Preview Newsletter
ACC PM 2/29/16
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(ACC Mentioned) Trans-Pacific Trade Pact Faces Rocky Road
Feb 29, 2016 | Chemical & Engineering News
By Glenn Hess
Early in February, the U.S. joined other members of the Trans-Pacific Partnership (TPP) to sign the largest regional trade agreement in history. The pact, five years in the making, aims to break down trade barriers between a dozen countries that collectively produce an estimated 40% of the world’s economic output. -
(ACC Mentioned) EPA to Crack Down on Chemical Plants and Refineries
Feb 29, 2016 | Chemical & Engineering News
By Jeff Johnson
U.S. chemical companies and refineries are in the crosshairs of an enforcement initiative that EPA unveiled earlier this month. -
Monsanto Given Legal Shield in a Chemical Safety Bill
Feb 29, 2016 | The New York Times
By Eric Lipton
Facing hundreds of millions of dollars in lawsuits, the giant biotechnology companyMonsanto last year received a legislative gift from the House of Representatives, a one-paragraph addition to a sweeping chemical safety bill that could help shield it from legal liability for a toxic chemical only it made. -
In Chemical Reform Law A Hidden Bailout For Monsanto’s Pollution
Feb 29, 2016 | Environmental Working Group
By Alex Formuzis, Vice President for Strategic Campaigns and Melanie Benesh, Legislative Attorney
As the New York Times reports today, federal lawmakers are poised to let Monsanto off the hook for decades of poisoning American communities with a toxic chemical known to cause cancer and nervous system damage, potentially saving the company billions of dollars. -
Regulators Lack 'Overall Understanding' of Oil Train Risk -- IG
Feb 29, 2016 | E&E Energywire
By Blake Sobczak
Federal railroad officials have "no overall understanding" of the risks posed by crude oil train traffic, according to a report released last week by the Department of Transportation's Office of Inspector General. -
Industry Turns to Empty Rail Cars for Extra Storage Space
Feb 29, 2016 | E&E Greenwire
There is so much crude oil in the United States that traders are experimenting with new storage places. The latest site: empty rail cars. -
BNSF to Improve Rail Capacity in Missouri with $140m Investment
Feb 29, 2016 | Railway-Technology
US freight transport firm BNSF Railway (BNSF) plans to invest $140m to expand capacity and maintain infrastructure in Missouri, US. -
(ACC Mentioned) Petrochemical Boom Seen Spurring U.S. Emissions
Feb 29, 2016 | E&E Greenwire
By Amanda Reilly
U.S. petrochemical manufacturing spurred by the shale revolution and low natural gas prices could have big greenhouse gas impacts, environmentalists today warned in a report. -
States Still Settling on Post-Stay Plans
Feb 29, 2016 | E&E Interactive
By Emily Holden and Rod Kuckro
E&E staff continue to track the wide range of state responses to the Supreme Court's decision to stop implementation of the Clean Power Plan. -
Wash. Scraps Proposed Carbon Rule, Plans New Steps on Climate
Feb 29, 2016 | E&E Climatewire
By Debra Kahn
Washington air regulators last week withdrew their plan to cap large greenhouse gas emitters, promising to present a new proposal in the spring that some observers hope will be more akin to other carbon regulations in the United States. -
Aerospace Companies Sue EPA Over Revised MACT Rule
Feb 29, 2016 | Inside EPA
Aerospace industry companies are suing EPA over its revised maximum achievable control technology (MACT) air toxics rule for the sector, which left existing emissions limits largely unchanged but introduced new limits for specialty coating operations, eliminated some regulatory exemptions, and tightened some reporting requirements. -
Brick Makers, Enviros Clash Over Litigation on Rules
Feb 29, 2016 | E&E Greenwire
By Sean Reilly
As the House prepares to vote this week on legislation to freeze implementation of new emissions limits on brick makers, industry groups and environmentalists are clashing in federal court over how to handle litigation surrounding the rules. -
EPA Seeks Feedback on Sulfur Dioxide Designations
Feb 29, 2016 | E&E Greenwire
By Sean Reilly
U.S. EPA is set to launch a 30-day public comment period on recently proposed attainment designations for its 2010 sulfur dioxide standard. -
A New Electric Grid Calls for New Reliability Rules
Feb 29, 2016 | E&E Energywire
By Peter Behr
The lumbering coal-fired power stations facing closure because of age and air emissions have been the workhorses of the U.S. high-voltage electric transmission grid. When the grid was stressed and frequency dropped, they ran harder.
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(ACC Mentioned) Trans-Pacific Trade Pact Faces Rocky Road
Feb 29, 2016 | Chemical & Engineering News
By Glenn Hess
Early in February, the U.S. joined other members of the Trans-Pacific Partnership (TPP) to sign the largest regional trade agreement in history. The pact, five years in the making, aims to break down trade barriers between a dozen countries that collectively produce an estimated 40% of the world’s economic output.
But before the agreement can take effect, it must be ratified by at least six countries that account for 85% percent of the combined gross domestic production of the 12 TPP nations—Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, the U.S. and Vietnam.
It’s widely anticipated that the larger economies in the TPP will wait to see what happens in the U.S. before approving the deal. But TPP faces a rocky road to congressional ratification. A vote might not occur until after the presidential election in November.
Despite support from many U.S. business groups, including the American Chemistry Council, the chemical industry’s main lobbying arm, numerous roadblocks stand in the way of congressional approval. One of the biggest is pushback by the pharmaceutical industry and consumer groups who are disappointed over TPP’s intellectual property (IP) protection for brand-name biologics, a new generation of drugs used to treat conditions included asthma and cancer.
Biologic medicines differ from most prescription drugs in that they are made from living matter, such as human cells, instead of through chemical synthesis. Unlike chemically synthesized pharmaceuticals, whose generics are a copy of the original, generic versions of biologics, called biosimilars, aren’t exactly the same due to differences in the way the products are manufactured. Because of this, patent protection is less effective for biosimilars than it is for chemically synthesized drugs.
In the U.S., biologics are protected from competition with lower-cost biosimilars for 12 years from the time the Food & Drug Administration approves them for marketing. A four-year period of “data protection” prevents biosimilar makers from relying on the innovator’s clinical trial data to secure regulatory approval, while the remaining eight years provide market exclusivity.
U.S. drug manufacturers, who have set their sights on emerging markets abroad, hoped the TPP agreement would require 12 years of market protections for biologics. But other nations have adopted a wide range of approaches. Australia, New Zealand, Singapore, and Chile offer five years of protection, Japan and Canada eight years, and several TPP countries—Mexico, Peru, Vietnam, Malaysia and Brunei—have no protection.
Consequently, U.S. negotiators faced stiff opposition and ultimately agreed to a compromise on the length of market exclusivity for biologics. The deal allows the U.S. to keep its current 12-year standard. Each of the other TPP countries can choose to adopt a protection period of at least five years but no more than eight years.
Australia, which led the charge against the U.S. position in the negotiations, was unwilling to offer more than five years of protection for biologic medicines. A longer term would increase the cost of Australia’s government-subsidized medical program.
The outcome on biologics protection in TPP greatly disappointed U.S. drug manufacturers. They argue that it costs nearly $1.2 billion to develop a biologic and between 12.9 and 16.2 years to recoup this investment.
“We have serious concerns that the regulatory data protection period for biologics in the TPP falls far short of what is necessary to continue the cycle of innovation that will lead to the breakthrough medicines of the future,” says Stephen J. Ubl, chief executive officer of the Pharmaceutical Research & Manufacturers of America, which represents brand-name drug companies. The 12-year U.S. model, Ubl says, “should have been the standard set in the TPP in order for the agreement to foster more cures and treatments for patients around the world.”
The refusal of other TPP countries to agree to a similar length of IP protection for biologics is “remarkably short-sighted,” says James C. Greenwood, CEO of the Biotechnology Innovation Organization, an industry trade association. “It has the potential to chill global investment and slow development of new breakthrough treatments for suffering patients.”
In contrast to industry, humanitarian organizations and consumer advocates warn the pact will harm public health in poorer countries by delaying patients’ access to affordable biosimilars.
“TPP will go down in history as the worst trade agreement for access to medicines in developing countries, which will be forced to change their laws to incorporate abusive intellectual property protections for pharmaceutical companies,” says Judit Rius Sanjuan, U.S. manager and legal policy adviser to Doctors Without Borders
Burcu Kilic, policy director for Public Citizen’s global access to medicines program, says the “monopolistic pharmaceutical industry has won a lot with the TPP, at the expense of people’s health. They should stop crying crocodile tears.”
Whether the current GOP-controlled Congress will agree to the trade deal is far from certain. Republican leaders, who have supported free trade agreements in the past, are lukewarm at best toward TPP.
Neither Speaker of the House Paul D. Ryan (R-Wis.) nor Senate Majority Leader Mitch McConnell (R-Ken.) has endorsed the pact. And both say that complaints about the agreement will have to be addressed.
In addition, Sen. Orrin G. Hatch (R-Utah), who chairs the Senate committee that oversees trade, has vowed to oppose the TPP agreement for failing to grant biologic drugmakers an adequate shield from generic competition. “Unfortunately, I am afraid this deal appears to fall woefully short,” Hatch says.
He has gone so far as to call for the agreement to be renegotiated. “The alternative to renegotiation may very well be no TPP at all,” Hatch declares.
There is also opposition from congressional Democrats. In addition to concerns over TPP’s worker rights protections and provisions that allow foreign companies to sue a government over environmental regulations that impinge on their profits, some Democrats contend the pact will drive up global drug costs. TPP’s chapter on intellectual property “confirms some of the worst fears of health care advocates,” says Rep. Rosa DeLauro (D-Conn.). “You can freeze cheaper generic drugs out of the market.”
Under the terms of “fast-track” legislation Congress passed last year, lawmakers can ratify or reject TPP, but they cannot amend it. Obama Administration officials insist they will not renegotiate the pact.
However, Hatch and other pro-trade GOP lawmakers could exert pressure on the Administration to negotiate side deals with each of the other TPP countries to address the length of IP protection for biologics as well as other controversial issues. “There is no way TPP will pass without some significant accommodations on the biopharmaceutical side,” says Brian A. Pomper, a partner at law firm Akin Gump Strauss Hauer & Feld LLP.
U.S. Trade Representative Michael B. Froman has acknowledged the lingering concerns of the business community. Froman says he is confident that lawmakers will approve the TPP pact once they understand “the benefits for their constituents.”
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(ACC Mentioned) EPA to Crack Down on Chemical Plants and Refineries
Feb 29, 2016 | Chemical & Engineering News
By Jeff Johnson
U.S. chemical companies and refineries are in the crosshairs of an enforcement initiative that EPA unveiled earlier this month.
The new effort is designed to reduce industrial discharges into water, limit toxic air emissions, and cut accidental releases from chemical and other industrial facilities, the agency says.
Some 150 catastrophic accidents occur each year at U.S. facilities that make, use, or store extremely hazardous substances, according to EPA. These incidents release chemicals that cause fatalities, serious injuries, and evacuations. They often occur near low-income or minority communities.
To combat these releases, the agency says its new initiative will focus on innovative prevention measures and better accident response capabilities.
“Enforcement initiatives help EPA focus time and resources on national pollution problems,” says Cynthia Giles, EPA assistant administrator for enforcement and compliance assurance. The initiatives are intended to “better protect communities, especially those overburdened by pollution.”
The American Chemistry Council, a chemical trade association, offered no comment on EPA’s enforcement efforts. The American Petroleum Institute says, “These initiatives are chasing nonexistent problems,” adding that API members strive to comply with federal and state regulations. Refinery emissions have declined significantly in recent years, API says.
However, in the past few years, EPA’s refinery enforcement actions have led to facilities shelling out more than $700 million for settlements of alleged violations, investments in environmental improvements, and penalties, according to EPA data.
The new initiative begins in October and will run for three years.
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Monsanto Given Legal Shield in a Chemical Safety Bill
Feb 29, 2016 | The New York Times
By Eric Lipton
Facing hundreds of millions of dollars in lawsuits, the giant biotechnology companyMonsanto last year received a legislative gift from the House of Representatives, a one-paragraph addition to a sweeping chemical safety bill that could help shield it from legal liability for a toxic chemical only it made.
Monsanto insists it did not ask for the addition. House aides deny it is a gift at all. But the provision would benefitthe only manufacturer in the United States of now-banned polychlorinated biphenyls, chemicals known as PCBs, a mainstay of Monsanto sales for decades. The PCB provision is one of several sticking points that negotiators must finesse before Congress can pass a law to revamp the way thousands of chemicals are regulated in the United States.
“Call me a dreamer, but I wish for a Congress that would help cities with their homeless crises instead of protecting multinational corporations that poison our environment,” said Pete Holmes, the city attorney for Seattle, one of six cities suing Monsanto to help cover the costs of reducing PCB discharge from their sewers.
The House and the Senate last year both passed versions of legislation to replace the 40-year-old Toxic Substances Control Act, a law that theEnvironmental Protection Agency acknowledged had become so unworkable that as many as 1,000 hazardous chemicals still on sale today needed to be evaluated to see if they should be banned or restricted.
Democrats and Republicans — along with the chemical industry and even some environmentalists — agree that the pending legislation would be a major improvement over existing law. But from legal liability shields to state-based regulatory authority, the House and Senate versions have major differences to resolve. The remaining disputes revolve around the basics of pre-emption: Who gets to sue? And who gets to regulate the chemical industry?
Already, attorneys general and top environmental regulators from 15 states have written to leaders in Congress demanding changes.
“Our future work depends on striking the right balance to strengthen the U.S. Environmental Protection Agency’s abilities and funding, without limiting state powers in creating and enforcing needed protections,” said aletter, obtained by The New York Times, sent by the top environmental regulators in California, Connecticut, Minnesota, New Hampshire, New York, Oregon, Washington and West Virginia.
Some of the most vociferous objections relate to the so-called Monsanto Clause. The provision does not mention the company by name, but between the early 1930s and 1977, Monsanto manufactured almost all of the 1.25 billion pounds of PCBs sold in the United States.
The chemicals were initially admired for their ability to prevent fires and explosions in electrical transformers and other equipment. But as the use of PCBs skyrocketed nationwide in products as varied as paints, pesticides and even carbonless copy paper, evidence mounted that they were contaminating the environment and potentially causing health problemsincluding cancer and immune-system complications. The E.P.A. banned their production in 1979.
PCB litigation has surged in the last year as cities and school systems struggle to comply with directives from federal and state regulators to reduce PCB levels in sewer discharge and in caulk once used to construct schools. Separately, a group of individuals who received diagnoses of a form of cancer known as non-Hodgkin’s lymphoma sued Monsanto last year, claiming the company should pay damages.
The Senate Environment and Public Works Committee, in a June reportaccompanying its version of the legislation, asserted that neither existing toxic chemical law nor any revisions pending in Congress should be seen as a way to “pre-empt, displace or supplant” the right to sue for damages in lawsuits like the ones filed against Monsanto.
The House also voted to preserve the right to sue if individuals or local governments believe they have been harmed by a chemical, regardless of future federal regulations of the substance. But a critical paragraph added to the House bill in late May made sure past regulatory requirements by the E.P.A. would continue to disqualify legal claims, and it specifically referred to the section of the 1976 toxic chemical law governing PCBs, giving Monsanto clearer authority in the future to ask judges to dismiss lawsuits filed against it.
Congressional aides involved in the drafting said the language was inserted at the request of Republican staff members at the House Energy and Commerce Committee. One Republican committee aide disputed any suggestion that this was a gift to Monsanto, but he said he was not allowed to discuss the issue on the record.
And Charla Lord, a Monsanto spokeswoman, said the company did not ask for the change.
But by November, Monsanto was clearly aware of the provision. Arguing before a federal court in Texas, a lawyer representing Monsanto cited the House language to say that certain of the legal claims against the company’s past PCB business should be dismissed.
“The House bill specifically exempts PCBs,” ensuring that protection from lawsuits would continue “after the passage of the new law,” the lawyer argued, even though the provision remained locked in negotiation.
The House provision is now drawing protests from local officials suing Monsanto to try to recover costs associated with PCB cleanups, and from lawyers who are trying to collect damages for individuals with health problems linked to PCB exposure, including non-Hodgkin’s lymphoma.
“Taxpayers and public entities would be left holding the bag to pay hundreds of millions of dollars if not billions of dollars cleaning up Monsanto’s PCBs,” said John Fiske, one of the lawyers representing the six cities suing to collect money from the company to help cover cleanup costs. Monsanto has not yet argued that the cities are barred from suing, but Mr. Fiske says he is certain that if the legislation passes, the company will make that argument.
Ms. Lord says Monsanto bears no responsibility for cleanup costs in cities like Seattle, San Jose and San Diego.
“PCBs served an important fire-protection and safety purpose,” she said in a written statement. “If these products were improperly disposed of, Monsanto is not responsible.”
And A. Elizabeth Blackwell, the lawyer representing Monsanto who cited the House language in the Texas lawsuit, says the provision is not a gift to the company, since it would merely preserve the protection the company believes it already has against claims brought under state law.
Monsanto registered to lobby on the chemical safety legislation last July, just after the House passed its version.
The Democratic state attorneys general from California, Hawaii, Iowa, Maine, Maryland, Massachusetts, New Hampshire, New York, Oregon, Rhode Island, Vermont and Washington are mainly concerned with the power that states will retain to regulate chemicals once the revised law passes.
They argue that the Senate version would block states from taking action on potentially hazardous chemicals for as long as four years while the E.P.A. reviewed them for possible regulation. That, the attorneys general say, could create roadblocks for state reviews already underway on products such as flame retardants in furniture cushions and methylene chloride, a chemical used in paint strippers.
“It could really slow down the pace of progress in the states,” said Ken Zarker, a manager at the Washington State Department of Ecology, which has its own chemical testing and regulation program.
The House bill presents a different issue: It would prevent a state from regulating a chemical if the health risk the state agency was targeting was different from the risk the E.P.A. had already acted on, the attorneys general say. For example, an E.P.A. regulation targeting a cancer threat from a cleaning product could block state officials from regulating the same product to protect consumers from respiratory illnesses.
Despite such concerns, Democrats and Republicans — as well as environmentalists and state officials — want legislation passed this year to replace the current law, which was rendered all but unenforceable by a 1991 court ruling.
That ruling left chemical regulation a patchwork of inconsistent state rules and national efforts by retailers like Target and Walmart to curb the sale of some products under pressure from environmental groups.
That hodgepodge has left few satisfied with the status quo.
Representative Diana DeGette, Democrat of Colorado and one of the lead House negotiators on the legislation, said: “We need to give security to consumers, so they know that dangerous chemicals will be regulated, and certainty to the industry, so it knows how chemicals it sells will be treated.”
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In Chemical Reform Law A Hidden Bailout For Monsanto’s Pollution
Feb 29, 2016 | Environmental Working Group
By Alex Formuzis, Vice President for Strategic Campaigns and Melanie Benesh, Legislative Attorney
As the New York Times reports today, federal lawmakers are poised to let Monsanto off the hook for decades of poisoning American communities with a toxic chemical known to cause cancer and nervous system damage, potentially saving the company billions of dollars.
Slipped at the last minute into the House version, H.R. 2576, of a bill to update the broken Toxic Substances Control Act of 1976 is a provision that could shield the company from liability for decades of pollution with a family of chemicals made only by Monsanto: polychlorinated biphenyls, better known as PCBs. While the insertion was so subtle many lawmakers probably did not even notice it, the implications of the Monsanto bailout clause are huge. The implications of the provision -- added at the last minute -- are significant enough that perhaps it should be called the “Monsanto bailout clause.”
The clause, found at section 7(c) of H.R. 2576, would likely block PCB lawsuits by both state and local governments and citizens. It would essentially prevent states from passing their own laws or regulations on PCBs. It is written so broadly it could even stop states and individuals from suing under negligence, product safety, clean air, and clean water laws for damages related to PCBs. At stake are a staggering amount of human and environmentl environmental devastation – and a lot of Monsanto’s money.
PCBs are a global contaminant with a long, ugly history. Virtually every man, woman and child in the world carries various levels of PCBs in their blood today. PCBs are so persistent that decades after being banned they still show up in human umbilical cord blood, according to our studies. These toxic chemicals are found in polar bears in the arctic and marine mammals like whales and dolphins in every ocean on the planet. The entire biosphere is polluted with PCBs that are believed to cause a number of serious health problems, including non-Hodgkin’s lymphoma and other cancers as well as serious neurological disorders in children. PCBs are so notorious that they are among the relative few toxic industrial chemicals banned globally by international law.
The legacy of PCBs stems almost entirely from the work of one company: Monsanto.
Best known today for its pesticide and seed business – including glyphosate, the chemical in Roundup that is the most used pesticide in history – St. Louis-based Monsanto first made its mark as a chemical company. From the early 1900s, Monsanto produced everything from saccharin added to Coca-Cola, later shown be to toxic, to hazardous chemicals used to make aspirin. By the 1930s the company began producing PCBs, heat- and fire-resistant chemicals that were used in an array of industrial and consumer products including plastics, paint, rubber goods, electrical and hydraulic equipment, caulking, floor finishing, tape, dyes and paper.
Not long after Monsanto introduced PCBs to the U.S. and the world, the company discovered the chemicals were in fact toxic, but hid that information from the public. This began a decades’ long environmental cover-up, the likes of which are unmatched, and was not entirely known until documents unearthed in several lawsuits through EWG’s landmark Chemical Industry Archives published in 2003 – the most notorious example occurring in the town of Anniston, Alabama. The Environmental Protection Agency banned PCBs in 1979.
Monsanto got out of the industrial chemical business in 1997 by spinning off a new company, Solutia. However, its PCB woes did not end there. Both companies have been named in numerous lawsuits related to PCB contamination, many of which were filed in 2015 alone. At least six cities—Oakland, San Jose, San Diego, Seattle, Spokane, and Berkeley—all sued Monsanto in 2015 to pay for the cleanup of contaminated waterways. Several hundred individuals have also filed suit. Potentially billions of dollars in cleanup costs and medical expenses are at stake for the company.
As litigation and potential liability mounted for Monsanto in 2015, Congress was also in the process of updating the Toxic Substances Control Act of 1976, or TSCA, the nation’s primary chemical management law. Drafts of H.R. 25676, the House TSCA-reform bill, obtained by EWG from early April and early May say nothing about PCBs. However, when H.R. 2576 was introduced on May 26, 2015, just days after amajor PCB suit was filed against the corporation, the clause had been inserted. The House passed the bill in June. Shortly thereafter, Monsanto began lobbying on TSCA for the first time. Given the timing and potential payoff, one has to wonder whether Monsanto took advantage of these reform efforts to slip in this last-minute provision.
S. 697, the Senate bill reforming TSCA, which passed in December 2015 has a similar provision. However, importantly, lawmakers made it clear in the Senate committee report that they did not intend for the provision to impact private lawsuits. It is now up to lawmakers from both the House and Senate to reconcile the two bills before it becomes law. If the Monsanto bailout clause makes it into the final version of the bill, it could leave countless victims of PCB poisoning without recourse and faultless, cash-strapped local governments to foot the bill to clean up Monsanto’s mess.
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Regulators Lack 'Overall Understanding' of Oil Train Risk -- IG
Feb 29, 2016 | E&E Energywire
By Blake Sobczak
Federal railroad officials have "no overall understanding" of the risks posed by crude oil train traffic, according to a report released last week by the Department of Transportation's Office of Inspector General.
A focus on regional oil tank car hazards has left regulators at the Federal Railroad Administration with a blind spot, the IG concluded following a year-and-a-half-long investigation.
By missing the bigger picture at the national level, FRA "cannot be sure that the regions consider all appropriate risk factors when allocating materials inspection resources," the IG said.
The watchdog cited FRA analyses that account for the volume of hazardous material routed through an area while ignoring the location of population centers and other potentially relevant factors.
The audit also turned up faults in FRA's handling of inspection data and its enforcement program. The IG pointed out that FRA has never referred any oil train safety violations for criminal prosecution, finding 17 cases that could have been pursued more aggressively.
The IG investigation began in October 2014, when the number of oil trains rolling across North America was near its peak (EnergyWire, Nov. 3, 2014). Since then, crude-by-rail shipments have fallen precipitously, declining by more than 35 percent in the fourth quarter of 2015 compared with the same period a year earlier.
Still, a series of high-profile oil train accidents -- including a 2013 derailment and explosion that killed 47 people in Lac-Mégantic, Quebec -- have kept the issue at the forefront for regulators and the public. In mid-2015, the Department of Transportation upgraded standards for the aging tank cars still used to haul crude and other flammable liquids, although critics questioned whether the rules went far enough to protect people living along oil train routes. The National Transportation Safety Board, an independent agency, kept tank car safety on its list of "most wanted" improvements for 2016 despite the downtick in traffic (EnergyWire, Jan. 14).
FRA Administrator Sarah Feinberg said the agency has taken "significant steps to increase penalty amounts paid by regulated entities as part of a renewed focus on enforcement," citing a 12 percent increase in the dollar amount of assessed or settled violations from 2014 to 2015, to $15.1 million.
An FRA spokesman pointed out that last year marked the highest-ever collection rate for civil penalties (EnergyWire, Jan. 21). The spokesman, Matthew Lehner, added that "most of the inspector general's recommendations are already being implemented for a safer rail system."
The IG agreed, saying FRA had "concurred with all of our recommendations and proposed appropriate actions and completion dates." But the office also hinted at an entrenched habit of under-reporting among inspectors, observing that on average, four infractions out of every 100 identified are ever recommended for civil penalties.
On top of that, the penalties that are assessed aren't always tailored to the severity of the original violation, the IG said. The watchdog highlighted one example in which two companies received the same $5,000 fine for offering an unsafe tank car up for transportation, even though one company had "a much worse compliance history."
That amount of money may not be enough to turn heads in the multibillion-dollar crude-by-rail business, the report suggested.
"Inspectors expressed concerns over the deterrent impact of the current penalty levels, with one noting that respondents 'just smile and cut the check,'" the IG said.
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Industry Turns to Empty Rail Cars for Extra Storage Space
Feb 29, 2016 | E&E Greenwire
There is so much crude oil in the United States that traders are experimenting with new storage places. The latest site: empty rail cars.
Standard oil tanks are running out of room due to the highest inventory levels in eight decades. Meanwhile, thousands of rail cars that were intended to transport oil sit idly as shipping by train has become unprofitable due to low crude prices.
For traders, the combination of cheap oil and extra rail cars has fostered a budding side business.
J.P. Fjeld-Hansen, a managing director for trading company Musket Corp., experimented with using rail cars for storage last year. He found he could turn a profit by storing oil while securing a higher delivery price later.
Some industry professionals are calling the practice "rolling storage" -- a landlocked twist on the "floating storage" manufacturers employ to hold crude on large oil tankers.
Using rail cars as storage could be derailed, however, by concerns over safety and space. A spate of high-profile transportation accidents has industry participants worried over leaky cars and the risk of collisions and fires.
"I don't want the liability," said Judy Petry, president of Oklahoma rail operator Farmrail System Inc. "We prefer not to hold a loaded car."
The oil has to go somewhere, however. The recent surge in production has created a giant surplus that the industry is struggling to handle.
BP PLC CEO Bob Dudley joked in a speech this month that by midyear, "every storage tank and swimming pool in the world will be filled with oil".
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BNSF to Improve Rail Capacity in Missouri with $140m Investment
Feb 29, 2016 | Railway-Technology
US freight transport firm BNSF Railway (BNSF) plans to invest $140m to expand capacity and maintain infrastructure in Missouri, US.
Under its 2016 capital expenditure programme, the company aims to operate a safe and reliable network, as well as support customer demand.
The programme will also bring capital investments more in line with forecasted customer freight service demand.
The maintenance programme will include about 1,190 miles of track surfacing and / or undercutting work, the replacement of approximately 65 miles of rail and more than 215,000 ties, as well as signal upgrades for federally mandated positive train control (PTC)."A safe and reliable network is critical to connecting products with key consumer markets whether they are in Missouri, across the nation or around the world."
According to BNSF, regular maintenance of the railroad reduces the need for unscheduled service work, which can slow down the rail network and decrease capacity.
BNSF Springfield Division operations general manager Leif Smith said: "A safe and reliable network is critical to connecting products with key consumer markets whether they are in Missouri, across the nation or around the world.
"Missouri is an important part of our network and ensuring that it remains strong is critical to meeting customer demands as well as the needs of communities near BNSF rail lines in the state."
The company has invested more than $600m in its Missouri network over the past three years.
The investment is part of BNSF's $4.3bn capital investment plan, which will include $2.8bn to replace and maintain core network and related assets.
Further investments include $500m for expansion and efficiency projects, $300m for a US Government-mandated PTC system, and $600m for locomotives, freight cars and other equipment acquisitions.
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(ACC Mentioned) Petrochemical Boom Seen Spurring U.S. Emissions
Feb 29, 2016 | E&E Greenwire
By Amanda Reilly
U.S. petrochemical manufacturing spurred by the shale revolution and low natural gas prices could have big greenhouse gas impacts, environmentalists today warned in a report.
The Environmental Integrity Project highlighted dozens of petrochemical projects proposed in response to low oil and gas prices.
The 140 petrochemical projects proposed or approved in the last five years are permitted to produce 179 million metric tons of carbon dioxide equivalent each year, the report found.
"You have this bulge that is going to start to show up in the greenhouse gas inventory," said Eric Schaeffer, executive director of the Environmental Integrity Project. "All of a sudden, boom, you have 200 million tons of carbon that you didn't build into functions about where carbon trends are going in the U.S."
In a statement provided to Greenwire, the chemical industry said that shale drilling has made possible a "historic expansion" in the sector and that increased manufacturing in the United States would help reduce global greenhouse gas emissions. The American Chemistry Council highlighted achievements in increasing the efficiency of manufacturing processes.
"The new shale-related U.S. chemical industry production is advanced, state-of-the-art and energy-efficient," the American Chemistry Council said in the statement.
The Environmental Integrity Project calculated greenhouse gas emissions of proposed projects through Clean Air Act New Source Review permitting data kept by states and U.S. EPA. The data represents the first wave of manufacturing projects that are supposed to have enforceable greenhouse gas limits.
The group found that, in 2015, 44 petrochemical construction and expansion projects that were either proposed or permitted are likely to pump 86 million metric tons of carbon dioxide equivalent into the atmosphere. That's equivalent to the emissions from 19 coal-fired power plants, the environmentalists said.
In 2014, 45 projects were expected to release up to 53 million metric tons of carbon dioxide equivalent, the report found.
Louisiana was home to nearly half the proposed projects in 2015. The state could see its greenhouse gas emissions grow by a third if all the projects are completed, the Environmental Integrity Project report found.
Schaeffer said the report is meant to highlight a sector that's often ignored in calculations of the carbon footprint of the natural gas industry.
"If 19 baseload coal plants went in, that would be news. Here you have the equivalent, and it's getting very little attention," Schaeffer said, adding, "The focus is upstream and on power plants. This sector, this sort of mid- and downstream stuff, gets less attention."
Schaeffer called the estimates "conservative" because they only include permitting data for large projects that was available online. The estimates also don't include many projects that are permitted in stages, he said. Policymakers will have to take these increased emissions into account, he said, and may have to require larger emissions reductions elsewhere to make up for them.
The Environmental Integrity Project, though, acknowledged that not all the proposed projects will be built, including some of the largest liquefied natural gas plants that are projected to release the most emissions.
Greg Bertelsen, senior director of energy and resources policy at the National Association of Manufacturers, today agreed that shale drilling has had a "huge impact" on the manufacturing sector.
"For many manufacturers, energy is one of the biggest, if not the biggest, input costs," Bertelsen said. "So when we have access to ample supplies of affordable energy, and those energy costs are stable, we find ourselves in a competitive advantage with manufacturers around the world."
According to the American Chemistry Council, in the last few years during the expansion in hydraulic fracturing, 266 projects valued at $164 billion have been completed, are under construction or are in the planning phase.
The industry group said that, since 1992, its members have reduced their greenhouse gas intensity by 42 percent. ACC said the chemistry industry was key in creating innovative new products, such as high-performance insulation for buildings and lightweight packing, that are helping many sectors reduce their greenhouse gas emissions.
"Chemistry solutions play an important role in helping society save energy and reduce greenhouse gas emissions," the group said.
NAM's Bertelsen pushed back against the Environmental Integrity Project's premise that emissions from new and proposed petrochemical manufacturing projects are not being taken into account.
He also said that, even if manufacturing projects cause a bump in domestic emissions, making products in the United States will lower greenhouse gas emissions globally.
"If that manufacturing is not taking place here, it's likely that it's taking place in some other country," he said. "As know from the data, we are more efficient on a greenhouse gas basis than other competitors."
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States Still Settling on Post-Stay Plans
Feb 29, 2016 | E&E Interactive
By Emily Holden and Rod Kuckro
E&E staff continue to track the wide range of state responses to the Supreme Court's decision to stop implementation of the Clean Power Plan. Check out the most recent updates:
California is continuing to plan a suite of changes to its cap-and-trade market to fit with Clean Power Plan requirements and link with potential trading partners (ClimateWire, Feb. 25).
Colorado state officials said they won't develop a "full" compliance plan (ClimateWire, Feb. 23).
In Louisiana, the new Democratic governor is moving forward with carbon-cutting talks, even though the Republican attorney general is suing over the Clean Power Plan (EnergyWire, Feb. 22).
Nevada, which is not challenging the rule in court, last week argued in legal briefs that the regulation would harm the state (EnergyWire, Feb. 24).
New Mexico state officials are assessing whether to continue planning but say a "bipartisan legislative solution" would be better than the Clean Power Plan.
Oregon is "reassessing the landscape" after the stay (ClimateWire, Feb. 26).
Indiana Gov. Mike Pence (R) has refuted news reports that the state would not develop a plan if the rule is upheld (ClimateWire, Feb. 26).
Stay tuned for stories from Montana, where ClimateWire reporter Elizabeth Harball is reporting this week on the future of the Colstrip coal plant and the impact of climate regulations on the state's politics and economy.
Today in Boston, EPA chief Gina McCarthy will speak at the Harvard School of Public Health. In Washington, D.C., the ARPA-E Energy Innovation Summit kicks off. McCarthy will speak there Wednesday.
Tomorrow morning, Arizona's Department of Environmental Quality will hold its second meeting since the Supreme Court decision. Arizona is assessing whether to continue planning, and Air Quality Division Director Eric Massey said DEQ would collect feedback about how to proceed and provide stakeholders with an update on technical work. DEQ has plans to meet again April 5, according to an agenda.
Tomorrow evening, Delaware's Department of Natural Resources and Environmental Control will hold a public workshop and listening session on the 2016 program review for the Regional Greenhouse Gas Initiative. RGGI, a Northeastern cap-and-trade program that Delaware participates in, is looking at how to revise its system to comply with the Clean Power Plan. See the most recent comments on RGGI's program review here.
In D.C. on Wednesday, Resources for the Future will hold an event to consider the merits of carbon taxes versus cap-and-trade programs.
On Thursday, as part of Advanced Energy Economy's Energy Forward event, company executives will release their 2016 market report. EnergyWire reporter Rod Kuckro will participate in a media roundtable discussion on energy policy, politics and the 2016 election.
On Thursday evening in St. Paul, Minn., the Legislative Energy Commission will meet to discuss "major pressures on Minnesota electric utility prices." The agenda includes presentations from Xcel Energy, Minnesota Power, Great River Energy and Otter Tail Power. Minnesota is one of the states charging ahead with Clean Power Plan planning, and the rule is sure to come up.
In case you missed it:
Last Monday, the Clean Power Plan legal briefing wars began (EnergyWire, Feb. 22).
Running out of options on Capitol Hill, Republican lawmakers expressed hope of influencing court action on the Clean Power Plan (E&ENews PM, Feb. 23).
States may plan discreetly to avoid "backlash," according to a White House official (ClimateWire, Feb. 25). National Association of Regulatory Utility Commissioners President Travis Kavulla tells E&ETV states shouldn't waste time focusing on the details of the rule (OnPoint, Feb. 22).
Renewable energy growth could slow more than 30 percent without the Clean Power Plan, despite Congress' recent extension of wind and solar tax credits, according to the Rhodium Group (ClimateWire, Feb. 25).
EPA is unlikely in the short term to use Section 115 of the Clean Air Act to regulate greenhouse gases (E&ENews PM, Feb. 24). Despite legal circle talks about the alternative, it isn't catching on (ClimateWire, Feb. 26).
The Energy & Environment Legal Institute says EPA took "marching orders" from lobbyists. The agency says the conservative group should not be allowed to file documents alleging those orders in federal court (E&ENews PM, Feb. 25).
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Wash. Scraps Proposed Carbon Rule, Plans New Steps on Climate
Feb 29, 2016 | E&E Climatewire
By Debra Kahn
Washington air regulators last week withdrew their plan to cap large greenhouse gas emitters, promising to present a new proposal in the spring that some observers hope will be more akin to other carbon regulations in the United States.
The now-defunct proposal by Gov. Jay Inslee's (D) Department of Ecology would have subjected emitters of more than 100,000 tons per year of carbon to a 5 percent reduction every three years. About 70 facilities were targeted, including refineries, landfills and aerospace manufacturers.
Observers are hopeful that the state will replace it with something more amenable to other state programs, and something that can cooperate better with U.S. EPA's Clean Power Plan. The Obama administration's CPP allows states to trade emissions credits among themselves. Despite the stay imposed earlier this month by the Supreme Court, Washington has pledged to continue supporting the federal plan.
"If you build a rule more on best practices, it might be easier to have those two puzzle pieces fit together," said Vlad Gutman, Washington director of the nonprofit Climate Solutions.
It was unclear how Washington's previous proposal would have meshed with the Clean Power Plan. It relied heavily on the use of offsets, which the CPP does not allow. It also would have allowed emitters to comply with their individual caps by submitting pollution allowances from other programs, including California's emissions market and the Regional Greenhouse Gas Initiative (RGGI) in the Northeast (ClimateWire, Feb. 12).
It had drawn a vaguely disapproving comment from the nine-state RGGI, which said the draft rule "raises substantive issues relating to the potential use of RGGI allowances."
Companies may get 'special consideration'
On Friday, the agency announced that the feedback it had received so far was substantive enough to withdraw the rule and come up with a new one in the spring. Ecology Department spokeswoman Camille St. Onge said manufacturers, in particular, had asked for "special consideration," as had other organizations "who are sensitive to global pricing for their products."
Other commenters asked for more detail on how the crediting system would work, she said.
REC Silicon is one company that requested special consideration. Three state lawmakers wrote to the Department of Ecology on REC Silicon's behalf earlier this month to ask for offsets and credits, arguing that the company's polysilocon solar products are aimed at reducing carbon dioxide. The lawmakers also asked for loosened emissions reduction requirements for businesses that are using the best technology available in their industry.
The agency will keep meeting with businesses and other groups while staff members rewrite the rule. Workshops that had been scheduled for March will be postponed, St. Onge said. Once the new proposal comes out, the agency will have six months to finalize it.
Observers stressed that the Department of Ecology's repudiation of the previous proposal is somewhat procedural, rather than a reflection of a significant policy shift. The agency is unable to make substantial changes to a proposed regulation. It's required instead to introduce a new rule with another public comment period.
Windfall profits
But the main change observers hope the Department of Ecology will make is to institute a straightforward cap on emissions, rather than subject each emitter to different individual caps.
"It's useful to have a total economywide cap," Gutman said. "Once you have that cap, that allows more cohesion and integrity when you're dealing with businesses entering the market and businesses exiting the market."
A key advantage of having an economywide cap is that individual businesses can't get extra credit for cutting emissions they were scheduled to eliminate anyway.
TransAlta's Centralia plant, which accounts for more than half the state's power-sector carbon emissions, could have voluntarily participated in the Department of Ecology's program, even though it's scheduled to shut down or convert to natural gas by 2025.
"If they shut down, they have all these credits on the market," explained Kelly Hall, Washington policy coordinator for Renewable Northwest, a coalition of renewable energy companies, environmental groups, law firms and ratepayer advocates.
"It's a windfall profit issue. An aggregate cap would ensure that emissions do not go above that cap, whereas when you don't have that, you could have some perverse leakages to new facilities and increase emissions."
Hall said she hopes the new version will be more environmentally robust.
"I think there is an opportunity not only to make the rule better but take the Clean Power Plan into account while they're drafting the rule, as well," she said.
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Aerospace Companies Sue EPA Over Revised MACT Rule
Feb 29, 2016 | Inside EPA
Aerospace industry companies are suing EPA over its revised maximum achievable control technology (MACT) air toxics rule for the sector, which left existing emissions limits largely unchanged but introduced new limits for specialty coating operations, eliminated some regulatory exemptions, and tightened some reporting requirements.
In a suit filed Feb. 5 with the U.S. Court of Appeals for the District of Columbia Circuit, the Aero MACT Group, anad hoc coalition of unnamed aerospace companies, asks the court to review the MACT rule, though the suit does not list reasons for the litigation.
EPA's final rule, which the agency issued Dec. 7, left MACT air toxics limits for the sector mostly unchanged following a risk and technology review of the industry, which was required eight years after the initial promulgation of air toxics regulations. The agency found no "residual risk" that needed to be mitigated by tougher regulation, and also found no technological developments in control technologies that would warrant tougher standards.
However, the rule introduced first-time emissions limits on specialty aerospace coatings, which are used to coat aircraft for specialized purposes.
It also eliminated regulatory exemptions for periods of startup, shutdown and malfunction (SSM) of equipment in line with agency policy following rulings against such exemptions by the D.C. Circuit. The rule makes changes to recordkeeping and reporting requirements to make them applicable to periods of SSM.
Although it is not involved in the litigation, the Aerospace Industries Association (AIA) in a Feb. 5 petition for administrative reconsideration filed with EPA outlines criticisms of the rule that could surface in the lawsuit.
"The Final Rule provides no compliance period for new obligations imposed on sources other than existing specialty coating operations, and retains rule language relating to the original rule deadline of 1998, creating ambiguity regarding the timeline for implementing the new requirements," AIA says. The group asks EPA to remedy this and "either issue a technical correction that provides three years for compliance, consistent with the specialty coating provisions as applied to existing operations or otherwise provide a regulatory clarification that the compliance deadline for new obligations unrelated to specialty coatings is three years."
Also, AIA says that requirements that industry operators estimate the amount of emissions associated with emissions limit violations should be clarified to state that it does not apply to non-numerical "work practice standards," which are an alternative to hard numerical emissions limits.
"For work practices, there are practical limitations on estimating emissions and imposing these requirements on work practice failures will be burdensome," AIA says. For example, "It is impracticable to estimate emissions from a rag that may have solvent in it that is not in a container as required."
AIA says that EPA also failed to give proper notice of its requirement in the final rule to tighten regulation pertaining to storage of waste containing air toxics, but not classified as hazardous.
"The increased stringency of the waste storage requirements will impose significant costs on AIA members, both in terms of the substantive requirements themselves and for developing systems to assure compliance. Further, the lack of a compliance date for this requirement needs to be remedied so that the industry will know when it is required to comply," AIA says. The group asks EPA to stay these requirements pending reconsideration.
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Brick Makers, Enviros Clash Over Litigation on Rules
Feb 29, 2016 | E&E Greenwire
By Sean Reilly
As the House prepares to vote this week on legislation to freeze implementation of new emissions limits on brick makers, industry groups and environmentalists are clashing in federal court over how to handle litigation surrounding the rules.
Those rules are the target of four separate lawsuits that have been consolidated by the U.S. Court of Appeals for the District of Columbia Circuit.
In a motion filed late last week, attorneys for brick and tile manufacturers urged the court to put all four suits on hold until U.S. EPA officials decided whether to grant administrative petitions to reconsider the regulations. If the agency opens a reconsideration proceeding, that "may partially or completely moot issues raised in these consolidated cases," the Brick Industry Association and two other plaintiffs said in the filing.
"Holding these cases in abeyance thus promotes judicial efficiency," they added.
But in a separate motion, the Sierra Club and Natural Resources Defense Council asked the court to cut their suit loose from the rest "so that it may proceed without delay." In the filing, the two environmental groups -- who allege that the new standards are too weak -- said their claims would not be affected by any reconsideration proceeding and that moving ahead with their case would not inconvenience the court.
Under the Clean Air Act, they added, EPA originally was required to issue hazardous air pollution regulations for brick and clay ceramics manufacturers in 2000. After the appellate court struck down the agency's initial try in 2007, EPA published a new version last October. More delay, the groups said, will prolong the public's exposure "to unlawfully high levels of toxic air pollution that threaten their health."
In an order this morning, the court set a March 25 deadline for responses to both procedural motions. EPA has not yet addressed in court either side's broader challenges to the new regulations.
Later this week, the House is expected to vote on H.R. 4557, sponsored by Rep. Bill Johnson (R-Ohio), which proposes pushing back the timeline for compliance with the new limits until all legal challenges are settled. In light of the fate of the first set of regulations, the industry should know that the current version will survive before spending money on new pollution controls, Johnson said.
But acting EPA air chief Janet McCabe and some congressional Democrats object, saying that if signed into law, the bill would act as an incentive to string out litigation as long as possible.
The House Rules Committee has scheduled a Wednesday meeting to discuss any proposed amendments to the bill, along with the terms of floor debate.
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EPA Seeks Feedback on Sulfur Dioxide Designations
Feb 29, 2016 | E&E Greenwire
By Sean Reilly
U.S. EPA is set to launch a 30-day public comment period on recently proposed attainment designations for its 2010 sulfur dioxide standard.
After receiving notification of EPA's recommendations earlier this month, affected states "now have an opportunity to demonstrate why they believe an intended modification by the EPA regarding those specified areas may be inappropriate," the agency says in a notice scheduled for publication in tomorrow's Federal Register.
But EPA is also interested in getting input from other "interested parties," the notice adds. Although not legally required under the Clean Air Act to seek public feedback in this instance, the agency is doing so to gather more information before making its final attainment determinations, according to the notice.
In the recommendations made public on Feb. 17, EPA proposed designating a dozen areas in eight states as failing to meet the 75 parts per billion primary ambient air quality standard for sulfur dioxide (Greenwire, Feb. 17). The agency plans to make the final determinations by July 2.
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A New Electric Grid Calls for New Reliability Rules
Feb 29, 2016 | E&E Energywire
By Peter Behr
The lumbering coal-fired power stations facing closure because of age and air emissions have been the workhorses of the U.S. high-voltage electric transmission grid. When the grid was stressed and frequency dropped, they ran harder.
Now, as tomorrow's grid is reshaped with more wind farms, solar arrays and gas-fired plants, experts warn that new regulation will be needed to ensure that these new resources provide the frequency support and other essential services that the coal plants delivered.
According to the North American Electric Reliability Corp. (NERC), those cleaner, greener sources of power provide a "significantly lower level of essential reliability services than conventional generation."
The Federal Energy Regulatory Commission (FERC) also said there is a "significant risk" that primary frequency support -- the initial source of backup power for the grid -- could be weakened if gas, wind and solar don't offer the services the shuttered coal plants provided.
For its part, the American Wind Energy Association says that modern wind units can match or exceed the grid stability capabilities of conventional power plants. For example, modern wind-powered generators can ramp up or down in seconds in response to the grid's needs.
Still, according to NERC, there is no guarantee that renewable and gas-fired generation will step up when needed. Some generators, including coal units, are not providing the reliability services today because it hurts their bottom line. New market incentives or operating rules are needed, experts say.
"If you continue going down this route, you're going to have significant challenges in managing disturbances," said John Moura, NERC's director of reliability assessment, in an interview withEnergyWire.
Conventional power plants with large spinning generators have traditionally cushioned the grid when frequency dropped too low, putting more energy into the system automatically, just by running harder. To allow power to flow across the grid, generators' frequencies are kept very closely aligned. If grid frequencies fall too far outside of the narrow operating bands, that can cause a brownout or blackout.
FERC is particularly concerned that some conventional coal- and gas-fired generators are also limiting the reliability services they provide by altering operational settings for economic reasons, FERC concluded in announcing an inquiry on the issue this month (FERC Docket RM16-6).
Switched-off governors
Conventional generators typically operate with governors that can keep the units running at a little less than full capacity, creating "headroom" to boost power quickly when the grid was stressed.
But "a significant portion" of generator operators east of the Rocky Mountains have configured governor settings "that either inhibit or prevent the provision of primary frequency response," FERC said. While the frequency issue is not a major reliability threat today, NERC said, it is taking longer for the eastern and western U.S. grid networks to bounce back from a frequency disturbance.
FERC's inquiry asks whether new generators should be required to provide frequency response services, and how services should be compensated.
The search is on for some combination of new rules and financial incentives that will ensure that generators and transmission operators have enough reliability services on hand, and will deliver them when needed.
"It's critical to look at what these essential reliability services are," said Joseph Eto, staff scientist and leader of the electricity markets and policy group at the Lawrence Berkeley National Laboratory.
The original industry guidelines, which formed the basis for today's standards, "were developed under a certain technological regime where certain things didn't have to be stated as explicitly," he added. "And as the technologies change and the way the grid is operated changes, more specifics may be required.
"There was a time when all generators had primary frequency control, and it was a given that they would be using those frequency controls -- the governors on the generators. Every steam generator had it turned on, because it was the unquestioned way you would operate the business. They were running in a way that allowed them to provide primary frequency control."
That changed with the reorganization of wholesale power markets in much of the United States in the 1990s, which put generators in price competition with each other in those markets.
Maintaining headroom to be able to provide frequency support could mean foregoing opportunities to sell more power.
State utility commissioners were briefed on these challenges last week by Moura, who summarized findings by a NERC task force on essential reliability services.
Ensuring the bare minimum
The task force recommended that "All new resources should have the capability to support voltage and frequency. Ensuring that these capabilities are present in the future resource mix is prudent and necessary."
"All resources have to provide this," NERC's Moura said. "It is a bare minimum of what you need to do to be a player on the grid."
The NERC task force has not proposed market incentives or regulations to address the issue, he said. The issue is different across the landscape of North America, with different environments in regions with wholesale electricity markets and traditional vertically integrated utilities, he said. "We try not to get into that solution space. It's up to utilities to figure out what is the best way," Moura said. "You have all the discretion on how you get there, but this is where you have to be."
NERC has identified three critical reliability services: frequency support, fast ramp-up and ramp-down response by generators, and voltage support. The latter is centered on the need for "reactive power," an esoteric component of electricity systems that maintains electromagnetic properties on transmission lines that allow power to flow. A plunge in reactive power as a succession of power lines tripped off in eastern Ohio helped precipitate the cascading 2003 Northeast Blackout.
Reactive power dissipates relatively quickly and must be supplied by local generators or electronic devices -- another reliability issue when the grid loses a long-running coal-fired plant that historically provided reactive power for its area, NERC noted.
In November, FERC issued a proposed rulemaking that would require all new or upgraded generators to be equipped to supply reactive power in order to connect to the grid. The order would cover wind generators, now exempt from such a requirement (FERC Docket RM16-1).
"The engineering is not the question," Eto said. "It's the rules and the incentives and the enforcement, and really the clarification of the requirements.
"Most of these are stakeholder processes," he said. "So you could say, well, if I were king, I would just direct these things. But we have an approach for developing these rules, and debating them, and having an open discussion before we move forward, and those processes take time. And many of us think that is appropriate."
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