Preview Newsletter
PM ACC 6/7/2016
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(ACC Mentioned) Turnover of Millennials and Other Workers Challenge North American Chemical Companies as Retirement Surge Looms, New Survey By Accenture And American Chemistry Council Reports
Jun 7, 2016 | Yahoo News
North American chemical companies face workforce turnover issues, which if not resolved, could mean more unplanned operations disruptions, more hiring and training costs and more efforts to maintain safety — reports a new survey by Accenture (NYSE: ACN) and the American Chemistry Council (ACC). -
Sen. Paul Lifts TSCA Bill Hold, Clearing Path for Vote
Jun 7, 2016 | Inside EPA
Sen. Rand Paul (R-KY) is lifting his procedural hold on pending legislation to overhaul the Toxic Substances Control Act (TSCA) after reading the legislation, clearing the path for a final Senate vote on the bill as early as this week that would send the measure to... -
Updated Rule Offers Better Oversight of Nanotech Chemicals
Jun 7, 2016 | Wall Street Journal
By Ben DiPietro
A bill approved by the U.S. House of Representatives that would update federal chemical safety standards for the first time in 40 years doesn’t include specific controls on chemicals used in nanotechnology but does offer new ways for regulators to better monitor... -
Green Chemistry Council Launches Preservatives Competition
Jun 7, 2016 | Chemical Watch
By Vanessa Zainzinger
The Green Chemistry and Commerce Council (GC3) is holding a competition for the development of new preservatives for personal care and household products. -
‘Intended Uses’ Still Missing from Authorisation Applications, Says ChemSec
Jun 7, 2016 | Chemical Watch
Upstream applicants are "complicating" the REACH authorisation process by not specifying the intended use of chemicals in their applications, says NGO ChemSec. -
EPA Tells Rep. Israel a Household Action Level for Lead in Drinking Water Will Come “Later This Year”
Jun 6, 2016 | Environmental Defense Fund
By Tom Neltner
In early 2015, the Environmental Protection Agency (EPA) first committed to developing a level that would provide context for those trying to assess an infants’ risk from lead in their drinking water. -
Echa Issues Advice on Alternative Test Methods
Jun 7, 2016 | Chemical Watch
Following last week's amendments to testing requirements in Annexes VII and VIII of REACH, Echa says companies need to take the changes into account when submitting information. -
(ACC Mentioned) Chemistry Council Hails Ethane Cracker News from Shell
Jun 7, 2016 | Akron Beacon Journal
By Bob Downing
From a press release today from the American Chemistry Council: SHELL DECISION TO BUILD PENNSYLVANIA CRACKER AFFIRMS LEADING ROLE OF U.S. CHEMICAL INDUSTRY. -
Shell CEO Eyes Top Spot with Post-BG Deal Refocus
Jun 7, 2016 | Reuters
By Ron Bousso and Karolin Schaps
Royal Dutch Shell (RDSa.L) plans to increase cost savings to $4.5 billion following its $54 billion acquisition of BG Group which Chief Executive Officer Ben van Beurden said will make it the best oil company investment, ahead of Exxon Mobil (XOM.N). -
Royal Dutch Shell’s High-Wire Act
Jun 7, 2016 | Paul J. Davies
By Wall Street Journal
For Royal Dutch Shell, austerity is tricky. The Anglo-Dutch oil and gas group is doing almost everything it can to make its finances work. The trouble for investors is that it still may not be enough. -
How a North Dakota Oil Billionaire is Helping Shape Trump’s Views on Energy
Jun 6, 2016 | Washington Post
By Steve Mufson
The difficulty of deconstructing Donald Trump’s views on energy can be boiled down to the case of the dead ducks. About six minutes into a May 26 energy address he gave in North Dakota, Trump condemned the Environmental Protection Agency’s “use of... -
POLITICO Pro Q&A: Deputy Energy Secretary Elizabeth Sherwood-Randall
Jun 7, 2016 | PoliticoPro
By Darius Dixon
Deputy Energy Secretary Elizabeth Sherwood-Randall is the Energy Department’s chief operating officer, so just about everything DOE does on nuclear weapons, energy R&D and environmental cleanup goes by her desk. -
As SoCal Braces for Aliso Canyon-Related Blackouts, These Energy Programs Can Help
Jun 7, 2016 | Environmental Defense Fund
By Jayant Kairam
Adding insult to injury, Californians learned this spring that the disastrous four-month methane leak at the sprawling Aliso Canyon natural gas storage facility could result in a new problem: outages. -
Explosive LNG Issues Grab PHMSA's Attention
Jun 7, 2016 | E&E Energywire
By Jenny Mandel
The Department of Transportation's May 19 workshop on liquefied natural gas (LNG) safety started with a bang. -
North Dakota State, Industry Officials React to Oregon Crude Train Derailment
Jun 7, 2016 | Natural Gas Intelligence
By Richard Nemec
Rail transport of Bakken crude oil is again in the spotlight following the derailment of 16 of 96 Union Pacific Railroad (UP) crude-hauling tank cars in Oregon last Friday just east of the Columbia River Gorge. -
Iowa Regulators OK Dakota Access Pipeline Construction Start
Jun 7, 2016 | Natural Gas Intelligence
By Richard Nemec
Iowa regulators on Monday on a 2-1 vote authorized Energy Transfer Partners' (ETP) to start construction in the fourth and final Midwest state needed for its 1,172-mile pipeline project to ship Bakken crude oil to markets along the East and Gulf coasts. -
Early Air Data Exacerbate Western States' Fears on Meeting Ozone NAAQS
Jun 7, 2016 | Inside EPA
By Stuart Parker
Preliminary air quality data for 2015 show that ozone levels in Western mountain states -- driven in part by heat and wildfires -- reached levels that in many cases exceed EPA's new ozone standard, exacerbating concerns among some states about their ability... -
EPA Asks Judge to Dismiss N.C. Ozone Lawsuit
Jun 7, 2016 | E&E Greenwire
By Sean Reilly
A federal judge should throw out North Carolina's lawsuit targeting a regional ozone-reduction program because the state has failed to cite resulting harm, U.S. EPA argues in a new court filing. -
Kennedy's CWA Opinion Prompts Debate on Fate of EPA Jurisdiction Rule
Jun 7, 2016 | Inside EPA
By Bridget DiCosmo
Supreme Court Justice Anthony Kennedy's concurring opinion in a ruling subjecting Clean Water Act (CWA) jurisdictional findings to judicial review is prompting debate over whether it provides clues on how the justice might rule on EPA's contested CWA... -
US, India to Enter Paris Climate Agreement, Work on Nuclear Power Deal
Jun 7, 2016 | The Hill - E2 Wire
By Devin Henry
President Obama and Indian Prime Minister Narendra Modi on Tuesday announced a suite of new climate-related initiatives, including a deal on the Paris climate accord and a deadline for a major nuclear energy project in India.
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Jun 7, 2016 | Yahoo News
North American chemical companies face workforce turnover issues, which if not resolved, could mean more unplanned operations disruptions, more hiring and training costs and more efforts to maintain safety — reports a new survey by Accenture (NYSE: ACN) and the American Chemistry Council (ACC). The survey was released today at the Council's annual business meeting.
Chemical companies face a shortage of experienced workers and must replace a substantial number of retiring baby boomers in the coming years. More than 20 percent of the chemicals workforce is approaching retirement in the next three to five years, said 40 percent of respondents.
If the aging workforce issue is not resolved in the next three to five years, 86 percent said the chemical industry's profitability will suffer significantly. This includes 49 percent of chemical companies that agree and 37 percent that strongly agree with this point of view at a time when industry expansion is expected to continue in North America.
Furthermore, only approximately one quarter of North American chemicals companies retained 90 percent or more of their millennial employees hired in the past three years. Most saw a 30-50-percent attrition rate among millennials. This compares with a recentAccenture Strategy study showing that new university graduates expect to stay on the job for more than three years.
"Abundant supplies of domestic natural gas from shale have moved the U.S. from being a high-cost producer of key petrochemicals and resins to among the lowest cost producers globally, creating a period of unprecedented growth," said ACC President and CEO Cal Dooley. "We currently have more than 262 new chemical projects announced that are valued at over $161 billion. For the first time in more than a decade, the U.S. chemical industry is once again creating good, high-paying American jobs and it's vital that we be able to attract and retain a talented workforce that helps us continue to drive economic expansion, innovation, and global competitiveness," he added.
Executives interviewed noted that chemical companies have effective knowledge transfer programs and can hire millennials with non-technical degrees and train them in the technical knowledge to do the job. The challenge for some is keeping millennials for long, productive careers in an industry considered "old," despite its track record of tremendous innovation.
"Companies in all industries have a range of generations in their workforce," said Julie Sweet, Accenture's group chief executive – North America. "We find that across generations, employees all want interesting work, an opportunity to make a meaningful contribution and a balanced life. By focusing on transparency, providing a hyper-personalized employee experience centered around these values, and providing a feedback loop to keep close to their people, companies can attract and inspire the best people across the generations."
Most chemical firms compete with peers for personnel, filling open positions mainly by hiring from other companies in the industry. This makes for a limited talent pool and fierce competition. More than half (52 percent) of chemical companies reported hiring professional talent from competitors. This compares with US Bureau of Labor Statistics data (from May 2015) showing that two-thirds of chemistry, chemical engineer and material science graduates, fields desired by chemical companies, work in in other industries, including government agencies and energy firms.
Exacerbating the workforce challenges is the so-called "missing middle" of workers ages 35 to 54. This is also a tight labor pool from which to recruit and replace retiring workers with valuable expertise.
"Now that innovation in the U.S. energy sector has created a surge in demand for chemical professionals, particularly skilled craft and technical workers, the industry needs to work collaboratively to close the growing gap," said Peter Cella, incoming ACC chairman of the board and President and CEO of Chevron Phillips Chemical Company. "Awareness is a critical first step, but we also need to work closely with our schools, communities and government leaders to ensure resources are in place to prepare tomorrow's workforce."
"When you sum it all up, we are fighting the war for talent on many fronts," said Inga Carus, ACC board member and chair of Carus Corporation. "We must not only hire the right people as older workers retire and transfer their knowledge to a younger work force, we must bridge the gap with millennials and get them excited about what we do with chemistry as we develop new products to meet the needs of their generation."
Another challenge is that new technologies are changing the face of the chemical industry workforce. Nearly two-thirds (63 percent) of respondents said that half or more of the workforce is changing compared to three years ago due to the advent of new skills, automation, robots and cognitive agents. Most (78 percent) expect further change due to digital technologies automating jobs, causing moderate (56 percent) to significant (22 percent) workforce reductions, though more skilled support jobs will be needed.
"While all of these workforce issues exist, 60 percent of chemical companies said they are adapting to digital technologies, but with some resistance," said David Yankovitz, managing director and chemical practice lead for Accenture. "They also recognize a greater need to embrace digital technologies to gain a competitive advantage. So as the industry overcomes this resistance and advances a people-first mindset to bolster the workforce, success will come in many areas from the production plant to the back office to the market with new products and services."
https://www.yahoo.com/news/turnover-millennials-other-workers-challenge-north-american-chemical-120000868.html
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Sen. Paul Lifts TSCA Bill Hold, Clearing Path for Vote
Jun 7, 2016 | Inside EPA
Sen. Rand Paul (R-KY) is lifting his procedural hold on pending legislation to overhaul the Toxic Substances Control Act (TSCA) after reading the legislation, clearing the path for a final Senate vote on the bill as early as this week that would send the measure to President Obama for his expected signature into law.
Paul “believes in reading legislation before voting for or against it. Having been given the opportunity to review this legislation, he’s now prepared to allow a vote to occur,” says a spokeswoman for the senator.
The House approved the bill May 24 in a 403-12 vote. Senators supportive of the bill had hoped to approve it before Congress' Memorial Day recess, but Paul placed a hold on the bill May 26, saying he needed more time to read it. Paul said he had concerns about the bill's criminal enforcement and state preemption provisions.
The bill would be a significant overhaul of the 1976 toxics law and give EPA major new powers to address both existing and new chemicals of concern, funded in large part through industry fees.
The bill also removes a number of obstacles in current law that many say prevent EPA from adequately regulating chemicals believed to be unsafe, such as removing language that would require the agency to identify the “least burdensome” option before regulating a chemical. That language is believed to have hindered EPA's efforts to ban asbestos following a 1991 U.S. Court of Appeals for the 5th Circuit decision in Corrosion Proof Fittings v. EPA that the agency failed to adequately identify the least burdensome option.
http://insideepa.com/news-briefs/sen-paul-lifts-tsca-bill-hold-clearing-path-vote
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Updated Rule Offers Better Oversight of Nanotech Chemicals
Jun 7, 2016 | Wall Street Journal
By Ben DiPietro
A bill approved by the U.S. House of Representatives that would update federal chemical safety standards for the first time in 40 years doesn’t include specific controls on chemicals used in nanotechnology but does offer new ways for regulators to better monitor the use of such chemicals.
Nanotechnology allows companies across a wide spectrum of industries to make products perform in ways they never were able to–for instance making them stronger, lighter or more durable, said Gerry Finley, senior vice president for casualty underwriting atMunich Re America. Nanotechnology is found in everything from common consumer products such as clothing, cosmetics and toothpaste to construction materials, battery technology and medical uses.
Some of the chemicals used in nanotech products or processes were regulated under the Toxic Substances Control Act but many of the chemicals used in nanotech processes were not on the original inventory list of chemicals the U.S. Environmental Protection Agency could review, said Lynn L. Bergeson, a founder at law firm Bergeson & Campbell, which focuses on issues involving domestic and international chemical product approvals.
Some of these chemicals were excluded from the original list because their molecular structure was so small that they were just presumed to be safe, said Ms. Bergeson. But with the advent of nanotechnology and the more prevalent use of these chemicals, therevised rules—expected to be approved by the U.S. Senate and signed into law by President Barack Obama—would allow the EPA to review and consider the size of the molecule and make a determination as to whether the use of such chemicals “might give rise to risks that don’t reveal themselves in the bulk size of the chemical,” she said.
The EPA’s position is if a chemical was on the inventory list and nano-sizing it doesn’t disturb the chemical’s molecular identity, “it’s an existing chemical and life goes on,” said Ms. Bergeson. Now, because of EPA’s new authority under the updated rule, EPA has new authority “to review existing chemical substances which might include a class of chemicals considered existing but which now are being manipulated under technology that could give rise to a new risk.”
Because the chemicals law regulates products and not technologies, chemicals used in nanotech processes were not treated any differently than chemicals used in other industrial and manufacturing processes, said Ms. Bergeson. Companies involved in nanotechnology lobbied hard to make sure they were not treated differently, she said. “The nanotech community and the industrial chemical community welcome the fact the law is technology-neutral because chemicals can be produced using any number of one or more technologies,” she said. “The focus is on the product and not how it came to be.”
According to a recent report from Munich Re, the global market for nanotechnology products will reach $64.2 billion by 2019, a compound annual growth rate of 19.8% from 2014 to 2019.
Retailers have been moving to restrict or bar products containing chemicals that are facing challenges by consumer advocates due to safety concerns or that are regulated in other countries. Nearly 30 states, led by California, have passed more than 100 laws regulating chemicals. The updated federal rules, once enacted, would, in most cases, pre-empt states from passing laws to regulate a chemical while the EPA is making a determination on it. The updated version mandates EPA begin with a review of 10 chemicals and eventually have 20 chemicals under review at a time. The reviews could take up to several years to complete.
Aside from the chemicals involved in nanotech processes, Mr. Finley said there are risks companies working in nanotech have to consider, including the safety of workers handling nano materials, either in the chemical plants that are making them or the manufacturing facilities that are using them. In the U.S. there are probably 450 to 500 companies in the nano materials business, he said, and workers at those plants may face exposures from their handling and from waste material that is generated. “Those employees in manufacturing facilities may also be exposed to active nano material but not as much as those creating” them at the chemical plants, said Mr. Finley.
“Makers of nano materials, we would expect them to have very strict protocols, very strong risk management, to protect employees and to make sure the materials they develop are fully vetted and safe as possible,” he said.
Also, he said there are risks to consumers who use these products and may be exposed to varying degrees depending on the type of product, how the product is used and what percentage of product consists of nano materials. “The challenge is understanding what these exposures are, what those risks are; that’s where we as an industry are at this point,” said Mr. Finley.
http://blogs.wsj.com/riskandcompliance/2016/06/07/updated-rule-offers-better-oversight-of-nanotech-chemicals-chemicals/
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Green Chemistry Council Launches Preservatives Competition
Jun 7, 2016 | Chemical Watch
By Vanessa Zainzinger
The Green Chemistry and Commerce Council (GC3) is holding a competition for the development of new preservatives for personal care and household products.
The competition will target small companies, researchers in academia, and individuals "with promising ideas". Those who submit the best ideas for new technologies will get the chance to partner with large chemical suppliers. These will fund their development and bring them to the market.
The personal care industry is struggling with a shrinking palette of preservatives available, as new regulation, and growing consumer concern, is triggering bans and restrictions, says the GC3's Monica Becker.
"It is important to have a broad palette of safe and effective preservatives. If there are too few across a range of products, consumers can become sensitised," she adds.
GC3 is a cross-sectoral, business-to-business network of companies and other organisations working to advance green chemistry. It says it hopes to raise awareness of the need for innovation in this area.
So far 14 companies have signed up as potential sponsors. This includes personal care giants Johnson & Johnson, Unilever, and Beiersdorf.
GC3 has also teamed up with the Minnesota Pollution Control Agency, the Forsythia Foundation, and the Target Foundation. They will be part of an expert panel judging the ideas that are submitted.
Entries will be judged based on a criteria document developed by the council. It covers their usefulness in terms of:
· performance;
· regulatory requirements;
· human health risks;
· environmental risks; and
· business factors.
The document has already been picked up by some large preservatives suppliers to inform their own development efforts, according to Ms Becker.
Rather than a single winner, the competition aims to generate several ideas. "There is no one size fits all, but many different products that require different preservatives. Also each company has its own criteria," says Ms Becker.
Down the line GC3 hopes the competition will encourage several business arrangements between chemical suppliers and innovators, she says.
The decreasing toolbox of preservatives available to the personal care industry has been a recurring discussion in Europe, since the EU cosmetics Regulation came into force.
But Ms Becker says the problem is a global one, affecting "all product manufacturers that need preservatives".
She adds that although most GC3 members are American, the competition is open to anyone. Some EU-based companies have already joined.
GC3 plans to officially launch the competition in September. Submissions will be evaluated for efficacy and safety, and the team will choose their finalists in January 2017.
https://chemicalwatch.com/47806/green-chemistry-council-launches-preservatives-competition
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‘Intended Uses’ Still Missing from Authorisation Applications, Says ChemSec
Jun 7, 2016 | Chemical Watch
Upstream applicants are "complicating" the REACH authorisation process by not specifying the intended use of chemicals in their applications, says NGO ChemSec.
The "pressing issue" needs to be simplified for the Echa committee experts evaluating such applications, it says in a press release issued last week.
It gives the example of functional chromate plating, which it says is "too broad a definition" to determine what uses are being applied for, and whether there are available alternatives.
"To remedy this, ChemSec has prepared a matrix that can be used to properly map the intended uses, and we hope Echa would like to consider using it in their work," ChemSec's Sonja Haider says.Low-quality applications
Broadly speaking the overall quality of some applications is low, ChemSec says, as they "frequently contain excessive non-essential information, have missing calculations, and data based on assumptions rather than real-life data".
Also, it adds, the authorisation procedure "fails to incorporate a broader analysis of all market actors affected by the committee decisions, instead only taking the applicants interests into account".
At this week's meeting of Echa's Socio-economic Analysis Committee (Seac), ChemSec raised three suggestions for changes to the process:
· include a wider perspective on costs and benefits in the analysis – not only those of the applicant;
· require upstream applicants to specify the scope of the application – including detailed uses and functions of chemicals and whether there are available alternatives; and
· make procedural changes – such as page limits and quality indicators in applications and more.
https://chemicalwatch.com/47839/intended-uses-still-missing-from-authorisation-applications-says-chemsec
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Jun 6, 2016 | Environmental Defense Fund
By Tom Neltner
In early 2015, the Environmental Protection Agency (EPA) first committed to developing a level that would provide context for those trying to assess an infants’ risk from lead in their drinking water.
An infant’s developing brain is extremely vulnerable to lead. Many parents rely on formula made from drinking water to feed their children. So if that water contains lead, the child is likely to be harmed.
A “Household Action Level” would help parents and public health officials know when lead in the drinking water reaches a level likely to produce an “elevated blood lead level” in an infant who is fed formula. This information can help parents and communities make informed choices about how to protect their children.
So we were pleased to see Rep. Steve Israel’s (D-NY) tweet about EPA's response to his questions regarding the Household Action Level. As a member of the House subcommittee that funds the nation’s water programs, Israel asked the agency to provide an update on the agency’s efforts to release a Household Action Level for committee record.
EPA’s written response: “The public will have the opportunity to review the draft Household Action Level when it is submitted for independent external peer review later this year.” (page 341 of pdf)
This is a welcome development since there was concern that the household action level would get tied up in the EPA’s long overdue overhaul of its flawed drinking water regulations. A proposed update isn’t expected until sometime in 2017.
In the aftermath of the drinking water crisis in Flint, there has been a growing awareness about the presence of lead in drinking water around the country. Communities and individuals are responding to the lessons learned now—not next year. There is a lot of work to be done.
A recent USA Today investigation revealed that some 2,000 water systems have failed to meet the EPA’s existing lead action leve since 2012. An estimated six to ten million homes still receive their drinking water through lead pipes. Many residents just don’t know if they are at risk.
As communities tackle these issues, they need guidance. When should a family invest in an in-home filter? How urgent is to replace these pipes? A household action level can help communities and families decide what to do, and when to do it.
A lot has changed in the 25 years since the EPA issued its lead in drinking water regulations. The Center for Disease Control and Prevention (CDC) has said that there is no safe level of lead in drinking water. The EPA has set its goal for the maximum containment level at zero, but achieving it won’t be easy.
A household action level alone will not achieve EPA’s goal, but it is a step in the right direction that is needed now. Hopefully, EPA will honor its commitment to Rep. Israel and issue a household action level for public review this year.
http://blogs.edf.org/health/2016/06/06/rep-israel-household-action-level-for-lead/#more-5318
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Echa Issues Advice on Alternative Test Methods
Jun 7, 2016 | Chemical Watch
Following last week's amendments to testing requirements in Annexes VII and VIII of REACH, Echa says companies need to take the changes into account when submitting information.
On 21 June, the new version of REACH-IT launches. From this date, non-animal testing will be the default requirement for:
· skin corrosion/irritation;
· serious eye damage/eye irritation; and
· acute dermal toxicity.
Similar requirements for skin sensitisation are expected by the autumn.
Echa says registrants, which have already submitted studies conducted in accordance with the previous requirements, do not need to modify their registration dossiers immediately.
However, they will need to follow the new procedure, when they update them.
Dr Gilly Stoddart, head of science at People for the Ethical Treatment of Animals (Peta), says the new requirements have been "long overdue". But now, "non-animal methods for testing skin and eye irritation have finally been accepted into the REACH annexes as the default methods."
"As the REACH death toll is set to skyrocket with the impending 2018 deadline, it is essential that registrants avoid testing on animals wherever possible," she adds.
To help companies, Echa will update its guidance this autumn. It will also revise its advice on the use of OECD test guidelines related to skin and eye irritation soon.
https://chemicalwatch.com/47870/echa-issues-advice-on-alternative-test-methods
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(ACC Mentioned) Chemistry Council Hails Ethane Cracker News from Shell
Jun 7, 2016 | Akron Beacon Journal
By Bob Downing
From a press release today from the American Chemistry Council:
SHELL DECISION TO BUILD PENNSYLVANIA CRACKER AFFIRMS LEADING ROLE OF U.S. CHEMICAL INDUSTRY
WASHINGTON (June 7 , 2016) – The American Chemistry Council (ACC) issued the following statement in response to an announcement by Royal Dutch Shell that Shell Chemical Appalachia LLC has taken the final investment decision to build a major petrochemical complex, comprising an ethylene cracker with polyethylene derivatives unit, near Pittsburgh, Pennsylvania.
“Today’s exciting news is another sign that a renaissance in American chemistry is underway,” said Cal Dooley, ACC President and CEO. “Thanks to our nation’s abundant supplies of shale gas, the U.S. has become the world’s destination for new chemical industry investment. Our competitive edge will mean new jobs and exports and a stronger manufacturing sector for years to come.”
Shell’s complex will use low-cost ethane from shale gas producers in the Marcellus and Utica basins to produce polyethylene, which is used in a variety of products, from food packaging and containers to automotive components. Ethane, a natural gas liquid, is the U.S. chemical industry’s main feedstock.
As of this month, 262 chemical industry projects valued at $161 billion are completed, under construction or planned for the U.S. These new factories and capacity expansions could create $105 billion in new annual chemical industry output and 738,000 permanent new jobs throughout the U.S. economy by 2023.
http://www.ohio.com/blogs/drilling/ohio-utica-shale-1.291290/chemistry-council-hails-ethane-cracker-news-from-shell-1.688725
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Shell CEO Eyes Top Spot with Post-BG Deal Refocus
Jun 7, 2016 | Reuters
By Ron Bousso and Karolin Schaps
Royal Dutch Shell (RDSa.L) plans to increase cost savings to $4.5 billion following its $54 billion acquisition of BG Group which Chief Executive Officer Ben van Beurden said will make it the best oil company investment, ahead of Exxon Mobil (XOM.N).
In its first long-term strategy presentation since February's deal, Shell unveiled plans to limit spending and exit countries in order to focus on the most profitable operations such as liquefied natural gas (LNG), deepwater oil production and chemicals.
The company also detailed longer-term plans to grow its shale oil and gas production and green energy as it switches to cleaner resources.
The combination of BG catapulted Shell to the world's second biggest international oil company behind Exxon by market capitalisation and production. Shell became the top liquefied natural gas trader and a major deepwater oil producer by increasing its position in Australia and Brazil.
Van Beurden hopes the new strategy to generate double digit returns will boost investor confidence and lift Shell's share price which has underperformed rivals since the BG deal was announced in April last year. The deal also doubled its debt-to-equity ratio to 26 percent, leading to credit rating downgrades.
"For the first 90 years of Shell's existence... we were the industry leader in total shareholder return. But we lost the lead in the 1990s," said the 58-year-old Dutchman, who was appointed in early 2014.
"I am determined to get us back to that number one position."
Shell targets a 10 percent return in capital employed by the end of the decade, assuming an oil price of around $60 a barrel, up from around 8 percent between 2013 and 2015.
Shell's year-to-date total return was minus 3.2 percent while Exxon shares offered returns of 10 percent, according to Thomson Reuters data.
The Anglo-Dutch company has been the only one among the group of 'oil majors' to make a large acquisition in the current downturn, as rivals focused on cutting spending.
"With all promises to shareholders maintained and lower forward capex than many thought possible, Shell in their own words is 'creating a world class investment case' which we agree with," said analysts at Bernstein, who rate Shell 'outperform'.
Shell's shares were up 2.4 pct to 1742 pence by 1342 GMT.
EXITS
A key element of van Beurden's plan will include narrowing its global activity. Shell said on Tuesday it will exit oil and gas operations in up to 10 countries and sell 10 percent of its production as part of a $30 billion asset sale plan by 2018.
The company is active in more than 70 countries but wants to focus on 13 nations, including Brazil, Australia and the United States. It did not say which countries it might exit. Reuters has reported that Shell plans to sell its assets in Gabon.
Shell lowered its planned 2016 capex to $29 billion, with exploration set at $2.5 billion, in a third cut from an initial $35 billion. Cost savings will come from 12,500 job cuts in 2015 and this year and overlaps in operations in areas including Australia, Brazil and the North Sea.
The company said its medium-term growth priorities were deepwater projects in Brazil and the Gulf of Mexico and its chemicals division, particularly in the United States and China.
Deepwater production could double to some 900,000 barrels of oil equivalent per day in 2020.
It also gave the go-ahead for investing in a new cracker and polyethylene plant in the United States, one of a handful of investment decisions this year as it grapples with the sharp drop in oil prices over the past two years.
Shell will slow new investment in its integrated gas business, which includes LNG, which it said has "reached critical mass following the BG acquisition".
In the long term, the company said it would target shale oil and gas production in North America and Argentina as well as biofuels, hydrogen, solar and wind in a new energies unit.
http://www.reuters.com/article/us-shell-strategy-idUSKCN0YT0GR
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Royal Dutch Shell’s High-Wire Act
Jun 7, 2016 | Paul J. Davies
By Wall Street Journal
For Royal Dutch Shell, austerity is tricky. The Anglo-Dutch oil and gas group is doing almost everything it can to make its finances work. The trouble for investors is that it still may not be enough.
Shell has found more cost savings more quickly from its takeover of BG Group and is slashing its investment plans back to almost the minimum needed to keep producing. But without a recovery in oil and gas prices it will struggle to balance its long-term prospects with near-term promises.
Shell made several nips and tucks at its investor day Tuesday. First, it has yet another $1 billion in synergies from the BG deal. Moreover, it reckons it will have achieved most of the $4.5 billion total next year, which suggests a high level of confidence.
This won’t cut Shell’s long-term operating cost base, still forecast to be $40 billion, because those synergies include less exploration investment. But this makes it more likely that the BG deal adds value at the equivalent of a long-term $60-per-barrel oil price.
The second pledge was a further cut to annual capital expenditure to between $25 billion and $30 billion between now and 2020, a big drop from Shell and BG’s combined $47 billion in 2014.
The group needs to spend about $25 billion a year just to maintain production, according to Morgan Stanley. Shell, however, projects that spending $21-26 billion will also allow it to invest in growing its deep-water output, which it expects to double by 2020, and in new chemicals capacity, such as the Pennsylvania complex it approved on Tuesday.
Either way, Shell has guaranteed it won’t spend more than $30 billion a year until it has cut debt enough to begin its promised $25 billion share buyback, which it would like to start in 2018.
Debt reduction depends on large asset sales, which have attracted some investor skepticism. Shell already has up to one-quarter of its promised sales under way--a good start in the current commodity price environment.
But that highlights Shell’s third promise: that it won’t prioritize today’s returns at the cost of tomorrow’s. If it can’t get the right price for assets it is prepared to sell, it would rather delay than give away value. By the same token, it could cap investment spending at $25 billion instead of $30 billion and in effect fund its buyback, but that would forgo adding future cash flows, such as those from chemicals.
Shell is walking a very fine line between milking its cash cows and ensuring there is something to replace them. Investors should see the long-term sense in this, but without a rise in oil prices both things become harder.
http://www.wsj.com/articles/royal-dutch-shells-high-wire-act-1465314519?mg=id-wsj
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How a North Dakota Oil Billionaire is Helping Shape Trump’s Views on Energy
Jun 6, 2016 | Washington Post
By Steve Mufson
The difficulty of deconstructing Donald Trump’s views on energy can be boiled down to the case of the dead ducks.
About six minutes into a May 26 energy address he gave in North Dakota, Trump condemned the Environmental Protection Agency’s “use of totalitarian taxes” to force the state’s energy companies “to pay multibillion-dollar fines before a penalty is even confirmed, which is actually rather hard to believe.”
“The Department of Justice filed a lawsuit against seven companies for the death of 28 birds while the administration fast-tracked wind projects that kill more than a million birds a year — far more than a million birds, I have to tell you, far more,” he said.
There are good reasons Trump may think the situation is hard to believe: It isn’t entirely true.
Those two statements contain two errors and one questionable assertion. Trump named the wrong agency, inflated the amount of the fine at least 133,333 times over and used the highest end of estimates about the number of bird deaths from wind turbines. Moreover, a federal judge tossed the duck case out of court in early 2012. No fine was paid.
How did this mashup happen? It was a product of the way Trump gets and absorbs advice. In this case, as in others, he relied on the contentions of other tycoons and then weaved them into his own mixture of ideas, anecdotes and figures. (Trump’s campaign did not reply to a request for comment.)
The dead duck story starts with oil billionaire Harold Hamm, whom Donald Trump has hailed as the “king of energy” and who helped introduce Trump at the North Dakota event at the Williston Basin Petroleum Conference. The youngest of 13 children of an Oklahoma sharecropper, Hamm, 70, made much of his fortune in North Dakota’s Bakken shale oil region. He is the chief executive of Continental Resources and owns $12 billion of the company’s stock.
Trump said that Hamm has “been amazing right from the beginning” in his assessment of the market — and may have been on more magazine covers than the presumptive Republican nominee himself.
amm has been telling the story about dead ducks for years. In 2011, the U.S. attorney in North Dakota brought criminal misdemeanor charges against seven oil companies, including Hamm’s, for failing to prevent 28 migratory birds, mostly ducks, from dying in the companies’ waste ponds. (In Continental’s case, the feathered victim was a Say’s phoebe, a type of rusty-bellied flycatcher.) The companies faced maximum fines of $15,000 per bird.
Rather than try to settle the case, Hamm decided to fight the charges.
The U.S. Fish and Wildlife Service, part of the Interior Department, said the oil-waste pits in question were supposed to be fenced and covered with nets to minimize bird deaths. The U.S. attorney said at the time that all seven companies, including Hamm’s, had been cited for similar violations without taking action. With the rate of shale oil drilling soaring, the state was considering whether to ban the waste pits and insist that the companies recycle liquid drilling waste.
But U.S. District Court Judge Daniel L. Hovland, a President George W. Bush appointee, in 2012 dismissed the government’s case, declaring that oil drilling was a “legal, commercially-useful activity” that had resulted in purely accidental bird deaths and that there was nothing criminal about it. He said charges of criminal “taking” under the Migratory Bird Treaty Act should be directed at hunters and poachers.
It was a victory for Hamm, who later that year dabbled in politics. He was on an energy advisory committee for Republican presidential nominee Mitt Romney, hosted a Romney fundraiser and donated $985,000 to Restore Our Future, a super PAC supporting Romney. Hamm did not comment for this article, but a company spokesman said she thinks that he and Trump met for the first time that year.
Scarcity vs. abundance
Other Trump positions in the North Dakota speech mirrored Hamm’s views, such as giving oil drillers greater access to federal lands and shelving protections for endangered species that lie in the path of drilling.
Hamm’s overarching vision appears to fit neatly with Trump’s pledge to “make America great again.” In an interview in 2012, Hamm said there were two views of oil in the United States: one that oil and gas are scarce, and the other that they are abundant. He put himself in the latter camp.
Yet Hamm, like Trump, may be relying on overly optimistic numbers. In the 2012 interview, Hamm said he thought that U.S. Geological Survey estimates of U.S. shale oil reserves were wrong and that the Bakken field alone held 24 billion barrels, seven times the USGS reckoning at that time. The following year, the USGS approximately doubled its estimate to 3.65 billion barrels, still about a seventh of Hamm’s assessment.
Trump, too, used inflated numbers last month. He said the United States has 1.5 times as much oil as the combined proven resources of all OPEC countries. Yet according to the federal Energy Information Administration, the United States had proven oil reserves of 39.9 billion barrels as of Dec. 31, 2014. Saudi Arabia has proven reserves of about 268 billion barrels, and four other members of the Organization of the Petroleum Exporting Countries have greater reserves than the United States.
Buoyed by these numbers, Trump promised “complete American energy independence,” a goal that has eluded presidents since the Arab oil embargo of 1973. The United States imports about half the oil it needs.
The biggest source of U.S. imports is Canada. Trump said that he, unlike President Obama, would approve a construction permit for the Keystone XL pipeline, which would secure nearly 800,000 barrels a day of crude-oil supplies from Alberta’s oil sands.
Trump said the project would create 42,000 jobs, a figure commonly cited by oil industry groups. In fact, according to pipeline owner TransCanada’s original estimates, the project would create 6,500 direct construction jobs over two years and 7,000 indirect supply-chain jobs. After construction, the pipeline would require fewer than 100 people to monitor pumping stations.
Trump also said he would use his bargaining skills to persuade TransCanada, which has filed suit over Obama’s rejection of a construction permit, to give the American people “a significant piece of the profits” from the pipeline.
TransCanada spokesman James Millar said in an email to The Washington Post that the pipeline wasn’t a matter for U.S. government ownership. He said it was “a business deal between American and Canadian companies and it is those U.S. firms who have negotiated contracts with us to either ship their oil to U.S. refineries or refineries who want to access American and Canadian crude through KXL to process it.”
Millar said that “they are profiting from this business deal and those profits benefit U.S. workers and the American economy. The U.S. Government’s role is that of a regulator.”‘Extreme agendas’
In addition to Hamm, Trump has talked about energy policy with Rep. Kevin Cramer (R-N.D.), a member of the House Energy and Commerce Committee who has been a blunt critic of Obama. A former member of North Dakota’s Public Service Commission, he was elected as the state’s sole House member in 2012.
Cramer has joined other lawmakers in an amicus brief in the case seeking to overturn the Obama administration’s Clean Power Plan to reduce greenhouse gases. He has denounced Obama’s “war on coal that seeks to put all coal mines out of business” and said on his website that “when this administration isn’t creating solutions in search of problems, it is apparently destroying private industry solely for political objectives.”
He supported the lifting of export restrictions on crude oil, giving North Dakota producers badly needed access to foreign markets where they can get higher prices.
Cramer, who declined to comment for this article, also has criticized Obama’s proposal to hand an additional $12 million to the Justice Department’s environment and natural resources division.
“The President should not regulate and litigate just because he cannot legislate,” Cramer said in a news release on his website. “The Congress will not allow him to borrow millions so the federal government can lawyer up in order to push an anti-jobs, extreme environmental agenda.”
Trump seems to be listening. He pledged in his first 100 days to rescind “job-destroying” Obama executive actions on the environment.
“In a Trump administration, political activists with extreme agendas will no longer write the rules,” he declared in his energy address. “Instead, we will work with conservationists whose only agenda is protecting nature.”
https://www.washingtonpost.com/business/economy/how-a-north-dakota-oil-billionaire-is-helping-shape-trumps-views-on-energy/2016/06/06/e6f101d0-2822-11e6-ae4a-3cdd5fe74204_story.html
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POLITICO Pro Q&A: Deputy Energy Secretary Elizabeth Sherwood-Randall
Jun 7, 2016 | PoliticoPro
By Darius Dixon
Deputy Energy Secretary Elizabeth Sherwood-Randall is the Energy Department’s chief operating officer, so just about everything DOE does on nuclear weapons, energy R&D and environmental cleanup goes by her desk.
She has worked at high levels of the Obama administration since its beginning, both as a foreign policy adviser and as a national security specialist, and she will go through its final days as the No. 2 at the Energy Department, where Secretary Ernest Moniz has made her a “full policy partner” and the agency’s ambassador to the White House.
POLITICO spoke with Sherwood-Randall in her office on a wide range of issues, including climate change, the role of the high-level Clean Energy Ministerials and how DOE is grappling with a growing emergency-response mission. This transcript has been edited for length and clarity.
In the past, there has been tension in the relationship between the DOE secretary and the deputy. How have you and Secretary Ernest Moniz avoided that?
The Secretary has made it clear from the start ... he wanted a policy partner as his deputy, in addition to the statutory responsibilities the deputy has for management of the department.
He did not envision that being my exclusive function. Indeed, it’s one of the reasons he established the undersecretary for Management and Budget. He really did see that given the major policy responsibilities we have, he needed to have a full policy deputy. For example, I spend a lot of time at the White House on our behalf ... on the whole range of issues, whether it’s the North Korean nuclear program or our climate agenda with the Chinese.
We endeavor to never have any daylight between us and also so that I’m fully witting of everything he’s trying to accomplish so that I can represent him.
Although in the past, in this department there have not always been highly collaborative relationships between the secretary and the deputy, I was not fully witting of all that until I came over here. But we’ve been extraordinarily integrated, both the two of us and also our teams. Our chiefs of staff teams work in an integrated way. I can’t imagine doing the job any other way. Frankly, there’s so much demand and pressure that the idea that you’d also be fighting a guerilla war in the horseshoe, it sounds horrific.
How did you end up coming to DOE from the White House?
In the spring of 2014, I got a call from the Presidential Personnel Office — and I thought the call was going to be to ask my advice about somebody they were looking at for another job — and they said the president would like you to consider becoming the deputy secretary of Energy.
I went to see John Podesta [then-counselor to the president on issues like climate] when I was in the nomination process, and John was an old friend and I talked to him about how the president and he saw this role. He said, “Liz, I’m gonna be really honest with you. I know you think you’ve worked on the most important issues facing the planet all your life because you’ve worked to prevent proliferation of WMD. But actually, combatting climate change is more important to the future of the planet.” His view was that we’re giving you a new mission that is equally, if not more important.
Seven Clean Energy Ministerials have come and gone, and I think it’s unclear for outsiders to know what they produce, besides perhaps improving relations with other countries.
I think it’s more than that. Basically, when you get leaders together ... those events compel bureaucracies to deliver results. That’s a lot of what you’re doing. You’re using this as an action-forcing event to get people on the ministerial side and Mission Innovation side to declare what their commitments are for getting stuff done. If Mission Innovation is about research and development, CEM is about deployment.
What we do with CEM is we push very hard in the preparation for commitments and deliverables in which a country will come and say, "Here’s what we plan to do. Here’s what we’re getting done. Here’s what’s left." Countries want to be respected by their peers around the table. You don’t want to come up short and be the one who comes up with a lame set of goals. So, it creates peer pressure. That’s fundamentally what it’s about.
So the main incentive at these international discussions is fear about not meeting your public commitments?
Look, countries don’t do things for altruism reasons. By and large, they do them out of self-interest, so what we have to do is align self-interest here. In order to create the collective good of sufficient action on climate change, every country has to see it to be in its interest to walk this walk. One of the things we’re demonstrating [to our international partners] is the tremendous economic benefit of the clean energy solutions that we have developed and deployed. Clean energy is good for business.
Aren’t there big hurdles for CEM and Mission Innovation in the U.S. because Congress isn’t going to provide funds to meet the administration’s promises?
We go through elections cycles every four years, and countries, I think, ultimately believe the U.S. will do the right thing. Of course, we’re asking for a significant increase and we’ll have to continue working with our colleagues. What’s been evident ... is how much bipartisan support there is for this innovation agenda.
Last year, I traveled to China on the first presidential trade delegation of this administration with [Commerce Secretary] Penny Pritzker. We took 24 energy companies, American clean energy companies that the Commerce Department had selected with our input. If we can both develop technologies, deploy them through our companies and then bring them out to markets around the world, there’s huge opportunity in meeting our climate goals, not only at home but abroad.
Yet China has a reputation for cloning other people’s technology and deploying it themselves.
This is of significant concern. One of the issues that we raised on the trip I took with Penny, and on the table for the [Strategic and Economic Dialogue meeting in China] is intellectual property protection. If the Chinese want access to our technology, they need to recognize that our companies are not going to want to do business with them if they can’t ensure the protection of their intellectual property, which is of course, their crown jewels.
Does China have the upper hand because of the West’s stong desire for it to cut emissions?
In the Chinese case you really see, in the regional and local leadership in particular, what I’ve described as the fierce urgency of now. Their cities are becoming unlivable and they need solutions, and they recognize that in partnership with us they can move much farther and faster.
Exelon has just announced that it will close two nuclear plants that have been losing money for years. Is there a bigger role DOE should be playing at the state-level when the administration says nuclear is needed for Obama’s climate goals?
You know we’ve got the loan program and the funding we’ve put into new nuclear reactors. What we do is provide the technical analysis that enables policymakers to decide on an informed basis about the future of energy choices like nuclear.
This is a hard time for nuclear power in this country ... but we continue to believe an informed public that has the benefit of the analysis that we’re doing will be able to make decisions that support nuclear remaining a significant dimension of our energy mix.
You’re heading up an effort to revamp DOE’s role in handling emergency response. What was it about the current system that needed to be changed?
It’s that our mission space has grown. In the development of a National Response Framework, DOE has been assigned responsibility for the energy sector. That’s all hazards, whatever may happen.
If something were to happen to the electricity grid it would be our responsibility to coordinate with industry — more than 90 percent of the infrastructure is in private hands. That is a very, very large mission space. We were not constituted for that. We are not organized for that. But we’ve had to build something that is the beginning of an operational capability to meet the responsibilities. Congress has also added responsibilities.
What we’re trying to think through is, as we look at the future of the agency, how do we organize in order to fulfill our mission?
Second, we have daily responsibilities because everyday there are threats to the grid. There are cyber threats. There are growing physical threats. There are extreme weather threats. We have built based on work [former Deputy Energy Secretary] Dan Poneman did, post-Superstorm Sandy. We have built a very strong partnership with industry through the Electricity Sector Coordinating Council. I co-chair that with [Southern Co.'s] Tom Fanning and [Edison Electric Institute's] Tom Kuhn.
We have developed a very elaborate set of exercises to work on emergency response coordination — how would we work together in the case of a major attack on the grid? ...This comes out of my national security background. In the past, the exercises were a little more academic, more like seminars. I’ve asked that we exercise operationally, the way we do in the national security space.
[And we're working] on a series of issues where we need to understand more and plan. One is on supply chain management. There are growing threats to the supply chain of the electricity sector.
Cyber?
Cyber is one. So, we’re looking how we can ensure the security of supply so that companies don’t build in weaknesses as they invest in infrastructure. We’re looking at electromagnetic pulse and its potential to affect the grid. And we’re looking at innovation. How can we guide investment in R&D that would enable industry [to] engineer-in security? I’m quite focused on that piece because our infrastructure is aging, a lot of investment needs to be made.
Is there some reorganization within DOE around that?
Not yet. We are thinking of leaving recommendations for the next team. Obviously, we don’t have a lot of runway. We need to be thinking about what we hand off.
https://www.politicopro.com/energy/story/2016/06/politico-pro-q-a-deputy-energy-secretary-elizabeth-sherwood-randall-118097
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As SoCal Braces for Aliso Canyon-Related Blackouts, These Energy Programs Can Help
Jun 7, 2016 | Environmental Defense Fund
By Jayant Kairam
Adding insult to injury, Californians learned this spring that the disastrous four-month methane leak at the sprawling Aliso Canyon natural gas storage facility could result in a new problem: outages.
The failure at Southern California Gas Company’s massive storage site exposed a critical weakness in the state’s energy system. Densely populated Southern California is over-dependent on natural gas from a single provider.
As a result, a vast area stretching from San Diego in the south to Los Angeles and San Bernardino County in the east may face power and gas shortages during the hot summer and cold winter months, a recent report by a group of state regulatory agencies warned.Will lights stay on?
Some analysts have suggested the possibility of power and gas outages might be exaggerated, but there’s no debate that the region is cutting it way too close for comfort.
Millions of people and thousands of businesses could be exposed to costly service disruptions if the region’s 17 gas-fired power plants can’t operate as expected and other gas needs go unmet.
It’s going to take time for the state to diversify its energy mix and create a stronger, more resilient system.
There’s recognition today that by balancing market incentives we can fuel competition between natural gas and clean energy resources to gradually transition to a more dynamic, reliable, and modern electric grid.
In the meantime, there are four steps regulators, utilities and consumers are already taking – and which must now be fully utilized and expanded to relieve immediate pressure:
1. Speed up deployment of demand response programs
This tool rewards customers for shifting their energy use to times of day when there is less demand on the power grid, or when renewable energy is more abundant. In turn, demand response reduces strain on the system when it’s most likely to hit or exceed maximum capacity.
Programs such as California’s Flex Alert, the Demand Response Auction Market and so-called automated demand response programs are all models that should be maximized.
2. Help consumers take advantage of time-of-use pricing
A different approach uses the power of prices to encourage consumers to adjust their energy use to times when the grid is not stressed – and renewable energy sources are plentiful. In addition to conserving energy, this program reduces bills.
This option is being piloted in California and already in use in other states. Southern California Edison’s pilot has more than 20,000 participants. If the utility educates consumers, they can take full advantage of this new program as we move into the summer months and the risk for power outages rises.
3. Invest in energy efficiency
Energy efficiency investments in residential and commercial buildings are among the most cost-effective and fastest ways to reduce peak energy and natural gas use.
California recently authorized an additional $250 million to target efficiency measures to households most affected by the Aliso Canyon leak, and to capture greater energy savings. These efforts can ease demand and reduce bills, especially in low-income communities. It’s critical that utilities fully leverage these funds.
4. Fast-track energy storage
Utilities and third-party providers can quickly build, connect and use home batteries and other energy storage systems to balance high energy demand. A leader in this area, California is already requiring utilities to invest in such projects – but more needs to be done.
Om a direct response to the Aliso Canyon disater and subsequent power reliability issues, the state’s Public Utilities Commission recently authorized fast-track procurement and deployment of this rapidly emerging technology to minimize the risk of outages. It’s an opportunity Southern California doesn’t want to miss.Turning the Aliso Canyon disaster into opportunity
California already generates more than one-quarter of its energy from renewable sources, and plans to boost that to 50 percent by 2030. By diversifying its energy portfolio for the long-term and designing a more competitive market, this state – like others – can become less dependent over time on one single fuel source.
But as the risk for power outages shows, these targets alone are not enough.
By rapidly scaling up programs that exist today, in addition to doubling down on clean energy investments, we can turn the Aliso Canyon disaster into an opportunity while keeping the lights on and our economy humming.
It’s what Americans expect.
This post was co-authored by Timothy O’Connor.
https://www.edf.org/blog/2016/06/07/socal-braces-aliso-canyon-related-blackouts-these-energy-programs-can-help
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Explosive LNG Issues Grab PHMSA's Attention
Jun 7, 2016 | E&E Energywire
By Jenny Mandel
The Department of Transportation's May 19 workshop on liquefied natural gas (LNG) safety started with a bang.
At DOT's headquarters in Washington, D.C., the agency's Pipeline and Hazardous Materials Safety Administration (PHMSA) hosted an in-depth discussion of what went wrong during a March 2014 explosion at an LNG facility in Plymouth, Wash., that led to five injuries and $72 million in property damage (EnergyWire, May 6).
The decision by PHMSA to conduct a broad review of its LNG safety rules -- and kick it off with an unusually open discussion of a fiery accident -- suggests the agency has taken to heart the saltiest criticisms tossed from Capitol Hill. "PHMSA is not only a toothless tiger, but one that has overdosed on Quaaludes and is passed out on the job," Rep. Jackie Speier, a Democrat from San Francisco, said during a congressional hearing in April 2015.
She pointed to the lethal and destructive natural gas pipeline accident in San Bruno, Calif., in 2010. In its aftermath, PHMSA came under fire for being slow to update its safety regulations. Late last year, a leaking Aliso Canyon underground gas storage facility outside Los Angeles, operated by Southern California Gas Co., prompted hand-wringing that regulators were underprepared.
If gas pipelines and storage fields come with risk, researchers are increasingly concerned that the expanding footprint of big LNG export terminals and other facilities along the U.S. coast are also potentially deadly.
LNG is jam-packed with energy. Natural gas is turned into a liquid by supercooling it to minus 260 degrees Fahrenheit, which shrinks its volume 600-fold and makes it easier to transport across the ocean.
Natural gas and its liquid form are flammable and explosive in confined spaces, but researchers say it's not prone to exploding when released in large, open areas. That's not the case for other heavy hydrocarbons such as propane and ethane, which can be stored at large LNG export facilities.
The concern among researchers and regulators grappling with how to regulate LNG safety is the potentially deadly mix of liquid fuels at an LNG site.
Things that go boom
At the DOT workshop last month, a presentation by Graham Atkinson, a principal scientist in the Major Hazards Unit of the Health and Safety Lab in Buxton, England, focused on what happens when heavy hydrocarbons explode.
The audience listened, riveted, as Atkinson showed photos -- some not previously seen by the public -- from industrial accidents linked to liquefied petroleum gas (LPG), LNG, gasoline and other petrochemicals.
Four of the incidents took place within the last decade and were explosions of so-called unconfined vapor clouds that led to a series of cascading events that ultimately destroyed the facilities.
Researchers looked at 24 vapor cloud explosions but focused their attention on four major industrial accidents -- at gasoline storage sites in Buncefield, England, in 2005; Jaipur, India, in 2009; San Juan, Puerto Rico, in 2009; and at an LPG storage site at Venezuela's Amuay refinery in 2012.
In work funded by PHMSA through a contract with the Energy Department's Oak Ridge National Laboratory, Atkinson's team reviewed photos and videos from the accidents and conducted tests with gasoline in a range of spill conditions. The team focused on how vapor clouds form in low wind conditions and when barriers keep gases from fully dispersing.
Atkinson said an accident can happen under two conditions. One is a small leak that, after as little as 15 minutes with no wind, can cause a massive explosion that resembles a bomb blast with no epicenter. Devastation is spread evenly across the range of the vapor cloud.
The other accident scenario is a large leak on a windy day, when cloud dispersion from the wind cannot keep up with the volume of gas released. That, too, creates a cloud-sized explosion zone. The shape of the plume can be mapped from the destruction.
Pictures from San Juan, Buncefield, Amuay and Jaipur show cars twisted and burned, bombed-out buildings, and flaming storage tanks.
"Fuel tanks are efficiently set on fire in the area covered by the vapor cloud," Atkinson noted, estimating that 95 percent of tanks exposed to the vapor clouds were set on fire. "It means it's a real tough job for all the emergency services. They're dealing with [potentially] 20 tanks set on fire. It's an almost unmanageable situation."
The researchers also looked at cases in which flash fires turned into explosions, finding that in some cases a confined space or a congested intersection of piping turned a fire into a blast.
"In all but one of the incidents reviewed, when a very large cloud was formed, there was a severe explosion," Atkinson said.
In low wind conditions, vapor clouds that accumulated from small, sustained leaks caused blast damage and fatalities 765 yards -- nearly half a mile -- or more from the source.
And if a large cloud of gasoline or LPG accumulates, a "severe explosion" is likely, Atkinson said.
'20 minutes'
After Atkinson spoke, a leader in the LNG industry quickly tried to wrestle control of the discussion, emphasizing that LNG doesn't carry the same risks as the non-methane fuels he had focused on.
Cheniere Energy Inc. is developing the Sabine Pass LNG export terminal in Cameron Parish, La. The terminal already has one processing train up and running to liquefy LNG, and construction plans include four more; the plant is the first modern LNG export facility in the United States (EnergyWire, May 3).
Pat Outtrim, vice president of government affairs for Cheniere, questioned Atkinson on his presentation in a rapid-fire series of yes-or-no questions.
Atkinson agreed with Outtrim that the heavy hydrocarbons tested have different properties from methane, and that the alert and emergency shutdown equipment at the facilities studied were absent, nonfunctioning or not able to alert the right people quickly.
But he disagreed with the notion that his results aren't applicable to LNG facilities.
Ethane blends, propane, isobutane and ethylene, as well as hundreds of metric tons of condensates like pentanes and hexanes, might be present at an LNG export site. The explosion research "shows just how important the detection and response protocols are," Atkinson told Outtrim. Vapor cloud explosions like those demonstrated "can't happen at an LNG facility if you detect [a leak] early and shut it down right away," he said.
The takeaway for the LNG industry should include consideration of automatic equipment shut-offs, Atkinson told EnergyWire.
"Twenty minutes can be enough to cause a problem," he said. If equipment shut-offs are manual, the staff needs to be well-trained. If sensors indicate a leak, "the response can't be, 'Oh, I need to go tighten it up.'"
"Problems tend to come from people. There are just so many cases where [warning lights] start flashing and people just go to pieces," he said.
One more challenge? Explosion events often occur at night, when wind speeds slow as the air cools. So plant personnel can go from keeping watch over a sleepy facility in the small, dark hours to a rapidly evolving emergency.
"When they decide what's sensible to automate, they ought to think about these factors and take it into account," Atkinson said.
The new LNG era
Still, automated controls are probably not the big worry that set PHMSA down the path of researching old accidents -- especially since many of a plant's most important controls have physical fail-safe mechanisms in case the electronics fail.
So why did PHMSA dedicate so much time to discussion of the hazards tied to gasoline, LPG and other hydrocarbons that are afterthoughts at most LNG installations?
A critique by two longtime LNG researchers offers some insight.
Jerry Havens and James Venart submitted public comments to the Federal Energy Regulatory Commission in January 2015 on a proposal to build the Jordan Cove LNG terminal in Coos Bay, Ore.
Havens has worked on LNG safety issues throughout his 40-year career and authored two of the computer models whose use was long required by federal regulators to assess the hazards of proposed LNG facilities. Venart was the longtime director of the Fire Science Centre at the University of New Brunswick in Canada, and studied industrial heat exchange and catastrophic explosions.
The Jordan Cove project proposed a liquefaction plant capable of processing up to 6.8 million metric tons per year of natural gas.
Havens and Venart said they were concerned that regulations governing LNG import terminals had been guided by the premise that LNG, as methane, poses less danger than other gas liquids and petroleum fuels. But with LNG export terminals designed and constructed under regulations used for simpler LNG import facilities, Havens and Venart warned that regulators were overlooking dangers.
"We believe the [Jordan Cove draft environmental impact statement] fails to provide for protection of the public from credible fire and explosion hazards," the researchers said.
The mix of refrigerants used to chill the gas and the heavy hydrocarbon impurities in pipeline gas that are stripped out and stored on-site pose a threat, they said.
"We believe these additional hazards have been discounted without sufficient scientific justification in spite of multiple international reports during the last decade of catastrophic accidents involving unconfined hydrocarbon vapor cloud explosions," Havens and Venart said.
The researchers also raised concerns that Jordan Cove and other proposed facilities would use concrete "vapor walls" to trap a gas cloud on the property and keep the fire hazards from breaching the property lines. But such walls would cause methane and other gases to build up into concentrated vapor clouds several meters deep, increasing the explosion risk.
With densely packed processing equipment on the site and a vapor fence trapping hydrocarbons, "one could hardly design the releases to better maximize the potential for catastrophic explosion hazard," Havens and Venart added.
FERC finalized Jordan Cove's EIS in September. It made no mention of Havens and Venart's comments.
Michael Hinrichs, a spokesman for the Jordan Cove project, noted in an email that "dispersion modeling, safety and security were all thoroughly analyzed and accepted by the FERC, [the Department of Transportation] and PHMSA to be within compliance." The three agencies, he said, "have all upheld the current modeling as meeting the safety criteria for the industry."
The Jordan Cove project's fate has since been thrown up in the air by an unexpected FERC decision to reject the project despite the favorable review by agency staff, pointing to a lack of firm contracts for LNG off-take (EnergyWire, April 19).
But Havens continues to be concerned. In a paper at the Health and Safety Laboratory -- where researcher Atkinson works -- in April, he argued that regulators are "doing it wrong" when it comes to gauging the explosion hazards of large hydrocarbon clouds.
Havens said PHMSA may be relying on the wrong computer models to assess explosion risks. Most of its results are classified for security reasons.
Divided responsibilities
At the workshop in May, Kenneth Lee, who directs PHMSA's engineering and research division within the Office of Pipeline Safety, declined to say what specific regulatory changes are on the table for an upcoming overhaul of the LNG rulebook, or even what the key questions are, deferring to public input from the meeting to shape the process (EnergyWire, May 20).
But the workshop itself, in providing a platform to discuss heavy hydrocarbon risks, points to the potential for new requirements for LNG export facilities. How those requirements might be designed remains to be seen.
Industry has welcomed small tweaks to PHMSA's rules that would bring them up to date, more easily encompass new technologies and be more in line with standards used by regulators in other jurisdictions. But any changes that added new hurdles to the process of siting LNG facilities -- which primarily falls under FERC jurisdiction -- could face opposition from developers. They could raise difficult questions about Sabine Pass LNG and the four other LNG export terminals under construction.
For its part, PHMSA pledges that the coming rulemaking process will be transparent. "We take comments that you submit very seriously," said Julie Halliday, a member of the agency's engineering and research division who coordinated much of the meeting, in a discussion of the next steps. "We will address those points that you submit."
Still, she noted that PHMSA's authority over LNG facility siting is limited. "We don't actually have authority for siting within our regulations," she said, describing the agency's role in that process as working out the public safety "exclusion zones" that extend around the core of the facility.
"It's about a setback. It's not telling you whether you can site a facility at a certain location," she added, noting that other agencies control that question. "If FERC doesn't have jurisdiction to site a facility, it's the local jurisdiction."
http://www.eenews.net/energywire/2016/06/07/stories/1060038378
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North Dakota State, Industry Officials React to Oregon Crude Train Derailment
Jun 7, 2016 | Natural Gas Intelligence
By Richard Nemec
Rail transport of Bakken crude oil is again in the spotlight following the derailment of 16 of 96 Union Pacific Railroad (UP) crude-hauling tank cars in Oregon last Friday just east of the Columbia River Gorge.
The accident site is being cleared of all oil spillage and the tank cars, all of which are the older C-1232 models, while community concerns and a wastewater treatment plant sewage pipeline damaged in the incident are both resolved separately, a Sacramento, CA-based UP spokesperson told NGI's Shale Dailylate Monday.
The preliminary speculation is that the cause was a faulty track attachment to a rail tie, and not anything related to the engine or the 96 oil tank cars, the UP spokesperson said. There is no estimate how long it will take to clear the site, finish the investigation and repair the sewage pipe connected to a wastewater treatment plant serving the town of 440 residents in Mosier, OR.
Normal rail operations are resuming with a 10 mph speed restriction in the area, and no new oil shipments are planned at this time. When they do resume, local authorities in the Mosier area will be notified in advance, the UP spokesperson said.
Local officials in and around Mosier, close to Hood River and the Dalles, voiced concerns about oil rail shipments through the area, particularly fears about Bakken crude being more volatile and explosion-prone than other crude supplies. Nevertheless, North Dakota Petroleum Council (NDPC) and the Department of Mineral Resources (DMR) reiterated that studies initiated two years ago concluded the Bakken supplies were no different than other crudes (see Shale Daily, May 21, 2014).
NDPC officials cite two studies completed after a series of crude train derailments in 2013, including one in eastern Canada in the town of Lac-Megantic (see Shale Daily, July 9, 2013). Upgraded federal standards and state requirements on testing Bakken crude's content have been put in place.
"Our accident investigation experience, from the ones that we have looked at, has not indicated that volatility is a significant issue," an NDPC spokesperson told NGI's Shale Daily on Monday. "The biggest contributor to a large explosion or fire is how much product is released rather than the volatility of the product."
In addition, federal officials in the Pipeline and Hazardous Material Safety Administration and the Department of Energy previously have testified to Congress that Bakken crude is generally the same as other light, sweet crude oils. Both the American Fuel and Petrochemical Manufacturers and Turner Mason & Co. engineering consultants did separate studies that confirmed this conclusion.
State officials noted that for the past 12 months or more, North Dakota has been requiring producers to use on-site conditioning applying state Industrial Commission (IC) prescribed temperatures and pressures on Bakken crude supplies to produce a consistent product prior to the shipment (see Shale Daily,Dec. 11, 2014). "So far, we've seen a roughly 99% compliance rate," said a spokesperson from the IC's DMR, which regulates the oil/gas activities in the state.
Any oil that does not meet content compliance standards must be reconditioned and retested within 48 hours of its failing initial tests, the DMR spokesperson said.
More recently, federal railroad oversight officials indicated that the energy industry needed to do more to control the volatility of oil and other fuels transported by the nation's railroads. Sarah Feinberg, acting head of the U.S. Department of Transportation's Federal Railroad Administration reinforced this notion last year (see Shale Daily, March 18, 2015).
"At this point, preliminary indications point to an unusual failure of a fastener that connects the rail to the railroad tie," the spokesperson for UP said.
By last Sunday most of the derailed tank cars, four of which burst into flames, in Oregon had been removed and the remaining oil was being hauled away by trucks, according to a report from UP. But there is no set timetable for completing the cleanup and restoration work, the UP spokesperson said.
After rerouting trains shipments since the accident, UP resumed operations on the line as of Sunday night, the spokespersons said. "There will be no new crude rail trains in the near term, and we will inform the community when we plan on doing that."
http://www.naturalgasintel.com/articles/106672-north-dakota-state-industry-officials-react-to-oregon-crude-train-derailment
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Iowa Regulators OK Dakota Access Pipeline Construction Start
Jun 7, 2016 | Natural Gas Intelligence
By Richard Nemec
Iowa regulators on Monday on a 2-1 vote authorized Energy Transfer Partners' (ETP) to start construction in the fourth and final Midwest state needed for its 1,172-mile pipeline project to ship Bakken crude oil to markets along the East and Gulf coasts.
The Iowa Utilities Board (IUB) action, which is effective when signed out on Tuesday, authorizes ETP's Dakota Access Pipeline LLC to start construction activity that is outside the pre-construction notice (PCN) areas along the route, which crosses the state diagonally from the northwest to southeast corners. PCN areas refer to parts of the route under the U.S. Army Corps of Engineers jurisdiction.
IUB Chair Geri Huser opposed the authorization and said she would file a dissent. Her colleagues, former IUB Chair Libby Jacobs and Nick Wagner, supported authorizing the start of construction.
As reported late last month at the Williston Basin Petroleum Conference in North Dakota by ETP's head of engineering, construction is underway everywhere else along the route, which avoids almost entirely having to cross over federal lands, so the state jurisdictions involved have loomed large (seeShale Daily, May 27).
"We will start construction on specific areas in Iowa immediately upon an order from the IUB," an ETP spokesperson told Shale Daily.
Since gaining the state's heavily conditioned approval in April, the oil pipeline project backers have had some fits and starts, mainly pertaining to a long list of local permits and notifications that Dakota Access representatives have been required to make before it could begin moving a lot of dirt and getting full-blown construction underway.
It appeared in early May that construction had begun in all four states, but subsequently the IUB kept the project on hold, and it remains the state with the most pipeline route right-of-way still needing to be nailed down either through lease agreements or eminent domain.
Nevertheless, the 30-inch diameter oil pipeline remains on track to be completed by the end of this year, providing a "safer, cleaner and cheaper" means of getting increased Bakken supplies to markets throughout the nation, Joey Mahmoud, ETP senior vice president for engineering, told the industry audience at the Williston Basin conference last week in Bismarck, ND.
http://www.naturalgasintel.com/articles/106669-iowa-regulators-ok-dakota-access-pipeline-construction-start
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Early Air Data Exacerbate Western States' Fears on Meeting Ozone NAAQS
Jun 7, 2016 | Inside EPA
By Stuart Parker
Preliminary air quality data for 2015 show that ozone levels in Western mountain states -- driven in part by heat and wildfires -- reached levels that in many cases exceed EPA's new ozone standard, exacerbating concerns among some states about their ability to attain the ozone limit despite an increasing number of wildfires in their states.
EPA set the new ozone NAAQS at 70 parts per billion (ppb) Oct. 1, tougher than the prior limit of 75 ppb set in 2008. Opponents of a tougher ozone standard have criticized the rule as potentially not achievable in some areas that experience high "background" ozone, which is naturally occurring or stems from foreign emissions. Regulators by definition cannot control background ozone by limiting air emissions from local sources.
EPA says the stricter standard is necessary to protect public health from adverse effects associated with ozone pollution, and the agency has downplayed concerns that background ozone will hinder attainment with the NAAQS.
But the possible inability of states to achieve the NAAQS due to background ozone is an argument several states and industry opponents of the stricter ozone standard are raising in pending appellate litigation. The preliminary data for 2015 gathered by states from air monitors could potentially reinforce those claims.
The results -- seen by Inside EPA but not yet vetted for publication or use in regulatory determinations -- show that last year ozone in many areas of the Mountain West and California exceeded the 70 ppb NAAQS limit. While ozone levels in California are known to be stubbornly high because of the state's unique topography, high ozone levels in the broader region were influenced in part by an elevated incidence of wildfire, sources say.
One Western air quality researcher, who agrees with EPA's decision to tighten the standard on health grounds, says the new NAAQS is "a very challenging standard for many cities in the West to meet." 2015 was hot in the region, with a high incidence of wildfire, and both heat and fire increase ozone, the source says.
"It is not so much that cities recorded very high values, it is that they exceeded the 70 ppb standard on many, many days," the source says, citing Salt Lake City, UT, as an example. The data show that the city experienced 18 days with ozone higher than 70 ppb in 2015 -- "a crazy number of days" to exceed the standard, the source says.
Increasing Wildfires
Wildfires have been burning a higher acreage of land each year in the West over the last decade than previously, and a warming climate is contributing to this trend, which is expected to continue, sources say.
Higher average temperatures and lower snowfall are "almost certainly" making conditions drier and more conducive to fire, with a longer fire season in many places, the source says. "In terms of wildfires, it is the shape of things to come," the source says, and heatwaves may also become more common as a result of climate change.
Even if 2015 turns out to be an anomaly, at the least it will still be a "black spot" on the records of some states, the source says. This matters because EPA determines NAAQS compliance using a three-year rolling average, so the agency would have to consider the 2015 data when it assesses states' compliance.
A second western source says that the data will color 2013-2015 data that states will use to determine their "design values," or long-term ozone averages, for "2015 Ozone NAAQs designation packages" that states must submit to EPA by Oct. 1. EPA then uses this information to develop formal designations of which areas are attaining the NAAQS, and which are in nonattainment, triggering a mandate to craft ozone reduction plans.
The source says that the 2013-2015 averages show divergent trends in ozone levels across the country. In the East, ozone levels are falling as emissions from coal-fired power plants and vehicles fall. In the Rocky Mountain region, they are not reducing, and ozone pollution associated with wildfires is partly responsible.
"With respect to fire activity and associated emissions, all the research for air pollution and climate change suggests that going forward in time, 1) more wildfire acres will burn each year, 2) the wildfire season will be longer (instead of 7-8 months, almost a year-round problem), and 3) in general wildfires will burn hotter (consuming more fuel, increasing emissions). It is already happening over the past 10 or so years, especially in the West," the source says.
Transported Ozone
Beyond heat and fire, there are other factors behind this situation in the West, including internationally-transported ozone, intrusions of high-level stratospheric ozone to the lower atmosphere, and emissions from oil and gas production, sources say. These causes are still poorly understood, sources agree.
Besides Salt Lake City, other cities in the West that appear to exceed the 2015 NAAQS based on 2013-2015 data are Denver, Phoenix, El Paso, Las Vegas and Reno, NV, in addition to numerous areas in California.
Supporters of the 2015 NAAQS say that EPA must by law follow the scientific evidence and set the NAAQS at a level that is protective of public health with an "adequate margin of safety" to protect vulnerable groups, such as children and asthmatics. EPA officials have downplayed any likelihood of background ozone causing Western areas, in particular, to fall into "nonattainment" status, which brings with it the obligation to impose costly pollution controls on industry or other measures to curb emissions.
To cope with events such as wildfires that can increase ozone levels, EPA has advocated that states use its "exceptional events" policy, which the agency is in the process of streamlining and expects to issue in revised form this summer. The policy allows states to exclude air quality monitoring results gathered during events qualifying as "exceptional" from demonstrations of NAAQS compliance, hence making it easier for areas to stay in attainment.
States have previously complained that the existing process is too cumbersome and slow, and EPA therefore issued a proposal Feb. 3 to simplify and speed-up the process of submitting exceptional events requests to EPA.
Industry opponents of the stricter ozone standard in their pending U.S. Court of Appeals for the District of Columbia Circuit suit over the NAAQS say this exemption and others offered by the agency, such as a "rural transport area" exemption for rural areas lacking their own sources, are inadequate.
'No Basis'
One environmentalist, however, disagrees. "Ozone exceedance[s] due to wildfires are eligible to be treated as exceptional events on a case-by-case basis. This means that some or many or all of the NAAQS exceedances could be excused, with violations not counted toward nonattainment status," the source says.
"I would expect wildfire to increase with worsening global warming. This provides no basis for opposing or relaxing the ozone NAAQS, however, nor for weakening the way that exceptional events are treated," the environmentalist adds.
"Allegedly high background levels of ozone and wildfires treated as exceptional events are not the same thing. There is no spot on planet Earth that has zero background levels of ozone. Nor are there areas in the western U.S. with background ozone levels close enough to 70 ppb to remotely justify the political hysteria manufactured by opponents of the 70 ppb standard for other reasons (invariably related to illegal economic objections)," the source says.
EPA is prohibited under the Clean Air Act and Supreme Court precedent from taking implementation costs into account when setting NAAQS.
http://insideepa.com/daily-news/early-air-data-exacerbate-western-states-fears-meeting-ozone-naaqs
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EPA Asks Judge to Dismiss N.C. Ozone Lawsuit
Jun 7, 2016 | E&E Greenwire
By Sean Reilly
A federal judge should throw out North Carolina's lawsuit targeting a regional ozone-reduction program because the state has failed to cite resulting harm, U.S. EPA argues in a new court filing.
Aiming to force EPA to decide whether the state should become part of the Ozone Transport Region, the North Carolina Department of Environmental Quality "fails to aver it has suffered any injury-in-fact -- a key element necessary to establish this court's jurisdiction," EPA attorneys wrote in the motion for dismissal entered Friday in U.S. District Court for the Eastern District of North Carolina.
In the March lawsuit, the state said EPA was illegally past due in deciding on a December 2013 petition by the governors of eight Northeastern states (E&ENews PM, March 31).
The governors charged in that petition that North Carolina was among nine states hurting their efforts to meet EPA's 2008 ambient air quality standard for ground-level ozone. They asked that all nine be made part of the Ozone Transport Region.
Ozone, the main ingredient in smog, can trigger asthma attacks and irritate lung passageways. It is formed by the reaction of volatile organic compounds (VOCs) and nitrogen oxides (NOx) in sunlight. States in the Ozone Transport Region, created by the 1990 Clean Air Act amendments, are supposed to work on curbing the movement of ozone and the chemicals that create it; any state added to the region has nine months to draw up plans for new controls on both VOC and NOx releases, according to the petition.
In the Friday filing, EPA acknowledged that it hadn't acted on the 2013 request. But in "merely" alleging a violation of the Clean Air Act, North Carolina has also failed to establish "standing" -- meaning that it hasn't shown any resulting harm -- or indicated that "any relief requested is likely to redress any injury," the filing said.
North Carolina officials have yet to elaborate on their reasons for going to court, but in a similar lawsuit filed in November to compel EPA to act on the state's proposed plan for meeting fine particulate regulations, they said federal regulators' inaction was hurting growth and fostering uncertainty within the business community. In a consent decree lodged with the same court last week, EPA agreed to make decision on the plan by late September.
http://www.eenews.net/greenwire/2016/06/07/stories/1060038418
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Kennedy's CWA Opinion Prompts Debate on Fate of EPA Jurisdiction Rule
Jun 7, 2016 | Inside EPA
By Bridget DiCosmo
Supreme Court Justice Anthony Kennedy's concurring opinion in a ruling subjecting Clean Water Act (CWA) jurisdictional findings to judicial review is prompting debate over whether it provides clues on how the justice might rule on EPA's contested CWA jurisdiction rule given concerns that he raised about the implications of the water law.
Writing in his concurrence with the court's unanimous May 31 decision in Army Corps of Engineers v. Hawkes Co., Kennedy said the “reach and systemic consequences of the CWA remain a cause for concern.”
Seth Jaffe, partner at the law firm Foley Hoag, said in a June 2 interview with Inside EPA, “What he's really doing is giving EPA a roadmap to ensure that the rule does, in fact, survive judicial review,” by voicing his concerns about the vagueness of the CWA -- uncertainty that was the basis for the jurisdiction rule. “EPA’s response is that that is precisely why we wrote the rule -- to eliminate as much of that vagueness as possible,” Jaffe said.
One legal source says that even though Kennedy's remarks do not specifically reference EPA and the Corps' rule to define the scope of the CWA, it is “definite foreshadowing” for how he could approach the rule. But that source also cautions that “Kennedy is very hard to predict and read on statutory cases especially.”
At least one source from the agriculture sector believes that the concurrence “portends badly” for the rule, which EPA and the Corps wrote to try and resolve uncertainty about the law's reach. That uncertainty was created in part by the 2006 Supreme Court ruling in Rapanos v. United States in which Kennedy and the late Justice Antonin Scalia created competing tests for assessing CWA jurisdiction, with EPA's rule relying heavily on Kennedy's test.
Several states, industry groups and others have filed suit over the rule in federal district and appellate courts. The U.S. Court of Appeals for the 6th Circuit has stayed implementation of the regulation nationwide while it proceeds with consolidated challenges to it, though the court's eventual ruling is expected to face Supreme Court review.
The jurisdiction rule was “written with Justice Kennedy in mind, and he has clearly signaled that he has even bigger problems with the [water] act itself. That's got to be disconcerting for the agencies,” the source says.
Jurisdictional Ruling
In Hawkes, the court's narrow unanimous ruling backed pre-enforcement judicial review of agencies' jurisdictional determinations (JDs), which are findings on whether particular waters are subject to permit limits and other protections under the CWA. But the decision relies in part on an agreement between agencies on how to conduct JDs that the White House has already signaled it may revise in order to avoid judicial review of future findings.
The overall decision in Hawkes, written by Chief Justice John Roberts, allows property owners who receive a JD saying their lands include waterbodies subject to the CWA to challenge those findings in court immediately, rather than waiting for EPA or the Army Corps of Engineers to initiate permitting or enforcement action.
The decision marks a significant shift from many lower courts' earlier decisions that had previously held a permit or enforcement action was necessary for a JD suit to go forward.
Roberts' decision says JDs are “final agency action” that carry legal consequences for recipients and can therefore be the subject of a lawsuit under the justices' landmark 1997 decision Bennett v. Spear, but the conclusion narrowly relies in part on a memorandum of agreement (MOA) between EPA and the Corps that, Roberts says, binds agencies to follow a JD's conclusions in enforcement actions and other litigation for at least five years after its publication.
But the court's reliance on the MOA could allow EPA and the Corps to dodge judicial review of future JDs despite unanimous decision, by amending its terms to remove the “safe harbor” provision Roberts cited.
Kennedy's Concurrence
Kennedy's concurring opinion, joined by Justices Samuel Alito and Clarence Thomas warns that without deeming JDs binding, the reach of the CWA becomes much less clear. That echoes a statement Kennedy made at oral argument that the water law is “quite vague in its reach, arguably unconstitutionally vague.”
“The Act, especially without the JD procedure were the Government permitted to foreclose it, continues to raise troubling questions regarding the Government's power to cast doubt on the full use and enjoyment of private property throughout the Nation,” Kennedy wrote in his concurrence in Hawkes.
He says that if the MOA is not binding as DOJ argued during the litigation, then “the Act's ominous reach would again be unchecked by the limited relief the Court allows today.”
Kennedy's 2006 concurring opinion in Rapanos attempted to try and provide some clarity on the scope of the water law. At the time, the justice said that wetlands, whether “alone or in combination with similarly situated lands in the region,” pose a “significant nexus” and are jurisdictional when they “significantly affect the chemical, physical, and biological integrity” of downstream, traditionally navigable waters.
By contrast, the plurality opinion in Rapanos written by Scalia held that only “relatively permanent” waterbodies that connect to traditional navigable waters and wetlands that have a “continuous surface connection” to such relatively permanent water bodies, are jurisdictional under the water law.
CWA Jurisdiction
The final jurisdiction rule adopts the language from the Kennedy test, finding that tributaries and “adjacent waters” share a significant nexus with downstream waters and are jurisdictional, and identifying specific types of other waters, such as prairie potholes, that could share a significant nexus to be assessed on a case-by-case basis.
But states and industry groups challenging the rule in the roughly two dozen appeals and federal district court cases argue that the agencies overstep their CWA authority by seeking to interpret Rapanos through rulemaking and that their interpretation is “inconsistent” with the Kennedy opinion.
Kennedy's comments in his Hawkes concurrence could signal sympathy with critics of the rule who claim it is expansive and seeks to greatly broaden federal regulation of private land, sources say.
However, Jaffe in the interview with Inside EPA said this would signal a shift in Kennedy's position in Rapanos. “Saying things in dicta is one thing; ruling that the CWA is unconstitutionally vague is another. When push comes to shove, Kennedy is very much the type of justice who respects rules of construction such as that the Court will endeavor mightily to avoid finding statutes unconstitutional,” Jaffe said.
The legal source says of Kennedy generally that “there are some cases he seems to be going a certain way, and events take a different turn after that, he'll take the position that it's not necessarily the ruling that was wrong, but it didn't stand for what came afterward, and perhaps needs refinement."
'Applied' Challenges
Meanwhile, legal sources generally agree that the Hawkes ruling could result in a slew of “as applied” challenges to EPA's CWA jurisdiction rule via judicial review of JDs.
However, EPA and the Corps say they are currently relying on Bush era guidance in JDs given that the 6th Circuit stayed the rule last October.
“This opens the floodgates for litigation over approved jurisdictional determinations,” the agriculture industry source says, and though courts are expected to be fairly deferential to the agencies, a coherent body of law is likely to emerge from how judges rule on jurisdiction.
A second legal source says that Hawkes is likely to force the Corps to “spend more time and be more careful” with issuing JDs and develop a more robust administrative record, because JDs will presumably be now subject to an “arbitrary and capricious” legal standard under the Administrative Procedure Act.
But Jaffe notes in a May 31 blog post that as Roberts acknowledged, JDs are not statutorily required, so the Corps could “simply promulgate a new regulation eliminating the JD process, in which case property owners would be forced to risk enforcement action or apply for a permit.”
http://insideepa.com/daily-news/kennedys-cwa-opinion-prompts-debate-fate-epa-jurisdiction-rule
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US, India to Enter Paris Climate Agreement, Work on Nuclear Power Deal
Jun 7, 2016 | The Hill - E2 Wire
By Devin Henry
President Obama and Indian Prime Minister Narendra Modi on Tuesday announced a suite of new climate-related initiatives, including a deal on the Paris climate accord and a deadline for a major nuclear energy project in India.
Brian Deese, President Obama’s top climate change advisor, said Obama and Modi are “aligned and on the same page” about the need to ratify the Paris climate deal, and that both will work toward that goal this year.
The United States has previously announced its intention to formally enter the climate deal, which sets greenhouse gas reduction targets for countries around the world.
India’s decision to do so, as well, greatly increases the chances the deal takes effect in 2016: the deal won’t formally kick in until countries representing at least 55 percent of global greenhouse gas emissions ratify it. India is the world’s fourth-largest emitter of carbon dioxide.
“Both leaders feel as if the collaboration between the two leaders was an important element of actually getting Paris successfully negotiated last December,” Deese told reporters Tuesday morning. “They will both clearly endorse the importance of promoting full implementation of the Paris agreement.”
Modi is in Washington this week for meetings with Obama and congressional leaders, and to deliver a joint address to Congress on Wednesday.
Obama and Modi have worked closely on climate matters, including the Paris deal.
Other climate and energy issues are on their agenda, as well: the U.S. will begin “preparatory work” on delivering six nuclear reactors to India, said John Morton, the White House’s senior director for Energy and Climate Change, and the two countries will set a June 2017 deadline to finalize a nuclear energy deal.
The U.S. and India also agreed to work on an international agreement phasing out hydrofluorocarbons (HFCs), a refrigerant chemical. The two, along with other nations, are looking to reach a deal on HFCs this year, something Deese called “the most significant step the international community could take” on climate change issues this year.
The two countries also agreed to tackle emissions from aircraft and to pump up to $60 million into Indian clean energy projects. India has also agreed to develop a national strategy to lower greenhouse gas emissions in the future.
“The area of climate change and clean energy has been an area of growing and deepening cooperation between the United States and India and it’s an issue of personal significance to both the president and Prime Minister Modi,” Deese said.
http://thehill.com/policy/energy-environment/282491-us-and-india-to-enter-paris-climate-agreement-work-on-nuclear-power
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