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Senate Leadership Urged to Break 'Gridlock' on TSCA Bill
Oct 29, 2015 | Chemical Watch
By Dinesh Kumar
Senator Tom Udall (D-New Mexico) has urged the Senate leadership to step in to break the “gridlock and dysfunction” that is holding up consideration of the bill (S 697) that he co-authored to reform the Toxic Substances Control Act. -
Synthetic Biology Innovations Need a Clearer Path to Market
Oct 29, 2015 | The Washington Post
By Dominic Basulto
A new report from the Wilson Center’s Synthetic Biology Project highlights the need to modernize the complex and often times contradictory regulatory oversight of the synthetic biology industry. -
Congressional Leaders Question EPA on Synthetic Turf Analysis
Oct 29, 2015 | Chemical Watch
In a move that could lead to a possible hearing, Congressional leaders have asked the US EPA if the safety of recycled rubber tire crumbs, used in synthetic turf fields, has been fully assessed. -
Chemical Safety Tops Cleaning Industry's Concerns
Oct 29, 2015 | Chemical Watch
By Kelly Franklin
Issues related to materials, including chemical safety and raw material sourcing, rank as the highest sustainability concern for cleaning products manufacturers and stakeholders, according to a recent report from the American Cleaning Institute (ACI). -
Pregnant Women in New York Have Highest Parabens Levels
Oct 29, 2015 | Chemical Watch
US researchers, examining human umbilical cord blood, found that a cohort of pregnant women in Brooklyn, New York, had the highest level worldwide of methyl and propyl parabens. -
Safety Board Extends Leave for Officials Under Fire
Oct 29, 2015 | E&E - Greenwire
By Sam Pearson
Two U.S. Chemical Safety Board employees who drew scrutiny from Congress and the U.S. EPA inspector general will remain on leave at least through most of next month, the agency said today. -
Dems Rail Against Automated Train Extension
Oct 29, 2015 | The Hill - Transportation
By Keith Laing
Senate Democrats are railing against an extension of a deadline for automating trains on most of the nation's railways that was approved by Congress this week, over the objection of safety advocates. -
Senate Passes Transportation Funding Stopgap Bill and Rail-Safety Extension
Oct 28, 2015 | The Washington Post
By Michael Laris and Ashley Halsey III
The Senate on Wednesday approved a measure that extends federal transportation funding for three weeks, along with a provision that gives the railroad industry at least three more years to implement life-saving automatic-braking technology. -
Staring Down New Transpo Deadline, 22 Days Away
Oct 29, 2015 | Politico (Morning Transportation
By Jennifer Scholtes
The clock restarts today in the race to enact a multiyear transportation funding bill before policy authority runs out again, but this new timer will only be ticking for a mere three weeks. -
Retailers Urge Senate to Pass Automated Train Extension
Oct 29, 2015 | The Hill - Transportation
By Keith Laing
The National Retail Federation (NRF) is urging the Senate to pass an extension for federal highway funding and a deadline for a new automated train system that was approved by the House on Tuesday. -
Mass-Based Compliance Option Gaining Favor -- EPA Official
Oct 29, 2015 | E&E - Energywire
By Anne C. Mulkern
Multiple states are leaning toward the option of setting a cap on carbon emissions in order to comply with EPA's Clean Power Plan, an EPA official said here yesterday. -
Obama Attorneys Confident as Legal 'Super Bowl' Kicks Off
Oct 29, 2015 | E&E - Greenwire
By Robin Bravender
President Obama's top environmental attorneys today said they're ready for what one dubbed the "Super Bowl" of climate litigation. -
Moderate GOP Senators Form Green Working Group
Oct 29, 2015 | PoliticoPro
By Andrew Restuccia
Four moderate Senate Republicans — including two facing tough reelection bids — are joining forces to rethink how the GOP approaches environmental issues. -
Moderate GOP Senators form Green Coalition
Oct 29, 2015 | The Hill - E2 Wire
By Timothy Cama
Four centrist Senate Republicans are banding together to call for policies to protect the environment. -
Analysts See New Demand But Tough Path for New Projects
Oct 29, 2015 | E&E - Energywire
By Jenny Mandel
With worldwide gas prices in the doldrums, demand outlooks for liquefied natural gas are unduly low. -
API Opts Not to Fight N.Y. Fracking Ban
Oct 29, 2015 | E&E - Energywire
The American Petroleum Institute missed Tuesday's filing deadline, leaving only one lawsuit left to challenge the New York state ban on high-volume fracking.
Industry and Association News - There are no clips to report at this time.
Chemical Management News
Chemical Security News
Transportation News
Energy and Environment News
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Senate Leadership Urged to Break 'Gridlock' on TSCA Bill
Oct 29, 2015 | Chemical Watch
By Dinesh Kumar
Senator Tom Udall (D-New Mexico) has urged the Senate leadership to step in to break the “gridlock and dysfunction” that is holding up consideration of the bill (S 697) that he co-authored to reform the Toxic Substances Control Act.
At issue is an attempt by Senator Richard Burr (R-North Carolina) to attach an amendment to the TSCA bill, relating to the reauthorisation of the Land and Water Conservation Fund (LWCF) (CW 22 October 2015).
“One of the things we face here is that because the LCWF has not been reauthorised, there are senators trying to attach this to other pieces of legislation,” Mr Udall said in a speech on the Senate floor on Wednesday. This has led to both bills, which have overwhelming support, being held up, he added.
“So we are in a situation where the Senate leadership needs to step in and say both of them have huge support [so] let's get a vote on them.”
Mr Udall, once again, sought unanimous consent for the Udall-Vitter TSCA bill to be taken up on the floor, without any extraneous amendments, at a time to be determined by the Majority Leader Mitch McConnell in consultation with the Democratic leadership. But Mr Burr objected.
“I am going to hold up the chemical bill, until there is an opportunity for me to either amend it or to offer my Land and Conservation Fund permanently extended on another piece of legislation,” he said.
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Synthetic Biology Innovations Need a Clearer Path to Market
Oct 29, 2015 | The Washington Post
By Dominic Basulto
A new report from the Wilson Center’s Synthetic Biology Project highlights the need to modernize the complex and often times contradictory regulatory oversight of the synthetic biology industry. Right now, there’s a confusing mix of federal regulators (FDA, USDA and EPA) and an alphabet soup of federal statutes (TSCA, FIFRA, FFDCA, PPA) that result in some synthetic biology products being caught in an innovation no-man’s land. And that could impede some promising innovations from reaching the marketplace, especially those from smaller start-ups
Take, for example, something as simple as a genetically modified mosquito that’s designed to mitigate human disease. According to the Wilson Center report, even this innovation is “relatively uncharted territory” for federal regulators. When the biotech firm Oxitec designed a genetic technique that would prevent female offspring of certain disease-carrying mosquitoes from reaching maturity, it raised a number of thorny regulatory questions.
If you think of this mosquito innovation as a pest control solution, then the USDA’s Animal and Plant Health Inspection Service (APHIS) should be the lead regulator. However, if you think of the genetically modified mosquito as a drug to eliminate a known disease – yellow fever, Dengue fever or Chikungunya – then the FDA should be the lead regulator.
But even here, there’s a potential problem, since it’s not clear if this should be considered an “animal drug” (in which case it would be regulated by the FDA’s Center for Veterinary Medicine) or a “human drug” (in which case it would be regulated by the FDA’s Center for Drug Evaluation and Research).
In the end, the FDA regulated the genetically modified mosquito as a new animal drug. But that wasn’t the end of the story, as Todd Kuiken, senior program associate at the Wilson Center’s Synthetic Biology Project, told me. A similar product from the same company — a biopesticide for diamondback moths — that works using the same genetic technique was forwarded to the USDA for regulatory review rather than the FDA.
And, in some cases, synthetic biology is progressing so fast that there’s simply not a regulatory agency that has clear jurisdiction over certain innovations. “The system is not flexible enough to address rapidly evolving technologies like synthetic biology,” Kuiken says. “This could make it difficult for agencies to properly evaluate the potential risks of these products, as well making it difficult for products to move to the market.”
This can happen in the cosmetics industry, for example, where commonly used cosmetic ingredients do not require FDA approval and companies are not required to label naturally occurring ingredients. This gets complicated, however, when synthetic biology innovators attempt to create a “synthetic” version of a commonly used, naturally occurring ingredient. Would they need to submit this for approval to the FDA or not?
Theoretically, squalene (a common ingredient in lotions) made from yeast microbes has the exact same chemical properties as squalene made from shark liver oil, so adding it to cosmetics products shouldn’t trigger FDA regulatory action. The problem, however, is that adding a synthetic ingredient to cosmetics might trigger a requirement from the Federal Trade Commission for clear labeling of this ingredient.
And there are plenty more of these examples in the Wilson Center report – in fields ranging from pollution control to health care to agriculture to clean energy. A huge mining company using microbes to more effectively mine copper in hard-to-reach spots, for example, might run afoul of the TSCA (Toxic Substances Control Act), even if there’s nothing particularly toxic about these microbes.
If similar types of innovations get caught in the regulatory maze of federal agencies, it could have a chilling effect on synthetic biology innovation, especially for smaller start-ups that may find the regulatory framework daunting. It all comes down to uncertainty: if you’re a deep-pocketed investor, would you invest millions of dollars in a company if you weren’t sure that the company would be allowed to bring a new product to market within a reasonable period of time?
That obviously wasn’t the case with Editas Medicine, which recently attracted $120 million in venture capital financing for its genome-editing technology, or Green Biologics, which recently landed $76 million for biofuels and bio-based chemicals. In fact, venture capitalists continue to back synthetic biology start-ups, to the tune of $500 million in the first nine months of 2015 – more than the total amount of synthetic biology VC financing in 2013 and 2014 combined.
So maybe the “chilling effect” produced by a complex regulatory landscape is overrated. In some cases, the approval process for synthetic biology innovations — especially those related to health and medicine — appears to be relatively straightforward, if at times arduous.
The real question seems to be about the type of innovations that are just so new or so revolutionary that government regulators get tripped up trying to define and understand them. In the recommendations section of the Wilson Center synthetic biology report, the authors noted several possible solutions: increasing funding to federal agencies, creating centers of technological excellence to keep regulators up-to-speed, and coming up with a long-term strategy that anticipates future changes within the industry. Think of this as making regulators smarter and better informed about how to approach new examples of synthetic biology innovation.
An important next step is to re-think the 1986 Coordinated Framework for the Regulation of Biotechnology, the core regulatory framework that lays out the regulatory responsibilities and statutes that apply to synthetic biology. However, this was last updated in 1992. What that framework assumes, then, is that the regulatory structures first put in place during the Reagan era are sufficient to address the scope of innovation nearly 30 years later.
The good news here is that the White House has recognized the need for change on the synthetic biology front. In July 2015, the White House issued a memo that suggested making changes to the framework in order to bring it up to date for modern realities. This fall, the White House Office of Science and Technology Policy began accepting comments on it and has scheduled the first public meeting to discuss a new Coordinated Framework on Oct. 30 at the FDA’s White Oak Campus in Silver Spring, Md.
What’s clear is that synthetic biology is another of those breakthrough technologies starting to make their way into the mainstream — alongside drones and self-driving cars — that regulators are struggling to understand. If they do, it could lead to a new era of progressive innovation. If they don’t, it could stop the flow of new innovations to market and hand the lead to other nations that figure things out before the United States does.
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Congressional Leaders Question EPA on Synthetic Turf Analysis
Oct 29, 2015 | Chemical Watch
In a move that could lead to a possible hearing, Congressional leaders have asked the US EPA if the safety of recycled rubber tire crumbs, used in synthetic turf fields, has been fully assessed.
In a letter to agency administrator Gina McCarthy, the lawmakers voiced concern about the safety of synthetic turfs using the recycled rubber. Referring to news stories on the subject aired by a TV network, they said: “These stories and others raise questions among athletes and their parents that crumb rubber on artificial turf fields may present a pathway to exposure to one or more carcinogens.”
The congressmen are: House Energy and Commerce Committee Chairman Fred Upton (R-Michigan), Ranking Member Frank Pallone (D-New Jersey), Chairman of the Subcommittee on Environment and the Economy John Shimkus (R-Illinois) and subcommittee Ranking Member Paul Tonko (D-New York).
Information they sought from the EPA includes:
whether the EPA had conducted additional testing, to fully assess the hazards and exposures associated with crumb rubber, after it noted, following a 2009 study, that such testing was needed;
whether work done by other federal agencies, like the Consumer Product Safety Commission and the Centers for Disease Control, to evaluate the potential risks from synthetic turf, provided the EPA with “additional relevant information to assess the hazards and exposures”;
whether chemical substances in crumb rubber present a hazard to human health “to the best of your knowledge”. If so, has the agency determined whether exposure to such substances present an unreasonable risk to human health?; and
has the agency identified a specific pathway of exposure to hazardous material in crumb rubber.
The letter comes as California has started a study to evaluate potential health risks posed by exposure to chemicals in synthetic turf and playground mats containing recycled tire crumb rubber, and several localities move to ban the installation of fields using the material (CW 26 October 2015).
However, 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” (CW 20 October 2015).
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Chemical Safety Tops Cleaning Industry's Concerns
Oct 29, 2015 | Chemical Watch
By Kelly Franklin
Issues related to materials, including chemical safety and raw material sourcing, rank as the highest sustainability concern for cleaning products manufacturers and stakeholders, according to a recent report from the American Cleaning Institute (ACI).
Transparency, defined by public disclosure of information related to sustainability, governance and products, also ranked as a top concern.
According to ACI president and CEO Ernie Rosenberg, the trade group “is already tackling a number of these top-tier issues”.
Through the trade group's Cleaning Product Safety Initiative, the ACI has compiled an ingredient inventory of more than 900 substances, used in its members' products, and has made available a hazard dataset that allows consumers to learn about potential risks, associated with those chemical ingredients.
Earlier this year, the industry group expanded the inventory to include human exposure models, associated with consumer product use.
The ACI has also partnered with other trade groups, to offer a voluntary chemical ingredient disclosure initiative that facilitates a “uniform system for providing ingredient information to consumers in a meaningful and easy-to-understand way”, across several consumer products industries.
ACI vice president of sustainable initiatives, Brian Sansoni, said that “many of our member companies are providing more information than ever before about their ingredients in their products.” He added that the ACI “[expects] these types of transparency programmes to grow and evolve in the months and years to come”.
The trade group's third biennial sustainability report included, for the first time, a “materiality assessment”, which drew on responses from cleaning producers and stakeholders to identify top sustainability concerns for the industry.
In addition to materials and disclosure issues, these included:climate change and greenhouse gas emissions;ecological impacts;water use; andworkplace health and safety.
Mr Sansoni said that the deeper understanding of the industry's priority issues will allow the trade group to “assess the extent to which our current initiatives address these”, and to determine whether the trade group should “adjust our initiatives accordingly”.
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Pregnant Women in New York Have Highest Parabens Levels
Oct 29, 2015 | Chemical Watch
US researchers, examining human umbilical cord blood, found that a cohort of pregnant women in Brooklyn, New York, had the highest level worldwide of methyl and propyl parabens. The women were predominantly of Caribbean and African-American descent
Parabens are commonly used as a preservative in cosmetics and other products. Concern about their endocrine-disrupting properties and possible impact on fetal development prompted the study.
Study coauthor Dr Laura A Geer, from the school of public health at the State University of New York (SUNY), said: " What we know from the study is that parabens are being transferred from pregnant women to their foetuses." This is problematic, she said, because they have been shown to have endocrine-disrupting properties in animal studies, leading to developmental and reproductive disorders.
The study concludes that maternal exposure is widespread but that differences are found between communities and countries in the spectrum and degree. It is the first to report on the occurrence of parabens in human umbilical cord blood.
The research was conducted by Arizona State University and State University of New York (SUNY) Downstate Medical Center and is published in Environment International.
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Safety Board Extends Leave for Officials Under Fire
Oct 29, 2015 | E&E - Greenwire
By Sam Pearson
Two U.S. Chemical Safety Board employees who drew scrutiny from Congress and the U.S. EPA inspector general will remain on leave at least through most of next month, the agency said today.
The move was quickly opposed by a watchdog group, Public Employees for Environmental Responsibility. PEER has advocated on behalf of the two employees, General Counsel Richard Loeb and Managing Director Daniel Horowitz, calling a monthslong internal investigation of their conduct unwarranted.
PEER said in a statement released today that the CSB had failed to launch new investigations of 19 chemical incidents since the departure of former Chairman Rafael Moure-Eraso, even as it conducts lengthy inquiries into Horowitz's and Loeb's conduct.
"The only new investigations undertaken by the Chemical Safety Board are of its own staff," PEER Executive Director Jeff Ruch said in a statement. "Plants are exploding, workers dying and communities endangered but this agency has no current plans to do much of anything about it."
Both employees, close associates of Moure-Eraso, were accused of using nongovernmental email accounts to conduct agency business, among other charges. Under a memo sent yesterday by CSB Chairwoman Vanessa Sutherland, Horowitz and Loeb will see their leave extended again until at least Nov. 16.
Horowitz filed a complaint earlier this month with the Office of Personnel Management seeking to be reinstated at CSB (Greenwire, Oct. 20).
Ruch said CSB's failure to deploy to additional accident sites could be a result of its internal turmoil. The agency had previously launched an average of 5.5 new investigations per year until this year, he said.
The agency was still not investigating all of the chemical incidents within its purview, Ruch said, echoing the findings of a U.S. EPA inspector general report this month (Greenwire, Oct. 22).
Sutherland said she couldn't compare her management of deployments to that of Moure-Eraso.
"My approach is to involve all relevant employees in the decision making progress in the deployment meetings that I have held thus far," Sutherland said in a statement. "I value our team's opinions, our current capacity, our current workload, the transition from one office building to another last month, our budget and our incident screening process, which has not resulted in a deployment over the last 8 weeks" since Sutherland's Senate confirmation in August.
As for what investigative activity occurred after the departure of Moure-Eraso but before Sutherland's confirmation, "I would like to think that the senior staff and then existing Board members were conducting deployment meetings as well as the ones I've seen, even if no deployment resulted," Sutherland said.
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Dems Rail Against Automated Train Extension
Oct 29, 2015 | The Hill - Transportation
By Keith Laing
Senate Democrats are railing against an extension of a deadline for automating trains on most of the nation's railways that was approved by Congress this week, over the objection of safety advocates.
The House and Senate voted on Tuesday and Wednesday, respectively, to move a Dec. 31 deadline for railroads to install an automated train navigation system known as Positive Train Control (PTC) to the end of 2018 in an attempt to avoid a partial railway shutdown.
Railroads had threatened to shut down without the extension, which was included in a measure to extend federal transportation funding that was set to expire on Thursday until Nov. 20. The measure containing the automated train extension goes now to President Obama's desk, who is expected to sign the bill to keep federal road funding flowing.
Democrats in the Senate said the inclusion of the automated train deadline extension in the temporary highway bill was misguided.
"This measure is a lose-lose, an avoidable and abysmal delay in life-saving technology for our railroads and an inadequate extension of highway and road funding," Sen. Richard Blumenthal (D-Conn.) said in a statement after the extension was approved.
"I will fight for aggressive implementation of the new deadlines for PTC to help save the costs in dollars and lives that may result from continuing collisions, derailments, and other preventable catastrophes," he continued. "One expert noted that ‘PTC is the most important rail safety advancement of our time’ — and the U.S. Senate today chose to delay it by five years.”
The December deadline for railroads to install the automated Positive Train Control system was set under a law passed in the aftermath of a 2008 commuter rail crash in California. The system, which regulates the speed and track movements of trains, has been touted as a game changer for train safety, but railroads have complained it is difficult to implement.
Under the legislation approved by the Senate on Wednesday, railroads will have an extra three years to work on the automated train conversion. They will also have the option of requesting an additional two years to work on the installation if they submit plans for doing the work by Dec. 31, 2018. The requests would have to be approved by the Department of Transportation on a case-by-case basis.
Supporters of the automated train extension said it is necessary to give railroads more time to install the PTC system to prevent an interruption in the nation's rail service during the upcoming busy holiday season.
"This legislation averts what would have been a catastrophic shutdown of railroad service while putting accountability provisions in place to ensure that implementation of Positive Train Control moves forward," said Sen. John Thune (R-S.D.), who is chairman of the Senate's Commerce, Science and Transportation committee.
"I urge the president to sign this bipartisan, bicameral measure into law as soon as possible to end the uncertainty surrounding the looming deadline for rail passengers and shippers across the country," Thune continued. "After two years of intensive oversight work from the Senate Commerce Committee, I am pleased the Congress came together to pass a tough, bipartisan and accountability-focused measure to ensure that we never need another extension.”
Rail industry groups praised lawmakers for heeding their warnings about the necessity for an extension of the automated train system.
"Members of the House and Senate are to be commended for taking the responsible action to extend the PTC deadline," Association of American Railroads President Ed Hamberger said in a statement.
"This provides the certainty American industries and businesses need to serve the millions of Americans who rely on rail every day," Hamberger continued. "The extension means freight and passenger railroads can continue moving forward with the ongoing development, installation, real-world testing and validation of this complex technology."
Democrats in the Senate, meanwhile, promised to continuing fighting for the automated train system under the new 2018 mandate.
"I want to express my disappointment that I was unable to shorten the delay of the Positive Train Control safety mandate on railroads," Sen. Barbara Boxer (D-Calif.) said in a statement after the vote on Thursday.
"My colleagues and I will continue to shine a spotlight to ensure that PTC is implemented properly within the new timeframe," she continued.
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Senate Passes Transportation Funding Stopgap Bill and Rail-Safety Extension
Oct 28, 2015 | The Washington Post
By Michael Laris and Ashley Halsey III
The Senate on Wednesday approved a measure that extends federal transportation funding for three weeks, along with a provision that gives the railroad industry at least three more years to implement life-saving automatic-braking technology.
Bowing to the reality that railroads were far from meeting the year-end deadline for the installation of the brake technology, known as Positive Train Control (PTC), the Senate joined the House in granting the extension. The original deadline, set in 2008, will now be extended to 2018, and, under certain circumstances, to 2020.
The move follows years of halting progress and aggressive lobbying by the railroads, which argued that the multibillion-dollar mandate was too complex and costly to finish on time.
The industry, led by large freight railroads, had presented an economic doomsday scenario if the deadline for implementing the technology was not extended. Sen. John Thune (R-S.D.) said the extension was critical to avoid “devastating” economic consequences.
[Deadline for train-safety technology undercut by industry lobbying]
Sen. Barbara Boxer (D-Calif.) had sought a one-year extension instead. She held up a large photograph of the crumpled wreckage of Amtrak Train 188, which derailed in Philadelphia in May, leaving eight dead in a crash that investigators said would have been prevented if PTC had been in place.
Boxer was sharply critical of the way that the extension came about — as part of the must-pass, stopgap funding bill — and blamed the powerful railroad lobby. “It’s a lobby that covers everybody,” Boxer said of both Republicans and Democrats.
Sen. Kirsten Gillibrand (D-N.Y.) said in a statement that “after so many preventable railway tragedies that have led to the loss of life, it is an insult to the families who have lost loved ones to let the rail lobby slip a multi-year Positive Train Control delay into a three-week extension.”
Gillibrand said the rail industry “has purposely dragged its feet in meeting its safety requirements.”
Sen. Jerry Moran (R-Kan.) disputed that characterization, saying the delay “has nothing to do with a lack of commitment by the railroads. It has to do with the fact we cannot get there in the time we had hoped for originally.”
A spokesman for the Association of American Railroads said that the industry has spent nearly $6 billion on implementing PTC and that much progress is being made.
In a statement, the association said the House and Senate “are to be commended for taking the responsible action to extend the PTC deadline. This provides the certainty American industries and businesses need to serve the millions of Americans who rely on rail every day.”
In addition to approving the spending bill, the Senate approved the nomination of Sarah Feinberg as head of the Federal Railroad Administration.
Feinberg, a former chief of staff to Transportation Secretary Anthony Foxx, had been acting administrator since January.
In a statement, Feinberg said that PTC “will prevent accidents and save lives” and “should be implemented as soon as possible. The additional tools that Congress has given the FRA will allow us to hold railroads accountable so that they meet critical milestones on the path to full implementation.”
The transportation funding extension until Nov. 20 will keep highway and transit funding that state and local projects rely on at current levels. It was the third extension this year, and the 14th in recent years.
Unlike earlier extensions this year and last, it will not require finding additional funding that critics have called gimmicks. The gas-tax-funded Highway Trust Fund has received a slight boost in recent months and is not expected to run low on cash as rapidly as once anticipated.
The temporary funding measure was passed with the hope that House and Senate conferees can reach agreement by next month on long-term bills passed by both bodies.
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Staring Down New Transpo Deadline, 22 Days Away
Oct 29, 2015 | Politico (Morning Transportation
By Jennifer Scholtes
STARING DOWN NEW TRANSPO DEADLINE, 22 DAYS AWAY: The clock restarts today in the race to enact a multiyear transportation funding bill before policy authority runs out again, but this new timer will only be ticking for a mere three weeks. Lawmakers who are in on the transpo talks are hopeful they’ll be able to get an all-encompassing, long-term highway and transit measure through both chambers before the ambitious policy deadline hits on Nov. 20. But while T&I leaders and Ways and Means members have signaled that the House’s multiyear bill could be on the floor next week, the world still has yet to see the pay-fors that are essential to making that happen.
PTC, EASY AS 1-2-3 (MORE YEARS): Rail operators begin readjusting now to their new goal of getting positive train control technology installed by the end of 2018, following the Senate’s move Wednesday to clear a short-term transportation patch with the PTC extension attached. Our Lauren Gardner reports that the bill, which now awaits President Barack Obama’s signature, amounts to “a three- to five-year delay in the deadline for installing the kind of safety technology that could have prevented last spring’s deadly Amtrak derailment in Philadelphia.”
Story Continued Below
Three or five?: Because the legislation sets the new deadline at the end of 2018 but allows for two more years of leniency for operators that meet certain benchmarks (like installing equipment and getting spectrum right), DOT will have to continue tracking each railroad’s progress to eventually make determinations about which will be held to three more years and which will get five.
Flexible demands: Lauren explains that “freight railroads and Amtrak would have to either fully implement positive train control or demonstrate the technology on working trains within most of their territories to get more time to bring the rest into compliance,” and DOT “can impose civil penalties on any railroad that doesn’t comply with the revised implementation plan it must submit to regulators under the compromise. So if a carrier says it will complete installation by the end of 2017 and blows the deadline, it will have to cough up fines.”
IT’S THURSDAY: Good morning and thanks for tuning into POLITICO’s Morning Transportation, your daily tipsheet on all things trains, planes, automobiles and ports.
Reach out: jscholtes@politico.com or @jascholtes.
“Instead, I'm stuck here rubbin' these fenders with a rag.”
FRA TAKES IN CONGRESSIONAL BLESSINGS: Federal Railroad Administration chief Sarah Feinberg begins reaping the benefits today of two major gifts from Congress: Senate confirmation and the PTC deadline extension that frees her from having to dole out penalties to noncompliant railroads come Jan. 1. Luckily for the administrator, the two agenda items — which weren’t supposed to move together in such quick succession — became linked in a last-minute, behind-the-scenes deal.
An ultimatum: Sen. Barbara Boxer told our Heather Caygle on Wednesday that she insisted on Feinberg’s confirmation in exchange for backing down from her threats to hold up the short-term transportation policy patch if it contained PTC language. "We got her as a result of my saying I wasn’t going to let this go. So I feel good about that," Boxer said. "Here was my option: shutting down the Highway Trust Fund and not having this administrator, or keeping it open and having her."
Under pressure: Although the FRA won’t need to start levying millions of dollars in fines upon railroads that don’t have PTC installed by year’s end, the agency is definitely not duty free under the deadline extension the Senate just cleared. Feinberg and her army of railroad regulators are under pressure now to keep up with each operator’s progress in working toward this new deadline and to keep lawmakers in the loop about how it’s going.
‘Baptism by fire’: If the rest of the administrator’s tenure is anything like the 10 months she’s been in the acting role, she won’t just be bogged down by PTC. Heather notes that Feinberg has so far guided the agency through quite a “tumultuous” year “that has included a spate of fiery oil train derailments, grisly grade crossing accidents and a deadly Amtrak crash in Philadelphia.” And Sen. Joe Manchin praised the newly confirmed administrator this week for the way she’s handled the “baptism by fire.”
GOP DEBATERS (BRIEFLY) TOUCH ON TRANSPORTATION: Finally, a little transportation talk in the presidential debate. Although it’s looking extremely unlikely that New Jersey Gov. Chris Christie will be the nation’s next president, the governor has suggested he’d be much harder on deceptive automakers if he had the power. Lauren notes that Christie said during Wednesday night’s GOP debate that executives who knew about and tried to conceal faulty ignition switches from the public belong in prison, and suggested that the Justice Department under President Barack Obama looks for "winners and losers” and has given General Motors “a pass.”
A DIFFERENT KIND OF DRONE STRIKE: It’s only a matter of time before an airplane goes down after hitting a drone, and Congress needs to do more to reduce that risk, so say aviation and drone safety advocates. Our Kathryn A. Wolfe reports that Air Line Pilots Association President Tim Canoll and Marty Rogers, deputy director of the Alliance for System Safety of UAS, made that case to Senate appropriators this week, and Sen. Dianne Feinstein backed them up. "Without regulation … it's only a question of time before a commercial airliner comes down," Feinstein told FAA Administrator Michael Huerta, adding that she hopes "there will be cooperation from the industry so that we get a prudent regulatory authority from the FAA, that currently now can do virtually nothing."
THE HOUSE GETS A NEW SPEAKER: A reluctant Paul Ryan is expected to clench the speaker’s gavel today as the House moves to ratify GOP lawmakers’ Wednesday vote for the Wisconsin Republican as their nominee to run the chamber. If Ryan delivers what he’s promised, this baton handoff will mean committee chairmen and rank-and-file members will wield more power, the House rules will get an overhaul and the chamber will start from a “clean slate,” POLITICO’s Jake Sherman and John Bresnahan report.
SENATE FIELDS DEBT DEAL: It’s the Senate’s turn to act now on the $80 billion budget deal the House passed Wednesday night to hike spending caps for two years and prevent federal default for the next year and a half. POLITICO’s Lauren French reportsthat the upper chamber “is expected to clear the measure, which would effectively draw to a close the era of budget battles that helped define President Barack Obama's relationship with Congress."
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Retailers Urge Senate to Pass Automated Train Extension
Oct 29, 2015 | The Hill - Transportation
By Keith Laing
The National Retail Federation (NRF) is urging the Senate to pass an extension for federal highway funding and a deadline for a new automated train system that was approved by the House on Tuesday.
The House voted to approve a measure to extend both federal transportation funding — currently set to expire on Thursday — for three weeks in an effort to prevent a highway funding stoppage.
The highway bill also includes a provision that moves a Dec. 31 deadline for railroads to install an automated train navigation system known as Positive Train Control (PTC) to the end of 2018 in an attempt to avoid a partial railway shutdown.
The Retail Federation said Wednesday the Senate should follow suit and quickly pass the extension of both federal transportation funding and the automated train deadline.
"This bill is critical to provide a short-term extension of funding for surface transportation programs beyond October 29. It also includes an important extension for the implementation of Positive Train Control (PTC) for the railroads," said David French, the group's senior vice president of government relations, in a letter to Senate Majority Leader Mitch McConnell (R-Ky.).
"While we strongly support the safety requirements of PTC technology, this extension is needed to ensure the Class I railroads, especially freight rail, are able to continue to operate without disruption," French continued. Freight rail is an integral part of a retailer’s supply chain."
The December deadline for railroads to install the automated Positive Train Control system was set under a law passed in the aftermath of a 2008 commuter rail crash in California. The system, which regulates the speed and track movements of trains, has been touted as a game changer for train safety, but railroads have complained it is difficult to implement.
Under the legislation approved by the House on Tuesday, railroads would have an extra three years to work on the automated train conversion. They will also have the option of requesting an extra two years to work on the installation if they submit plans for doing the work by Dec. 31, 2018. The requests would have to be approved by the Department of Transportation on a case-by-case basis.
Critics have complained the agreement will result in a "blanket" extension for railroads to install technology that has been touted as a life-saver that can prevent deadly train accidents.
The Retail Federation said Wednesday that preventing a railway shutdown is vitally important to their industry, however.
"Retailers are now in the final phases of their peak shipping season for holiday merchandise," French wrote. "Retailers and other industries have already suffered through one supply chain disaster this year with the slowdowns at the West Coast ports. Any disruption of the freight rail system will once again have wide ranging impacts on retailers and other freight rail customers who rely on the Class I railroads."
French concluded that "Congress needs to act immediately to provide funding for the surface transportation programs as well as ensure rail service, especially freight rail, continues without disruption by providing an extension for PTC."
The Senate is expected to vote on the highway funding and automated train extension as early as Wednesday afternoon.
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Mass-Based Compliance Option Gaining Favor -- EPA Official
Oct 29, 2015 | E&E - Energywire
By Anne C. Mulkern
Multiple states are leaning toward the option of setting a cap on carbon emissions in order to comply with EPA's Clean Power Plan, an EPA official said here yesterday.
Joe Goffman, associate assistant administrator and senior counsel at EPA, said the CPP alternative known as "mass-based" is finding fans. The other option, called rate-based, requires power plants to cut carbon emissions to a certain level per megawatt-hour of electricity generated.
"We are hearing a lot of feedback that, depending on the day you ask us, seems to suggest that folks are looking at mass-based programs," Goffman said. "They're noting that there's a lower level of transaction costs, there's potentially more transparency for states when they make allocation decisions."
In addition, he said, "some people are observing that interstate or regional programs might be better under a mass-based approach."
Goffman spoke here at a joint meeting of the Western Interstate Energy Board, the Committee on Regional Electric Power Cooperation and the State-Provincial Steering Committee. The event yesterday focused on options for compliance under CPP, the EPA's rule aimed at cutting carbon pollution from power plants.
Representatives from Arizona, Colorado, Montana and Utah also spoke. All said they were just at the start of gathering feedback from interested groups and had not made any decisions about the rate-based or mass-based option. But several said that mass-based had an appeal.
"We do think that mass-based has a lot of advantages for Montana," said Jeff Blend, an economist and energy analyst with the Montana Department of Environmental Quality.
The state has only coal-fired generation. Montana's 2030 goal under CPP is 1,305 pounds of CO2 per MWh. Under the rate-based approach, that would be a 47 percent reduction from the state's 2012 emissions rate. That is the steepest shift required of any state (EnergyWire, Aug. 12).
Using the mass-based approach would mean cutting emissions to 11.3 million annual tons from 2012's 18 million tons, a 37 percent reduction, Blend said.
Mass-based "gives full credit to any affected unit that might close before 2030," Blend said, and the state has units that are going to be at end of their contract before 2030.
"Mass might potentially be easier to measure," he said.
Rate-based also has some advantages, he said, adding that it "gives us more credit for renewable energy and energy efficiency."
The state is likely to seek trading with other states, however, so it needs "to see what neighboring states are going to do," Blend said, adding "we really don't see how Montana's going to meet its goal unless we trade."
Under trading, states that are short of their goals could purchase allowances or credits from states that can decarbonize at a lower cost. EPA has said that mass-based states may not trade with rate-based states (ClimateWire, Oct. 13).
Representatives from other states yesterday also indicated they would be interested in a trading program. California is one of the states that might have extra allowances to trade.
California uses a mass-based approach for carbon emissions reduction through its economywide cap-and-trade program. The limit, or "cap," drops over time. Companies that are under the cap must secure allowances for their emissions. Those are sold at auction.
The Golden State in meeting the CPP mandate is expected to have surplus emissions reductions because of cap and trade and other climate programs it has implemented.
Craig Segall, a senior staff attorney with the state's Air Resources Board, said the agency will examine CPP compliance and the issue of interstate trading as it looks at how to meet its in-state climate goals. It wants to cut emissions 80 percent below 1990 levels by 2050 and is looking to set a 2030 interim target.
"We've said for a long time that a regional carbon market is good for the West," Segall said. "It reduces costs. It helps get everyone's emissions down and encourages job growth for the renewable sector."
And because California is so big and imports part of its power, "we know our decisions affect other people," Segall said.State growth a factor in choice
William Allison, director of Colorado's Air Pollution Control Division, said that while "it's too early to say definitively where we're going to end up, a mass-based approach does have a certain degree of attractiveness. Tracking tons of emissions is more what we're used to."
However, the Centennial State's population is growing, Allison said, which is "a significant factor for us to consider."
"We want to make sure we don't sign up for something that's going to hamper our growth," Allison said.
The rate-based approach has some flexibility in states with growing populations and energy demands, several said.
The population also is growing in Utah, where residents tend to have big families, said Glade Sowards, an environmental scientist with the Utah Division of Air Quality. The state just marked 3 million residents, and that's projected to grow to 4 million in 16 years.
Because of that, he said, state officials are concerned about "an absolute cap" on emissions. However, the air quality division "has a bit of agency bias towards the mass-based approach. We're more comfortable there."
As well, he said, the agency's early analysis and work with a consulting firm suggest "that a rate-based approach would probably be a heavy lift for us. We would have to do quite a bit of renewables."
The mass-based option is easier to implement, said Franz Litz, a consultant with the Great Plains Institute, "because for the experience we have with mass, it's more predictable."
An EPA analysis said that mass-based would be 39 percent less costly than rate-based, he said.
Mass-based also gives states the ability to bank allowances if electricity demand is lower than expected in a given year.
"Under rate-based, you don't get you any more allowances," Litz said.
Litz said he also sees that mass-based is becoming the more popular option.
"The great majority of states and also stakeholders are leaning in that direction, from my vantage point," Litz said.Incentives for developing renewable power
Goffman, the EPA counsel, also fielded questions from those at the session. One woman asked about the incentives EPA is giving to encourage states to build wind and solar energy generation and install energy efficiency measures in low-income communities between 2020 and 2022, before the rule takes effect.
Under the proposed Clean Energy Incentive Program, EPA would reward participating states with early action allowances or emission rate credits, which can be used against the emissions reductions that states must make between 2022 and 2030 (ClimateWire, Oct. 23).
The woman asked Goffman if EPA would consider giving the incentives for renewable power placed in places with other "vulnerable" populations if the state could demonstrate that the community was at risk, even if it wasn't low-income.
"Yes, absolutely," Goffman said.
Another person asked when EPA's federal compliance plan would be finalized and said that it would be good to have that done by next September, when states must submit an initial compliance plan.
Goffman said that EPA lawyers have advised that the agency can't just create a federal plan. It first would have to make a finding that a state had failed to submit a workable plan or that it had an incomplete plan.
"Only after we finalize that finding do we trigger our authority to establish a final federal plan for the state," Goffman said.
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Obama Attorneys Confident as Legal 'Super Bowl' Kicks Off
Oct 29, 2015 | E&E - Greenwire
By Robin Bravender
President Obama's top environmental attorneys today said they're ready for what one dubbed the "Super Bowl" of climate litigation.
The legal battle over the administration's Clean Power Plan -- a rule to slash power plants' greenhouse gas emissions -- formally kicked off last week. It pits U.S. EPA and its allies against 26 states and numerous industry challengers.
"This is the Super Bowl of climate change litigation right now," Assistant Attorney General John Cruden said today at an environmental law conference here. Cruden, who heads the Justice Department's environmental branch, will be defending the EPA rules against the challenges lodged in the U.S. Court of Appeals for the District of Columbia Circuit.
Administration attorneys say some of their top talent has been preparing for the court fights and are confident they'll prevail in the legal skirmish that's expected to drag on for years and may ultimately be decided by the Supreme Court.
"I fully feel that once we get to the merits of this case, the agency is going to be in good shape," EPA General Counsel Avi Garbow said today at the conference hosted by the American Bar Association. "We are quite proud of what we've done with the Clean Power Plan, and now the eyes are on the lawyers in many respects to ensure that we can defend it."
Agency lawyers have long been preparing behind the scenes for the inevitable court battle, Cruden added. "We have now a team of lawyers that were designated from early on, were watching all of this," Cruden said. "We were prepared to go right away."
And, Cruden added, this won't be the administration's first time defending its climate policies in court. "We've gone to the Supreme Court multiple times on greenhouse gas issues. This is the latest in that area," he said.
Several of EPA's challengers have asked federal judges to immediately freeze the rule as the court considers the broader legal arguments. Allowing the rule to go forward, EPA's foes say, would cause them irreparable harm.
In a request sent to the court yesterday, Cruden laid out EPA's proposed schedule for judges to assess the requests to halt the rule. EPA's schedule envisions that the court will still be weighing petitions and responses through the end of December, meaning a stay wouldn't be issued before U.N. climate talks start in Paris late next month.
Sen. James Inhofe (R-Okla.) yesterday accused the administration of delaying a court decision on staying the rule with Paris in mind.
"The Clean Power Plan is on legally vulnerable ground, and the agency knows it," Inhofe said. He added EPA has "been slow-walking" the existing power plant rule's publication and "now is asking the federal court to delay next steps on the rule's legal challenges until after the international climate talks in Paris" (E&ENews PM, Oct. 28).
But Garbow rejected that claim.
"Keep in mind, we didn't move for a stay; others did," he said. "When we talk about timing and litigation, one of the key questions that everybody asks is, 'What's a reasonable amount of time for the government to intelligently respond to the motion at issue?'"
He added, "I don't think that Paris or anything else factors into this, this is just good litigation."
Given the flurry of lawsuits surrounding the Clean Power Plan and the controversial Waters of the U.S. regulation, Cruden joked today that the Obama administration has provided an "economic stimulus package" for environmental and natural resources lawyers.'Cut the rhetoric'
Garbow also offered some advice today for lawyers looking to share their perspectives with government officials: "Cut the rhetoric."
"Oftentimes, it is clients that feel in some way at greater liberty to throw around harmful rhetoric that does nothing to promote in my judgment a solution," Garbow said in response to a question about how lawyers should engage with agency attorneys.
"Please assume that we have acted reasonably," Garbow added. "There is a temptation to think -- and whether it's grandstanding or what -- to think that there are some ill motivations behind public servants in the government or in the rank and file here and that you're coming in to kind of correct a horrendous error in the law. That's really not the case."
Offering a new idea or an alternative path to government lawyers, he said, "is a much better platform, I believe, than if you walk in the door and say, 'You are utterly wrong and we have the sole answer to save you here.'"
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Moderate GOP Senators Form Green Working Group
Oct 29, 2015 | PoliticoPro
By Andrew Restuccia
Four moderate Senate Republicans — including two facing tough reelection bids — are joining forces to rethink how the GOP approaches environmental issues.
Sens. Kelly Ayotte (N.H.), Mark Kirk (Ill.), Lindsey Graham (S.C.) and Lamar Alexander (Tenn.) will launch a new informal coalition on Thursday in an effort to broaden the Republican conference's approach to environmental policy beyond its crusade to overturn EPA regulations, POLITICO has learned.
The Energy and Environmental Working Group will "be a way for us to bring together members of our party and start an ongoing conversation about these topics — like how we can best protect our environment and climate, pursue common sense and market-based reforms to grow our economy and promote cleaner energy production," Ayotte said in a statement.
The establishment of the working group shows the shifting political dynamics at play over environmental policy, with some in the GOP worried that Republicans' skepticism of mainstream climate science and opposition to air and water regulations isn't sustainable in the long term.
Ayotte, for example, has made the environment a central issue in her campaign for reelection against New Hampshire's Democratic governor, Maggie Hassan. This week she came out in favorof President Barack Obama's climate regulations for power plants, bucking many in her party, and her campaign released a new advertisement touting her environmental record. As far back at last year, she was warning her fellow Republicans about the risks of not coming up with their own solutions to issues like climate change.
"I hope … that we can actually get to legislating on some of these issues, rather than just having a fight on what we agree or disagree with with what the administration has proposed," Ayotte saidduring a December 2014 speech, adding that GOP lawmakers have to act, "not just, 'We disapprove of this.' What’s your alternative? What is your alternative that is going to make a difference?"
Kirk, one of the most vulnerable Senate Republicans up for reelection in 2016, is more moderate on environmental issues than many of his Senate colleagues. He supported the 2009 cap-and-trade bill when he was in the House, for example.
But unlike Ayotte, he has been critical of EPA's climate regulations and he suggested to POLITICO earlier this week that he would support a Republican bid to overturn them through a Congressional Review Act challenge.
In a statement, Kirk focused on his push to protect the Great Lakes, a key issue in his native Illinois. "We can protect our environment without hurting the economy and this group is crucial for striking the balance that the American people expect," he said.
Graham, who worked with Sens. John Kerry and Joe Lieberman on climate legislation in 2009 and 2010 before abandoning the effort, has long raised red flags about the GOP's stance on environmental issues, asking earlier this year, "What is the environmental platform of the Republican party? I don't know either."
In a statement, Graham, who is languishing near the bottom of the polls of GOP presidential candidates, said, "I’m tired of sending hundreds of billions of dollars to buy oil from people who hate us. We must have energy independence. And in the process, I believe it is possible to produce a safe, clean environment, and create new well-paying jobs for Americans of all generations.”
Alexander, for his part, is a vocal advocate of expanding nuclear power and has called for greater investments in research and technology, even as he often refers to windmills as "Cuisinarts in the sky."
Aides said climate change will just be one piece of the working group's work and they stressed that each member has his or her own priorities. The aides said the lawmakers hope to huddle in the coming weeks and will meet regularly after that, though there is no set schedule.
One aide declined to say whether they hope to propose legislation, instead saying that their first goal is to create a "broader dialogue" among Senate Republicans.
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Moderate GOP Senators form Green Coalition
Oct 29, 2015 | The Hill - E2 Wire
By Timothy Cama
Four centrist Senate Republicans are banding together to call for policies to protect the environment.
Sen. Kelly Ayotte (N.H.), Lamar Alexander (Tenn.), Mark Kirk (Ill.) and Lindsey Graham (R-S.C.) describe the group as a loose coalition that will meet regularly to come up with Republican pro-environment policies and enlist more GOP senators to support them.
The group includes two senators in Ayotte and Kirk who face tough reelection races next year in states won by President Obama in 2012. Their races will help determine which party has the Senate majority in 2017.
Each of the members of the group is on record as agreeing with the scientific consensus that human activity causes climate change, something very few GOP lawmakers endorse.
And while only Ayotte supports President Obama’s carbon rule for power plants, all four of the senators say they are concerned that the wrong climate policies could hurt the economy and jobs.
The group’s formation was first reported by Politico.
“The Energy and Environment Working Group will be a way for us to bring people together and start an ongoing conversation about these topics — like how we can best protect our environment and climate, pursue common sense and market-based reforms to grow our economy, and promote cleaner energy production,” Ayotte said in a statement.
Graham, who is running for president and has stood out as the most climate-focused candidate among the GOP field, said, “It is possible to produce a safe, clean environment, and create new well-paying jobs for Americans of all generations.”
Liz Johnson, a spokeswoman for Ayotte, said forming the coalition is part of an effort to prioritize issues such as conservation funding and energy efficiency among Republicans.
“This is still in the early stages, so there’s no set schedule yet, but the group will meet periodically to talk about ways to build support for protecting the environment and climate and promoting cleaner energy production while also helping the economy,” she said.
The coalition’s founding follows an effort by 11 moderate House Republicans in September to get their conference on board recognizing human-caused climate and to work toward Republican policies to address it.
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Analysts See New Demand But Tough Path for New Projects
Oct 29, 2015 | E&E - Energywire
By Jenny Mandel
With worldwide gas prices in the doldrums, demand outlooks for liquefied natural gas are unduly low.
But while the LNG industry may be underestimating global demand, new export terminals and expansions will be put on hold as players reassess the fundamental structure of the market, a recent Barclays research note argues.
"Most of the demand outlooks we have seen were based on the expectation that LNG prices were going to be in the teens," analysts wrote in a reference to prices that prevailed as recently as a year ago before the oil and gas price crash. "If it is going to remain in the $7 to $9 [per million British thermal units] range, we would think all these demand outlooks are understated."
The oil price drop affected world natural gas markets by pulling down prices thanks to contracts that use complex formulas to link natural gas prices to crude.
As crude prices have continued to drag, though, the impact on LNG is more complicated: Spot market prices are low, but many long-term contracts rely on multiyear averages that put LNG buyers on the hook for higher rates based on crude oil pricing from the $100-per-barrel days.
The upshot, Barclays notes, is that many buyers have reduced their LNG offtake to the lowest limits allowed under contract. In India, for example, where natural gas demand runs far above the available supply, the country has seen lower year-over-year imports for just the second time in the last 15 years.
But the analysts expect crude prices to recover in the next year or two, rising from the $50-per-barrel range to a more "normal" $70-per-barrel range. Meanwhile, both spot and contract LNG prices will likely remain depressed, they said, due to factors including those lagging averages, the flood of new projects coming online around the world and excess supply turned away by buyers under extended contracts.
"When crude prices recover and LNG prices don't follow suit, we think fertilizer, power and [petrochemical] industries are going to have to seriously consider switching from higher cost feedstocks such as naphtha and fuel oil," the analysts wrote, with a resultant surge in demand.
The Barclays analysis also predicts that a slow-moving shift in LNG markets toward liquidity and transparency will continue to gather steam.
Forces like fuel switching and untapped demand "will push LNG to be priced off its own supply/demand and marginal cost of production," the note says, though it acknowledges that such structural changes "will likely take some time to get sorted out."
In the near term, they said, the combination of low prices and structural uncertainty will put a damper on U.S. exporters.
Exhibit A? The analysts point to efforts by Cheniere Energy Inc. to expand two projects that are currently under construction by adding additional LNG processing "trains" at their Sabine Pass and Corpus Christi projects as unlikely to proceed in the near term.
"This isn't to say that we don't think they will get done, but we think the LNG market is structurally changing and buyers will likely refrain from any sort of commitment until long-term implications are sorted out," the analysts said.
Other analysts point to China as a big question mark for world markets.
"More new LNG markets will emerge with lower gas prices, particularly if oil prices climb," analysts with Wood Mackenzie noted at a natural gas conference this week in Singapore. "However, China's gas market policies will probably be even more important to the resolution of global oversupply. More liberalized market conditions could enable China to absorb more LNG, mitigating the impact of the LNG oversupply on price."Coal switching costs
Wood Mackenzie sees world coal prices as setting an effective floor for natural gas, thanks to the potential for fuel switching.
The analysis describes a complex calculus for fuel switching decisions, depending not only on the relative prices of coal and natural gas but also an carbon credit prices in different European markets and the role of renewables. Germany is less prone to coal displacement than England, they note, with natural gas prices between $3.70 per MMBtu and $7.30 per MMBtu generally required to trigger substitutions in various markets.
Wood Mackenzie notes that for gas exports to take place, the calculation for whether to ship does not take into account the sunk costs associated with export terminal construction, even for a new terminal, but rest on a margin that can cover the cash costs of liquefaction, transport, regasification and market access.
"At prevailing [European] coal prices of U.S. $50 per ton ... a floor price for gas in Europe and Asia could go down to prices at which U.S. LNG exports fail to cover cash costs," the analysts warned. "This would force U.S. LNG exporters to consider shutting-in for periods, a move which would depress U.S. gas prices."
Russia, a major European gas supplier, will also play a major role in shaping European markets, the analysts warn. "As suppliers absorb the full risks of the impending oversupply, some will reconsider the economics of incremental investment, reducing supply availability in time. But at periods of severe oversupply, Russian gas supply behaviour will ... be key to gas price formation in Europe."
To both groups, a major takeaway for gas markets in the near term is uncertainty. "Looking ahead, 130 [million metric tons per year] of new supply can be seen coming into the market over the next 5 years, mostly from Australia and the U.S. As the global market absorbs all the new LNG, as it tries to balance, new floors for spot prices are likely to be tested, unlocking new demand and curtailing some supply, with global pricing implications," Wood Mackenzie concluded.
Or as Barclays summed it up: "One cannot add 25 percent [more] supply into the market with terms and conditions ... that are so different from how it's been done for decades and not expect things to change."
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API Opts Not to Fight N.Y. Fracking Ban
Oct 29, 2015 | E&E - Energywire
The American Petroleum Institute missed Tuesday's filing deadline, leaving only one lawsuit left to challenge the New York state ban on high-volume fracking.
API New York, a state chapter of the oil and gas trade group, purposefully missed the deadline to file an Article 78 challenge against the fracking ban, according to Executive Director Karen Moreau.
"We are still considering other options," Moreau said, adding that they'll be "closely watching" attorney David Morabito's progress.
Morabito filed his own challenge earlier this year after he was informed that high-volume hydraulic fracking was now banned on his property through the new law.
In his case, Morabito will argue that the state's research, including a health report, didn't warrant the ban and will try to force the Department of Environmental Conservation to allow fracking on his property.
When he heard API wouldn't yet be joining in his fight against the ban, Morabito said he wasn't surprised.
"It is a very, very costly endeavor to commence an action against the state of New York, especially when it's something so serious," Morabito said. "If I had to pay an attorney, it would be shockingly exorbitant" (Jon Campbell, Rochester Democrat and Chronicle, Oct. 28). -- MB
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