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ACC AM Jan 15
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(ACC Mentioned) 5 Chemical Stocks to Enrich Your Portfolio in 2016
Jan 14, 2016 | Nasdaq
The chemical industry is clawing its way back after being roiled by the global economic crisis. The industry fared reasonably well last year, thanks to continued strong momentum in the automotive market and a recovery in commercial construction - an end-market that has long been out of favor. -
(ACC Mentioned) Oil Rout Changes Chemicals Landscape
Jan 15, 2016 | ICIS News
By Will Beacham
As oil continues to collapse past the $30/bbl mark, the global chemical industry faces some new realities if - as looks likely - these low prices persist. Although the heads of some oil companies such as Shell’s Ben van Beurden are still talking up the oil price (he needs a higher price for the proposed $51bn merger with BG Group to make sense)... -
(ACC Mentioned) Letters: Reusable Bags Are Safe, Eco-Friendly
Jan 14, 2016 | The Advocate
By Max Ciolino
This letter is in response to Mr. Morrison’s letter published on Dec. 31, titled “Reusable bags not a great alternative.” We are a coalition of local business and nonprofit leaders committed to building a stronger, safer and more resilient New Orleans through a Reusable Bag Ordinance. Mr. Morrison used a flawed 2010 plastics... -
2015 in the US Congress: Dids and Didn'ts
Jan 14, 2016 | Plastics News
By Gayle S. Putrich
Though plenty of people outside of the Beltway think of the 114th U.S. Congress as a “do-nothing Congress” (not to be confused with the actual Do-Nothing Congress, which in fact passed 906 bills into law from 1947-49, in spite of what President Harry Truman had to say), lawmakers did actually manage to get a few things done in 2015... -
Great Lakes Gull Eggs Contaminated by Non-Stick Chemicals
Jan 14, 2016 | Environmental Working Group
By Logan Malik
Perfluorinated compounds, or PFCs – the class of chemicals used in DuPont’s Teflon, 3M’s Scotchgard and many other products – pollute the bodies of people and animals in every corner of the world. In the latest findings, Canadian scientists have detected PFCs in virtually all of the eggs of herring gulls sampled in the Great Lakes region. -
DOJ to Help CSB Get Exxon Mobil's PSM Documents
Jan 15, 2016 | BNA Daily Environment Report
By Stephen Lee
The Department of Justice has agreed to compel Exxon Mobil Corp. to provide information about a Feb. 18, 2015, explosion at the company's oil refinery in Torrance, Calif. To date, Exxon Mobil has either ignored or given only partial responses to nearly half of the U.S. Chemical Safety and Hazard Investigation Board's 148 subpoena requests. -
Exxon Mobil Asserts Torrance Plant Is Safe
Jan 14, 2016 | LA Times
By Ivan Penn
Exxon Mobil Corp. has stepped up its defense of the company's management of the Torrance oil refinery and response to an explosion there last February. Speaking to the U.S. Chemical Safety Board during a public hearing Wednesday night, Torrance refinery manager Brian Ablett said Exxon Mobil has conducted its own investigations of the Feb. 18... -
Railroads Defend Automated Train Delay
Jan 14, 2016 | The Hill - Transportation
By Keith Laing
Railroads are defending a delay in the implementation of automated train technology after the National Transportation Safety Board (NTSB) included it on its wish list for 2016 safety improvements. The NTSB called for the installation of automated train technology known as positive train control that would prevent passenger and freight rail crashes... -
Pause Urged for Federal Onshore Oil, Gas Leasing
Jan 15, 2016 | BNA Daily Environment Report
By Alan Kovski
President Barack Obama should order the Interior Department to stop new leasing of onshore federal land for oil and natural gas drilling until a study is completed on the climate impacts of the leasing program, six environmental activist groups said in a Jan. 14 letter to the president. -
Greens Call For Climate Review Of Oil, Gas Drilling Program
Jan 14, 2016 | The Hill - E2 Wire
By Devin Henry
An assortment of green groups is asking the Obama administration to review the environmental impact of onshore oil and gas drilling. In a Thursday letter to President Obama, the groups said the Interior Department should freeze all new leases for gas and oil drilling on federal land while it assesses the climate change implications of those activities. -
BLM Postpones Another Lease Sale; Enviros Claim Victory
Jan 14, 2016 | E&E News PM
By Phil Taylor
The Bureau of Land Management in late December quietly postponed its Jan. 26 oil and gas lease sale in Billings, Mont., marking the third time since November that the agency has pushed back an auction of federally owned minerals. The decision, which was hailed by environmental groups, has fueled more speculation over whether the... -
Reclassifying Gas Wells in Texas May Cut State Tax Revenue
Jan 15, 2016 | BNA Daily Environment Report
By Nushin Huq
Tax incentives for natural gas wells using hydraulic fracturing are causing concern for Texas Comptroller Glenn Hegar, because an increasing number of reclassifications may lead to diminished revenues for the state. In 2015, the number of wells that were reclassified from oil to natural gas more than tripled, according to the Texas Railroad Commission... -
EPA Outlines Efficiency Role in Clean Power Plan
Jan 15, 2016 | BNA Daily Environment Report
By Andrew Childers
Energy efficiency will play different roles in states' Clean Power Plan compliance strategies depending on how they choose to implement the carbon dioxide standards for power plants, agency officials said Jan. 14. While energy efficiency is an option for states as they implement the Clean Power Plan... -
Power Plan Implementation on Environmental Justice Agenda
Jan 15, 2016 | BNA Daily Environment Report
By Rachel Leven
Environmental justice advocates will be pushing the Environmental Protection Agency in 2016 to keep overburdened communities front and center as the agency begins implementing carbon standards for power plants and other major rules. While some advocates are hoping the EPA will take ground-breaking action to quantify and consider... -
EPA Takes Comment on Greenhouse Gas Reporting Rule
Jan 15, 2016 | BNA Daily Environment Report
The Environmental Protection Agency will accept comment until Feb. 29 on a proposed rule that would update the greenhouse gas emissions reporting requirements for power plants, refineries, chemical plants, underground coal mines and other large facilities. The proposed rule (RIN 2060-AS60) would create new or revised... -
Energy Bill Could Hit Senate Floor This Month, Aide Says
Jan 15, 2016 | BNA Daily Environment Report
By Ari Natter
A broad energy bill that includes language to expedite the federal approval process for liquefied natural gas exports could be brought to the Senate floor by month's end, a Republican leadership aide told Bloomberg BNA Jan. 14. While it is “certainly possible” legislation could be on the floor this month, the aide cautioned... -
House Republicans Resume Push to Roll Back Rules
Jan 15, 2016 | BNA Daily Environment Report
By Dean Scott
Supporters of legislation to ease regulatory burdens and roll back legal strategies that environmental groups use to strengthen regulations will continue their efforts in 2016, first in the House of Representatives. The largely Republican-led effort has been backed by the U.S. Chamber of Commerce and other industry groups... -
Congressional GOP Decamps For 'Competition Of Ideas'
Jan 14, 2016 | E&E News PM
By George Cahlink
Congressional Republicans huddled here for a three-day retreat to lay out their party's 2016 legislative agenda and hear from the head of one of the nation's largest utility companies at a closed-door session. Both House and Senate lawmakers said their goal is to find common legislative ground for the coming year that will resonate with voters... -
EPA Seeks To Resume Some Utility MACT Challenges
Jan 14, 2016 | InsideEPA
EPA is asking the U.S. Court of Appeals for the District of Columbia Circuit to resume briefing in consolidated suits over technical provisions in the agency's maximum achievable control technology (MACT) air toxics rule for power plants, after the court opted to remand the rule to EPA rather than vacate it as sought by some utilities. -
California Water Regulators Should Study Food Safety
Jan 14, 2016 | San Francisco Chronicle
California is a major producer of crude oil — and of the nation’s agriculture. For a number of reasons, those two industries may be mixing in a way that’s very unhealthy. The drought, now in its fourth year, has strained relationships between these two industries. Mixing oil and water Leader of state’s embattled oil agency resigns State shuts 33... -
Judges Question Timeliness of Air Permitting Lawsuit
Jan 15, 2016 | BNA Daily Environment Report
By Patrick Ambrosio
Federal appeals court judges were skeptical that environmental groups have a timely challenge against the Environmental Protection Agency's 1980 regulation on the applicability of the new source review permitting program in nonattainment areas (Sierra Club de Puerto Rico v. EPA, D.C. Cir., No. 14-1138, oral arguments 1/14/16). -
D.C. Circuit Likely To Reinforce Air Act Lawsuit Time Limit In Permit Case
Jan 14, 2016 | InsideEPA
By Stuart Parker
U.S. Court of Appeals for the District of Columbia Circuit judges signaled at Jan. 14 oral argument that they are likely to reinforce a Clean Air Act 60-day deadline for filing lawsuits over EPA rules and reject environmentalists' case over lead pollution that attempts to reopen a decades-old agency air permitting rule for judicial review.
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(ACC Mentioned) 5 Chemical Stocks to Enrich Your Portfolio in 2016
Jan 14, 2016 | Nasdaq
The chemical industry is clawing its way back after being roiled by the global economic crisis. The industry fared reasonably well last year, thanks to continued strong momentum in the automotive market and a recovery in commercial construction - an end-market that has long been out of favor.
Notwithstanding a slew of headwinds including concerns over China's economy, weakness in Europe, soft agriculture market fundamentals and weak demand in the energy space, the industry's recovery momentum is expected to continue in 2016, aided by strength in the light vehicles market, an upswing in the housing sector and significant shale-linked capital investment.
While the European chemical industry remains in choppy waters given sluggish demand in key markets, high energy costs, lower prices, flat production growth and weak R&D investments, prospects in the U.S. look bright.
The U.S. chemical industry is poised for growth despite several headwinds. According to a recent monthly report from the American Chemistry Council (ACC), U.S. chemical production will continue to expand over the next several years and the American chemical industry will eventually transcend the nation's overall economic growth.
The outlook paints an encouraging picture as the ACC envisions national chemical production to rise 2.9% in 2016 and 4.4% in 2017. The trade group also sees the momentum to continue through the second half of the decade on the heels of new capital investments and capacity additions.
The shale gas bounty and abundant supply of natural gas liquids has been a huge driving force behind chemical investment on plants and equipment in the country and have provided the U.S. petrochemicals producers a compelling cost advantage over their global counterparts. The shale revolution has made the U.S. an attractive investment hotspot and incentivized a number of chemical companies to pump in billions of dollars to boost capacity.
Per ACC, over 261 new chemical projects have been announced by chemical makers (worth more than $158 billion) since 2010 to take advantage of ample natural gas supplies with 34% of them already complete or under construction. Such investments - many backed by Federal government support - are expected to boost capacity and export over the next several years.
Chemical companies also remain actively focused on expanding their reach in high-growth markets and are increasingly looking for cost synergy opportunities and enhanced operational scale through consolidations in a bid to cope with the current low commodity price environment.
Moreover, the automotive sector is witnessing significant momentum. In particular, U.S. light vehicles (a key chemical end-market) sales hit all-time high in 2015 and are expected to rise further this year, aided by an improving job market, rising personal income, lower fuel prices and attractive financing options.
A recovery across housing and commercial construction markets has been another supporting factor for the chemical industry recovery. After being hit hard in the recession, the construction industry is currently in the process of gradual healing. The underlying demand trends in the housing space remain strong and homebuilding is expected to pick up pace in 2016, supported by an encouraging job picture, affordable interest/mortgage rates and rising consumer confidence. This augurs well for chemical demand in this major end-market.
5 Chemical Bets for 2016
Below we list 5 chemical stocks that look good amid the prevailing operating environment and might offer healthy investment returns. These stocks are also armed with a solid Zacks Rank. Going by the Zacks model, companies sporting a Zacks Rank #1 (Strong Buy) or #2 (Buy) have strong chances of outperforming the broader market.
Stepan Company SCL
Illinois-based Stepan, a Zacks Rank #1 stock, delivered a positive earnings surprise of 18% in the last reported quarter and has racked up an average beat of around 12% in the trailing 4 quarters.
This specialty and intermediate chemicals maker is taking steps to cut costs through its efficiency program and other strategic initiatives, which should lead to higher earnings. The company's continued efforts to diversify its business in Europe coupled with new laundry detergent volumes across North and Latin America are expected to support margins in its surfactant business in 2016.
Ferro Corp. FOE
This Ohio-based specialty chemicals maker has raked in positive earnings surprises in 3 of the last 4 quarters with an average beat of around 13.7%. This Zacks Rank #1 stock is looking to expand its portfolio through both organic and inorganic means. It recently snapped up a 100% stake in Istanbul-based Ferer. The buyout, which reinforces the company's presence in Turkey, is expected to generate incremental sales of around $3 million in 2016.
PPG Industries, Inc. PPG
Our next pick in the space is Pittsburgh-based PPG Industries, sporting a Zacks Rank #2. This coatings giant has delivered positive earnings surprises in 3 of the last 4 quarters, with an average beat of around 2.7%. The stock has a long-term expected earnings per share (EPS) growth rate of roughly 8.7%.
PPG Industries has a diversified base of products and markets, and looks to grow its businesses strategically along with controlling costs. It is benefiting from and synergies of acquisitions (including Comex) and healthy momentum across automotive OEM, automotive refinish and aerospace markets. PPG Industries should also gain from its aggressive cost cutting and restructuring actions.
Olin Corp. OLN
Missouri-based chlor alkali products maker Olin, a Zacks Rank #2 stock, has delivered positive earnings surprises in 3 of the trailing 4 quarters. Its long-term projected EPS growth rate is 5%.
Olin, in Oct 2015, completed its purchase of Dow Chemical's DOW U.S. Gulf Coast chlor-alkali and vinyl, global chlorinated organics and global epoxy businesses. With this major acquisition, Olin has become a global leader in chlorine-based products. It is now the biggest integrated chlor-alkali maker with a diverse product portfolio and geographic base. The company also expects to realize significant annual cost synergies from the buyout.
Axiall Corp. AXLL
Lastly, Georgia-based Axiall is another good choice with a Zacks Rank #2. The stock delivered a whopping positive earnings surprise of around 435% in the last reported quarter. Its long-term projected EPS growth rate is 5.1%.
Axiall remains focused on streamlining its operations and improving its cost structure. The company and its partner Lotte Chemical recently reached a final investment decision to build an ethane-based ethylene plant in Lake Charles, LA. Investment in this major ethane cracker project is in sync with Axiall's strategy to improve its ethylene cost position in its chlor-alkali business.
Final Thoughts
The chemical industry is still feeling the bite of slowdown in China, sluggishness in some parts of Europe and the impacts of the oil price slump and a stronger dollar. However, a gradually healing U.S. economy, strong momentum in the automotive space and positive trends across the construction markets are expected to keep the industry on the path to recovery in 2016.
Amid this scenario, it would be a prudent idea to zero in on the above-mentioned chemical names with healthy prospects if you are looking to beef up your returns this year.
Read more: http://www.nasdaq.com/article/5-chemical-stocks-to-enrich-your-portfolio-in-2016-cm565914#ixzz3xIurxgoN -
(ACC Mentioned) Oil Rout Changes Chemicals Landscape
Jan 15, 2016 | ICIS News
By Will Beacham
As oil continues to collapse past the $30/bbl mark, the global chemical industry faces some new realities if - as looks likely - these low prices persist.
Although the heads of some oil companies such as Shell’s Ben van Beurden are still talking up the oil price (he needs a higher price for the proposed $51bn merger with BG Group to make sense), increasing numbers of analysts disagree. International eChem’s Paul Hodges has been predicting $20-30/bbl since August 2014 and he has now been joined by the likes of Goldman Sachs and Morgan Stanley in expecting the rout to continue and low prices to persist for years.
On the supply side the oil price crash has cut the number of US exploratory rigs yet production there has dipped only slightly. Meanwhile once sanctions end sometime this year, Iran could bring daily production to 3.6m bbl/day, around 800,000 barrels a day above current production according to the International Energy Agency. That would be the country’s highest level of crude output since 2011. Iraq is also ramping up production to record levels.
According to Hodges, there is now a vast energy surplus in coal, gas, oil and renewables: “So it’s a market share game, as the Saudis realised when they gave up trying to hold the price 18 months ago. You either sell today, or risk ending up leaving the oil in the ground.”
For the chemical industry, a collapsed oil price levels the playing field in terms of feedstock costs. This is good news for naphtha-based regions such as Europe, which had been suffering from years of decline with an oil price so much higher than natural gas and ethane prices elsewhere.
As the global ethylene cost curve flattens, we can expect this to be a positive tailwind for naphtha-based producers, especially as they enjoy a broader production portfolio of co-products than their ethane-based peers.
Analysts at HSBC said in January that as oil fell faster than chemical prices in 2015, positive net pricing was the largest driver of operating earnings growth for the European chemical industry.
The explosion of US shale oil and gas production, meanwhile, gave US chemical producers a new and huge advantage over their peers in Europe and Asia. With typical, entrepreneurial zeal the industry grasped this opportunity with a tidal wave of capacity additions planned or under construction with startups from 2016.
However many of these investment decisions were based on oil at up to $100/bbl, giving a big differential between oil and gas values. There may well be delays or cancellations now that oil has collapsed and demand growth has slowed.
Low oil is having a disastrous effect on the finances of oil companies, large and small. One estimate suggests that 250,000 jobs have been shed globally in the oil and gas sector since the price collapse began.
Investment by oil majors is being severely curtailed, and this will impact their integrated chemicals operations. We can expect to see more project cancellations or delays in 2016.
Looking at demand, China’s economy looks set to endure permanently lower rates of economic growth as its population ages and economy rebalances. This means one of the world’s key drivers of oil and energy demand growth will need less fossil fuels, especially as the government there pushes renewables.
Elsewhere, there are signs of slowing of economic growth in the US and many emerging markets are also slowing, especially those reliant on oil export income. Although lower oil prices leave more money in consumers’ pockets, there are few signs of this feeding through to more consumer spending at present.
Demand remains the driving factor for chemicals, with trade group Cefic forecasting only a 1% rise in chemicals production across Europe in 2016 because of sluggish domestic and international demand. The American Chemistry Council remains more bullish with a forecast of 3.1% for chemical production (excluding pharmaceuticals) in 2016 after a 3.8% gain in 2015.
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(ACC Mentioned) Letters: Reusable Bags Are Safe, Eco-Friendly
Jan 14, 2016 | The Advocate
By Max Ciolino
This letter is in response to Mr. Morrison’s letter published on Dec. 31, titled “Reusable bags not a great alternative.” We are a coalition of local business and nonprofit leaders committed to building a stronger, safer and more resilient New Orleans through a Reusable Bag Ordinance. Mr. Morrison used a flawed 2010 plastics industry-sponsored study to make the specious argument that reusable bags present health risks while completely ignoring the enormous economic, health and environmental benefits they provide.
The study Mr. Morrison cites was funded by the American Chemistry Council, a trade association representing North American chemical and plastic bag manufacturers, which used a very small sample set of 84 reusable bags.
While it is true that microbes were found on over half the bags sampled, 97 percent of the individuals interviewed for the study stated they never washed their bags. Even the lead author of that study, University of Arizona microbiologist Michael Gerba, states the findings do not suggest that reusable bags present any threat of outbreak of disease.
Yes, reusable bags may very well contain bacteria after use, just as our kitchen cutting boards and countertops do. A couple of common-sense habits will eliminate the germs. First, designate reusables for just the grocery store. Second, wash regularly. Like dishes, clothes and other items we use repeatedly, reusable bags require regular cleaning to prevent the threat of germs and bacterial growth.
While there are no real health concerns related to using reusable bags, consumers should be concerned about the health risks posed by plastic bags. New Orleans is an island surrounded by water: the Mississippi River, Lake Pontchartrain, the Gulf of Mexico, not to mention the many bayous and lagoons it contains. As a water city, we have a greater responsibility to protect our vital resources from the pollution of single-use disposables.
Plastic bags clog our sewers, litter our lakes, choke birds and marine life that commonly mistake it for food and ultimately contaminate our food chain and threaten the livelihoods of those working in our seafood industry.
Statistics show that one reusable bag can replace 700 single-use, disposable bags. When you bring your own bags to the store, think about how many plastic bags you are keeping out of your streets, parks and waterways.
We strongly believe reusable bags are not only safe but a great alternative to single-use, plastic bags. To learn more about this important issue, please join us on Jan. 21 from 5:30 p.m. to 7:30 p.m. at Habitat for Humanity ReStore, 2900 Elysian Fields Ave., for a free, educational public forum. We hope to see you there!
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2015 in the US Congress: Dids and Didn'ts
Jan 14, 2016 | Plastics News
By Gayle S. Putrich
Though plenty of people outside of the Beltway think of the 114th U.S. Congress as a “do-nothing Congress” (not to be confused with the actual Do-Nothing Congress, which in fact passed 906 bills into law from 1947-49, in spite of what President Harry Truman had to say), lawmakers did actually manage to get a few things done in 2015 — much of it to the pleasure of the plastics industry and almost all of it at the last minute.
That said, there is plenty left to do before Congress adjourns. And since 2016 is an election year, with races back home and the added distraction of the presidential primaries, members have even less time than usual to get it all done.
Microbeads
In 2015 — barely — the House and Senate did come to an agreement to ban plastic microbeads from all rinse-off cosmetics and toothpastes made or sold in the United States by July 2019 (PL 114-114). Even the plastics industry was behind the ban after studies showed the 5-millimeter or smaller polyethylene bits, billed by cosmetics companies as gentle exfoliators, slide straight through municipal water treatment facilities and directly into waterways.
But the bill didn’t include provisions for “leave-on” cosmetic products or household cleaners, which could prompt a second round of microbead legislation in the coming months to close possible loopholes.
Taxing and spending
For the first time in six years, the House and Senate did manage to get all 12 appropriations bills out of their respective committees. With the clock ticking on the end of the year, they didn’t get passed individually. Instead they were rolled into a massive spending and tax incentive package that was passed instead (PL 114-113).
Lawmakers didn’t give the U.S. Environmental Protection Agency the amount of money the Obama Administration requested, shorting EPA by about $500 million with the intent of “reining in” the agency and preventing it from “operating outside its mission,” according to Congressional Republicans.
The tax incentives did include a pile of provisions the plastics industry, and small business owners in general, can crow about. It includes a two-year temporary repeal on the 2.3 percent excise tax on medical devices that went into effect with the Affordable Care Act, aka ObamaCare, in January 2013.
After 15 extensions since it was first introduced in 1981, the new law makes permanent and expands the R&D Tax Credit, so plastics processors with less than $50 million in gross receipts can now claim the credit against their Alternative Minimum Tax (AMT) and the credit is now opened up to start-ups, allowing businesses with gross receipts of less than $5 million per year to take the credit up to $250,000 against their payroll taxes up to five years on any research or supply costs while working toward innovation.
Also made permanent? Small businesses can breathe easy with permission to expense up to $500,000 in capital expenditures per year. FYI: for the plastics industry, the federal government considers any resin maker with fewer than 750 employees a “small business.” For plastics manufacturing and mold makers, it’s fewer than 500 people but for plastics products wholesalers, any more than 100 employees and you’re not small enough for the feds.
TSCA
One big, last-minute surprise from the Senate was to squeeze in floor passage of a bill that would update a decades-old law regulating chemical manufacture, transportation and use. So after a long, bumpy road, both the House (HR 2576) and the Senate (S 697) did manage to pass their own overhauls of the Toxic Substances Control Act (TSCA). Even Sen. Barbara Boxer (D-Calif.) eventually got on board to allow the Dec. 17 voice vote, saying in a statement that the bill has “vastly improved over the original bill” and that she will be “intimately involved,” presumably fending off attempts to pre-empt existing state chemical regulations with a new federal law.
But the late-in-the-game approval from the Senate means they didn’t even get started on reconciling the two very different bills (the House version being just over 200 pages and the Senate version about 350, just for starters). Conference committee deliberations are expected to kick off the week of Jan. 11.
Medical devices
Finally, one bill that didn’t make it through the Senate — or even make it onto most folks’ radar — in 2015 is expected to get a lot of attention in the coming year and could have a serious impact on the medical device market. The 21st Century Cures Act, passed by the House (HR 6) in July and still sitting in committee in the Senate, would make it significantly faster and easier for medical devices to get to market. But consumer groups are in an uproar after reports that lobbyists, specifically device trade group AdvaMed, and the U.S. Food and Drug Administration worked even more closely than is usually acceptable to craft the bill together.
At least the debate won’t be boring.
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Great Lakes Gull Eggs Contaminated by Non-Stick Chemicals
Jan 14, 2016 | Environmental Working Group
By Logan Malik
Perfluorinated compounds, or PFCs – the class of chemicals used in DuPont’s Teflon, 3M’s Scotchgard and many other products – pollute the bodies of people and animals in every corner of the world. In the latest findings, Canadian scientists have detected PFCs in virtually all of the eggs of herring gulls sampled in the Great Lakes region.
Researchers from the National Wildlife Research Center in Ottawa report that measurable concentrations of PFCs were found in more than 97 percent of the herring gull eggs they collected in 2012-2013 from sites in Canada and the U.S.
PFCs are used to make heat-resistant, stain-resistant and water-resistant materials. They build up in living things and the environment, and in people can cause cancer, birth defects, heart disease and other diseases. Studies have also found that in animals PFCs can cause tumor growth, reproductive problems and disrupt liver and thyroid function.
Concentrations varied depending on location in the region, with the highest levels found near cities.
In 2010, the U.S. Centers for Disease Control and Prevention found PFCs in the blood of almost all Americans, with the average level less than 10 parts per billion, or ppb. In the gull eggs, the Canadian researchers found concentrations of more than a dozen types of PFCs ranging as high as 113 ppb. This suggests that people in the Great Lakes may be at heightened risk of exposure from eating fish or other wildlife that live and drink from these highly polluted lakes.
So-called “long-chain” PFCs, with molecules containing eight carbon atoms, have been largely phased out in the U.S. by the end of 2015. However, chemical companies replaced them with dozens of short-chain chemicals that may have some of the same health hazards but have not been adequately tested for safety. Many of the chemicals found in the gull eggs were short-chain PFCs, indicating that like their predecessors these repolacements are building up in living things.
One way people in the Great Lakes can limit their exposure to PFCs is to reduce the amount of fish and other wildlife from that area to no more than one meal a week. For others, EWG advises staying away from pre-treated carpets, non-stick pans and water-repellent outdoor equipment. To learn more, check out our guide to avoiding PFCs.
But the long-term solution to pollution from PFCs and other toxic chemicals is to pass stronger regulations.
This month the Food and Drug Administration banned three long-chain perfluorinated compounds from food packaging, ten years after EWG and other environmental health groups sounded alarms over the safety of similar chemicals. Last year, Congress passed two bills to update the nation’s badly broken and outdated chemicals law, the Toxic Substances Control Act. But neither “reform” bill goes nearly far enough. Real TSCA reform would ensure that both new chemicals and those already on the market are safe and that the most dangerous substances are quickly reviewed and regulated.
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DOJ to Help CSB Get Exxon Mobil's PSM Documents
Jan 15, 2016 | BNA Daily Environment Report
By Stephen Lee
The Department of Justice has agreed to compel Exxon Mobil Corp. to provide information about a Feb. 18, 2015, explosion at the company's oil refinery in Torrance, Calif.
To date, Exxon Mobil has either ignored or given only partial responses to nearly half of the U.S. Chemical Safety and Hazard Investigation Board's 148 subpoena requests. The requests concern a near-miss incident at the time of the explosion that could have released highly toxic hydrofluoric acid into the community.
During a sometimes heated Jan. 13 public meeting at Torrance City Hall, Brian Ablett, manager of Exxon Mobil's Torrance refinery, told the CSB board members that the company hasn't responded because it thinks the board is overreaching in its document requests.
Now, however, the Justice Department has determined that the CSB's jurisdiction does cover near misses, said agency chief Vanessa Sutherland, “because our core mission is to prevent.”
According to a CSB spokeswoman, the U.S. Attorney's Office has authorized filing a complaint on CSB's behalf in federal court to force Exxon Mobil to turn over the documents the agency has subpoenaed.
The CSB was notified of Justice's decision Jan. 12, the spokeswoman told Bloomberg BNA.
Jurisdictional Fight
Despite its resistance, Exxon Mobil has already provided more than 340,000 pages of documents and images to various agencies, including 136,000 pages to CSB alone, Ablett said. The company's employees have also participated in more than 150 witness interviews, including 67 with CSB.
At one point during the meeting, CSB Board Member Rick Engler asked Ablett why Exxon Mobil appears to be sharing information with elected officials about how it could change its work processes to avoid future disasters, but not with the CSB.
In response, Ablett said the company has offered to meet with the CSB board members to reach a conclusion about the subpoenas “and an alignment on where we go.”
Questions About Near Miss
Ablett also denied that the near miss—which happened when an 80,000-pound piece of debris flew out of the explosion and slammed into scaffolding more than 100 feet away, narrowly missing a tank containing tens of thousands of pounds of modified hydrofluoric acid—could have resulted in a toxic release, since the walls of the vessel were four inches thick.
Board Member Kristen Kulinowski raised questions about that claim, suggesting that Ablett was downplaying the amount of damage a flying 80,000-pound object could cause.
Two Exxon Mobil workers were injured in the 2015 blast in the refinery's electrostatic precipitator, a piece of equipment that controls air pollution .
Hydrocarbons had accumulated inside the electrostatic precipitator over a period of several days, leading to a blast that spread catalyst dust as far as a mile away, the CSB found.
No Risk, Exxon Mobil Says
Ablett also claimed that, during Exxon Mobil's internal investigation, the company found no evidence that the explosion and dust spread posed a risk to the community.
The refinery has layers of protections in place that would mitigate the impact of any release, Ablett said.
He further said the company has changed some of its procedures, including the way it de-energizes the electrostatic precipitator when there's a risk of hydrocarbons in the unit, and has made various improvements to its equipment.
“Be assured, we believe we understand the cause of the February 18 incident, we have applied those lessons diligently,” Ablett said.
Several audience members laughed when Ablett talked about how highly Exxon Mobil values safety, prompting him to pause and then respond angrily, “I can repeat that, if you like.”
“Oh, we heard you,” one member of the public replied, triggering the longest applause break of the night.
Grassroots Demand for More Research
Also during the meeting, Sally Hayati, a member of the grassroots Torrance Refinery Action Alliance, called on the CSB board members to investigate Exxon Mobil's use of a chemical known as modified hydrofluoric acid.
Exxon Mobil developed the chemical more than 20 years ago in response to concerns about regular hydrofluoric acid, which Sutherland said can cause severe damage to human respiratory systems, skin and bones, potentially leading to death.
Modified hydrofluoric acid is allegedly safer because, when released, it's designed to fall to the ground harmlessly rather than spreading. But Hayati said not enough is known about how the substance actually works.
Local press reports have alleged that Torrance city officials knew 15 years ago that Exxon Mobil was reducing the percentage of an additive to the acid that makes it safer, but failed to notify the community.
During the meeting, Torrance Mayor Patrick Furey vigorously denied the coverup charges.
Also during the meeting, Rep. Ted Lieu (D-Calif.) showed a map displaying a “kill zone” with a radius of two miles should 5,200 pounds of modified hydrofluoric acid be released. Within a three-mile radius of the Torrance refinery are 333,000 residents, 71 schools and eight hospitals, according to the CSB.
Tense Exchanges
When Sutherland called upon members of the public to speak, the meeting devolved into a series of often testy exchanges between Exxon Mobil employees and Torrance residents.
Almost three dozen Exxon Mobil workers and contractors—more than half the speakers who took to the podium—took turns vehemently insisting that the refinery is safe.
“Sometimes management tells employees that you need to testify or they will shut us down and you loose [sic] your job,” one anonymous commenter wrote on the CSB's bulletin board.
“They're not defending Exxon,” wrote another commenter. “That ship sailed and the refinery is already sold to PBF Energy. They're defending their own performance as citizens and operations of the refinery.”
PBF hopes to acquire the refinery, which is not currently operating, later this year, after various repairs are finished.
At another point during the public comment period, Donna Duperron, president of the Torrance Chamber of Commerce, said the refinery provides thousands of good jobs.
In response, Jesse Marquez, executive director of a community group called Coalition for a Safe Environment, said that Exxon Mobil's decision to postpone required maintenance should qualify as criminal negligence, and Torrance resident Joe Galliani said the company was “stonewalling subpoenas like mafia dons.”
Deviations From Standard Procedures
The blast was sparked by a chain of process safety management problems, including deviations from existing procedures, Sutherland said during a news conference earlier in the day.
In changing its procedures, Exxon Mobil was found to have relied on an outdated, three-year-old written variance from its standard procedures. The company's managers had not carried out a management-of-change review before implementing the 2012 variance, even though conditions in the workplace had changed since it was written, said Mark Wingard, the board's investigator in charge.
He further said Exxon Mobil lacked other safeguards to minimize the threat of a combustible mixture igniting in the electrostatic precipitator.
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Exxon Mobil Asserts Torrance Plant Is Safe
Jan 14, 2016 | LA Times
By Ivan Penn
Exxon Mobil Corp. has stepped up its defense of the company's management of the Torrance oil refinery and response to an explosion there last February.
Speaking to the U.S. Chemical Safety Board during a public hearing Wednesday night, Torrance refinery manager Brian Ablett said Exxon Mobil has conducted its own investigations of the Feb. 18 explosion and “didn't find any evidence that the Feb. 18 incident posed any danger to the community.”
“Nothing, nothing is more important to Exxon Mobil than the safety of our employees … and our neighbors,” Ablett said.
The Chemical Safety Board held the hearing at Torrance City Hall in part to release findings from its investigation into the refinery explosion, which has been a major contributor to high gasoline prices in the Los Angeles area.
The investigation found multiple safety-management problems that led to the incident and endangered the lives of “many community members.” The oversight agency also said that Exxon Mobil has ignored or given incomplete responses to 49% of its subpoena requests.
Ablett accused the Chemical Safety Board of “overreach” in its request for documents. “It's important to remember that the CSB does not have unlimited jurisdiction,” he said.
But Vanessa Allen Sutherland, the board's chairwoman, said that “our jurisdiction is very broad. Our goal is to learn as much as possible.”
U.S. Rep. Ted Lieu (D-Torrance) said during the hearing that he was troubled by Exxon Mobil's refusal to respond to all requests for documents and information.
“Refineries are not supposed to explode,” Lieu said. “What is it that they have to hide?”
Exxon Mobil is selling the refinery to PBF Energy, which has said the refinery must be repaired before the deal closes.
Wednesday night's hearing drew a standing-room-only crowd of more than 300. Many said they were employees or contractors at the refinery, and they defended Exxon Mobil.
Michelle Livergood, 53, who has lived in Torrance for 44 years, said Exxon Mobil officials once considered her “their worst nightmare.” But now a contractor at the plant, Livergood said she has learned how important safety is to the company.
“We work every day to be safe,” Livergood testified. “I do enjoy working there, and they're good people.”
Some residents criticized the refinery as a threat to the community that should be closed.
In addition to health and safety concerns the refinery might pose to nearby residents, emissions from the plant continue to contribute to climate change, Exxon Mobil's critics said.
“That refinery has to go,” said 58-year-old Joe Galliani, who has lived in Torrance for 23 years and works on climate issues for 350.org. “Exxon has no credibility in this city or in this country.”
The Torrance plant accounts for 10% of the state's refined gasoline capacity and 20% in Southern California. Since the explosion, Exxon Mobil has operated the plant at less than 20% normal capacity. That has contributed to L.A. region gasoline prices that have reached as high as $1.50 above the national average.
On Thursday, the U.S. average for a gallon of regular was $1.93. In the L.A. area the price was $2.99, according to AAA.
The high prices, strongly criticized by advocacy organization Consumer Watchdog, have helped other oil refiners' profits.
California gas prices typically run higher than the rest of the nation because of the mandated special blend of less-polluting fuel as well as higher taxes and fees. But the refinery outages have created inventory shortages that caused an even wider gap.
Lieu said many people don't want to see the refinery close, but he said more has to be done to ensure public safety.
“We want it to go back into full operation,” Lieu said. “We also want it to be safe.”
In addition to destroying the plant's pollution control system, the explosion spewed debris that nearly struck a tank filled with hydrofluoric acid. If the tank had ruptured and the acid had leaked out, those exposed could have suffered severe injuries or been killed.
“A near miss is an extraordinary event,” said Jerad Denton, a lawyer and investigator with the Chemical Safety Board.
Investigators said a lack of proper analysis of conditions, proper safeguards and timely maintenance of equipment contributed to the explosion.
The state is working on setting standards and requirements that ensure proper analysis to help prevent the kinds of troubles that led to the Torrance explosion.
Chemical Safety Board investigators said current California safety management guidelines lack important safety requirements, but if the proposed reforms were in place, they would likely have prevented the explosion.
Even so, Ablett dismissed reports about threats to public health and safety from the explosion.
“Contrary to speculation and the worst-case scenarios, they simply don't take into account the procedures we have in place,” Ablett said.
Chemical Safety Board member Kristen Kulinowski said she found it difficult to believe Exxon Mobil's defense that the tank containing hydrofluoric acid was not vulnerable to debris weighing tens of thousands of pounds hurtling through the air.
“I having a little hard time with that scenario,” Kulinowski said.
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Railroads Defend Automated Train Delay
Jan 14, 2016 | The Hill - Transportation
By Keith Laing
Railroads are defending a delay in the implementation of automated train technology after the National Transportation Safety Board (NTSB) included it on its wish list for 2016 safety improvements.
The NTSB called for the installation of automated train technology known as positive train control that would prevent passenger and freight rail crashes to be completed as soon as possible in its annual "Most Wanted" list released on Wednesday.
The mandate for technology to fully implemented nationwide was delayed until 2020 by Congress last year. The Association of American Railroads (AAR) said the three-year automated delay is a reasonable extension that gives railroads more time to comply with the new federal rules.
“The freight rail industry shares the NTSB’s commitment to safety as our industry is working as quickly as possible to get PTC installed across the country and providing the additional safety benefits it is designed to do," the group said in a statement that was provided to The Hill.
"Positive Train Control is a full-time focus of the freight rail industry and we are committed to getting the technology fully installed by 2018 with any final testing for full coast-to-coast operations completed by 2020, in accordance with the extension, which ensures PTC is safely and effectively tested nationwide," the group continued.
The NTSB said Wednesday that Congress should have forced railroad companies to meet the original 2015 deadline for installing the automated train system.
“Every PTC-preventable accident, death, and injury on tracks and trains affected by the law will be a direct result of the missed 2015 deadline and the delayed implementation of this life-saving technology,” NTSB Chairman Christopher Hart said in a statement as he was unveiling the NTSB's 2016 "Most Wanted" list.
The mandate was set after a commuter rail crash in California in 2008, but railroads successfully lobbied lawmakers last year to give them more time.
The AAR said the automated system has been more complicated to install than lawmakers and regulators initially expected when the mandate was first signed into law in 2008.
“The reality is this technology is not-off-the shelf, it had to be developed from scratch and isn’t just about plugging in or turning on components, it is a complex step-by-step process, both in terms of safety engineering and implementation," the group said.
"The freight rail industry’s emphasis since 2008 has been to make sure PTC is done right, which is why field-testing is essential for safely deploying the technology and is a critical focus for the rail industry," the group continued. "The importance of proper testing is underscored with the industry experiencing failure rates of up to 40 percent as railroads install and test PTC equipment.”
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Pause Urged for Federal Onshore Oil, Gas Leasing
Jan 15, 2016 | BNA Daily Environment Report
By Alan Kovski
President Barack Obama should order the Interior Department to stop new leasing of onshore federal land for oil and natural gas drilling until a study is completed on the climate impacts of the leasing program, six environmental activist groups said in a Jan. 14 letter to the president.
The groups said state offices of Interior's leasing agency, the Bureau of Land Management, refuse to quantify climate emissions from oil and gas development activities and ignore the climate costs from these activities to society.
“Five years ago, the Council on Environmental Quality published draft guidance on evaluating the climate change impacts of federal programs,” the groups said. “The CEQ guidance has never been finalized and the climate impacts of the federal oil and gas program have never been studied.”
The groups referenced the “ever-louder calls” of activists to “keep it in the ground,” meaning restrict the production of fossil fuels.
The letter was signed by representatives of Earthjustice, Friends of the Earth, Greenpeace USA, Rainforest Action Network, Waterkeeper Alliance and WildEarth Guardians.
Emission Volumes Cited
The groups said the federal onshore oil and gas program is responsible annually for emissions of more than 200 million tons of carbon dioxide-equivalent, or 4 percent of all U.S. emissions from all energy sources.
The trend under the Obama administration over the fiscal years 2009-2014 has been toward less onshore production of natural gas and more onshore production of oil, as documented by the Congressional Research Service. At the same time, production on private and state lands has raced ahead, causing the federal share of both oil and gas production to decline sharply.
The service attributed the lagging of federal production behind other production partly to the more favorable geology of nonfederal lands and partly to the relative ease of nonfederal leasing.
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Greens Call For Climate Review Of Oil, Gas Drilling Program
Jan 14, 2016 | The Hill - E2 Wire
By Devin Henry
An assortment of green groups is asking the Obama administration to review the environmental impact of onshore oil and gas drilling.
In a Thursday letter to President Obama, the groups said the Interior Department should freeze all new leases for gas and oil drilling on federal land while it assesses the climate change implications of those activities.“The federal oil and gas program can withstand a leasing timeout while climate impacts are being studied,” the groups wrote.
“With that study in hand, it will become possible for you and your successors in leadership to determine what form that program should take in a climate-constrained world.”
Friends of the Earth, Greenpeace USA, the Rainforest Action Network, Waterkeeper Alliance and WildEarth Guardians all signed the letter to Obama.
The letter is part of the burgeoning “keep it in the ground” movement, which is pushing Obama and other leaders to stop extracting fossil fuels from federal lands.
Sen. Bernie Sanders (I-Vt.), a Democratic presidential contender, has introduced a bill to do just that. While the Obama administration has declined to stop all federal energy extraction, the president did justify the denial of the Keystone XL pipeline, in part, by saying more fuels need to stay underground in the future.
Obama said in his State of the Union address Tuesday that he is looking to tweak the leasing rates oil and coal companies pay when drilling or mining on federal land.
“Rather than subsidize the past, we should invest in the future — especially in communities that rely on fossil fuels,” Obama told Congress. “That’s why I’m going to push to change the way we manage our oil and coal resources, so that they better reflect the costs they impose on taxpayers and our planet.”
In their letter, the groups encouraged him to go even further.
“You have championed the pressing need for climate action on the world stage and have recognized the imperative to keep some fossil fuels in the ground to leave a hospitable planet for future generations,” they wrote.
“For the federal oil and gas program, there is a crucial step you can take today that will align an outdated energy policy with your climate policy leadership.”
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BLM Postpones Another Lease Sale; Enviros Claim Victory
Jan 14, 2016 | E&E News PM
By Phil Taylor
The Bureau of Land Management in late December quietly postponed its Jan. 26 oil and gas lease sale in Billings, Mont., marking the third time since November that the agency has pushed back an auction of federally owned minerals.
The decision, which was hailed by environmental groups, has fueled more speculation over whether the Obama administration has formal plans to ratchet back lands it makes available for fossil fuel development in order to reduce downstream emissions of greenhouse gases.
According to a Dec. 22, 2015, letter to stakeholders from James Sparks, the acting associate state director for BLM's Montana and Dakotas office, the sale was postponed "because there is not enough time to coordinate an appropriate venue."
The sale was to include one parcel in North Dakota, a tiny offering compared to historical BLM sales. It "should be available at a future date," the letter reads.
It's the same reason BLM gave after postponing its Dec. 10, 2015, oil and gas lease sale in Washington, D.C., and a Nov. 17, 2015, sale in Salt Lake City: Not enough space in the auction room.
The Utah sale has been rescheduled to Feb. 16, and the D.C. sale was consolidated into the Eastern states office's next quarterly lease sale March 17.
Environmental activists from the "Keep It in the Ground" movement, which is seeking to halt all new leasing of federally owned oil, gas and coal, have been showing up to demonstrate outside BLM's auction sites around the country, and the agency says it wants to accommodate them.
Al Nash, a BLM spokesman in Billings, said the agency's headquarters has said it is working on "new guidelines" for selecting facilities for lease sales, but the Montana office has not received them yet.
"Given the fact that we had one parcel up for sale, we found the most prudent approach was to postpone," he said.
Craig Leff, a spokesman in the D.C. office, said there's no formal guidance in the pipeline but that state offices have been instructed to be mindful of the growing public interest in leasing when it selects auction sites.
"We go out of our way to make all of these oil and gas lease sales open to the public," he said. "We wanted to find venues that could accommodate the larger crowds and also ensure safety."
Yet that explanation has been unsatisfactory to more than a dozen House Republicans led by House Natural Resources Chairman Rob Bishop (R-Utah), who sent a letter to the Interior Department last month noting that it has no legal obligation to ensure the general public can attend lease sales (E&E Daily, Dec. 17, 2015).
"Hence, we question the validity of the excuse -- that the BLM needed a larger venue to accommodate increased interest," the lawmakers wrote.
News of the latest postponement comes just days after President Obama said in his State of the Union address that he wants to "change the way we manage our oil and coal resources so that they better reflect the costs they impose on taxpayers and our planet," a somewhat cryptic statement that could signal plans to scale back the nation's fossil fuel leasing programs as part of the administration's fight against climate change (ClimateWire, Jan. 14).
Leff said BLM's postponements have nothing to do with climate change.
Environmental groups don't see it that way.
"This third delay of an oil and gas lease sale is a clear sign that the 'keep it in the ground' movement is gaining traction and building momentum towards keeping dirty fossil fuels in the ground," said a statement today by Friends of the Earth, a key driver of the movement. "Postponement of one oil and gas lease sale after another is a positive trend, but President Obama should demonstrate climate leadership and put a stop to all future fossil fuel lease sales."
Marissa Knodel, a climate campaigner for Friends of the Earth, said the group had just started planning a protest for the Jan. 26 lease sale but then discovered it had been postponed.
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Reclassifying Gas Wells in Texas May Cut State Tax Revenue
Jan 15, 2016 | BNA Daily Environment Report
By Nushin Huq
Tax incentives for natural gas wells using hydraulic fracturing are causing concern for Texas Comptroller Glenn Hegar, because an increasing number of reclassifications may lead to diminished revenues for the state.
In 2015, the number of wells that were reclassified from oil to natural gas more than tripled, according to the Texas Railroad Commission, which regulates the oil and gas industry and classifies wells in the state.
Though most wells produce both oil and natural gas, wells in Texas are registered as either oil or natural gas wells. Natural gas produced from wells that are classified as “high cost” natural gas wells is eligible for a severance tax rate reduction, which is determined on a sliding scale, Todd Lowther, a partner at Thompson & Knight LLP, told Bloomberg BNA.
“The tax that otherwise would apply is 7.5 percent,” Lowther said. “So the sliding scale is from zero to 7.4 percent, based on the nature of the well being drilled.”
The tax break is only on the natural gas produced, Lowther explained. Any oil produced from that same well doesn't receive the tax break.
Texas Railroad Commission statistics show a steep increase in well reclassifications over the past three years. From September 2014 to September 2015, the number of wells that were reclassified from oil to natural gas was 844, compared with 246 reclassifications in the previous-year period. From September 2012 to September 2013, there were only 145 oil-to-gas reclassifications. The numbers of reclassifications of natural gas wells to oil wells for the same time periods were 239, 100 and 68, respectively.
“If such reclassifications were expanded, it could adversely affect revenues as a result of refunds and reduced natural gas tax collections,” Hegar said in an October 2015 state revenue estimate.
Legislative Help
Once a well is designated a “high cost” well, the designation can last up to 10 years or 50 percent of the cost to drill the well.
“If you're talking about a $9 million well, that's a $4.5 million incentive,” said Stephen Long, a tax partner at Baker & McKenzie LLP.
Severance tax relief for what were then considered “high cost” drilling operations was introduced in the 1980s to help the struggling Texas economy, especially the oil and gas sector. These wells were high cost relative to what was common at the time, Lowther said.
“The legislation that was introduced wasn't passed into law until 1996,” he said. “So it was kicked around for a while and when oil and gas was low for a significant period of time, they decided they needed some incentive to get things going on.”
Refund Ambiguity
There is some ambiguity around whether the reclassification of wells will allow producers to obtain a tax refund, Long said. Traditionally, a producer files with the Texas Railroad Commission for the classification it is seeking when it first begins drilling the well. Once the classification has been approved, the well is treated as having had that classification since the well was first drilled. It is retroactive and refunds can be paid out.
“The question here, and I think it's really an unresolved question, is whether a well was producing oil but is later reclassified as a gas well, would a refund apply in that case,” Long said. “Some taxpayers are taking the position that would be the case, and I think they have a pretty good reason to take that position. Clearly the comptroller has some concerns in that area.”
Long added that he hasn't seen the comptroller taking a position on the issue of refunding the reclassifications.
“All of the public comments I've seen is that he's aware of the issue and he wants the Legislature to be aware that it's going to affect revenue estimates,” Long said.
Eagle Ford Shale
The wells at issue are primarily in the Eagle Ford Shale play, in southern Texas, Long said. It is currently the most active play in Texas.
“When the comptroller put out his estimate that the reclassifications would cost the state $250 million a year, that's what he was basing his estimate off of, is the wells in the Eagle Ford,” Long said.
When the severance tax incentive statute was crafted, it used a body of language from federal law to define what constitutes a high-cost natural gas well. That federal law has since been repealed, so the definition no longer applies for federal purposes, but has remained unchanged in state statute, Lowther said.
“It describes the high cost of a well as pertaining to certain depths, certain geological formations, primarily shale,” Lowther said. “Before we had the technology in the early 2000s to do all the horizontal drilling, all the [hydraulic fracturing] we see now, it was viewed as a much more high-cost, maybe even cost-prohibitive method of extracting natural gas.”
Factors for Well Switching
Most wells in Texas were initially registered as oil wells, James LeBas, an economist and consultant to the Texas Oil and Gas Association, told Bloomberg BNA.
“Drilling in these formations is not necessarily knowable at the time you complete the well, whether you have an oil well or gas well,” LeBlas said. “Oil is the default, and a lot of these wells were filed as oil, but the years that followed realized, ‘We had a gas well.’ So what they're doing is going back and correcting those, in some cases, back to the original date of completion.”
He added that while there are certainly tax reasons for companies to categorize their wells as natural gas wells, there are other reasons as well. There might be spacing issues, or contractual reasons with respect to the royalty interest owners, LeBlas explained.
“The big lump, I think, was attributable to a large producer that had been sort of accumulating their requests and then they finally got washed through by the commission by one or two chunks,” LeBlas said, referring to the 844 reclassifications in the year ending September 2015. “It is true that there is more now than there was 10 years ago.”
Railroad Commission Approval
In order for a well to be classified or reclassified as a high-cost natural gas well, the operator must first obtain approval from the Texas Railroad Commission. The commission examines certain criteria to establish whether a well is indeed gas or oil, LeBlas said. The commission uses an oil-to-gas ratio as well tests to determine if a well can be classified as natural gas well.
“In my opinion, a great majority of these are correcting what they should have been all along,” LeBlas said.
Oil Boom and Bust
The price of oil may have also played a role in the recent waves of reclassifications, Lowther said.
“I think what's been going on is during the oil boom, if you want to call it that in 2008 and 2009, there was a significant disparity between where oil was on the price curve and where natural gas was on the price curve,” Lowther said. “I think when folks were really excited about oil and running around, on the Eagle Ford in particular, trying to find leasehold positions that had more oil versus gas, there was more excitement about designating a well that they were going out and drilling as an oil well as opposed to a natural gas well.”
The fact that a lot of natural gas was also produced, and the wells could have been designated as high-cost wells, was overlooked.
As the price of oil has slumped, the focus has shifted to people trying to get the “biggest bang for their buck in terms of production,” Lowther said. The tax breaks provide an incentive for producing at these wells instead of just shutting them down until prices increase.
“We may not have seen the end of it,” LeBlas said. “Shale still has a long way to go, and your default is oil and you're still filing as oil, and you find out it's gas later, you owe it to everyone in the process to classify it correctly.”
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EPA Outlines Efficiency Role in Clean Power Plan
Jan 15, 2016 | BNA Daily Environment Report
By Andrew Childers
Energy efficiency will play different roles in states' Clean Power Plan compliance strategies depending on how they choose to implement the carbon dioxide standards for power plants, agency officials said Jan. 14.
While energy efficiency is an option for states as they implement the Clean Power Plan (RIN 2060-AR33), which sets carbon dioxide emissions targets for the power sector in each state, how regulators account for that will vary depending on whether they choose a rate-based or mass-based compliance strategy and whether their plans focus on federally enforceable emissions standards on power plants or incorporate other state-led initiatives to reduce greenhouse gas emissions, EPA officials said on a webinar with state officials and utilities.
The Clean Power Plan “puts energy efficiency front and center of the compliance options,” Denise Mulholland, a senior program manager in the State and Local Climate and Energy Program of the EPA's Office of Atmospheric Programs, said.
But states will need to consider how energy efficiency interacts with other policy choices they make when implementing the rule, she said. Under a mass-based plan, which would set a cap on carbon dioxide emissions from the power sector in a state, energy efficiency plays “more of a complimentary role,” Mulholland said, because compliance is measured in emissions from the smokestack of regulated power plants. However, states could choose to set aside some of the carbon dioxide allowances that would be apportioned to power plants under a mass-based system to provide incentives for energy efficiency or they could auction off the allowances and use the proceeds to fund energy efficiency programs, as is done in the Regional Greenhouse Gas Initiative in the Northeast, she said.
Energy efficiency would play a more prominent role in a rate-based compliance strategy that would limit the amount of carbon dioxide that could be emitted per megawatt-hour of electricity generated. Under a rate-based system, utilities would generate Emission Rate Credits (ERCs) by taking steps to reduce their emissions, Mulholland said. States could also include energy efficiency as an option if they chose a compliance strategy under the so-called “state measures” approach that includes state-led initiatives to reduce carbon dioxide that are not part of their federally enforceable compliance plan.
Verification Key
One of the challenges with energy efficiency as a compliance strategy will be proper evaluation, measurement and verification (EM&V) to demonstrate that the efficiency measures are producing actual carbon dioxide emissions reductions. The EPA has proposed verification requirements as part of a draft federal plan (RIN 2060–AS47) to implement the Clean Power Plan.
Niko Dietsch, from the EPA's State Climate and Energy Program, said the agency plans to periodically review its verification requirements to ensure they comport with the best practices available.
“The last thing we'd like to do is lock in strategies that are not up to date or don't reflect best practices,” he said.
The energy efficiency webinar was the second of three sessions the EPA has scheduled on Clean Power Plan implementation issues. The third and final webinar Jan. 28 will focus on renewable energy's role in the rule (04 DEN A-20, 1/7/16).
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Power Plan Implementation on Environmental Justice Agenda
Jan 15, 2016 | BNA Daily Environment Report
By Rachel Leven
Environmental justice advocates will be pushing the Environmental Protection Agency in 2016 to keep overburdened communities front and center as the agency begins implementing carbon standards for power plants and other major rules.
While some advocates are hoping the EPA will take ground-breaking action to quantify and consider environmental inequalities, the agency seems intent on following a more measured approach moving into the new year.
During Obama's final year in office, the EPA Office of Environmental Justice wants to ensure the policies and tools it developed over the past several years will set a new normal for how the agency's program offices consider environmental justice in the years to come.
“We've really started to see that the agency is starting to fulfill the mandate back from 1994,” Matthew Tejada, director of the EPA's justice office, told Bloomberg BNA, referring to Executive Order 12898, which directed federal agencies to consider vulnerable communities in their work. “We don't want to lose that momentum.”
EJ Frameworks
The EPA plans to release in early 2016 two frameworks to detail the office's priorities for the next several years—the EPA's EJ 2020 Action Agenda and the federal Interagency Working Group for Environmental Justice Action Agenda.
The EJ 2020 Action Agenda, which covers developments through 2020, will include long-term plans for incorporating environmental justice into permitting and short-term plans for updating in the spring EJSCREEN, a tool to help identify potentially overburdened populations, Tejada said.
The federal interagency group's agenda will span 2016 to 2018.
Both agendas are highly anticipated by advocates and state environmental agencies. Alexandra Dunn, executive director and general counsel for the Environmental Council of the States, told Bloomberg BNA states are working closely with the EPA to make sure states understand the results that could be generated by EJSCREEN and to share states' best practices to assess environmental justice in permitting (115 DEN B-1, 6/16/15).
Lisa Garcia, a former senior adviser to the EPA administrator for environmental justice, pointed to the upcoming interagency working group agenda as an opportunity to elevate the group and its power to holistically address community concerns (104 DEN A-16, 6/1/15).
Clean Power Plan
Much of advocates' agendas in 2016 will focus on implementation of recently finalized rules or trying to influence ongoing rulemakings.
Many advocates will be working on the Clean Power Plan (RIN 2060-AR33), which sets state-specific carbon dioxide emissions rates or mass-based targets for each state's power sector (06 DEN B-1, 1/11/16).
Justice advocates will provide input to ongoing federal components of the rulemaking, such as the Clean Energy Incentive Program, a voluntary initiative to get clean energy and energy efficiency efforts in low-income areas, and provide input on states' plans to protect vulnerable communities. Dunn said states are working with the EPA and environmental justice advocates to determine what an “environmental justice approach” may look like for initial state submissions of compliance plans in the fall (176 DEN A-7, 9/11/15).
“We think the fight against climate change has the potential to transform society” for the better, Nicky Sheats, director of Thomas Edison State College's Center for the Urban Environment and a justice advocate, told Bloomberg BNA. The high-profile fight against climate change, including implementing the Clean Power Plan, could be harnessed to not only protect the environment but also to help vulnerable people.
Other Rulemakings, Issues
Garcia, now vice president of litigation for healthy communities at Earthjustice, also said implementation of the farmworker protection standard (RIN 2070-AJ22), which aims to protect individuals who work in the agriculture industry from overexposure to pesticides, would be a priority (08 DEN B-20, 1/13/16).
Jalonne White-Newsome, director of federal policy for WE-ACT for Environmental Justice, told Bloomberg BNA her group will be tracking a rule setting greenhouse gas and fuel efficiency standards for medium- and heavy-duty engines and vehicles, which could protect public health (RIN 2060-AS16).
States will be watching electronic reporting rules that are being developed or implemented by the EPA, which Dunn said would improve transparency and communication for communities.
Garcia also will track developments in the EPA's Office of Civil Rights, which has come under fire for its handling of discrimination claims (176 DEN A-15, 9/11/15).
Cumulative Risk, Impact
As Obama's term comes to a close, advocates are looking for action in a number of long-sought-after areas (158 DEN A-8, 8/17/15).
One of the most prominent issues centers on cumulative risk or impact. The issue boils down to measuring existing environmental or social risk or burdens across types of pollution and then utilizing that information to inform permitting, rulemaking or other decisions (186 DEN A-11, 9/25/15).
Sheats said the Obama administration may begin the conversation with justice groups and others, while Garcia called for development and use of a “starter formula” that identifies, for example, the 10 worst contributors to pollution and then utilizes that information in cumulative risk assessments.
Tejada said the issue will be reflected in the upcoming EJ 2020 Action Agenda, and “a lot of folks would like for us to get there really quickly.” But the process is “going to take some time,” he said.
“We're an agency that is guided by science, and it will take as much time as it needs to take for us to be certain of the science, especially around something as critical as looking at cumulative risk from multiple sources,” Tejada said. “We're going to have to go through a process.”
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EPA Takes Comment on Greenhouse Gas Reporting Rule
Jan 15, 2016 | BNA Daily Environment Report
The Environmental Protection Agency will accept comment until Feb. 29 on a proposed rule that would update the greenhouse gas emissions reporting requirements for power plants, refineries, chemical plants, underground coal mines and other large facilities. The proposed rule (RIN 2060-AS60) would create new or revised confidentiality determinations for various pieces of data required to be submitted under the greenhouse gas emissions reporting program under 40 C.F.R. pt. 98. The agency would phase in the changes between the 2016 and 2018 reporting years at a cost of $1,081,830 per year for all the combined facilities affected, once fully implemented. The proposed revisions cover 30 subparts of the reporting program and would remove reporting requirements for facilities with little or no emissions and eliminate reporting requirements for data no longer considered necessary. Comment can be made at http://www.regulations.gov and should reference Docket No. EPA-HQ-OAR-2015-0526. The EPA's proposed rule is available at https://s3.amazonaws.com/public-inspection.federalregister.gov/2015-32753.pdf.
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Energy Bill Could Hit Senate Floor This Month, Aide Says
Jan 15, 2016 | BNA Daily Environment Report
By Ari Natter
A broad energy bill that includes language to expedite the federal approval process for liquefied natural gas exports could be brought to the Senate floor by month's end, a Republican leadership aide told Bloomberg BNA Jan. 14.
While it is “certainly possible” legislation could be on the floor this month, the aide cautioned in an e-mail that there is “nothing locked” in place yet.
Multiple lobbyists told Bloomberg BNA that the bill could be brought to the floor after the Senate acts on legislation related to Syrian refugee policy, possibly the week of Jan. 25.
Sen. Lisa Murkowski (R-Alaska) previously told Bloomberg BNA she had received assurances from Senate Majority Leader Mitch McConnell (R-Ky.) the bill was “in the queue” for floor consideration (08 DEN A-11, 1/13/16).
The five-part bill (S. 2012) includes provisions that would strengthen building codes, among other energy-efficiency measures, as well as provisions that would increase cyber-security protections for the electricity grid and expedite the licensing process for hydropower projects.
Though the bill by Murkowski easily passed the Senate Energy and Natural Resources Committee that she chairs on a 18-4 vote, its path ahead remains rocky as the measure is expected to attract contested amendments, according to observers such as Cheryl Wilson, a Bloomberg Intelligence analyst.
“It's doubtful the measure ever gets off the senate floor,” an energy lobbyist told Bloomberg BNA.
Rocky Road Ahead?
A fight over amendments, such as a measure that would have limited the Environmental Protection Agency regulation of carbon emissions from fossil fuel-fired power plants, led to the demise of a bipartisan energy efficiency bill (S. 2262) in 2014 (92 DEN A-3, 5/13/14).
However, Robert Dillon, spokesman for Murkowski and other Republicans on the Energy and Natural Resources Committee, dismissed the notion the bill wouldn't make it off the floor and pointed to the passage of legislation (S. 1) that would have required the Obama administration's approval of the Keystone XL pipeline last January.
“Sen. Murkowski has a record of successfully managing legislation on the floor. I don't see what's going to be different this time,” Dillon said in an interview.
The legislation, dubbed the Energy Policy Modernization Act, could become the first broad rewrite of energy policy since 2007 if enacted into law.
The wide-ranging legislation also includes measures that would repeal a section of law that requires federal buildings to phase out fossil fuels by 2030, authorize funding for grid-storage research within the Department of Energy and streamline the federal approval process for natural gas pipeline projects.
The House version of the bill (H.R. 8) was passed by a vote of 249-174, amidst a veto threat and nearly unanimous opposition by Democrats.
That bill would expedite the Energy Department's consideration of licenses to export liquefied natural gas, increase security of the nation's electric grid and speed up the review time for federal permitting of natural gas pipelines (233 DEN A-4, 12/4/15).
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House Republicans Resume Push to Roll Back Rules
Jan 15, 2016 | BNA Daily Environment Report
By Dean Scott
Supporters of legislation to ease regulatory burdens and roll back legal strategies that environmental groups use to strengthen regulations will continue their efforts in 2016, first in the House of Representatives.
The largely Republican-led effort has been backed by the U.S. Chamber of Commerce and other industry groups, and they hope to build on a big win they scored in 2015 with passage of a bill to streamline environmental reviews and permitting.
The House, which has taken the lead in passing regulatory reform bills since Republicans took control of the chamber in the 2010 elections, quickly resumed its efforts this year by passing two deregulatory measures on Jan. 7 (05 DEN A-22, 1/8/16).
One bill, the Sunshine for Regulatory Decrees and Settlements Act (H.R. 712), targets legal strategies used by environmental groups to get the Environmental Protection Agency to expedite or strengthen rules through so-called sue-and-settle litigation. The bill, introduced by Rep. Doug Collins (R-Ga.), passed on a 244-173 vote.
The other bill, the Searching for and Cutting Regulations that are Unnecessarily Burdensome (SCRUB) Act (H.R. 1155), introduced by Jason Smith (R-Mo.), passed on a 245-174 vote. It would create a review commission to weed out “unnecessary” and burdensome environmental and other rules and recommend them to Congress for repeal .
The White House Office of Management and Budget issued statements of administration policy threatening a presidential veto of both measures.
Whether the Senate will take up those bills—or any other sweeping regulatory reform measures—in 2016 is unclear; the chamber has shown little appetite for most of the House proposals in recent years, mostly due to opposition from Democrats and veto threats from the White House.
Momentum From Permitting Bill?
The latest effort to roll back regulations comes on the heels of a significant victory for Republicans in 2015 on legislation to streamline environmental reviews and permitting, an effort led in the Senate by Sens. Rob Portman (R-Ohio) and Claire McCaskill (D-Mo.).
But Amit Narang, regulatory policy advocate for Public Citizen's Congress Watch, said bipartisan support for reducing delays in permitting for major energy, manufacturing and other projects is unlikely to give much momentum for legislation to revamp regulatory procedures that his group argues would only erect new hurdles for adminsitrative agencies.
“On these broader regulatory reform proposals, they are all in the Senate's court,” where supporters would need 60 votes to overcome a filibuster, Narang told Bloomberg BNA. “And even if something does make it out of the Senate, I don't think approval by the president is a given on any of these proposals.”
New Opportunity to Intervene
The regulatory decrees bill (H.R. 712) would require the EPA and other agencies to provide public notice when they have received notices of intent to sue from groups such as environmental organizations and require agencies to provide industry groups, states and other affected parties an opportunity to intervene before agencies file consent decrees or settlements with a court.
Environmental and public interest groups say industry criticism of such settlements is overblown because they are often the only way to get the EPA and other agencies to move forward on long-delayed rulemakings or to get the agency to adhere to legislative deadlines requiring it to periodically review and, if necessary, strengthen environmental protections.
The White House, in its veto threat of H.R. 712, said that bill “would serve only to introduce redundant processes for litigation settlements and spawn excessive, expensive, and time-consuming regulatory litigation.”
The SCRUB Act, modeled after the Defense Base Closure and Realignment Commission created by Congress to close unneeded military bases, would create a nine-member commission to identify rules that should be repealed or amended.
In its veto threat, the White House noted that President Barack Obama already launched a process for retrospective review of duplicative or outdated rules and said that existing “look-back” of existing regulatory burdens “is most effective when led by the agencies.”
By contrast, the SCRUB Act's commission would be tasked with reviewing “the entire Code of Federal Regulations,” an effort “likely to produce a haphazard list of rules” that would be used to repeal those regulations by Congress, according to the White House.
Bills in Senate Committees
The Senate has not acted on either of its versions of the two House bills. Neither the Senate sunshine for regulatory decrees measure (S. 378), introduced by Judiciary Committee Chairman Chuck Grassley (R-Iowa), nor the Senate SCRUB Act (S. 1683), introduced by Sen. Orrin Hatch (R-Utah), have been marked up in committee. The sunshine regulatory decrees measure was referred to the Judiciary Committee while the SCRUB Act was referred to the Homeland Security and Governmental Affairs Committee.
Bill Kovacs, the U.S. Chamber of Commerce's senior vice president for environment, technology and regulatory affairs, said passage of the streamlined permitting legislation, which was tucked into the highway reauthorization legislation that cleared Congress in December, gives him some optimism that other deregulatory measures could move in the Senate (233 DEN A-9, 12/4/15).
“We certainly hope so,” Kovacs said, noting that the streamlined permitting provisions—incorporated in the highway bill known as Fixing America's Surface Transportation Act (FAST Act) that cleared the Senate in December—benefited from strong Democratic support (231 DEN A-19, 12/2/15).
The permitting provisions became law when Obama signed the FAST Act (Pub. L. No. 114-94) on Dec. 4. The law incorporated streamlined permitting provisions introduced by Portman and McCaskill as the Federal Permitting Improvement Act (S. 280) and requires coordination by the EPA and various other regulatory agencies when reviewing a major infrastructure, energy or manufacturing projects.
It also significantly limits the amount of time allowed for opponents of a project to challenge a decision for a permit.
Bill on Regulatory Procedures
Kovacs said another priority of the Chamber of Commerce is a bill to revamp the regulatory procedures the EPA and other agencies must follow before proposing and finalizing rules. That measure, the Regulatory Accountability Act (H.R. 185), also would require agencies to analyze a broad array of costs before pursuing regulations and steer agencies to select the least burdensome regulatory option.
One of the challenges for moving that bill is the technical nature of how regulations are developed as well as the detailed changes being proposed, Kovacs said, which makes it difficult to draw the attention of senators, even those who repeatedly complain about the overall burdensome nature of regulations.
“Everyone has a political position on whether a regulation on X or on Y is good,” Kovacs said. “But when you get into the operation of government, it's just a different level of discussion” required.
The House passed the Regulatory Accountability Act in January 2015. The Senate Committee on Homeland Security and Governmental Affairs in October approved a similar measure—the Early Participation in Regulations Act (S. 1820), introduced by Sen. James Lankford (R-Okla.)—but it is unclear whether it has enough support to be brought to the floor.
But if there was any lesson from the success of the streamlined permitting bill, it is that amassing support for regulatory procedural legislation requires convincing individual senators, one by one, of the merits of the proposal, Kovacs said.
Member-by-Member Lobbying
“I wish I knew an easier way, but it literally was member by member” to gain support from Senate Democrats on the Portman-McCaskill measure, Kovacs said.
“A year and a half ago in the Senate, we had one or two Democrats” supporting the permitting measure, Kovacs said—but the measure cleared the Senate homeland security panel with unanimous Democratic support at a May 2015 markup, he said (89 DEN A-16, 5/8/15).
Supporters had been pushing the permitting legislation for more than four years, and passage “came after a lot of negotiation and a lot of good will built up,” including significant input from the White House, Kovacs said—in stark contrast to veto threats the administration has issued on the majority of regulatory measures now poised before Congress.
Burdens Called Overblown
Scott Slesinger, legislative director for the Natural Resources Defense Council, said concerns by industry groups that regulations have grown overly burdensome and costly to industry are overblown. Bills such as the Regulatory Accountability Act would only erect new hurdles for regulatory agencies that already take too long to promulgate rules needed to protect the environment and public health and safety, he said.
“I've been in this business for 40 years, and every year the worst regulation in history coming down to destroy the economy is the next one,” Slesinger told Bloomberg BNA.
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Congressional GOP Decamps For 'Competition Of Ideas'
Jan 14, 2016 | E&E News PM
By George Cahlink
Congressional Republicans huddled here for a three-day retreat to lay out their party's 2016 legislative agenda and hear from the head of one of the nation's largest utility companies at a closed-door session.
Both House and Senate lawmakers said their goal is to find common legislative ground for the coming year that will resonate with voters in the November general election
House GOP Conference Chairwoman Cathy McMorris Rodgers (R-Wash.) called the meetings a "competition of ideas" that would lead to GOP alternatives to the vision outlined by President Obama in his State of the Union address Tuesday night.
"It's really our opportunity to rally around a common vision for America and the best way to move it forward," she said.
Senate Energy and Natural Resources Chairwoman Lisa Murkowski (R-Alaska) has said she hopes to use the retreat to meet with her counterpart, House Energy and Commerce Chairman Fred Upton (R-Mich.), to find common ground on comprehensive energy legislation. The House passed an energy bill last year, while a bipartisan Senate energy measure that has been voted out of Murkowski's committee awaits floor time (Greenwire, Jan. 14).
Sen. John Barrasso (R-Wyo.), a GOP policy committee chairman and member of the Energy panel, told reporters he believes the Senate would soon be taking up a comprehensive energy bill but did not have a specific date for floor action. He said a priority for him will be provisions in the bill easing restrictions on liquid natural gas exports.
Meanwhile, Tom Fanning, the chairman, president and CEO of the Southern Co., helped to lead a session for House and Senate lawmakers focused on the economy and jobs this morning.
The session was not open to the press, and Fanning's appearance was not listed on the press schedule, but an official conference agenda reviewed by E&ENews PM listed him as panelist along with Nasdaq CEO Robert Greifeld. The panel was moderated by CNBC host Larry Kudlow, who is eyeing a Senate challenge to Connecticut Democrat Richard Blumenthal this election.
Most members of the House GOP caucus are attending the meetings that began yesterday evening and wrap up midday tomorrow. More than half of the GOP senators were attending, but none of the Republicans seeking the presidency were expected.
According to the agenda, other policy sessions were set on health care and national security. The health session included National Institutes of Health chief Francis Collins and Fitbit co-founder and CEO James Park, while the national security one featured several retired military officers and former Homeland Security Secretary Michael Chertoff. Also on the agenda were sessions on "common ethics pitfalls," how to make better use of social media and congressional reform.
House Speaker Paul Ryan (R-Wis.) and Senate Majority Leader Mitch McConnell (R-Ky.) also will address the retreat. Other keynote speakers are New York City Cardinal Timothy Dolan, conservative commentator George Will and President George H.W. Bush biographer Jon Meacham.
Religious services and Bible studies were held this morning, with another scheduled for tomorrow, while a Baltimore tour was available to spouses, as well as a trip to the National Aquarium for children.
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EPA Seeks To Resume Some Utility MACT Challenges
Jan 14, 2016 | InsideEPA
EPA is asking the U.S. Court of Appeals for the District of Columbia Circuit to resume briefing in consolidated suits over technical provisions in the agency's maximum achievable control technology (MACT) air toxics rule for power plants, after the court opted to remand the rule to EPA rather than vacate it as sought by some utilities.
“EPA believes that the issues presented in this case, all of which involve challenges to EPA’s denial of petitions for reconsideration of aspects of the [MACT] Rule, are now ripe for decision, and that there is no reason to further delay resolution of this case. Accordingly, EPA asks that the case be removed from abeyance and the parties required to submit briefing format proposals within 10 days of the Court’s action on this motion,” EPA says in a Jan. 14 filing.
The four challenges to technical provisions, known as ARIPPA v. EPA, et al., were placed in abeyance last year while the D.C. Circuit weighed how to proceed with a Supreme Court ruling on the utility MACT.
The Supreme Court in a 5-4 ruling in June agreed with industry critics of the rule that the agency should have considered compliance costs in its finding that the rule is “appropriate and necessary,” a prerequisite to issuance of the MACT. The high court then sent litigation over the MACT back to the D.C. Circuit, which had previously ruled 2-1 to broadly reject all challenges to the rule, also known as the Mercury and Air Toxics Standards.
In a Dec. 15 order the appellate court then granted EPA's request to remand the rule to the agency and not vacate it while EPA works on finalizing an assessment of the costs of the rule as part of the “appropriate and necessary” determination.
EPA on Nov. 20 then issued its proposed consideration of costs as part of that determination, 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 it satisfies the Supreme Court's ruling.
The agency's Jan. 14 filing indicates that EPA believes litigation can now resume on the technical provisions being challenged in ARIPPA, even while it works to finalize the cost review.
The four suits consolidated as ARIPPA are diverse and challenge specific aspects of the MACT rule that EPA declined to alter on reconsideration. For example, Pennsylvania power generator ARIPPA raises issues specific to its use of coal waste to generate electricity, which it says is unfairly disadvantaged by the rule.
The Utility Air Regulatory Group (UARG), representing other utilities, challenges EPA's emissions data and consequent cancer risk estimates for hazardous air pollutants other than mercury.
Utility Hawaiian Electric challenges EPA's failure to reconsider “whether emissions data used to establish the particulate matter standard for liquid oil-fired non-continental units in the [MACT] Rule were non-representative and should have been discarded as outliers,” while environmental groups including the Chesapeake Climate Action Network challenge the rule's particulate matter emissions limits, which they claim should be tougher.
EPA notes that ARIPPA and UARG oppose its motion to resume briefing, while Hawaiian Electric and environmental groups support it -- though the agency does not elaborate on the reasons for opposition or support.
Meanwhile, EPA in two unopposed Jan. 14 motions asks the court to keep two related challenges to aspects of the rule, both called UARG v. EPA, in abeyance as the agency works to complete a reconsideration of various issues raised by UARG, such as provisions relating to startup and shutdown of power plants.
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California Water Regulators Should Study Food Safety
Jan 14, 2016 | San Francisco Chronicle
California is a major producer of crude oil — and of the nation’s agriculture. For a number of reasons, those two industries may be mixing in a way that’s very unhealthy.
The drought, now in its fourth year, has strained relationships between these two industries. Mixing oil and water Leader of state’s embattled oil agency resigns State shuts 33 wells injecting oil wastewater into aquifers
Farmers need water for crops. The oil and gas industry needs it for production, especially hydraulic fracturing.
The partial solution for the past 30 years has been for some oilfields to pass on their leftover production fluid to irrigation districts. Then it’s treated, diluted with surface water, and used for agricultural irrigation.
That’s alarming enough — as a December 2015 study from the nonprofit Pacific Institute notes, “Produced water can contain elevated concentrations of minerals, metals, petroleum hydrocarbons, volatile organic compounds, radionuclides, and man-made chemicals used for hydraulic fracturing and other operations.”
But with irrigation districts seeking to expand the practice as the drought drags on, it’s all the more vital for California to put public health ahead of all other concerns.
Skepticism from water groups, along with media attention, spurred the Central Valley Regional Water Quality Control Board to assemble a panel to look at the safety of using treated oilfield wastewater for food crops.
“Food safety is outside the expertise of the Central Valley Water Board staff and there is limited published information on this subject,” wrote the board, in its charter for the food safety panel. The panel will solicit expert opinion and use the information to scrutinize the permitting process for oilfield-produced water.
“This process has been going on for 30 years and we haven’t found anything yet of concern,” said Miryam Barajas, a board spokesperson. “So we’re doing the research to figure out what else we need to be investigating.”
This is the sort of study that should have been done sooner.
Still, late is better than never. Since there aren’t any predictions for the drought to end any time soon, this is an issue that’s only going to grow in importance.
State regulators need to study this, too, with the help of food scientists and public health experts. Recommendations for these practices should be statewide — not left up to regional variance.
California’s food supply is a matter of great importance to the entire state and the entire country.
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Judges Question Timeliness of Air Permitting Lawsuit
Jan 15, 2016 | BNA Daily Environment Report
By Patrick Ambrosio
Federal appeals court judges were skeptical that environmental groups have a timely challenge against the Environmental Protection Agency's 1980 regulation on the applicability of the new source review permitting program in nonattainment areas (Sierra Club de Puerto Rico v. EPA, D.C. Cir., No. 14-1138, oral arguments 1/14/16).
Christopher Ahlers, a staff attorney at the Vermont Law School's Environmental and Natural Resources Law Clinic, argued that the EPA's approval in July 2014 of a Clean Air Act permit to Energy Answers Arecibo LLC for the construction of an incinerator in Puerto Rico, and the agency's assertion that the incinerator is not subject to the nonattainment new source review program, constituted a final agency action that could be challenged.
Energy Answers was instead issued a prevention of significant deterioration permit, a type of permit that generally is less stringent than a nonattainment new source review permit. The nonattainment new source review program requires facilities to meet the lowest achievable emission rate and obtain offsets for any added emissions in a nonattainment area.
The rule in question codified that nonattainment new source review permits would only be required for new or modified facilities that would result in an increase in emissions of a nonattainment pollutant that the facility emits in major amounts, which the agency defined as 100 tons or more per year. The EPA determined the Energy Answers facility did not require a nonattainment new source review permit for its lead emissions because the facility did not qualify as a major source for lead pollution.
Arguments Focus on Timeliness
The environmental petitioners argued that the EPA's policy, which uses emissions of a specific nonattainment pollutant as the threshold for inclusion in the nonattainment new source review program, is a violation of Clean Air Act language that set “potential emissions in major amounts of any air pollutant” as the statutory trigger for nonattainment new source review.
“The statute in clear,” Ahlers said. “EPA has created an administration exemption which clearly violates the plain language, the text of the statute.”
While Judge Robert Wilkins appeared receptive to that argument, stating that the EPA's interpretation of the relevant Clean Air Act language doesn't “make sense” in the context of the entire statute, all three judges on the panel expressed doubt that the environmental petitioners had brought a timely challenge.
Judge Harry Edwards said the case law the court could rely upon is “quite clear” that a lawsuit filed more than 60 days after a regulation goes final is “too late” if the lawsuit challenges the rule as originally written, without any new grounds.
Judge David Sentelle also was skeptical that the environmental petitioners had a timely challenge, while Wilkins said the “best argument” for the environmental groups would have been that the rule did not apply to Puerto Rico when it was codified in 1980 because Puerto Rico was in attainment. However, Wilkins said, the groups also failed to file a lawsuit within 60 days of the EPA making a nonattainment designation for Puerto Rico under the lead standards, which occurred in 2011.
The EPA has requested that the court dismiss the lawsuit over a lack of timeliness.
‘Attack ... Is Too Late.'
”The petitioners' attack on this 35-year-old regulation is too late,” said Andrew Doyle, a Justice Department attorney who argued on behalf of the EPA. “It's too late under any conceivable construction of the Clean Air Act's judicial review provision.”
Brendan Collins, a partner at Ballard Spahr LLP who argued on behalf of Energy Answers Arecibo, said the company agreed with the arguments advanced by the government. Collins also noted the environmental groups have other tools available to them to address the alleged injuries caused by the EPA's permit decision and rule, including an administrative petition for rulemaking or reconsideration based on new information.
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D.C. Circuit Likely To Reinforce Air Act Lawsuit Time Limit In Permit Case
Jan 14, 2016 | InsideEPA
By Stuart Parker
U.S. Court of Appeals for the District of Columbia Circuit judges signaled at Jan. 14 oral argument that they are likely to reinforce a Clean Air Act 60-day deadline for filing lawsuits over EPA rules and reject environmentalists' case over lead pollution that attempts to reopen a decades-old agency air permitting rule for judicial review.
“You are too late” to challenge the 1980 permitting rule, Judge Harry Edwards told attorney Christopher Ahlers, representing the Sierra Club at arguments, calling the legal challenge “really kind of absurd.”
The other two judges that heard the case, David Sentelle and Robert Wilkins, were also skeptical of Sierra Club's claim that EPA's grant of a Clean Air Act prevention of significant deterioration (PSD) permit for a solid waste incinerator in Arecibo, Puerto Rico, reopened the decades-old permitting rule to judicial review.
If the judges rule in line with their statements at arguments, the case appears unlikely to change D.C. Circuit precedent on when petitioners can overcome the 60-day time limit in order to attack old agency rules.
Environmentalists say EPA's issuance of the PSD permit to Energy Answers Arecibo for an incinerator that will boost lead emissions in an area already classified in “nonattainment” for the lead national ambient air quality standards (NAAQS) effectively reopens the underlying permit rule -- which they oppose -- to litigation.
EPA denies this, noting that the challenge came 35 years too late under the air law's 60-day filing deadline. The agency argues that the granting of the PSD air permit for the facility is simply the application of the longstanding rule, and does not constitute “after-arising grounds” re-opening the 1980 rule to a lawsuit.
Sierra Club says that the incinerator in Puerto Rico will emit more lead than a battery recycling facility in Arecibo that was responsible for the area's nonattainment designation in the first place.
Rather than challenging the permit under the terms of the PSD program and Puerto Rico's state implementation plan (SIP) for the air law, the group attacks the underlying 1980 rule, titled Requirements for Preparation, Adoption, and Submittal of SIPs; Approval and Promulgation of State Implementation Plans. They argue that the regulation leads to weaker air permits than the Clean Air Act requires.
The group did appeal EPA's issuance of the permit to the agency's Environmental Appeals Board (EAB), making claims about the illegality of the 1980 rule, but the EAB in March denied the appeal.
EPA May 19 issued the final PSD permit, triggering the current lawsuit, Sierra Club de Puerto Rico, et al. v. EPA, et al. Environmentalists say the agency should have issued a tougher nonattainment new source review (NNSR) air permit instead that would have required Energy Answers to purchase “offsets” to compensate for its lead emissions. But the company cannot do so because there is only one other source -- the battery recycler -- that could furnish offsets, so a stricter permit would effectively preclude construction of the incinerator.
But EPA says that its 1980 permitting rule requires NNSR permits only for major air pollution sources for nonattainment pollutants. Major sources are those emitting 100 tons per year of a NAAQS pollutant such as lead -- however, the proposed incinerator would emit lead far below those levels.
The facility would emit other NAAQS pollutants at levels high enough to be considered a “major source” - but the area is classified in “attainment” for these pollutants, and so no NNSR permit is needed.
'After-Arising Grounds'
Judge Wilkins suggested that Sierra Club might have had a case for “after-arising grounds” re-opening the 1980 rule to review had it filed suit within 60 days of EPA's designation of Arecibo as nonattainment for lead -- which it could be argued made the area subject to the rule for the first time. However, Sierra Club did not do so, filing instead within 60 days of EPA's granting of the final permit.
Sentelle noted that “you are not challenging the permit per se here.”
Ahlers replied that while environmentalists are not challenging the permit itself, the permit created “ripeness” for then groups' challenge. “EPA's rule creates the harm,” Ahlers said, to which Sentelle asked if that is the case, why did environmentalists lack standing or ripeness to sue when the rule was issued?
Ahlers answered that some of the petitioners were not even born in 1980.
To this, Edwards noted that the same is true of any regulation, where potential litigants become subject to a rule only years after its promulgation. This does not mean regulations are reopened to review simply because people are born. “Do we allow that -- of course not!” Edwards said.
Sierra Club relies in part on the precedent set by the D.C. Circuit and Supreme Court in litigation over EPA's “timing” and tailoring” rules that narrowed the scope of the PSD permit program to allow for regulation of greenhouse gases (GHGs) under the program for the first time. The D.C. Circuit upheld these rules in 2012 in Coalition for Responsible Regulation v. EPA, but the high court in its the 2014 decision in Utility Air Regulatory Group v. EPA forced EPA to narrow the scope of the program again to exclude some sources.
Sierra Club claims that EPA's issuance of car tailpipe rules for GHGs reopened the PSD program for stationary sources to judicial review, and that EPA's issuance of the incinerator permit similarly reopens a longstanding PSD rule to review.
But Edwards said the two situations are different because in Coalition, EPA with its tailpipe rule did something that effectively changed the underlying regulation, making judicial review of the PSD rules possible. Sentelle noted that Coalition said nothing about the rights of unborn petitioners when rules are promulgated.
Department of Justice (DOJ) attorney Andrew Doyle made similar observations to Edwards regarding the inability of petitioners to sue should they become subject to a regulation only years after its promulgation. “Congress drew lines” about how long rules can be challenged for, he said. In Coalition, the tailpipe rule had the effect of expanding the PSD program to “never-before regulated sources,” he said.
Ahlers, in rebuttal, said that the incinerator at issue in Puerto Rico represents just such a never-before regulated source.
Permitting Rule
Wilkins was the only judge to examine the merits of Sierra Club's arguments regarding the 1980 permitting rule, and he appeared sympathetic to the idea that EPA's action in limiting NNSR permits to nonattainment pollutants is incompatible with some air law language on major source permitting.
He said EPA's view of the statute and various regulations governing PSD permitting appeared flawed, telling Doyle, “I just don't think that construction makes sense” in the context of the air law's focus on reducing pollution.
Doyle argued that there are other mechanisms, or “hooks,” available for regulators to try to reduce lead emissions from the incinerator, such as reasonable further progress provisions of SIPs and minor-source permitting. Doyle said that EPA in its longstanding “offset ruling” made the case that not limiting NNSR permits to nonattainment pollutants would create an unreasonable regulatory burden. Attorney Brendan Collins, representing Energy Answers Arecibo, backed Doyle's arguments, saying, “it is inconceivable that a rule that has been undisturbed for 36 years would be flipped.” Sierra Club could petition for fresh rulemaking or reconsideration of the 1980 rule, but not judicial review, Collins said.
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