warned of the potential for catastrophic, nationwide failures on both freight and passenger railroads if companies can’t legally operate beyond the end of the year.
The freight rail industry needs until the end of 2018 to install the necessary hardware and until the end of 2020 to have it fully tested and operational, said Ed Hamberger, president and CEO for the Association of American Railroads.
“We are committed to getting this job completed,” Mr. Hamberger said.
Industrywide, freight railroads have spent nearly $6 billion of an estimated $10 billion price tag. But Congress in 2008 “did not appreciate the scope or complexity of the technology. It’s not for lack of trying, but we’re not going to make — across the entire network — the 2015 deadline,” Mr. Hamberger said.
Congress required railroads to apply positive train control on lines that carry passengers as well as products classified by the U.S. Department of Transportation as toxic inhalation hazards, which include chemicals like chlorine gas and anhydrous ammonia.
More than 60,000 route miles would fall under these specifications, close to half of the 140,000-mile U.S. network.
Lines around Pittsburgh will soon see installation of certain wireless infrastructure. Railroads keep their hazardous materials route secret due to security concerns, but an Amtrak route carries passengers through Pittsburgh on the Washington, D.C., to Chicago route.
Transportation companies for years have been calling the deadline arbitrary and impossible to meet. While the Senate passed an extension bill in July, the House has not acted on a similar proposal introduced Sept. 30.
CSX Corp. and Norfolk Southern Corp., the two major freight carriers through southwestern Pennsylvania, both have said positive train control is several years away. In September, their chief executives detailed their slow progress in separate letters to Sen. John Thune, R-S.D., chairman of the Senate’s transportation committee.
As of September, CSX had so far spent $1.3 billion, including $800 million to replace about half its existing signaling system. The Jacksonville, Fla.-based company plans to spend around $1.9 billion.
“Many of the hurdles we contemplated in 2008 remain as challenges today,” Michael Ward, chairman and CEO of CSX, said. For example, software suppliers still have not developed defect-free versions of components needed to fully install the technology. On the conference call, Mr. Hamberger noted some companies were reporting a 30 to 40 percent error rate in some of the software components.
CSX has begun evaluating imposing embargoes on shippers of certain chemicals, Mr. Ward wrote, as well as “seriously considering” service suspensions for all goods traveling along lines shared with commuter rail networks that would not meet the deadline.
Norfolk Southern President and CEO James Squires wrote that the company had made “Herculean” efforts toward compliance but was considering legal action to invalidate the Dec. 31 deadline. The Virginia company must install equipment in 3,400 locomotives, replace 2,700 signals and map more than 16,000 track miles.
“There will be a transportation crisis in this country,” Michael Melaniphy, president and CEO of the American Public Transportation Association, said on the conference call.
Mr. Melaniphy said an orderly shutdown of a major rail network takes about eight weeks. Without an extension by the end of October, many freight and commuter rail companies will likely begin discussing service shutdowns.
When a reporter suggested that Congress certainly would not allow the network to descend into chaos and that the industry was using scare tactics, Mr. Melaniphy disagreed.
“We’re raising this issue because it is very real,” Mr. Melaniphy said. “Let us never take for granted what Congress may or may not do. … We’re presenting today the facts of what is happening.”
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Washington State Lawmakers Urge EPA To Drop Water Toxics Proposal
Oct 20, 2015 | InsideEPA
By Amanda Palleschi
Republican lawmakers from Washington state are urging EPA to withdraw its proposed Clean Water Act (CWA) human health water quality criteria for toxics in the state, arguing that EPA's proposed criteria are too restrictive and that the agency is attempting to overhaul what should be a state regulatory process.
"We are greatly troubled by the continued actions of the [EPA] towards the State of Washington in its process to develop its own water quality standards as established by the Clean Water Act," the lawmakers write in an Oct. 7 letter to EPA Administrator Gina McCarthy. "This is just the latest in a series of efforts by EPA to force Washington State into adopting standards that go well beyond what is required for states under the CWA, and ignores the primary and long-standing role states have in developing water quality standards established by the statute."
The lawmakers signing the letter are Reps. Dan Newhouse, Jaime Herrera Beutler, Cathy McMorris Rodgers and Dave Reichert.
EPA's proposal, published Sept. 14 in the Federal Register, would update Washington state's fish consumption rate (FCR) from 6.5 grams per day (g/day) to 175 g/day and maintain its current cancer risk calculation of 10^-6. EPA says the more stringent FCR "accounts for local data, reflects input from tribes in Washington, and protects fish consumers downstream in Oregon, where the state has also used an FCR of 175 g/day to derive its human health criteria."
The agency's action follows the state's inability to finalize updated water quality criteria for toxics. While the rule proposed in January by the Washington Department of Ecology would have also increased the FCR to 175 g/day, EPA had criticized the state's proposal to lower the cancer risk rate to 10^-5. Gov. Jay Inslee (D) had argued that using the 10^-6 cancer rate would have extremely tough standards, resulting in an unacceptable level of uncertainty for businesses and local government with little corresponding benefit to human health.
But the lawmakers' concerns focus primarily on what they say is an overreach of federal authority that could set a precedent giving the agency leeway to apply its own standards in other states.
"EPA has consistently ignored its existing guidance and made clear that the agency will disapprove Washington's [human health water quality criteria] unless the state uses extremely conservative cancer risk levels and fish consumption rates in the development of the [criteria]," they write. "Additionally, EPA's actions have the potential to set an adverse national precedent, as the logic it is using to ignore its existing policy could be applied in many other states."
'Comprehensive' Standards
They also argue that the Washington Department of Ecology's own "comprehensive package" of standards were already stringent and adequately protective of human health: "While Washington stakeholders have been involved in the process, which resulted in a rigorous, stringent standard, EPA has short circuited that process by proposing to impose even more restrictive criteria."
The representatives ask EPA to withdraw the proposal "and let Washington determine the appropriate course of action to adopt its own human health water quality standards, as contemplated by the [Clean Water Act]."
The lawmakers' concern about federal overreach echoes concerns raised earlier this year by the National Association of Clean Water Agencies, which argued the agency's objection to the state's draft cancer risk levels oversteps the agency's authority under the CWA to oversee states' development of such standards.
Meanwhile, the U.S. Chamber of Commerce is asking the agency to extend its comment deadline on the proposal for Washington state until March 14, 2016.
"Establishing risk-based criteria for water quality is a complex and technical undertaking. Interested parties, including the Chamber and its members, require far more than sixty days to fully evaluate the proposed rule and the underlying technical bases," writes U.S. Chamber of Commerce Senior Vice President for Environment, Technology and Regulatory Affairs William Kovacs in an Oct. 8 letter to McCarthy.
The Chamber also notes that EPA's economic impact analysis "does not include or account for several likely significant cost impacts," and argues that stakeholders should get additional time to "conduct our own research and develop a complete economic analysis for the proposed rule."
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State Regulators, Utilities See Advantages in Mass-Based Approach to EPA Rule
Oct 20, 2015 | E&E - Energywire
By Jeffrey Tomich
U.S. EPA's draft Clean Power Plan prompted concerns last year about a "dash to gas" -- a wide-scale, costly build-out of natural-gas-fired generation to replace retiring coal plants.
The final plan issued Aug. 3, which is more geared toward facilitating emissions allowance trading, seems instead to be inciting another race -- one toward mass-based compliance plans.
A key "threshold" decision facing state regulators as they look to begin crafting compliance plans -- whether to choose rate- or mass-based approaches -- dominated much of the discussion yesterday during a workshop here on the Clean Power Plan.
The daylong meeting was organized by the Bipartisan Policy Center and nonprofit Great Plains Institute. It is a follow-up to a similar conference in June that was hosted by the same groups (EnergyWire, June 8).
The earlier meeting produced broad agreement, even among groups that disagreed about many aspects of the rule, that multistate compliance with emissions allowance trading has benefits that could help bring down the cost of meeting the EPA-mandated carbon dioxide emissions reductions.
Yesterday's workshop, similarly, suggested that many of the same groups have a preference for choosing a mass-based compliance approach under which a specific cap is set for CO2 emissions from a state's existing power plants. Under the alternative rate-based approach, states would have to reduce emissions to a certain level, or rate, per megawatt-hour of electricity generated.
Mass-based approaches are generally viewed as preferable for trading because "it's easier to administer and it is more simplistic," said Sandra Byrd, a vice president of Arkansas Electric Cooperatives Corp.
"It's an easier way of quantifying the emissions reduction. And because it's easier and because more folks are likely to choose it, it's something that will be traded on a regional basis, which makes the costs lower for consumers," said Byrd, a former chairwoman of the Arkansas Public Service Commission.
Byrd said if the industrial sector gets allowances at some point, those could be added to the pool for trading purposes.
Coal-dependent states, especially, will see mass-based approaches as being most favorable because retirements of older, inefficient plants that are occurring regardless of the Clean Power Plant can be counted toward compliance.Momentum for mass
Other state regulators, utility officials and representatives of grid operators PJM Interconnection and the Midcontinent Independent System Operator likewise said a mass-based approach is simpler, easier to administer and familiar for state air regulators, who have established similar emissions caps for other pollutants.
Byrd said the key advantage to a rate-based approach is that it more easily allows for economic development and electricity demand growth, which could mean increased CO2 emissions under a mass-based plan.
But Pam Kiely, senior director of regulatory strategy for the Environmental Defense Fund, said that shouldn't be as much of a concern because the electric industry has been accommodating increased electricity demand for years while simultaneously reducing air emissions.
"I think the same can be true in the carbon context," she said.
Scott Weaver, manager of strategic policy analysis for Columbus, Ohio-based American Electric Power Co., said a rate-based approach could also make sense for Southeast states, such as Georgia or South Carolina, that are adding new nuclear generation. That's because the additional carbon-free power would help lower the pounds of CO2 produced per megawatt-hour.
But Paul Sotkiewicz, a senior economic policy adviser to PJM, suggested there would be strong pressure for most states, including states adding nuclear output, to opt for a mass-based compliance strategy. That's because states looking to benefit from selling emissions allowances are going to want the most liquid market and largest possible pool of trading partners.
Officials from regional transmission organizations have said they'll be able to keep the lights on regardless of what approach states in their footprint choose. But a patchwork approach will be more expensive and complicated.
"We can manage to maintain reliability under a variety of scenarios," said Kari Evans Bennett, senior director of program strategy at MISO and a former Indiana utility regulator. "It's just a matter of how expensive it would be."States still in 'think tank stage'
While state regulators have expressed a familiarity with simpler mass-based plans, they have been careful to say publicly that no decisions have been made.
Nancy Lange, a member of the Minnesota Public Utilities Commission, said it may be because they're still busy analyzing, modeling and understanding implications of both approaches. States including Arkansas, Missouri and Iowa have recently hosted their first stakeholder meetings since the Aug. 3 rule (EnergyWire, Sept. 24). Michigan and some states plan to do their own modeling to complement work being done by regional transmission organizations.
"I don't know if any state has done enough analysis to know that one approach is preferable over another," Lange said.
Becky Keogh, director of the Department of Environmental Quality for host state Arkansas, said the state is in "the think tank stage" of evaluating the Clean Power Plan. The state held its first meeting on the Clean Power Plan just last week (EnergyWire, Oct. 13).
Among the key questions it is trying to answer: What is the best approach? How might it affect reliability and environmental quality? Is the timeline sufficient to add new infrastructure, do environmental scoping and get regulatory approval? And what is the cost to consumers and the effect on the state's economy?
States may also be hesitant to declare whether they'll choose a rate- or mass-based approach until they know more about the potential for allowance trading. There's broad agreement that a critical mass of trading partners is needed to keep costs down. States that adopt a different approach risk becoming islands and having higher compliance costs.
"Its hard to separate rate from mass discussions from discussions about regional trading," Bennett said.
Citing studies by grid operators MISO and Southwest Power Pool that show cost savings, Colette Honorable of the Federal Energy Regulatory Commission urged state planners, regulators, utilities, and environmental and consumer groups to evaluate multistate compliance options and keep a focus on what's best for consumers.
Where implementation of the rule affects electricity users is "where the rubber meets the road," she said.
Meanwhile, she said FERC will be working with EPA to ensure that two mechanisms in the rule aimed at maintaining reliability work as intended.
"I believe belts and suspenders really don't hurt," Honorable said.
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