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PM ACC 12/15/2015

Industry and Association News

(ACC Mentioned) Chemicals Industry Stock Outlook - Dec. 2015
Dec 15, 2015 | Zacks Equity Research

The broad-based meltdown in commodities this year has put several industries in the Basic Materials space on slippery ground, and the $5 trillion global chemical industry is no exception.

Chemical Management News - There are no clips to report at this time.

Chemical Security News

In Flint, Mich., There’s So Much Lead in Children’s Blood That a State of Emergency is Declared
Dec 15, 2015 | Washington Post
By Yanan Wang

For months, worried parents in Flint, Mich., arrived at their pediatricians’ offices in droves. Holding a toddler by the hand or an infant in their arms, they all have the same question: Are their children being poisoned?

Transportation News

(ACC Mentioned) Major Rail Merger Prospects Confront a Just-Reformed STB
Dec 15, 2015 | Material Handling & Logistics News
By David Sparkman

If a stalled attempted acquisition of Norfolk Southern by the owner of Canadian Pacific eventually proceeds, it would run smack into a Surface Transportation Board (STB) freshly reformed by Congress and could provoke other American railroads...

Energy and Environment News

Court Refuses to Overturn Air Pollution Rule Despite Supreme Court Defeat
Dec 15, 2015 | The Hill - E2 Wire
By Timothy Cama

An appeals court has upheld the Obama administration’s sweeping mercury pollution rule for power plants, despite a Supreme Court decision against the regulation.
Mercury Rule Survives, But Co-Benefits Fight Looms
Dec 15, 2015 | PoliticoPro
By Alex Guillen

EPA’s mercury rule survived a key legal test Tuesday, but agency critics are preparing a new line of attack that could undermine the foundation of that rule along with other key elements of the Obama administration’s regulatory agenda.
More Legal Battles Likely After Mercury Rule Survives Attack
Dec 15, 2015 | E&E - Greenwire
By Robin Bravender and Sean Reilly

The Obama administration scored a major victory in court this morning as federal judges kept U.S. EPA's landmark mercury standards for power plants in place, but the legal battle over the rule isn't done yet.
EPA Wins Bid For Utility MACT Remand Without Vacatur, Binding Deadline
Dec 15, 2015 | InsideEPA
By Anthony Lacey

The U.S. Court of Appeals for the District of Columbia Circuit has granted EPA's request to remand the utility maximum achievable control technology (MACT) air toxics rule to the agency without vacating it, providing a significant victory to the agency...
DOJ Says Judge Failed To Consider Harm In Denying Stay Of CWA Lawsuit
Dec 15, 2015 | InsideEPA
By Bridget DiCosmo

Department of Justice (DOJ) attorneys are arguing that a federal district court judge erred in her order rejecting DOJ's request to stay litigation over EPA's Clean Water Act (CWA) jurisdiction rule, saying the judge failed to consider the harm to the administration...
Audit: EPA Used “Covert Propaganda” in Water-Rule Campaign
Dec 15, 2015 | National Journal
By Ben Geman

The Environmental Protection Agency broke federal law by using a social-media campaign to drum up support for a controversial rule meant to protect the nation’s streams and waterways, according to a congressional audit.
Silence on the Climate Pact From the Republican Candidates
Dec 14, 2015 | New York Times
By Editorial Board

One can describe the 2016 Republican presidential candidates in many ways, but “silent” is seldom one of them. Yet after 195 nations agreed on Saturday to reduce the greenhouse gas emissions that cause climate change, the Republican field remained nearly mum.
Success Of Climate Deal Will Hinge On Chemistry
Dec 15, 2015 | Chemical and Engineering News
By Cheryl Hogue

Chemists and other scientists are expected to play a key role as the world implements the new climate changedeal that governments clinched in Paris on Dec. 12.
Climate Change Activists are Just Warming Up
Dec 15, 2015 | Los Angeles Times
By William Yardley

Even as it became clear that a historic climate agreement could be reached in France, activists were organizing protests deep into next year, some liberal political leaders were pledging to go beyond whatever goals the agreement might yield...
Calif. Explores How to Mesh Cap and Trade With Federal Rule
Dec 15, 2015 | E&E - Climatewire
By Debra Kahn

California regulators are wading through the details of how to connect their landmark cap-and-trade system to U.S. EPA's regulations for power plants.
11 Candidates Line Up for Texas Energy Regulator Seat
Dec 15, 2015 | E&E - Energywire
By Mike Lee

For the second time in as many years, candidates are lining up to run for a seat on the influential state board that regulates the Texas energy business.

Industry and Association News

(ACC Mentioned) Chemicals Industry Stock Outlook - Dec. 2015

Dec 15, 2015 | Zacks Equity Research

The broad-based meltdown in commodities this year has put several industries in the Basic Materials space on slippery ground, and the $5 trillion global chemical industry is no exception. Nevertheless, the chemical industry has fared reasonably well in the first three quarters of 2015, thanks to continued strength in the automotive space and a recovery in residential construction markets.
But the highly cyclical industry is not without its challenges, as headwinds such as soft agriculture market fundamentals, depressed demand in energy markets, slowdown in China, lumpiness in Europe and a stronger dollar weighed on the performance of chemical companies this year.

Chemical companies remain actively focused on increasing their reach in high-growth markets to cut their exposure on businesses that are grappling with weak demand and input cost pressures. Strategic measures including cost management and productivity improvement also remain the prime focus of these companies to stay afloat in the prevailing difficult global economic backdrop.

In a bid to cope with the current low commodity price environment, chemical companies are also looking for cost synergy opportunities and enhanced operational scale through consolidations. The recently announced $130 billion proposed mega-merger of Dow Chemical (DOW - Analyst Report) and DuPont (DD - Analyst Report) -- the biggest chemical deal ever -- is a huge testimony to these strategic moves.

Some industry-specific challenges, Eurozone’s tepid recovery and concerns over China’s future growth remain sources of near-term uncertainties for the chemical industry. Chemical makers are also feeling the pinch of weak demand in the energy space amid a subdued oil price environment.

Despite these headwinds, the industry’s recovery momentum is expected to continue heading into 2016, aided by strength in the light vehicles market, positive trends across the construction markets and significant shale-linked capital investment.

U.S. Holds Promise, EU & China in Choppy Waters

The U.S. chemical industry is poised for growth despite multiple challenges. According to the American Chemistry Council (ACC), an industry trade group, U.S. chemical production will expand both this year and next, and the American chemical industry will eventually transcend the nation’s overall economic growth and emerge as a long-term economic growth engine as improvements in key end-use industries and emerging markets take hold.

The ACC envisions U.S. chemical production to rise 3.2% this year and 3% in 2016, higher than 2% growth witnessed in 2014. Notwithstanding the slowdown in global manufacturing and oil price volatility, the U.S. chemical industry is seeing production volume gains. Production is expected to pick up pace on the heels of new capital investments and capacity additions.

The shale gas bounty and abundant supply of natural gas liquids have provided the U.S. petrochemicals producers a compelling cost advantage over their global counterparts. The ACC expects this competitiveness to drive export demand and new capital investment in the country. New capacity is expected to provide a significant boost to chemical production as these investments come on stream in the coming years.
The shale revolution has incentivized a number of chemical companies to invest billions of dollars to ramp up capacity in the country. Chemical makers including BASF (BASFY - Snapshot Report), Dow Chemical, LyondellBasell Industries (LYB - Analyst Report), Eastman Chemical (EMN - Analyst Report), Celanese (CE - Analyst Report) and Westlake Chemical (WLK - Snapshot Report) are investing heavily on shale gas-linked projects to take advantage of ample natural gas supplies which is expected to boost capacity and export over the next several years.

However, a stronger dollar is holding down U.S. exports, reducing their attractiveness in overseas markets. While strength in the U.S. manufacturing, an improving job market and expansion in major end-use markets have boosted demand for chemicals, persistent softness in overseas markets has constrained U.S. export sales.

Outlook for Europe remains tepid given fresh signs of slowdown in the region. The Eurozone economy continues to sputter with a lackluster growth in the third quarter of 2015. Chemical makers in the European Union remain affected by lower prices, flat production growth and sluggish demand.

According to a recent report from the European Chemical Industry Council (CEFIC), European chemical output rose just 0.3% during the first eight months of 2015. Chemical prices, which are down 4.5% in the first eight months in the European Union, also remain under pressure. High energy costs and weak R&D investments are also hurting the European chemical industry.

Moreover, the persistent weakness in China -- a key market for chemicals -- is expected to remain a major drag on the industry. China’s economic growth slowed in third-quarter 2015 despite a raft of government stimulus measures including interest rate cuts. The world’s second-biggest economy remains battered by its tepid property market and weak manufacturing and export sectors, which is contributing to its sluggish economic growth.

In addition, the near-term outlook for the fertilizer and agricultural chemicals space still remains cloudy due to insipid economic growth in certain developing markets, particularly Brazil.

Zacks Industry Rank

Within the Zacks Industry classification, the chemical industry falls under the broader Basic Materials sector (one of 16 Zacks sectors) which is expected to have a 2.6% share of total earnings for the S&P 500 in 2015. We rank all of the more than 260 industries in the 16 Zacks sectors based on the earnings outlook for the constituent companies in each industry.

The way to look at the complete list of 260+ industries is that the outlook for the top one-third of the list (Zacks Industry Rank of #88 and lower) is positive, the middle 1/3rd or industries with Zacks Industry Rank between #89 and #176 is neutral while the outlook for the bottom one-third (Zacks Industry Rank #177 and higher) is negative. (To learn more visit: About Zacks Industry Rank.)

We have three chemicals related industries: Chemical Plastics, Chemical Diversified and Chemical Specialty. Chemical Plastics industry currently retains a Zacks Industry Rank #103, placing it in the middle one-third of the 260+ industry groups. Both Chemical Specialty and Chemical Diversified industries lie in the bottom 1/3rd with a Zacks Industry Rank #202 and #217, respectively.

Looking at the exact location of these industries, one could say that the general outlook for the chemical industry is ‘Neutral-to-Negative.’

Sector Level Earnings Trends
Basic Materials is among the sectors that have witnessed double-digit earnings declines in third-quarter 2015. Earnings for the sector participants in the S&P 500 index fell 18.8% in the quarter, versus a 3.9% rise in the second. Nevertheless, the sector racked up a decent beat ratio (percentage of companies coming out with positive surprises) of 65% for earnings in the third quarter. Total revenues for these companies are down 14.4% in the third quarter versus a 10% decline a quarter ago.

For fourth-quarter 2015, earnings are expected to show a 7.5% decline. Revenues are also forecast to fall 9.7% in the quarter. Both, however, reflects an improvement over what was witnessed in the third quarter. For first-quarter 2016, earnings are expected to fall 7.7% while revenues are forecast to rise 7.3%.

For more details about the earnings of this sector and others, please read our ‘Earnings Trends’ report.

The Road Ahead

The chemical industry remains besieged by a slowdown in China, sluggishness in some parts of Europe, the impacts of crude oil price slump and a mightier greenback. Nevertheless, a gradually healing U.S. economy, strong momentum in the automotive space and an upswing in the housing market are expected to keep the industry on the path to recovery moving into 2016.
- See more at: http://www.zacks.com/commentary/64921/chemicals-industry-stock-outlook---dec-2015#sthash.jVYh6ApO.dpuf

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Chemical Management News - There are no clips to report at this time.

Chemical Security News

In Flint, Mich., There’s So Much Lead in Children’s Blood That a State of Emergency is Declared

Dec 15, 2015 | Washington Post

By Yanan Wang

For months, worried parents in Flint, Mich., arrived at their pediatricians’ offices in droves. Holding a toddler by the hand or an infant in their arms, they all have the same question: Are their children being poisoned?
To find out, all it takes is a prick of the finger, a small letting of blood. If tests come back positive, the potentially severe consequences are far more difficult to discern.
That’s how lead works. It leaves its mark quietly, with a virtually invisible trail. But years later, when a child shows signs of a learning disability or behavioral issues, lead’s prior presence in the bloodstream suddenly becomes inescapable.
According to the World Health Organization, “lead affects children’s brain development resulting in reduced intelligence quotient (IQ), behavioral changes such as shortening of attention span and increased antisocial behavior, and reduced educational attainment. Lead exposure also causes anemia, hypertension, renal impairment, immunotoxicity and toxicity to the reproductive organs. The neurological and behavioral effects of lead are believed to be irreversible.”
The Hurley Medical Center, in Flint, released a study in September that confirmed what many Flint parents had feared for over a year: The proportion of infants and children with above-average levels of lead in their blood has nearly doubled since the city switched from the Detroit water system to using the Flint River as its water source, in 2014.
The crisis reached a nadir Monday night, when Flint Mayor Karen Weaver declared a state of emergency.
“The City of Flint has experienced a Manmade disaster,” Weaver said in a declaratory statement.
The mayor — elected after her predecessor, Dayne Walling, experienced fallout from his administration’s handling of the water problems — said in the statement that she was seeking support from the federal government to deal with the “irreversible” effects of lead exposure on the city’s children. Weaver thinks that these health consequences will lead to a greater need for special education and mental health services, as well as developments in the juvenile justice system.
“Do we meet the criteria [for a disaster area]? I don’t know,” she toldMichigan Live. But Weaver doesn’t think the city can receive the help it needs without alerting federal officials to the urgency of the matter.
To those living in Flint, the announcement may feel as if it has been a long time coming.
Almost immediately after the city started drawing from the Flint River in April 2014, residents began complaining about the water, which they said was cloudy in appearance and emitted a foul odor.
Since then, complications from the water coming from the Flint River have only piled up. Although city and state officials initially denied that the water was unsafe, the state issued a notice informing Flint residents that their water contained unlawful levels of trihalomethanes, a chlorine byproduct linked to cancer and other diseases.
Protesters marched to City Hall in the fierce Michigan cold, calling for officials to reconnect Flint’s water to the Detroit system. The use of the Flint River was supposed to be temporary, set to end in 2016 after a pipeline to Lake Huron’s Karegnondi Water Authority is finished.
A petition lobbying for the ending the city’s Flint River water supply garnered26,000 signatures.
Through continued demonstrations by Flint residents and mounting scientific evidence of the water’s toxins, city and state officials offered various solutions — from asking residents to boil their water to providing them with water filters — in an attempt to work around the need to reconnect to the Detroit system.
That call was finally made by Snyder (R) on Oct. 8. He announced that he had a plan for coming up with the $12 million to switch Flint back to the Detroit system. On Oct. 16, water started flowing again from Detroit to Flint.
David Murray, press secretary for Michigan governor Rick Snyder’s office, told The Washington Post that the state has been working on improving the water quality in Flint and other cities for the past year. It has also offered more than $10 million in financial assistance to pay for a temporary switch into the Detroit system while the connection to Lake Huron is being prepared.
“Flint residents need to have access to safe, clean water,” Murray wrote in an email to The Post. “Gov. Snyder and the administration have been working closely with the city to focus on health issues affecting children and other city residents, and address water infrastructure challenges.”
He added that while Flint’s water is currently safe to drink, “some families with lead plumbing in their homes or service connections could experience higher levels of lead in the water that comes out of their faucets.” An action plan created by Snyder in October includes free water testing, free water filters and the accelerating of corrosion controls in the drinking water system, according to Murray.
For the parents of children who may have been affected, such actions were accompanied by the sense that they had come too late.
These parents and other Flint residents filed a class-action federal lawsuitagainst Snyder, the state, the city and 13 other public officials in November for the damages they have suffered as a result of the lead-tainted water. The suit, which claims to represent “tens of thousands of residents,” alleges that the city and state officials “deliberately deprived” them of their 14th Amendment rights by replacing formerly safe drinking water with a cheaper alternative that was known to be highly toxic.
“For more than 18 months, state and local government officials ignored irrefutable evidence that the water pumped from the Flint River exposed [residents] to extreme toxicity,” the complaint reads. “The deliberately false denials about the safety of the Flint River water was as deadly as it was arrogant.”
Calling officials’ conduct “so egregious and so outrageous that it shocks the conscience,” the complaint cites the specific experiences of a few plaintiffs and their families, all of whom allege they have been challenged by similar health ailments since high levels of lead and copper entered their bloodstreams.
These conditions include skin lesions, hair loss, chemical-induced hypertension, vision loss and depression. Of the four families described in the complaint, two had ceased to drink Flint water after a certain point — and used it only for washing and cooking — but still said they were exposed to many of the same ill effects.
Snyder’s press secretary, Murray, wrote in an email to The Washington Post that the administration disagrees with points in the suit, but declined to discuss details of pending litigation.
As the Detroit Free Press reported in October, avoiding Flint water became a way of life for the city’s residents.
Those who could afford it opted for bottled water, buying it by the gallons. Those who couldn’t spare the money drank it straight from the tap all the same, knowing that they would be paying for it later. When it came to bathing, some slowly filled bathtubs with pots of boiled water for their children.
LeeAnn Walters, a Flint resident and mother of 4-year-old twins, took every precaution after blood tests revealed that the level of lead in one of her sons had soared after the switch to Flint River.
“I was hysterical,” Walters told the Free Press. “I cried when they gave me my first lead report.”
She had feared lead was the problem when her whole family developed rashes and her son stopped gaining weight.
Now, Walters said, when her children experience problems as they grow up, she will always wonder whether things would have been different — if their lives would have been better — if it weren’t for the water.

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Transportation News

(ACC Mentioned) Major Rail Merger Prospects Confront a Just-Reformed STB

Dec 15, 2015 | Material Handling & Logistics News

By David Sparkman

If a stalled attempted acquisition of Norfolk Southern by the owner of Canadian Pacific eventually proceeds, it would run smack into a Surface Transportation Board (STB) freshly reformed by Congress and could provoke other American railroads to jump on the merger bandwagon.
The board of NS has spurned two purchase offers worth more than $28 billion made by CP. Bill Ackman, CP’s majority owner who announced plans to merge the two railroads, has asserted that NS stockholders are being punished by the rail company’s low earnings.
Ackman has promised to slash costs and improve profitability, which he also said he would do with CP before acquiring it three years ago. He has been credited with having accomplished this at CP, although a recent survey shows shippers are not happy with the railroad’s leadership.
Although it is based in Canada and has extensive operations there, CP in 2009 acquired the Dakota, Minnesota and Eastern Railroad and the Iowa, Chicago and Eastern Railroad in the United States.
Last week the NS board said CP’s offers were too low, and cited antitrust and other regulatory roadblocks that would most likely derail the merger of two of the remaining handful of large freight railroads in North America.
“There is a high probability that, after years of disruption and expense, the proposed combination would be rejected by the Surface Transportation Board,” says James A. Squires, CEO of NS. The company has publicized a white paper written by two former STB commissioners, Francis Mulvey and Charles Nottingham, who agree with this view.
Squires pulls no punches in his opinion of CP’s leadership. “We believe that Canadian Pacific’s short-term, cut-to-the-bone strategy could cause Norfolk Southern to lose substantial revenues from our service-sensitive customer base,” he says, pointing to extensive changes the railroad is making to improve its profitability.
“We also believe the proposed transaction risks harm to vital transportation infrastructure and the communities we serve,” Squires adds. “Any strategy that hurts our customers and the broader community is highly unlikely to receive regulatory approval and is inconsistent with the delivery of shareholder value over the long-term.”
Responding to press inquiries, Union Pacific publicly restated its position that combinations like CP and NS will disrupt nationwide rail operations. “We oppose rail industry mergers in the current environment and believe the regulatory hurdles for future consolidation would be significant,” UP spokesman Aaron Hunt says.
“If there is consolidation to be had, we would participate as well,” BNSF executive chairman Matt Rose told Bloomberg News. He said that BNSF, which is owned by Warren Buffett’s Berkshire Hathaway, might choose to make its own offer to acquire NS and if the CP-NS merger proceeds, BNSF could switch gears and make a bid to purchase CSX.
The Wall Street Journal reports that a survey of rail shippers conducted by Cowen & Co. found that 71% of them oppose the CP-NS merger, and about half say they would communicate their unhappiness to the STB.
“We’ve long passed the point where merger-generated service improvements have the potential to outweigh the anti-competitive impacts resulting from fewer routing options,” comments one survey respondent. Another shipper observes that CP’s CEO Hunter Harrison “does not know how to run a railroad, but it is his way or the highway."
Facing a Reformed STB
Major rail mergers would get much more scrutiny from the government today because there are fewer big rail companies. Most rail customers can access only one major railroad, which gives rail companies unique pricing power that you don’t find in more competitive modes.
Supervising the nation’s railroads is the Surface Transportation Board, an independent agency created by Congress, that is organized in much the same fashion as the Federal Trade Commission and Federal Communications Commission. The STB also is the successor to the old Interstate Commerce Commission and its commissioners are appointed by the President and approved by the Senate to serve for set terms.
Last Thursday Congress passed legislation reauthorizing the STB and expanding its membership from three to five commissioners. The new law streamlines the board’s procedures for reviewing railroad rate cases. It also shortens timelines and simplifies highly-complicated procedures used by the STB to mediate shipper disputes with railroads over freight rates.
Until now rail rate cases routinely cost shippers and the railroads more than $3 million to litigate and could take over three years to resolve. The new law also allows commissioners to discuss policy issues informally. Prior to this change any such discussions required them to post public notice and hold open hearings.
The reform legislation enjoyed support from major shipper groups and the Association of American Railroads, which supported the measure after a competitive switching provision that was included in earlier legislation was not included in this newer bill. Also called reciprocal switching and long sought by shippers, competitive switching would require railroads to share track with other railroads to guarantee competitive service for shippers who currently are served by only one railroad.
After this reform bill passed last week AAR president Edward R. Hamberger commented, “This legislation strikes the right balance of preserving a market-based structure for shippers and railroads, while also providing commonsense process improvements that will allow the STB to work more efficiently.”
The American Chemistry Council, which was one of the major supporters of the legislation, states, “It’s clear there is a widespread consensus among Congress that the status quo is not working and that our country’s freight rail policies need to be updated. Now that Congress has acted, we urge the STB to move forward on proposals to increase rail-to-rail competition and improve the board’s rate review process.”
The Rail Customer Coalition, consisting of trade associations that represent manufacturing, agricultural and energy companies, hailed the changes in how the STB handles rate disputes and has allowed it to be more proactive in resolving freight rail issues.
“In light of the recent service breakdowns impacting rail customers nationwide, this legislation also emphasizes the existing responsibility of the railroad industry to dedicate revenue appropriately to meet current and future service needs,” the coalition says. “Specifically, the STB has an opportunity to follow Congress’s lead by moving forward on proposals to increase rail-to-rail competition and improve the board’s rate review process.”

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Energy and Environment News

Court Refuses to Overturn Air Pollution Rule Despite Supreme Court Defeat

Dec 15, 2015 | The Hill - E2 Wire

By Timothy Cama

An appeals court has upheld the Obama administration’s sweeping mercury pollution rule for power plants, despite a Supreme Court decision against the regulation.
The Court of Appeals for the District of Columbia Circuit ruled Tuesday that the Environmental Protection Agency (EPA) is allowed to enforce the air pollution regulation while it works to fix the flaw identified by the high court.
The Supreme Court ruled in June that in developing the mercury and air toxics standards, the EPA violated the Clean Air Act by not considering the compliance costs to electric utilities.
The agency did consider costs in writing the rule, but the justices decided that a unique provision in the law requires a cost-benefit analysis before even starting to write it.
The Supreme Court did not overturn the rule and left it to the Circuit Court to decide its fate. The EPA plans to fix the problem by April, by simply reasserting the cost-benefit analysis that it already completed.
The Circuit Court judges did not say why they reached their decision in the brief order, although they noted that the EPA has promised a fix by April 16.
EPA spokeswoman Melissa Harrison said the agency is “very pleased” with the Circuit Court’s decision.
“These practical and achievable standards are already cutting pollution from power plants that will save thousands of lives each year and prevent heart and asthma attacks,” she said. “The standards also slash emissions of the neurotoxin mercury, which can impair children’s ability to learn.”
Harrison noted that the majority of power plants affected by the rule are already operating the necessary controls to comply.
A group of states and energy companies had asked the Circuit Court to vacate the rule, arguing that the Supreme Court’s decision identified a fatal issue that prevents the rule’s enforcement.
But the EPA said that argument ignores the court’s “tradition of remanding deficient rules without vacatur when vacatur would have significant adverse consequences for public health and the environment, or offers evidence of any significant disruptive consequences for industry of maintaining the status quo under the Rule through remand without vacatur.”
In oral arguments earlier this month, the Circuit Court judges repeatedly questioned whether the states and energy companies would experience any harm if the rule were allowed to stand,according to Bloomberg BNA.
The mercury standard is one of the most expensive regulations put forth by the Obama administration. Enforcement only started earlier this year, but utilities blamed it for the closure of scores of coal-fired power plants in recent years.
Republicans held up the Supreme Court ruling as a vindication of their criticisms of the EPA and evidence that the Obama administration does not care about the costs of its regulatory initiatives.

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Mercury Rule Survives, But Co-Benefits Fight Looms

Dec 15, 2015 | PoliticoPro

By Alex Guillen

EPA’s mercury rule survived a key legal test Tuesday, but agency critics are preparing a new line of attack that could undermine the foundation of that rule along with other key elements of the Obama administration’s regulatory agenda.
EPA can keep regulating mercury emissions from power plants while it fixes a rule setting those limits, a three-judge panel of the D.C. Circuit Court of Appeals ruled Tuesday. The agency failed to consider the rule’s costs early enough in the process, but the panel said that mistake passed a judicial test for whether a rule should be kept in place even as it is sent back to an agency for fixing.
While the decision is a major win for the Obama administration, EPA may not have much time to rest on its laurels. Opponents of the rule are expected eventually to begin a new lawsuit challenging EPA’s use of co-benefits.
The Supreme Court in June ordered EPA to reanalyze whether it was“appropriate and necessary” to write the mercury rule, and to consider costs and benefits from the start. The agency is planning a new finding by April, and the circuit’s ruling means the Supreme Court’s ruling was more of a speed bump than a roadblock for the mercury rule.
While the justices acknowledged EPA has discretion over exactly how to weigh costs and benefits, Chief Justice John Roberts singled out its reliance in this case on ancillary benefits, and Justice Antonin Scalia’s majority opinion cited the direct benefits of the rule — fueling speculation that they are eager to take on the issue.
EPA has considered co-benefits as far back as 1978, according to a brief in the mercury case from New York University's Institute for Policy Integrity. "EPA simply followed longstanding professional practices for assessing indirect regulatory effects," the institute wrote.
It is also only sensible to include co-benefits in a calculation because EPA would have to include the ancillary costs of any of its rules, IPI's Michael Livermore said in an interview.
"Why would it be that if the Clean Power Plan reduces particulate matter pollution, it doesn’t take that into account? It just doesn’t make any sense," he said. Once a court fully weighs the co-benefits issue, Livermore added, "they’ll realize that it would be very inefficient for the agency to ignore these benefits."
The issue has flared to new levels over the mercury rule because EPA could only quantify $6 million in direct benefits, though there were a number of benefits it did not or could not assign a dollar figure. However, installing the mercury controls also significantly reduces power plants’ emissions of particulate matter, a co-benefit worth tens of billions of dollars that helped EPA justify the costs rule.
In welcoming the D.C. Circuit's ruling Tuesday, EPA pointed highlighted the other pollutant reductions.
"These practical and achievable standards are already cutting pollution from power plants that will save thousands of lives each year and prevent heart and asthma attacks," EPA spokeswoman Melissa Harrison said in a statement. "The standards also slash emissions of the neurotoxin mercury, which can impair children’s ability to learn. All told, for every dollar spent to make these cuts in emissions, the public is receiving up to $9 in health benefits."
The rule was estimated to cost utilities nearly $10 billion to install mercury controls, vastly more than the $6 million in quantifiable benefits directly tied to mercury reductions. EPA argued that while the ancillary benefits helped tip the balance in a formal cost-benefit analysis, it also believes the rule is justified because the costs represent a small fraction — about 2.7 percent — of the electricity industry’s annual revenues.
Even the direct benefits calculation is vulnerable to rejection in court, said William Yeatman of the Competitive Enterprise Institute, a free-market group. Yeatman rejected EPA's analysis, in which the agency assumed damages related to pregnant women catching and eating mercury-contaminated fish from polluted waterways.
"EPA’s has produced no evidence these voracious pregnant anglers actually exist; rather, they are modeled to exist," Yeatman said in a statement. "I suggest these 'victims' don’t exist, and that the putative mercury benefits are much closer to zero."
Critics aren’t buying any part of EPA's analysis, and plan to go after EPA’s use of co-benefits.
“The fact of the matter is that the Obama EPA is unable to justify this illegal rule through any cost-benefit analysis, which is why they never did any such analysis in the first place,” said Gary Broadbent, assistant general counsel for Murray Energy. “Their use of co-benefits is a farce.”
Murray will sue again over the new “appropriate and necessary” finding, he added.
EPA’s foes are also eyeing co-benefits as another avenue to attack the agency’s power plant carbon rules, which rely in part on health benefits as high as $34 billion that come from incidental reductions in nitrogen oxides and sulfur dioxides.
The Clean Power Plan “has the same inherent flaws” as the mercury rule when it comes to co-benefits, Broadbent said.
C. Boyden Gray, a former ambassador and energy diplomat in the Bush administrations, wrote in July that EPA should not be able to count ancillary benefits of the Clean Power Plan because that part of the Clean Air Act "expressly prohibits" EPA from regulating certain pollutants, including particulate matter. Gray represented the National Federation of Independent Business in the failed lawsuit challenging EPA’s proposed carbon rule.
The co-benefits controversy has gained traction in part because key members of the judiciary have openly signaled their interest in reviewing the practice. Roberts questioned whether EPA was making an “end-run” around the law when it “bootstrapped” the ancillary benefits into its analysis.
“It's a good thing if your regulation also benefits in other ways,” Roberts said at oral arguments over the mercury rule in March. “But when it’s such a disproportion, you begin to wonder whether it's an illegitimate way of avoiding the quite different limitations on EPA that apply in the criteria program.”
The Obama administration disputed Roberts’ argument, with Solicitor General Don Verrilli saying that counting co-benefits “is a well-recognized methodology that goes back decades.”
D.C. Circuit Judge Brett M. Kavanaugh earlier this month pointed to Roberts’ concern and predicted courts would be asked to weigh in on the question soon.
The Supreme Court’s ultimate ruling in the MATS case sidestepped the co-benefits issue, and it’s not clear whether the justices simply didn’t have enough information to make up their minds at the time or if Roberts was unable to round up a majority on the matter.
Regardless, the chief justice clearly telegraphed skepticism about the longstanding policy, and EPA’s foes have taken note.
Andrea Bitely, a spokeswoman for Michigan Attorney General Bill Schuette, said he is “aware” of Roberts’ comments and will “continue to evaluate all arguments in our challenge to the rule.”

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More Legal Battles Likely After Mercury Rule Survives Attack

Dec 15, 2015 | E&E - Greenwire

By Robin Bravender and Sean Reilly

The Obama administration scored a major victory in court this morning as federal judges kept U.S. EPA's landmark mercury standards for power plants in place, but the legal battle over the rule isn't done yet.
Foes of the mercury standards are weighing their legal options after judges on the U.S. Court of Appeals for the District of Columbia Circuit this morning sided with EPA against state and industry challengers. A three-judge panel agreed to keep EPA's rule in place, allowing the agency to tweak the regulation to bring it in line with a Supreme Court ruling that the agency had failed to properly consider costs.
But legal experts predict it won't be long until the rule is again under attack in court.
EPA has promised to hustle to adjust its rule by next spring and has already issued a draft decision concluding that the benefits of its air toxics standards justified the costs of the rule. In the short order issued by the court, the judges made a point to note that "EPA has represented that it is on track to issue a final finding ... by April 15, 2016." That cost analysis is likely to come under fire.
In addition to expected litigation over EPA's cost analysis, the agency's challengers could ask the appeals court's three-judge panel to rehear the case or seek en banc review by all of the circuit's judges. They could also seek review by the Supreme Court of the lower court's decision.
In regard to future legal challenges, "nothing would surprise me," said Jim Barnes, a former EPA general counsel who now teaches law at Indiana University. "It seems like there is pretty much a scorched-earth mentality with respect to virtually everything EPA does."
But Barnes questioned the practical impact of more litigation, given that many power producers with coal-fired plants are already addressing their mercury emissions. "If the companies haven't seen the writing on the wall, I think they're even more likely to see it now," Barnes said.
William Yeatman, a senior fellow at the conservative Competitive Enterprise Institute, said in a statement, "While today's unfortunate decision keeps the rule in place for now, EPA is not yet off the hook. The agency still must perform a cost benefit analysis on the mercury rule, and this analysis will be subject to judicial review, which will be no cakewalk for the EPA."
Industry groups and nearly 20 states had asked the appeals court to toss out the EPA rule in light of the Supreme Court's June ruling. Led by White Stallion Energy Center LLC and the state of Michigan, the rule's critics argued that the high court's decision rendered the rule illegal and required that it be vacated.
Luke Popovich, a spokesman for the National Mining Association, said the court's decision to keep the rule in place isn't surprising. The National Mining Association was among the industry groups that had asked for the rule to be tossed out. Typically, Popovich said, "the appellate courts have shown regulatory agencies great discretion, however egregiously wrong they have been."
Asked today about legal strategies in light of the court's order, Eric Groten, an attorney at Vinson & Elkins representing White Stallion Energy Center in the lawsuit, said in an email, "Can't say yet on next steps."
Jim Pew, an attorney at Earthjustice representing environmental groups that supported EPA in the lawsuit, is expecting more battles. "The industry lawyers get paid by the hour and they have no reason to stop their tactics; they've been fighting the controls on power plants for decades," he said. But, he added, "I don't really think there is much left in their arsenal."
EPA issued the Mercury and Air Toxics Standards -- or MATS -- in December 2011 to require coal-burning power plants to reduce emissions of mercury, lead, arsenic and other hazardous air pollutants. Coal plants are the country's largest emitters of mercury, and EPA said that MATS would prevent 11,000 premature deaths a year and yield up to $90 billion in health benefits.
Industry and state opponents of the rule argued that the Supreme Court had unequivocally ruled that EPA exceeded its authority under the Clean Air Act when it issued the mercury standards. EPA, they said, "failed to answer the threshold question Congress directed it to consider before regulating the emission of hazardous air pollutants from power plants: Is such regulation worth it -- that is, are the benefits of regulation worth the costs?" (Greenwire, Sept. 25).
During oral arguments this month on whether to knock down the mercury rules, conservative Judge Brett Kavanaugh forecast that the next big fight over the rule will center on how the agency measures so-called co-benefits.
The Republican appointee pointed to concerns raised by Supreme Court Chief Justice John Roberts regarding EPA's practice of counting health "co-benefits" in justifying the economic impacts of its clean air rules. Those are health benefits not directly attributable to reductions in mercury.
"He referred to that as an end run and bootstrapping and disproportionate," Kavanaugh said of Roberts' comments. "I assume that's going to be the key battleground six months, a year from now, will be whether co-benefits are properly part of the analysis or not" (Greenwire, Dec. 7).
Scott Segal, director of the Electric Reliability Coordinating Council -- a group of power companies -- said that the court's decision "should be viewed against the clear and unmistakable signal sent by the Supreme Court that it will no longer accept EPA analysis that plays fast and loose with calculation of cost and benefit."
Segal added, "Because such behavior characterizes the Clean Power Plan," the Obama administration's rules to crack down on power plants' greenhouse gases, "EPA should be very concerned" about how the high court will react to the Clean Power Plan.
Lawsuits challenging the Clean Power Plan are pending in the D.C. Circuit and are widely expected to make their way to the Supreme Court.Obama admin, backers laud decision
For now, the Obama administration and its backers are heralding the D.C. Circuit's latest move on mercury.
"EPA is very pleased with the court's decision to leave the Mercury and Air Toxics Standards (MATS) in place," agency spokeswoman Melissa Harrison said in a statement. "All told, for every dollar spent to make these cuts in emissions, the public is receiving up to $9 in health benefits. A majority of power plants have already installed and are operating the controls needed to meet MATS and the rest will be doing so in April 2016."
Pew of Earthjustice said, "It's really very good news for all the people who aren't going to die as a result of air pollution this year and all the people who will stay alive next year because they won't be killed by air pollution."
Brendan Collins, an attorney at Ballard Spahr representing power companies, who asked the court not to toss out the mercury rule, said he, too, was pleased with the court's decision.
"Generators who configured their generation fleets in anticipation of the rule based their investments on their views of how MATS will impact capacity and wholesale prices," he said. "If the rule were vacated, some compliant plants could bypass their controls and reduce their operating costs, and plants that had planned to retire would continue to operate. As a result, the electricity markets would look very different from the way they were expected to look under MATS when generators were making those investment decisions."
His clients include Calpine Corp., Exelon Corp., National Grid Generation LLC and Public Service Enterprise Group Inc.
State and local air pollution control officials also applauded the D.C. Circuit's decision, said Bill Becker, executive director of the National Association of Clean Air Agencies. "We are confident EPA will find the costs of the rule are reasonable and do not alter its earlier determination that regulation of air toxics from power plants is appropriate and necessary to protect public health," Becker said.
A coalition including 15 states and many environmental groups had pressed the court to keep the rule in place while sending it back to the agency for a quick fix.
EPA maintains that it's on track to issue its final consideration of cost in April 2016. EPA published a proposed supplemental finding on Dec. 1 and is accepting comment on its proposal until Jan. 15, 2016 (Greenwire, Nov. 23).

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EPA Wins Bid For Utility MACT Remand Without Vacatur, Binding Deadline

Dec 15, 2015 | InsideEPA

By Anthony Lacey

The U.S. Court of Appeals for the District of Columbia Circuit has granted EPA's request to remand the utility maximum achievable control technology (MACT) air toxics rule to the agency without vacating it, providing a significant victory to the agency and its supporters who wanted the rule to remain in place while it crafts a cost analysis.
In a two-page per curiam order issued Dec. 15, the court remanded the rule while the agency works on the cost analysis required by the Supreme Court, but the court set no binding deadline for EPA to finish that work. Instead, the judges overseeing litigation on the rule write, “[We] note that EPA has represented that it is on track to issue a final finding . . . by April 15, 2016.”
The ruling is a significant win for EPA, environmentalists, “clean” utilities and states supporters of the rule who all urged the D.C. Circuit to leave the measure in place while the agency works toward finalizing its formal consideration of costs for its determination that the MACT is “appropriate and necessary” (A&N) under the Clean Air Act.
The Supreme Court in a 5-4 ruling issued in June in Michigan v. EPA faulted the agency for not considering costs in its initial A&N finding. EPA had argued that the air law was not explicit on when costs should be considered, and argued that it had factored costs into the later stage of the rulemaking when it set the actual emissions standards. But industry groups and states critical of the rule said costs should have been a factor in the A&N determination.
The majority of justices agreed with that argument and remanded litigation over the rule back to the D.C. Circuit in White Stallion Energy Center v. EPA, et al. The appellate judges in a 2-1 ruling issued in 2014 had previously broadly upheld the MACT against several attacks on its merits, including defending its emissions limits.
During the remand proceeding, EPA urged the court to return the rule to the agency but not vacate it. EPA argued that leaving the rule in place while it wrote a cost analysis for the A&N finding would help preserve important air pollution control requirements. But opponents urged the court to vacate the measure and start over, saying the lack of cost consideration undermined the entire basis for the rule and that the MACT must be scrapped.
EPA on Nov. 20 then issued its proposed consideration of costs as part of the A&N finding, and is taking comment on it through Jan. 15. The analysis is a more limited assessment of the rule's implementation costs rather than a more sweeping new cost-benefit review, but EPA says its satisfies the Michigan ruling.
At Dec. 4 oral argument on motions to govern, Department of Justice lawyers on EPA's behalf cited the release of the proposed finding as a signal that EPA is working quickly to address the high court's ruling, and vowed a final cost finding by April 15 next year.
Through their questioning at oral argument, Chief Judge Merrick Garland and Judge Judith Rogers appeared to support a remand of the rule while the agency processes the final cost assessment.
Garland conditioned his support for that position on EPA issuing a timely final revision to its appropriate and necessary finding, asking if EPA can issue the final finding by April 15 -- the date by which power plants with a one-year MACT compliance deadline extension must comply with the rule.
“EPA is on track to meet that intended deadline,” said DOJ attorney Stephanie Talbert.
Judge Brett Kavanaugh's position was more ambiguous, as he asked tough questions of all parties, although he appeared to agree with Garland on the possible need for EPA to stick to a hard deadline in the event the court decides against vacating the MACT.
However, the per curiam order only notes that the agency has set an April 15 deadline for finalizing the cost finding and does not make that target binding.
None of the three judges dissented from the order.

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DOJ Says Judge Failed To Consider Harm In Denying Stay Of CWA Lawsuit

Dec 15, 2015 | InsideEPA

By Bridget DiCosmo

Department of Justice (DOJ) attorneys are arguing that a federal district court judge erred in her order rejecting DOJ's request to stay litigation over EPA's Clean Water Act (CWA) jurisdiction rule, saying the judge failed to consider the harm to the administration from the denial from having to deal with “duplicative” litigation.
In a Dec. 14 reply brief filed with the U.S. District Court for the District of North Dakota, DOJ on EPA's behalf urges the court to rescind the order against a stay. The department notes that the U.S. Court of Appeals for the 6th Circuit has stayed the rule nationwide while it weighs whether it has authority to hear suits over the rule. If the appellate court rules it does have jurisdiction over the suits, it could moot the slew of pending district court cases.
In the reply brief, DOJ argues that the “[o]rder denying the stay omits any consideration of whether there would be harm to Plaintiffs from a limited stay of the litigation at a time when the Rule is already stayed nationwide and enjoined as to them,” adding that the judge's order should be reversed “for that reason alone.”
Magistrate Judge Alice Senechal issued the Nov. 10 order in State of North Dakota, et al., v. EPA, et al. that rejected the request to stay the lawsuit filed over the rule by North Dakota and 12 other states.
DOJ appealed the order Nov. 24, arguing that Senechal's decision is in error, seeking a stay of the litigation pending the outcome of a string of appeals pending in the 6th Circuit.
In the new filing, DOJ says, “Given the posture of the parallel and highly relevant proceedings in the Sixth Circuit, the Magistrate Judge should have entered a limited stay of this litigation rather than a scheduling order setting deadlines for briefing. The Order should be vacated and reversed.”
DOJ warns of the burden for the administration from having to contest potentially duplicative litigation. DOJ cites a 2001 8th Circuit ruling, Missouri, ex rel. Nixon v. Prudential Health Care Plan, saying the appellate court has “referred numerous times to its 'general policy that duplicative litigation in federal courts should be avoided.'”
The department is also citing Transamerica Life Insurance Company v. Lincoln National Life Insurance Company, a 2008 suit in the U.S. District Court for the Northern District of Iowa finding a magistrate judge's order is “contrary to law” if the judge did not apply the proper legal standard.
However, the 13 states have argued that Senechal made no clear mistake worthy of appeal. In particular, they argue that even if the 6th Circuit decides it has authority to hear suits over the rule, that decision will not be binding on any courts outside its jurisdiction, which covers only Michigan, Ohio, Kentucky and Tennessee.

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Audit: EPA Used “Covert Propaganda” in Water-Rule Campaign

Dec 15, 2015 | National Journal

By Ben Geman

The Environmental Protection Agency broke federal law by using a social-media campaign to drum up support for a controversial rule meant to protect the nation’s streams and waterways, according to a congressional audit.
The Government Accountability Office said Monday that EPA used “covert propaganda” by blasting out a social-media message supporting the Waters of the United States rule. The 21-page report says EPA violated restrictions on using appropriated money for grassroots lobbying.
The rule, finalized in the spring, is meant to clarify the federal government’s authority under the 1972 Clean Water Act, giving EPA more power to restrict development and pollution in streams and wetlands. Industry groups roundly oppose the rule, and a federal judge put a hold on its implementation in an October ruling. Republicans have also discussed using the must-pass spending bill to try to kill the rule.
In the lead-up to the rule’s finalization, EPA had conducted a vast social-media campaign, aided by an application called Thunderclap that allows a message to go out through multiple social-media accounts. The campaign was meant to counter opposition to the rule and included links to an EPA Web page about the water regulation.
But the GAO said that Thunderclap and other social-media campaigns violate federal propaganda rules by not disclosing that a federal agency was the source of information.
The audit also said that EPA separately broke the law by linking to two environmental groups’ websites that instructed members to call members of Congress and fight legislation to kill the WOTUS rule. That, the GAO said, amounted to grassroots lobbying.
Federal agencies can promote their own policies, but are barred from urging the public to contact Congress regarding legislation.
The report was done at the request of Senate Environment and Public Works Committee Chairman James Inhofe, one of the key congressional opponents of the rule, after The New York Times wrote about the social-media campaign. In a statement, Inhofe said the report “confirms what I have long suspected, that EPA will go to extreme lengths and even violate the law to promote its activist environmental agenda.
“EPA’s illegal attempts to manufacture public support for its Waters of the United States rule and sway Congressional opinion regarding legislation to address that rule have undermined the integrity of the rulemaking process and demonstrated how baseless this unprecedented expansion of EPA regulatory authority really is,” he said.
In a statement, the EPA said it disagreed with the assessment and that the agency did not encourage the public to contact Congress or any state legislature.
“We maintain that using social media to educate the public about our work is an integral part of our mission,” the agency said in a statement. “We have an obligation to inform all stakeholders about environmental issues and encourage participation in the rulemaking process. We use social media tools just like all organizations to stay connected and inform people across the country about our activities.”
Republicans say WOTUS is a federal overreach that will leave farmers and developers unable to carry out their daily activities without seeking approval from the government. The Senate has passed a measure that would force EPA to scrap the rule, but the White House has threatened a veto.
There has been a push to attach a rider killing the rule on the omnibus spending package due out of Congress this week, although Democrats have vowed not to allow any rule-killing riders on the final bill. Negotiations over the inclusion of a repeal of the nation’s crude-oil export ban, a Republican priority, have included the demand that there be no environmental riders.
It’s unclear whether Republicans will use the latest GAO report to try to add the rider back into the bill.

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Silence on the Climate Pact From the Republican Candidates

Dec 14, 2015 | New York Times

By Editorial Board

One can describe the 2016 Republican presidential candidates in many ways, but “silent” is seldom one of them. Yet after 195 nations agreed on Saturday to reduce the greenhouse gas emissions that cause climate change, the Republican field remained nearly mum.
There could be two reasons for this. They’re not interested in acknowledging a victory for President Obama. Perhaps more important, blocking international action on climate change is not necessarily what Republican voters want.
Before the Paris meeting, the Environmental Protection Agency issued rules to cut emissions from coal-fired power plants, a move the Republican-led Congress voted this month to scuttle. Mr. Obama said he would veto that legislation, and the Paris agreement was written in language that avoids having to put it to a congressional vote.
In light of the Paris pact and broad public support, it’s starting to look like a handful of Republicans against a warming world.Continue reading the main storyRELATED IN OPINIONEditorial: The Paris Climate Pact Will Need Strong Follow-UpDEC. 14, 2015
About two-thirds of Americans want the United States to join an international pact to curb the growth of greenhouse gas emissions, according to a recent New York Times/CBS News poll. While a small majority of Republican voters oppose such a pact, a similarly small majority of Republicans favor domestic limits on carbon emissions from power plants — the limits that the Republican-led Congress voted to block.Paris Climate Change Conference 2015Complete coverage of the United Nations meeting in Paris from Nov. 30 to Dec. 11, and efforts to reach an emissions deal.The Paris Climate Pact Will Need Strong Follow-UpDEC 14Republicans on Campaign Trail Largely Ignore the Climate DealDEC 13A Climate Deal, 6 Fateful Years in the MakingDEC 13Despite Internal Struggles, France Sees Bright Spot as a Successful HostDEC 13Leaders Move to Convert Paris Climate Pledges Into ActionDEC 13
See More »
The survey also suggests that denial of climate science is receding like so many glaciers: 75 percent of those polled agreed that global warming was seriously affecting the environment, or that it would in the future. More than half of Republicans (58 percent) agreed.
That makes things tricky for a Republican candidate hoping to lure climate change skeptics in the primary, then pull more moderates in the general election — which may explain the silence. Of the nine Republican candidates who will debate in prime time on Tuesday, only Gov. John Kasich of Ohio had any substantial comment on the pact: “While the governor believes that climate change is real and that human activity contributes to it, he has serious concerns with an agreement that the Obama administration deliberately crafted to avoid having to submit it to the Senate for approval,” Mr. Kasich’s spokesman said in a statement. “That’s an obvious indicator that they expect it to result in significant job loss and inflict further damage to our already sluggish economy.” The administration would argue that it avoided the Republican-controlled Congress because it would almost surely vote this agreement down, regardless of the world’s support for it.Continue reading the main storyRECENT COMMENTSBean Counter 076 5 minutes ago
Republicans do not see this as a money making proposal....there supporters are not clean energy folks....let if go another 75-100 years and...Jason Vanrell 5 minutes ago
Interesting as well, is that the rank and file Republican electorate is equally silent on this matter, as evidenced by their lack of...Brian Z 5 minutes ago
I can't wait to read the Republican candidates efforts to "school" the vast number of supporters to another view of climate change. Or not.SEE ALL COMMENTS WRITE A COMMENT
In the past, these Republican candidates have disparaged the idea of global warming. “We’re not going to make America a harder place to create jobs in order to pursue policies that will do absolutely nothing, nothing, to change our climate,” Marco Rubio said in a Republican debate in September.
CONTINUE READING THE MAIN STORY561COMMENTS
Donald Trump uttered this marvel: “I am not a believer, and I will, unless somebody can prove something to me, I believe there’s weather. I believe there’s change, and I believe it goes up and it goes down, and it goes up again.”
Ted Cruz, who seems enthralled with the idea of a climate-science conspiracy, said last week, “Climate change is the perfect pseudoscientific theory for a big-government politician who wants more power.” On Saturday, Mr. Cruz had nothing to say.
Let’s hope the candidates’ new silence suggests that they see that when 195 nations together recognize the need for immediate action, their arguments to do nothing seem more misguided than ever.

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Success Of Climate Deal Will Hinge On Chemistry

Dec 15, 2015 | Chemical and Engineering News

By Cheryl Hogue

Chemists and other scientists are expected to play a key role as the world implements the new climate changedeal that governments clinched in Paris on Dec. 12.
The historic Paris pact includes commitments by 185 countries and the European Union to control emissions of carbon dioxide and other greenhouse gases. It signals a shift away from a world economy marked by unfettered release of carbon dioxide produced by burning fossil fuels. The agreement is expected to drive innovation in renewable energy, battery storage, and energy efficiency. It also opens the door for more nuclear energy and further development and deployment of technologies to capture and sequester CO2.
American Chemical Society Executive Director and CEO Thomas M. Connelly Jr. says, “The Society appreciates that the delegates at the Paris climate summit have taken the science seriously and appear to have reached agreement on the critical elements of an accord to address climate change.” He adds, “Translating that agreement into effective solutions will demand the best efforts of scientists, with chemists playing a prominent role.” ACS publishes C&EN.
Other chemists likewise see opportunity for innovation in the agreement. Keith E. Peterman, a chemistry professor at York College of Pennsylvania, says the transition from a fossil-fuel-based society to one that increasingly relies on renewable energy will require new materials. “The chemists are going to be the ones to develop them,” says Peterman, who attended the Paris conference.
Advanced materials will also be needed for more sustainable and energy-efficient transportation and construction, says Achim Steiner, executive director of the United Nations Environment Programme.
Meanwhile, the new accord telegraphs a message to businesses. “It signals encouraging stronger investment in low-carbon solutions—and that requires stronger investment in R&D,” says Elliot Diringer, executive vice president of the Center for Climate & Energy Solutions, a nonpartisan U.S. group that advocates for action to combat climate change. “There is a clear opportunity for business to partner and drive innovative low-carbon and energy efficient solutions forward,” adds Novozymes CEO Peder Holk Nielsen.
U.S. Secretary of State John Kerry views the Paris accord “as perhaps one of the biggest job creators in the world,” one which will include increased private sector employment for researchers and developers of new materials and technology.

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Climate Change Activists are Just Warming Up

Dec 15, 2015 | Los Angeles Times

By William Yardley

Even as it became clear that a historic climate agreement could be reached in France, activists were organizing protests deep into next year, some liberal political leaders were pledging to go beyond whatever goals the agreement might yield and diplomats, scientists and consultants were planning the next global summit.
In the final days of COP21, as the 21st Conference of Parties came to be called, a hashtag briefly came to life on Twitter: #COP22.
That would be the 22nd Conference of Parties, scheduled for next November in Morocco.
On the day of the Paris agreement, Hakima El Haite, the Moroccan environmental minister, reached out to Christiana Figueres, the head of the United Nations Framework Convention on Climate Change: "Thank you, dear Christiana, for your dedication," El Haite wrote. "Your work continues in Marrakesh."
While many questions remain about the agreement — Will it truly help solve the problem? Will nations honor their commitments? Will investors move away from fossil fuels? — it appears to include at least one guarantee: The century ahead will be filled with more conflict, progress, protests, ambition and intransigence about climate change.
And more conferences.
"This institutionalized that the world has committed to taking action on climate change — that's the historic nature of it," said Gregg Small, the executive director of Climate Solutions, a climate policy and clean-energy group based in the Pacific Northwest. "What it does not do is solve the problem. That's up to all of us."
Like an addict's entry into rehab, the agreement is a crucial step toward recovery. The trouble is that fossil fuels are the substance and most of the planet is hooked. In theory, it could be another 85 years — the year 2100, when many of the goals in the agreement are to be met — before it is clear whether Paris was a decisive intervention.
That is part of why environmental groups decided early on to cast Paris not as a destination but as a crossroads.
"All along we knew this was the road 'through Paris,' no matter what the outcome," said Will Bates, the global campaigns director for the climate activist group 350.org. "Barring just a total miracle, we knew that the climate movement would need to continue on for the weeks, months and years ahead. We're going to need to gain more strength to continue to push back against the fossil fuel industry and do all we can to keep fossil fuels in the ground."
The group, cofounded by the environmentalist and writer Bill McKibben, helped lead protests in Paris on the day the agreement was reached, and it is now helping organize what it says will be "nonviolent direct actions to confront some of the most dangerous fossil fuel projects on the planet and build support for ambitious renewable energy initiatives."
Those acts, which Bates said could include protests like those against Royal Dutch Shell's Arctic drilling program by "kayaktivists" in the Pacific Northwest, are being planned in the U.S., Australia, Brazil, Canada, Germany, Indonesia, Nigeria, the Philippines, South Africa, Spain and Turkey. Other countries could be included.
Bates said his group trained "between 3,000 and 5,000 activists for direct action" during the conference outside Paris.
Even as world leaders received most of the attention during the two-week conference, "subnational" alliances that have been particularly popular in liberal parts of the West continued to cast themselves as moving faster on climate than nations.
The day before the agreement was reached, the mayors of Los Angeles, San Francisco, Seattle, Portland, Ore., and Eugene., Ore., held what they called the first "West Coast Mayors Summit," meeting in Portland. Among their promises: using more renewable energy to power city buildings, expanding the use of electric vehicles in city fleets and affirming commitments to reduce fossil fuels by at least 80% below 1990s levels by 2050.
Govs. Jerry Brown of California and Jay Inslee of Washington were among the participants at "an official side event" of last week's conference, with each boasting of their state's climate record.
"We're leading on the Pacific Coast," said Inslee, noting his plan to create a carbon cap on emissions through executive action. "We're rocking on this issue."
But when Inslee stated that Washington had the highest number of electric cars per capita in the United States, Brown was skeptical.
"I have to question that statistic," Brown said, before adding: "Good, if that's true. That just gives us more incentive to catch up."
Both governors insisted, as have many other leaders, that the long-term fight against climate change is actually a long-term opportunity to create jobs in producing clean energy and building more efficient vehicles, transportation networks and buildings.
Climate change has helped create another type of job, one that is likely to last for years — the work Bates and other activists do.
Bates, 31, said he first learned about the "true severity of the climate crisis" when he was 16 and spent time at an environmental program in Maine called Chewonki. He became a student activist on climate issues while he attended Middlebury College in Vermont. Now he lives with his wife in the Pyrenees mountains in Spain and coordinates with activists around the world through the Internet and conference calls.
"We very much hope to work ourselves out of this job," he said late Monday, having just returned home. "But we know the governments are not going to get the job done for us even though they're making some nice promises."

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Calif. Explores How to Mesh Cap and Trade With Federal Rule

Dec 15, 2015 | E&E - Climatewire

By Debra Kahn

California regulators are wading through the details of how to connect their landmark cap-and-trade system to U.S. EPA's regulations for power plants.
At the top of the regulators' agenda is how to preserve their own program, which has been in place since 2012. As the only state with an economywide carbon cap, California is already on track to reduce its greenhouse gases to 1990 levels by 2020 and is writing regulations to reach 40 percent below that by 2030.
"Our goal really is to make sure we're protecting and enhancing the environmental integrity of the market that's existing," Jason Gray, a staffer with the California Air Resources Board (ARB), said yesterday at a workshop exploring how to comply with EPA's Clean Power Plan.
California is planning to submit its cap-and-trade program as the primary "state measure" that will satisfy the federal requirement to reduce its power-sector emissions about 13 percent below 2012 emissions levels in terms of pounds of carbon dioxide emitted per megawatt-hour.
In order to make the cap-and-trade regulations dovetail with the federal program, state regulators foresee a host of potential changes. They could decide to change the compliance schedule for cap and trade, which requires emitters to turn in allowances every three years, so that it matches up with EPA's timetable, which requires states to meet targets every two or three years.
The state might also need to change the market rules that allow emitters to "borrow" greenhouse gas permits from future years of the program, a practice that EPA's regulations prohibit. And while California's program requires wholesale electricity buyers to account for the emissions associated with out-of-state power purchases, EPA's plan does not.
Regulators will also need to decide whether to make cap and trade itself the official "state measure" that must meet EPA's standards or whether to insert separate emissions standards into the program that will serve as the federally enforceable "backstop."
As well, the permits that local air districts issue to power plants under the Clean Air Act's Title V will have to certify compliance with whatever federally approved greenhouse gas standards California ends up adopting.Seeking help from outside groups
Staff urged the industry representatives and environmentalists at the meeting to help them figure out how to handle the details.
"We just only started getting into most of those details the last two months," said Rajinder Sahota, the head of ARB's cap-and-trade program. "We're still barely getting into it and already feeling challenged."
Participants in yesterday's workshop encouraged ARB staffers to figure out how to actually trade allowances with other states.
"If we want this work to be leveraged in the future ... obviously, finding a way to link the cap-and-trade program as an economywide [program] with other programs certainly should be a goal or consideration," said Jean-Philippe Brisson, a lawyer with the firm Latham & Watkins who represents emitters.
When asked if California's existing market link with the Canadian province of Quebec precludes trading with other states, ARB staff said it shouldn't.
"No, we don't," senior attorney Craig Segall said in response to a question from a San Diego Gas & Electric representative. "We think it requires more careful analysis." The linkage with Quebec also ensures that "whatever trading decisions we make need to be consistent with the environmental integrity of this market as it stands," he said.
State officials have also gone through U.S. EPA's list of affected power plants in California and found 26 plants with a total of 36 additional generating units that should be regulated, they said. That would add about 3.6 million short tons to the state's 2030 emissions target, or about an 8 percent increase, to 52 million short tons of carbon dioxide per year, up from a current target of 48.4 million short tons.
ARB plans to release proposals for its state plan early next year. The state also plans to conduct an environmental analysis under the California Environmental Quality Act that covers both Clean Power Plan compliance and any needed amendments to the cap-and-trade program. The draft analysis will be released sometime in the spring, staff said.

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11 Candidates Line Up for Texas Energy Regulator Seat

Dec 15, 2015 | E&E - Energywire

By Mike Lee

For the second time in as many years, candidates are lining up to run for a seat on the influential state board that regulates the Texas energy business.
Despite its name, the Texas Railroad Commission regulates oil and gas development, pipelines and some natural gas utilities in the biggest energy-producing state in the country. The three commissioners are elected statewide and serve staggered six-year terms.
David Porter, the current chairman of the Texas Railroad Commission, shook up the field last week when he announced he won't seek re-election (EnergyWire, Dec. 11). Seven Republicans have filed for the seat, with most saying they want to use the seat to promote the energy business and conservative ideals. Three Democrats and a Libertarian have also entered the race, hoping to make the commission more responsive to the general public.
The primary is March 1, and a runoff election will be held May 24 if it's necessary.
John Greytok, a lawyer who's also a registered lobbyist and was an early supporter of U.S. Sen. Ted Cruz, said he entered the race because Porter wasn't doing enough to promote and defend the oil industry in Texas.
The commission should lead a counteroffensive against the Obama administration's environmental policies, he said. There's already a precedent, he said, citing the campaign of industry and state officials who pushed back against a plan to list the dunes sagebrush lizard as an endangered species.
"We need to be in the fight earlier," he said.
Wayne Christian, who filed to run for the seat yesterday, is a former state representative from Center who is aligned with the tea party movement. He held office for 16 years and was twice named to Texas Monthly's list of 10 worst legislators.
"Stakeholders within both the oil and gas industry and the conservative grassroots movement have flooded my phone with calls encouraging me to run for this seat," Christian said in a news release.
Christian ran for a seat on the commission in the 2014 Republican primary and garnered 42.3 percent of the vote before losing in a runoff to Ryan Sitton, who went on to win the general election.
Ron Hale, also seeking the Republican nomination, ran unsuccessfully last year for a state Senate seat representing the Houston area. He could not be reached to comment but said on his website that he wants to promote property rights and other conservative principles.
A fourth Republican, Gary Gates, has run unsuccessfully for five legislative seats, most recently getting 34.2 percent of the vote in a special election for a state Senate seat.
Three relative newcomers filed for Republican nomination yesterday. Weston Martinez, of San Antonio, describes himself on Twitter as a political and media strategist. Doug Jeffrey is an Air Force veteran who manages his family's farm and ranch in Vernon, according to an emailed statement. Lance Christian also filed, according to the Texas Republican Party website, but no contact or background information was available about him as of deadline.
It's the second election season in a row in which a sitting Republican has declined to run for re-election to the commission. Barry Smitherman stepped down to run for state attorney general in 2014, and four Republicans ran to replace him.
Democrats, meanwhile, say they see the Texas Railroad Commission, which long has been criticized for its close ties to the oil and gas industry, as an opening to break 20 years of Republican dominance in statewide politics.
"It's really important that there be a voice of reason and progressive thinking" on the commission, said Lon Burnam, a former state representative from Fort Worth who filed to run for the commission seat.
Burnam served in the House for 18 years before losing in the Democratic primary last year. An outspoken environmentalist, Burnam was often isolated in the conservative statehouse. He was named to Texas Monthly's list of worst legislators in 2003 and 2013.
Cody Garrett, who describes himself on his website as a former print and television journalist, said he got interested in the commission while working on other candidates' campaigns. He wants to address air pollution from oil and gas development and protect surface owners from having their property condemned, the site says.
Grady Yarbrough also filed as a Democrat. He ran in the Democratic primary for U.S. Senate in 2012, losing in a runoff.
Mark Miller, the Libertarian candidate, said he wants to end "crony capitalism" on the commission -- such as the oft-criticized campaign contributions that the members collect from the companies they regulate.
Miller, who holds a doctorate in petroleum engineering, taught at the University of Texas and was an industry consultant before he retired. He ran for the Texas Railroad Commission in 2014, gaining 3.2 percent of the vote in the general election. He said in an interview that he understands the odds.
"I'd love it if I could just get more people to understand what the Railroad Commission is," he said.

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