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ACC AM 8/11/2016
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(ACC Mentioned) Factors Supporting the Bullish Case for Chemical Stocks
Aug 10, 2016 | Zacks (In Nasdaq)
By Zacks Equity Research
The chemical industry remains besieged by a number of challenges, including weak demand in agricultural and energy markets, a sluggish Chinese economy and headwinds from a strong dollar. -
Implementation of TSCA Section 6: EPA Moving in the Wrong Direction?
Aug 11, 2016 | BNA Daily Environment Report
By W. Caffey Norman
EPA has not regulated a chemical under TSCA Section 6, which provides for regulation of existing as opposed to new chemicals, since 1989, when it adopted a ban on asbestos which was subsequently overturned by a federal Court of Appeals. -
Disparate Views on Chemical Priorities Voiced at EPA Meeting
Aug 11, 2016 | BNA Daily Environment Report
By Pat Rizzuto
The Environmental Protection Agency's chemical prioritization regulation must provide clear criteria for designating chemicals to be low priorities for risk evaluation, industry representatives said Aug. 10. -
Reconsideration of Oil, Gas Air Standards Rejected by EPA
Aug 11, 2016 | BNA Daily Environment Report
By Patrick Ambrosio
The Environmental Protection Agency won't reopen its 2012 hazardous air pollution standards for the oil and gas industry, as the agency rejected all remaining reconsideration petitions brought by industry, states and environmental organizations. -
E&Ps Pushing Proppant Intensity Ever Higher, Say Frack Sand Operators
Aug 10, 2016 | Natural Gas Intelligence
By Carolyn Davis
Commodity prices may not encourage too many rigs to rise in North America in the near-term, but as oil and gas producers experiment with longer laterals and increased fractures, there’s a bit more optimism among sand operators. -
U.S., India Boost Clean Energy Partnership With $30 Million
Aug 11, 2016 | BNA Daily Environment Report
By Rebecca Kern
The U.S.-Indian Partnership to Advance Clean Energy Research (PACE-R) will be expanded with an additional $30 million in public-private funding, according to an Aug. 9 Energy Department funding opportunity announcement. -
DOT Tweaks Crude-by-Rail Regulations in Final Rule
Aug 11, 2016 | BNA Daily Environment Report
By Ari Natter
Transportation Department regulations for trains hauling crude oil and other flammable materials would be tweaked under a final rule announced Aug. 10. -
(ACC Mentioned) Plastic and Recycling Niches Unite to Close the Loop
Aug 10, 2016 | Waste 360
By Arlene Karidis
Plastics continue to flood the waste stream, yet not nearly enough is returned to manufacturers for them to crank out their products at capacity. Instead, volumes of the would-be valuable commodity are stockpiling at landfills. -
(ACC Mentioned) Study Finds Unlikely Sustainability Champion In Plastics
Aug 11, 2016 | Middle Eastern Plastics
Plastics have come out on top as the unlikely green champion when tested against other materials for consumer goods and packaging in a study highlighted by the Gulf Petrochemicals and Chemicals Association (GPCA). -
Stronger Ozone, Soot Regs Would Save 9,000+ Lives — Study
Aug 11, 2016 | E&E News PM
By Sean Reilly
U.S. EPA could head off thousands of deaths and illnesses each year by further tightening air quality standards for ground-level ozone and fine particulates, a public health advocacy group said in an analysis released today. -
EPA Says Ruling Bolsters Plant Standards
Aug 10, 2016 | E&E News PM
By Sean Reilly
A federal appellate court's recent ruling on contested air pollution standards for boilers bolsters U.S. EPA's defense of another set of regulations on how states must address excess industrial plant shutdown and startup emissions and equipment breakdowns, the agency's lawyers said in a filing today. -
EPA, Critics Seize On Boiler MACT Ruling To Bolster Claims In Other Suits
Aug 10, 2016 | Inside EPA
By Stuart Parker and Lee Logan
EPA and its critics are seizing on the appellate ruling that vacated and remanded parts of the agency's boiler and incinerator air toxics rules in order to support their claims in suits over other EPA rules, with the agency saying it boosts its defense of a rule forcing changes to state air plans and manufacturers saying it undermines EPA's utility climate rule. -
Boiler Ruling Supports Malfunction Position, EPA Says
Aug 11, 2016 | BNA Daily Environment Report
By Patrick Ambrosio
The Environmental Protection Agency's decision to require amended state pollution plans for malfunctions is supported by a recent federal appeals court decision on industrial boiler standards, the agency argued in a court filing (Walter Coke Inc. v. EPA, D.C. Cir., No. 15-1166, letter filed 8/10/16). -
Eyeing Democratic Majority, Senators Rethink Climate Strategy
Aug 11, 2016 | BNA Daily Environment Report
By Dean Scott
Hillary Clinton is surging not only in national polls but also in key swing states—and that is good news for a bloc of Senate Democrats who hope to put climate change back on the front burner and fill a vacuum of leadership triggered by the departure of once-towering Senate figures on the global warming issue. -
In California's Climate Debate, State Lawmakers Push For More Authority
Aug 10, 2016 | Los Angeles Times
By Liam Dillon
With negotiations over extending California’s landmark climate change programs struggling during the last month of the state’s legislative session, lawmakers are once again pushing for changes at the agency responsible for making the greenhouse gas reductions work.
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(ACC Mentioned) Factors Supporting the Bullish Case for Chemical Stocks
Aug 10, 2016 | Zacks (In Nasdaq)
By Zacks Equity Research
The chemical industry remains besieged by a number of challenges, including weak demand in agricultural and energy markets, a sluggish Chinese economy and headwinds from a strong dollar. Nevertheless, the industry remains on the road to recovery, gaining from healthy momentum across automotive and construction markets. There are a number of reasons to be optimistic about the broader chemical industry for both the short and long haul, which we have highlighted below:
Shale Abundance Driving Chemical Spending
The shale gas revolution in the U.S. has been a huge driving force behind chemical investment on plants and equipment in the country. According to the American Chemistry Council (ACC), the U.S. has emerged as an attractive investment location and petrochemical makers are now significantly expanding capacity in the country leveraging new supplies of natural gas. New methods of extraction such as horizontal drilling and hydraulic fracturing (or fracking) are boosting shale production, bringing down prices of ethane (derived from shale gas) in the process.
Driven by the abundant natural gas supply, chemical makers are ratcheting up investment on shale gas-linked projects which is expected to beef up capacity. The shale boom has incentivized a number of chemical companies to pump in billions of dollars for setting up facilities (crackers) in the U.S. to produce ethylene and propylene in a cost-effective way.
Per ACC, domestic chemical investment related to shale gas has reached as high as $164 billion, more than 60% of which are from firms outside the U.S. Already 264 projects -- many backed by the Federal government -- have been announced by chemical makers to take advantage of ample natural gas supplies with 40% of them already complete or under construction. Such investments are expected to boost capacity and export over the next several years. The ACC expects average annual gains of more than 8% in U.S. chemical industry capital spending through 2018.
Automotive in High Gear
The automotive sector -- a major chemical end-use market -- is witnessing significant momentum. The sector is enjoying the fruits of low gasoline prices. Outlook paints a rosy picture as global automotive sales are expected to rise 2.7% to 89.8 million units in 2016 on the back of strong volume growth in the U.S. and Europe, according to IHS Automotive.
The U.S. auto industry also remains in top gear. U.S. light vehicles (a key end-user market for chemicals) sales hit all-time high of around 17.5 million units in 2015 and are expected to rise further this year, aided by an improving job market, rising personal income, lower fuel prices and attractive financing options. New car and light truck sales are expected to reach to 17.7 million units in 2016 on the back of reduced gasoline prices and rising employment, as per The National Automobile Dealers Association (NADA) estimates.
The Auto industry in Asian countries, especially China, is also expected to thrive over the next several years. As such, chemical makers are expected to gain from higher demand from this important end-market.
Strategic Moves
Chemical companies continue to shift their focus on high-growth markets (driven by megatrends) in an effort to whittle down their exposure on other businesses that are struggling with weak demand and input costs pressure. Moreover, cost-cutting measures -- including plant closures and headcount reduction -- and productivity improvement actions by chemical companies are expected to yield industry-wide margin improvements. Several chemical makers are also disposing non-core assets as they shift their focus on high-margin businesses.
Consolidations Gathering Steam
Chemical makers remain actively focused on mergers and acquisitions to diversify and shore up growth in a still-difficult global economic environment. These companies continue to explore growth opportunities in the fast-growing emerging markets, particularly in the lucrative regions of Asia-Pacific and Latin America. The industry saw a pick-up in consolidation activities in 2014 and the momentum continued in 2015.
Chemical companies are increasingly looking for cost synergy opportunities and enhanced operational scale through consolidations. The $130 billion proposed mega-merger of Dow Chemical (DOW) and DuPont (DD) -- the biggest chemical deal ever -- is a huge testimony to these strategic moves.
Other major deals that have taken place in the chemical space in the recent past include Albemarle Corp.'s (ALB) $6.2 billion buyout of Rockwood Holdings, Inc., Eastman Chemical Company's (EMN) purchase of specialty chemical company Taminco Corp. for $2.8 billion, PPG Industries Inc.'s (PPG) acquisition of Mexican paint company Comex, Olin Corp.'s (OLN) acquisition of a significant portion of Dow Chemical's chlorine business for $5 billion, Merck KGaA's $17 billion acquisition of Sigma-Aldrich and FMC Corp.'s (FMC) acquisition of Cheminova A/S.
Construction Sector Gaining Momentum
A recovery across housing and commercial construction -- major chemical end-markets -- has been another tailwind for the chemical industry. After being hit hard in the recession, the construction sector has recovered on the back of strong housing fundamentals.
The U.S. housing sector saw steady recovery in 2015 backed by stabilizing mortgage rates, improving job market and moderating home prices, and the momentum continues this year. The underlying demand trends in the housing space remain strong, supported by an improving employment levels, affordable interest/mortgage rates, rising consumer confidence and a recovering economy.
Recent housing data has been fairly upbeat with reports of higher sales of new single-family houses coupled with mid-single-digit growth in housing starts. Moreover, the home remodeling market is also picking up pace.
The renewal of long-stalled construction projects and long awaited access to credit from lending institutions has also helped invigorate the commercial construction sector. U.S. architecture firm billings continue to rise. The US Architecture Billings Index (ABI), an indicator that offers a glimpse into the future of U.S. non-residential construction spending activity, clocked 50.6 in April 2016 (a reading above 50 indicates an increase in billings).
Moreover, the American Institute of Architects (AIA) expects healthy growth in non-residential construction spending this year based on strong demand for hotels, office space, manufacturing facilities and amusement and recreation spaces. The AIA sees spending to go up 8.3% in 2016. This augurs well for demand for chemicals in the construction markets.
Wrapping Up
As you can see from the above-mentioned factors, there are a few good reasons to be optimistic about the chemical industry. Chemical stocks that are well placed in the current operating backdrop include DuPont, FMC Corp., Air Products and Chemicals Inc. (APD), The Dow Chemical Company, PPG Industries Inc. and Celanese Corp. (CE).
http://www.nasdaq.com/article/factors-supporting-the-bullish-case-for-chemical-stocks-cm663776
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Implementation of TSCA Section 6: EPA Moving in the Wrong Direction?
Aug 11, 2016 | BNA Daily Environment Report
By W. Caffey Norman
W. Caffey Norman is a partner in the Squire Patton Boggs Washington, D.C., office. He has represented chemical companies and associations in connection with the regulation of toxic chemicals for over 35 years.
The opinions expressed here do not represent those of Bloomberg BNA, which welcomes other points of view.
Introduction
EPA has not regulated a chemical under TSCA Section 6, which provides for regulation of existing as opposed to new chemicals, since 1989, when it adopted a ban on asbestos which was subsequently overturned by a federal Court of Appeals. This 27-year hiatus appears to be coming to an end, as EPA has indicated that it expects to propose three such rules by late 2016. As part of these rulemakings, EPA convened Small Business Advocacy Reviews (SBARs) on June 15, 2016. These SBARs were for trichloroethylene (TCE) in vapor degreasing and for methylene chloride (dichloromethane or “DCM”) and n-methyl pyrollidone in paint stripping. Although such an SBAR would seem equally necessary under the Regulatory Flexibility Act for the third rulemaking (TCE in spot cleaning and aerosol spray degreasing), no such panel has yet been convened.
This article reviews how EPA is approaching implementation of TSCA Section 6 in light of its presentations at these meetings, and previews how EPA will move forward in the new legal landscape following enactment of the Frank R. Lautenberg Chemical Safety for the 21st Century Act on June 22, 2016. It should be of particular relevance to manufacturers of basic commodity chemicals, such as chlorinated hydrocarbons and formaldehyde.
Work Plan Assessments and TSCA Section 9
Suprisingly, the focus of EPA's SBAR presentations was occupational exposure. Based on Work Plan Assessments released in June 2014 (TCE) and August 2014 (DCM), EPA identified many occupational exposure scenarios that exceeded the target cancer risk range of 1 x 10-6. For TCE, EPA derived an acceptable exposure limit (AEL) of 0.4 parts per billion (ppb) as an eight-hour time-weighted average (TWA). For DCM, EPA derived a cancer AEL of 0.2 parts per million (ppm) as an eight-hour TWA. For TCE it also identified non-cancer risks to workers for a range of human health effects, most notably cardiac anomalies in offspring, and a remarkably low non-cancer AEL of 1 ppb, also as an eight-hour TWA, for acute exposures. The non-cancer AEL derived by EPA for acute exposures to DCM was 1.3 ppm.
Occupational/Consumer Exposure Regulated.
The AELs derived by EPA are below (three of them orders of magnitude below) current workplace limits. The Occupational Safety and Health Administration (OSHA) has regulated occupational exposure to TCE and DCM for many years. For TCE, the permissible exposure limits (PELs) are 100 ppm as an eight-hour TWA, 200 ppm as an acceptable ceiling concentration, and 300 ppm as an acceptable maximum peak (five minutes in any two-hour period) above the acceptable ceiling concentration for an eight-hour shift. TCE producers recommend compliance with the Threshold Limit Values (TLVs) developed by the American Conference of Governmental Industrial Hygienists. For TCE, the current TLVs are 10 ppm as an eight-hour TWA and 25 ppm as a Short-Term Exposure Limit.
For DCM, in 1997 OSHA adopted a comprehensive standard under Section 6(b)(5) of the Occupational Safety and Health Act (OSH Act) lowering the workplace exposure limit for DCM from 500 ppm to 25 ppm as an eight-hour TWA. In addition, it established a short-term (15-minute) exposure limit (STEL) of 125 ppm and an action level for concentrations of airborne DCM of 12.5 ppm (eight-hour TWA).
As justification of its emphasis on the workplace, EPA indicated to the small business representatives that it has authority to regulate occupational hazards because the authority of OSHA extends only to private sector employers. Thus, public sector employees would not be subject to OSHA jurisdiction. While true, this has been the case since enactment of the OSH Act in 1970, preceding the enactment of TSCA by six years. It had not previously been suggested that this limitation on OSHA's authority would give EPA jurisdiction over all workplaces. Further, according to EPA, OSHA has no plans to revise its PELs for these compounds, while EPA's TSCA authority includes addressing toxic chemicals that cut across worker, public sector, and consumer settings.
EPA produced a letter (undated but thought to have been issued on or about April 4, 2016) from David Michaels, Assistant Secretary for Occupational Safety and Health, to James Jones, EPA's Assistant Administrator for Chemical Safety & Pollution Prevention, which states “[g]iven certain limitations imposed on OSHA's authority under the OSH Act, this Agency believes TSCA provides the EPA with a means of eliminating or reducing the risks associated with these chemical uses in a more coordinated fashion across both consumer and occupational settings.” The letter does not indicate how or why Assistant Secretary Michaels, whose department has no jurisdiction outside the workplace, was authorized to address consumer exposures.
As to consumer exposure, EPA's concern about DCM use in paint stripping arose from reports of over a dozen asphyxiations of individuals stripping bathtubs. In addition to its concern about occupational exposure, EPA disclosed in the SBAR for paint stripping that it is considering restricting sales of DCM to 55-gallon drums. This would eliminate the sale of DCM-based paint strippers to consumers and eliminate much of the commercial refinishing market as well. Here EPA appears to be prepared to act without reference to the Federal Hazardous Substances Act (FHSA), which grants jurisdiction over household products containing hazardous substances to the Consumer Product Safety Commission (the Commission or CPSC).
In 1987, the Commission adopted cautionary labeling for household products containing DCM, including paint strippers, that would meet or exceed the requirements of the FHSA. (Labeling of Certain Household Products Containing Methylene Chloride; Statement of Interpretation and Enforcement Policy (hereafter the “Statement”), 52 Fed. Reg. 34698 (September 14, 1987).) Under the FHSA, further regulation of these household products is precluded absent a finding that the cautionary language contained in the Commission's Statement is ineffective. The Commission has received a petition requesting that it strengthen the label to address the acute over-exposure as well as the chronic hazard, and Commission staff recently gave its approval to cautionary language that warns against using such products to strip bathtubs.
It is odd that EPA has chosen DCM for its one of its inaugural rulemakings under the Lautenberg Act, even though it has already addressed DCM under a different (and substantially unchanged) provision of TSCA. Specifically, Section 4(f) requires EPA, upon receipt of information which indicates that “there may be a reasonable basis to conclude” that a chemical “presents a significant risk of serious or widespread harm,” to initiate action under TSCA 5, 6, or 7. Based on information that it had received in 1985, EPA initiated a priority review of risks of human cancer from exposures to DCM by announcing that it would be conducting, in consultation with other federal agencies, a comprehensive and integrated regulatory investigation. (50 Fed. Reg. 42037 (October 17, 1985).) Thereafter, EPA described the risk management actions completed by OSHA and CPSC, and reported on how “the integrated regulatory investigation led to significant exposure reductions in the major chlorinated solvent use applications, and established a precedent for future cooperative regulatory endeavors.” (56 Fed. Reg. 24811 (May 31, 1991).) The information that EPA received in 1985 was the preliminary findings of the cancer bioassay that is the basis of its current cancer AEL. The only new scientific information is relevant to non-cancer effects (the asphyxiations of individuals stripping bathtubs), and as noted above is already being addressed by CPSC in a much more targeted fashion.
Environmental Exposure Already Regulated.
It is also a matter of concern that neither the TCE nor the DCM Work Plan assessment makes use of voluminous information on the very uses of concern that are already required to be reported to EPA. The TCE Work Plan assessment uses the incorrect baseline for exposure to TCE from vapor degreasing, because all of the exposure data in the assessment were collected long before the May 2010 compliance deadline established in the 2007 National Emission Standard for Hazardous Air Pollutants (NESHAP) for Halogenated Solvent Cleaning. This comprehensive regulation of vapor degreasing imposed a 7 tons per year facility-wide limit on TCE emissions, changed work practices, and greatly reduced both in-facility (occupational and bystander) exposure and fenceline emissions (see 40 C.F.R. Part 63, Subpart T; 72 Fed. Reg. 25138 (May 3, 2007)). Most significantly, it requires detailed reporting to EPA from 2010 onward, for all covered degreasers, of TCE consumption, emissions, controls, and other such information of direct relevance to EPA's exposure assessment, which has so far been completely ignored by EPA (40 C.F.R. § 63.471(e),(f),(g),(h)).
Similarly, EPA's DCM Work Plan assessment does not reflect workplace conditions following implementation of EPA's NESHAP for Paint Stripping and Miscellaneous Surface Coating Operations at Area Sources. (40 C.F.R. Part 63, Subpart HHHHHH; 73 Fed. Reg. 1738 (Jan. 9, 2008).) This regulation requires each paint stripping operation to minimize the evaporative emissions of DCM, to evaluate each application to ensure there is a need for paint stripping, to evaluate each application where a paint stripper containing DCM is used to ensure that there is no alternative paint stripping technology that can be used, to reduce exposure of all paint strippers containing DCM to the air, and the like (40 C.F.R. 63.11173). Each paint stripping operation must maintain copies of annual usage of paint strippers containing DCM on site at all times, and if it has annual usage of more than one ton of DCM must develop and implement a written plan to minimize the use and emissions of DCM.
Section 112 of the Clean Air Act, under which these standards were adopted, requires that they must ensure an “ample margin of safety to protect public health.” Thus, if the risk of concern were significant, EPA would have to adopt more protective standards under the Clean Air Act. It is regrettable that EPA's Work Plan assessments for TCE and DCM for these very applications fail to start with the detailed study and analysis of these sources already carried out by another part of EPA.
TSCA Section 9.
As originally enacted and as updated by the Lautenberg Act, TSCA Section 9(d) requires EPA to consult and coordinate with other federal agencies “for the purpose of achieving the maximum enforcement of this Act while imposing the least burdens of duplicative requirements on those subject to the Act and for other purposes.” Worker and consumer health and safety fall under the jurisdictions, respectively, of OSHA and CPSC. The uses of TCE in vapor degreasing and DCM in paint stripping are already more than adequately regulated under the OSH Act and/or the FHSA. This comprehensive regulatory framework provides adequate protections with respect to the same potential adverse impacts and potential exposure pathways targeted by the current EPA initiative. Taking steps that may lead to the removal of products from the marketplace because workers or consumers failed to comply with the existing legal requirements is not consistent with TSCA either as initially enacted or as revised.
The basis for EPA's broad assertion of jurisdiction over occupational and consumer uses is unclear. The Lautenberg Act eliminated the requirement in TSCA Section 6(a) that EPA protect “against [unreasonable] risk using the least burdensome requirements,” but did not materially change the existing framework that requires unreasonable risks to be addressed under statutory authority other than TSCA wherever possible. EPA's longstanding interpretation of this framework is as follows:
“Under section 9(a)(1) of TSCA, the Administrator is required to submit a report to another Federal agency when two determinations are made. The first determination is that the Administrator has reasonable basis to conclude that a chemical substance or mixture presents or will present an unreasonable risk of injury to health or the environment. The second determination is that the unreasonable risk may be prevented or reduced to a sufficient extent by action taken by another Federal agency under a Federal law not administered by EPA. Section 9(a)(1) provides that where the Administrator makes these two determinations, EPA must provide an opportunity to the other Federal agency to assess the risk described in the report, to interpret its own statutory authorities, and to initiate an action under the Federal laws that it administers.
“Accordingly, section 9(a)(1) requires a report requesting the other agency: (1) To determine if the risk may be prevented or reduced to a sufficient extent by action taken under its authority, and (2) if so, to issue an order declaring whether or not the activities described in the report present the risk described in the report.
“Under section 9(a)(2), EPA is prohibited from taking any action under section 6 or 7 with respect to the risk reported to another Federal agency pending a response to the report from the ether Federal agency. There would be no similar restriction on EPA for any risks associated with a chemical substance or mixture that is not within the section 9(a)(1) determinations and therefore not part of the report submitted by EPA to the other Federal agency.” (4,4’-Methylenedianiline; Decision to Report to the Occupational Safety and Health Administration, 50 Fed. Reg. 27674 (July 5, 1985). EPA also has acted under Section 9(a) to refer 1,3-butadiene and glycol ethers to OSHA, 50 Fed. Reg. 41393 (Oct. 10, 1985) and 51 Fed. Reg. 18488 (May 20, 1986), respectively, and to refer dioxins in bleached wood pulp and paper products to the Food and Drug Administration, 55 Fed. Reg. 53047 (Dec. 26, 1990).)
TSCA Section 9(b) is the intra-agency counterpart to Section 9(a). It requires EPA to “coordinate” actions taken under TSCA with actions taken under other statutes administered by EPA. If EPA determines that a chemical risk “could be eliminated or reduced to a sufficient extent by actions taken under the authorities contained in such other Federal laws, the Administrator shall use such authorities to protect against such risk,” unless she determines that “it is in the public interest” to proceed under TSCA. Indeed, the Lautenberg Act strengthened TSCA Section 9(b) by moving into it a provision formerly in TSCA Section 6 requiring EPA, in making such a public interest determination, to compare “the estimated costs and efficiencies of the actions to be taken under [TSCA] and an action to be taken under such other law.”
It was clear from the outset that TSCA is to be used only when other statutes fail to provide a remedy for unreasonable risks. When TSCA was enacted in 1976, Representative James Broyhill of North Carolina indicated that “it was the intent of the conferees that the Toxic Substance Act not be used, when another Act is sufficient to regulate a particular risk,” (122 Cong. Rec. H11344 (Sept. 28, 1976).) TSCA Section 9(a) is substantively unchanged by the Lautenberg Act. The House Energy and Commerce Committee Report states: “H.R. 2576 reinforces TSCA's original purpose of filling gaps in Federal law that otherwise did not protect against the unreasonable risks presented by chemicals,” and further clarifies that “while Section 5 makes no amendment to TSCA Section 9(a), the Committee believes that the Administrator should respect the experience of, and defer to other agencies that have relevant responsibility such as the Department of Labor in cases involving occupational safety.” (H. Rep. No. 114-176 (114th Cong., 1st Sess.) at 28. Cf. Detailed Analysis and Additional Views of Senators Boxer, Markey, Udall, and Merkley, “13. TSCA As the Primary Statute for the Regulation of Toxic Substances … EPA's authorities and duties under Section 6 of TSCA have been significantly expanded under the [Lautenberg Act] … The interagency referral process and the intra-agency consideration process established under Section 9 of existing TSCA must now be regarded in a different light since TSCA can no longer be construed as a ‘gap-filler’ statutory authority of last resort.” 162 Cong. Rec. S3517 (June 7, 2016).)
Colloquies on the floor of the House of Representatives make this intent clear with specific reference to TCE and DCM, most notably the following:
“Mr. SHIMKUS. Mr. Speaker, I yield 2 minutes to the gentlewoman from Tennessee (Mrs. Blackburn), the vice chair of the full committee.
Mrs. BLACKBURN. Mr. Speaker, I do rise in support of the amendments to H.R. 2576, and I congratulate ChairmanShimkus on the wonderful job he has done. Mr. Speaker, I yield to the gentleman from Illinois (Mr. Shimkus) for the purpose of a brief colloquy to clarify one important element of the legislation.
Mr. Chairman, it is my understanding that this bill reemphasizes Congress' intent to avoid duplicative regulation through the TSCA law. It does so by carrying over two important EPA constraints in section 9 of the existing law while adding a new, important provision that would be found as new section, 9(b)(2).
It is my understanding that, as a unified whole, this language, old and new, limits the EPA's ability to promulgate a rule under section 6 of TSCA to restrict or eliminate the use of a chemical when the Agency either already regulates that chemical through a different statute under its own control and that authority sufficiently protects against a risk of injury to human health or the environment, or a different agency already regulates that chemical in a manner that also sufficiently protects against the risk identified by EPA.
Would the chairman please confirm my understanding of Section 9?
Mr. SHIMKUS. Will the gentlewoman yield?
Mrs. BLACKBURN. I yield to the gentleman from Illinois.
Mr. SHIMKUS. The gentlewoman is correct in her understanding.
Mrs. BLACKBURN. I thank the chairman. The changes you have worked hard to preserve in this negotiated bill are important. As the EPA's early-stage efforts to regulate methylene chloride and TCE under TSCA statute section 6 illustrate, they are also timely.
EPA simply has to account for why a new regulation for methylene chloride and TCE under TSCA is necessary since its own existing regulatory framework already appropriately addresses risk to human health. New section 9(b)(2) will force the Agency to do just that.
I thank the chairman for his good work.” (162 Cong. Rec. H3028 (May 24, 2016).)
Work Plans and TSCA Sections 6, 26
EPA appears ready to push its authority into the workplace and consumer uses even though TSCA Section 9's limits on this authority were strengthened. On the other hand, although significant changes were made to ensure that EPA would employ the “best available science” in its risk assessments, EPA seems poised to rely on remarkably sketchy and inadequate assessments in its inaugural rulemakings under TSCA Section 6.
TSCA Section 6(b)(4)(F), as revised by the Lautenberg Act, requires that EPA's risk evaluations must, among other things:
• “integrate and assess available information on hazards and exposures for the conditions of use of the chemical substance, including information that is relevant to specific risks of injury to health or the environment and information on potentially exposed or susceptible subpopulations identified as relevant by the Administrator;”
• “take into account, where relevant, the likely duration, intensity, frequency, and number of exposures under the conditions of use of the chemical substance;” and
• “describe the weight of the scientific evidence for the identified hazard and exposure.”
New TSCA Section 26(h) requires that, in carrying out Section 6, “to the extent that the Administrator makes a decision based on science, the Administrator shall use scientific information, technical procedures, measures, methods, protocols, methodologies, or models, employed in a manner consistent with the best available science, and shall consider as applicable—
(1) the extent to which the scientific information, technical procedures, measures, methods, protocols, methodologies, or models employed to generate the information are reasonable for and consistent with the intended use of the information;
(2) the extent to which the information is relevant for the Administrator's use in making a decision about a chemical substance or mixture;
(3) the degree of clarity and completeness with which the data, assumptions, methods, quality assurance, and analyses employed to generate the information are documented;
(4) the extent to which the variability and uncertainty in the information, or in the procedures, measures, methods, protocols, methodologies, or models, are evaluated and characterized; and
(5) the extent of independent verification or peer review of the information or of the procedures, measures, methods, protocols, methodologies, or models.”
With regard to the Work Plan assessments completed prior to passage of the Lautenberg Act, the subject of this article, TSCA Section 26(l)(4) provides that “the Administrator may publish proposed and final rules under section 6(a) that are consistent with the scope of the completed risk assessment for the chemical substance and consistent with other applicable requirements of section 6.” Thus, EPA may base regulation on the pre-enactment risk assessments only to the extent that they comply with the substantive requirements above.
While this is not the place for an extensive analysis of the shortcomings of these assessments, a few examples may suffice:
• The TCE Work Plan assessment expressly relies on hazard values derived directly from a single academic study to estimate non-cancer risk, even though several other studies, including two Good Laboratory Practice-compliant studies conducted under EPA guidelines, have been unable to reproduce the effect; the academic study has been heavily criticized in the published literature; other regulatory agencies have expressly declined to rely on the academic study citing data quality concerns; the authors of the study have published repeated corrections that fail to address the data quality concerns; and a majority of EPA's own staff scientists expressed “low” confidence in its results.
• Both assessments relied on out-of-date exposure scenarios that did not take into account changes in workplace emissions and exposures as a result of adoption and implementation by EPA of the NESHAPs described above. Indeed, the DCM assessment relies upon data that preceded the 20-fold reduction in permitted workplace levels (from 500 ppm to 25 ppm) that resulted from adoption of the OSHA workplace standard in 1997.
• Both assessments are screening level assessments which do not meet Office of Management and Budget guidelines implementing the Information Quality Act for a “highly influential scientific assessment” to support TSCA Section 6 rulemaking. Both assessments employed a cascade of worst-case or default assumptions that led to overestimation of potential risks. Such assessments may be appropriate to support a decision that no further action or evaluation is necessary, because there is confidence that the potential risks are not a concern. However, they are considered inappropriate to support regulations intended to reduce risk because screening level assessments do not accurately estimate risk or quantify exposures.
• The report of the peer review of the TCE assessment highlights the foregoing points in the clearest possible terms, but EPA has to date ignored it. In fact, the EPA Assistant Administrator for Chemical Safety and Pollution Prevention wrote to the EPA Inspector General that “[i]t is notable that the external peer reviews of all the Work Plan assessments we have completed thus far supported our overall assessment methodologies and conclusions.” (Response to Office of Inspector General Draft Report No. OPE-FY14-0012 “EPA's Risk Assessment Division Has Not Fully Adhered to Its Quality Management Plan,” (July 30, 2014), Appendix A, p.10 (available athttps://www.epa.gov/sites/production/files/2015-09/documents/20140910-14-p-0350.pdf) . Compare BNA Daily Environment Report, “EPA Peer Reviewers Say Trichloroethylene Analysis Not Ready for Regulatory Use” (July 18, 2013).)
Following enactment of the Lautenberg Act, it should be clear that a risk evaluation that supports a TSCA Section 6 rule must be more robust than the screening level Work Plan assessments that EPA conducted for TCE and DCM. Peer review and public comments identified numerous scientific deficiencies with the draft Work Plan assessments, including the inappropriate use of default assumptions; ignoring contrary evidence that affects the weight of the scientific evidence; reliance on inappropriate exposure data; conclusions inconsistent with the evidence cited; and reliance on a study that is not reproducible. Equally important shortcomings in both the hazard and exposure assessments were noted. Whatever “best available science” may mean, it cannot include reliance on an unreproducible toxicity study or outdated exposure information. And certainly EPA can no longer afford to ignore the conclusions of the peer review it initiated, as it must consider “the extent of independent verification or peer review of the information.”
Implications for Other Chemicals
There is nothing unique or unusual about TCE or DCM that would limit EPA's apparent over-reaching to their uses. EPA initially targeted them because of concerns about consumers and small workplaces, but is now looking at much broader regulation. EPA has derived cancer potency factors for dozens of widely used compounds (the table** below shows EPA's cancer potency factors for six other such chemicals, selected at random). Most if not all such substances would effectively be banned from the workplace under the approach EPA is considering.
http://news.bna.com/deln/DELNWB/split_display.adp?fedfid=95329256&vname=dennotallissues&fn=95329256&jd=95329256
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Disparate Views on Chemical Priorities Voiced at EPA Meeting
Aug 11, 2016 | BNA Daily Environment Report
By Pat Rizzuto
The Environmental Protection Agency's chemical prioritization regulation must provide clear criteria for designating chemicals to be low priorities for risk evaluation, industry representatives said Aug. 10.
Environmental and health organizations urged the EPA to ensure that many chemicals could be deemed high priorities for risk evaluation.
All sides said they want the criteria the EPA will set to designate chemicals as high or low priorities for risk evaluation to be easily understood by individuals outside the agency.
The comments came at an agency meeting about a regulation it must develop by June 2017 describing how it will prioritize chemicals for risk evaluation. The EPA will accept written comment by Aug. 24 on how it should craft its proposed rule. The agency aims to propose the rule by the end of December.
Chemicals deemed high priorities will be subject to risk evaluation, which could lead to use restrictions, labeling requirements or other risk management measures. No further action is triggered by low-priority designation.
More than 600 people representing industry and environmental health groups as well as the California Environmental Protection Agency, health care organizations and academic researchers registered for the meeting. The rule under discussion is required under the amendments the Frank R. Lautenberg Chemical Safety for the 21st Century Act made to the nation's primary chemicals law, the Toxic Substances Control Act.
Ashland, Dow Focus on Workability, Data
Three industry officials urged the EPA to establish a workable risk-based process to designate chemicals as high or low priorities.
“You don't want too many chemicals in the high priority net” or the agency won't be able to evaluate them efficiently, Tony Schatz, director of environmental, health, safety and product regulatory affairs at Ashland Inc., said.
The EPA should designate as low priorities chemicals that will have little or no exposure, such as intermediate chemicals that are used in a closed system, Schatz and Scott Arnold, product sustainability consulting leader at the Dow Chemical Co., said. Intermediate means the chemicals are used only to make other chemicals but aren't in the final chemical or manufactured product. Closed systems limit worker exposure by keeping the chemicals inside equipment that is operated by a person or robotic system that also is isolated from the chemicals.
Lorenz Rhomberg, a risk analyst at Gradient, an environmental and risk sciences consulting company, said there will be a lot of chemicals that are neither high nor low priorities but remain somewhere in the middle. Given the thousands of chemicals in commerce, the EPA must establish rigorous criteria “near the end of the scale” to differentiate chemicals important enough to be high priorities or clearly low priorities, he said.
Most Chemicals Should Be High Priorities: NRDC
Kristi Pullen, a staff scientist with the Natural Resources Defense Council, was among the environmental health representatives who said the EPA should use broad criteria to designate high priority chemicals.
“EPA must adopt a prioritization screening method that ensures most chemical substances are ultimately deemed a ‘high priority’ for risk evaluation,” Pullen said.
The EPA must ensure the door to high priority designation “is a wide and inclusive gateway, not a narrow crevice through which few chemicals slip through,” she said.
Role Played by Prenatal Exposure
Nathaniel DeNicola, a physician who spoke for the American Congress of Obstetricians and Gynecologists, or ACOG, focused on the role prenatal exposures should play in the EPA's prioritization efforts.
“An analysis of National Health and Nutrition Examination Survey data from 2003 to 2004 found that virtually every pregnant woman in the United States is exposed to at least 43 different chemicals,” DeNicola said, referring to a 2011 study of 268 pregnant women.
“Prenatal exposure to environmental chemicals is linked to a number of adverse health consequences, and patient exposure at any point in time can lead to harmful reproductive health outcomes,” he added.
“Until and unless proven otherwise, ACOG considers potential exposure to chemicals during pregnancy an unreasonable risk. Therefore, it is ACOG's position that a chemical should be designated high priority if there is potential exposure to pregnant women and the fetus, infants, or children,” DeNicola said.
Data Acquisition Strategy Should Be in Rule: EDF
Lindsay McCormick, a research analyst with the Environmental Defense Fund, said the EPA must include a data-acquisition strategy as part of its prioritization rule.
“It is critical that the prioritization process include collecting and developing information that does not currently exist or the agency does not have,” McCormick said.
“To do this, the rule should codify EPA's clear authority to identify and fill data needs through both test orders and data call-ins, and describe how and when EPA will use it. For example, on a routine basis as part of the prioritization process, EPA should require companies to submit existing information they have on their chemicals, especially information that has already been submitted to other governments,” she said.
No Data? No Risk?
Tracey Woodruff, director of the program on reproductive health and the environment at the University of California, San Francisco, and lead author of the study to which DiNicola referred, voiced a perspective repeated by many other commenters.
EPA's rule “should clearly state that no data does not mean no risk,” Woodruff said.
Arnold was among many commenters who urged the EPA to use emerging types of in vitro, computer-modeled and other information to set priorities.
The types of data the EPA will accept should be flexible so that the agency can incorporate new data-generation technologies as they mature, Arnold said.
http://news.bna.com/deln/DELNWB/split_display.adp?fedfid=95329287&vname=dennotallissues&fn=95329287&jd=95329287
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Reconsideration of Oil, Gas Air Standards Rejected by EPA
Aug 11, 2016 | BNA Daily Environment Report
By Patrick Ambrosio
The Environmental Protection Agency won't reopen its 2012 hazardous air pollution standards for the oil and gas industry, as the agency rejected all remaining reconsideration petitions brought by industry, states and environmental organizations.
The 2012 emissions standards, which included the first federal air standards for natural gas wells that are hydraulically fractured, were intended to curb emissions of volatile organic compounds, a precursor to the formation of ground-level ozone, and hazardous air pollution.
Those standards required new hydraulically fractured gas wells to utilize technology known as a “green completion” to capture gas that otherwise would have escaped, a move that the EPA said would reduce volatile organic compound emissions by nearly 95 percent.
The EPA previously revised aspects of the 2012 standards (RIN:2060–AP76) in response to reconsideration requests by industry and environmental organizations.
However, the agency announced in an Aug. 10 notice that it rejected all remaining requests, including issues highlighted by the American Petroleum Institute, the Gas Processors Association, the Texas Commission on Environmental Quality and a coalition of environmental organizations that includes the Natural Resources Defense Council.
The issues that the EPA won't reconsider include industry concerns that the standards require flaring in situations in violation of local ordinances in some areas and environmental group concerns about the enforceability of language concerning emissions standards for pneumatic controllers. The agency provided its full justification for rejecting all the remaining reconsideration issues in a response document posted online.
Methane Reductions Expected
While the focus of the 2012 standards was hazardous air pollution and volatile organic compounds, the EPA also projected that the standards would achieve some reductions in methane, a potent greenhouse gas.
The agency in 2016 issued methane limits (RIN:2060-AS30) for new and modified oil and gas wells, and it is collecting data on various aspects of the oil and gas industry that are necessary to consider setting methane regulations for existing oil and gas wells.
The EPA's denial of the remaining reconsideration petition issues constitutes a final agency action that can be challenged in federal appeals court. Any lawsuits over the decision must be filed in the U.S. Court of Appeals for the District of Columbia Circuit by Oct. 11.
http://news.bna.com/deln/DELNWB/split_display.adp?fedfid=95329276&vname=dennotallissues&fn=95329276&jd=95329276
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E&Ps Pushing Proppant Intensity Ever Higher, Say Frack Sand Operators
Aug 10, 2016 | Natural Gas Intelligence
By Carolyn Davis
Commodity prices may not encourage too many rigs to rise in North America in the near-term, but as oil and gas producers experiment with longer laterals and increased fractures, there’s a bit more optimism among sand operators.
U.S. Silica Holdings Inc., Hi-Crush Partners LP, Fairmount Santrol Holdings Inc. and Superior Silica Sands LC, while cautious about the near-term, all see higher proppant intensity among their onshore customers.
The reasons became clear during 2Q2016 conference calls. For example, Chesapeake Energy Corp. CEO Doug Lawler proclaimed a new era in completion technology, which the company has dubbed “proppant-geddon” (see Shale Daily, Aug. 5). Chesapeake’s largest completion in history, drilled in the Haynesville Shale, used more than 30 million pounds of sand. It plans additional tests up to 50 million pounds “in the back half of the year,” CEO Doug Lawler said.
Stay up to date on 2Q16 earnings and projections for the remainder of the year with NGI's Earnings Call and Coverage sheet.
‘Few Green Shoots’ at U.S. Silica
U.S. Silica is expecting the upside — but not immediately, CEO Bryan Shinn said during the recent 2Q2016 conference call.
“Several industry experts have predicted a coming surge of demand for frack sand,” Shinn said. “While we also expect to see significant increases in sand used per well, to date our demand has not picked up significantly. We are, however, beginning to see a few green shoots, which may be signs of an impending market recovery.”
For example, he cited “numerous conversations recently with customers who've indicated a renewed interest in securing long-term supply contracts. In addition, we've seen activity levels in our 30-day open order book begin to tick up in the last few weeks, indicating the potential for an incremental increase in demand.” Oil and gas sand pricing also appears to have stabilized in the last couple of months following an “epic downturn,” Shinn said.
“In fact, we've begun to test the waters for potential price increases in specific parts of certain markets. So have we hit the bottom of the cycle? Well, our largest customers believe that we have. Our view is that we have to continue to do the things we've done over the past several quarters to position our company for success...”
U.S. Silica appears to be laying plans for a surge in sand proppant. In July it agreed to pay $210 million for New Birmingham Inc. affiliate NBR Sands (see Shale Daily, July 19). Plans are to more than double operations at the Tyler, TX, facility to 2 million tons/year.
The Frederick MD-based commercial silica producer only a few days ago also agreed to pay $218.3 million to buy Sandbox Enterprises LLC, a frack sand logistics company, to help manage the proppant supply chain.
“Increasingly, wells are demanding greater levels of proppant,” Shinn said of the purchases. “Since 2013, the per-well demand for proppant has increased more than 70% and is estimated to rise further in the coming years.
“This trend has created significant logistics challenges for energy and frack service companies, as more proppant means more deliveries, more trucks, and more congested jobsites.” High-intensity completions, he said, “often require 400 truckloads of sand or more, creating delivery delays, noise and dust at the well site. Many service companies are citing last-mile proppant logistics as a major barrier when energy markets recover.”
While U.S. Silica management is encouraged by recent customer conversations, Shinn stressed that contracts signed going forward would be designed to recover margins as the market recovers.
“Finding ways to peg the contracts to market indicators like the West Texas Intermediate prices or number of rigs, things like that, is where we're going. And I feel like that's where the industry is going to go as well. I think everyone is looking to make sure that as things get tight again, which it feels like they will…you just do the math on completion intensity, and the amount of sand that's now needed per rig, or per 100 rigs…It's almost certain that things will tighten up, and the challenge is to structure the contracts in a way that are fair to both parties.
The “more confident customers” that have a feel for what’s going to happen in the market with sand are signing up for volume commitments, but most remain “leery.”
U.S. Silica's frack sand demand in April was relatively slow, while May business picked up before tailing off in June.
“As we rolled into July, our volumes were up versus 2Q2016 exit. And... for the first time in a while, our 30-day advance order book is up pretty substantially. So it feels like there could be some green shoots out there. I'm feeling better about 3Q2016 volumes” versus 2Q2016.
As far as demand, Shinn said generally the finer grades of sand are tighter than coarser products, “driven by the move to more slickwater fluid systems, which tend to use the finer products.”
U.S. Silica has about 2,600 railcars in storage today, down about 200 from 1Q2016.
“There are somewhere between 25,000 to 30,000 cars in storage across the country, based on our estimates,” Shinn said of the industry. “And just based on that, and sort of the reality, our partners are showing a fair amount of flexibility in working with us...”
Hi-Crush Seeing ‘Greater Sand Intensity’
“We entered the second quarter with the same headwinds as we experienced throughout the first quarter, but did see a gradual yet steady improvement in activity and volumes throughout the second quarter following a low in April,” Hi-Crush CFO Laura Fulton said during the recent quarterly call.
The company’s northern white sand volumes were lowest in April, while May was sequentially better, with a further increase in June, Fulton said. While activity and volumes may not increase every month for the rest of the year, the second quarter trend was finally to the positive, and represents an encouraging dynamic for the partnership.”
The “improving pattern is the direct result of the continuation of greater sand intensity,” she said. “We’ve had continued discussions with our customers on the benefits of higher-intensity completions, and we hear the same commentary from producers discussing the positive impacts of more sand on their quarterly investor calls.
“The trend of more sand per lateral foot is real. It's impactful. It's rig-count-neutral and, along with the completion of the drilled but uncompleted wells, it's one of the most important drivers of support for our business.”
Hi-Crush CEO Robert Rasmus was cautious about the recovery, however.
“While the rig count has slowly started to stabilize and even increase in certain areas, the higher well completion activity that comes from increased rigs may take some time to surface in the sand industry” because of “the normal and expected time lag between rig activity and completions,” Rasmus said.
“We continue to see some frack sand producers selling sand at what we consider to be unprofitable and unsustainable prices, even for those with industry-leading cost structures. As demand for sand picks up, we expect to see pockets of short supply, which will help shore up pricing, moving to overall tight supply as demand increases with greater completion activity and sand intensity.”
He also likes what he is hearing from the exploration and production (E&P) companies about increasing proppant.
“We've all heard in recent months and more recently on the latest round of earnings calls that more sand used per stage and per well equates to better well results. We have corroboration of that statement from recent pronouncements from E&Ps...” More sand per frack is a prevalent message, but for the proppant providers, the drilled but uncompleted (DUC) wells also are an avenue for profit.
Whittling down the DUC backlog represents “pent-up sand demand that is rig count-neutral and offers E&Ps attractive returns on new capital, even at current hydrocarbon prices,” Rasmus said. “These sand intensity and DUC trends are tailwinds specific to sand demand. When combined with new activity across the U.S., this supports our view that the frack sand industry will lead the energy sector recovery.”
The Permian is the go-to area for more proppant today, which is why Hi-Crush invested in more silos, Fulton said.
“But with the natural gas prices where they are right now, we can see the Marcellus and Utica coming back,” she said. “We don't have an owned and operated terminal in the Midcontinent, but we're seeing activity levels increase, and we have third parties that we can work with.
“But I think it's along the lines of what most analysts are expecting, is that you would see the Permian and the Eagle Ford coming back and then the Marcellus and Utica, then Midcon, Denver-Julesburg…The Bakken is probably the last one to come back…”
More sand going into gas wells in the Marcellus and Utica is a boon for Hi-Crush, Rasmus said.
”We've seen some wells, three in particular that we know of, that have used over 60 million pounds of proppant on those wells, and those wells have been absolutely gangbusters in terms of their performance results. It’s just almost shocking in terms of the production results relating from that…We are seeing similar results by increased sand usage and increased number of stages on the natural gas wells in addition to the oil-based wells.”
Intensity Seen 20-25% Higher in 2016, Says Fairmount
At Fairmount Santrol, July proppant volumes rose from the second quarter and “proportionately more so” on resin-coated proppant (RSP) CEO Jenniffer Deckard said during the quarterly conference call.
“We have also seen a market shift in our conversations and actions with our customers, which have largely turned to a focus on assurance of future supply of quality products and in quantities that will be necessary for them as the cycle turns upwards,” she said.
As commodity prices recover, “operators are expected to accelerate completion of wells from existing DUC inventories. That’s in advance of and in addition to rig count increases. And second, proppant intensity continues to grow and could increase by 20-25% on average for the full year 2016.”
Pricing for RCP, a premium proppant, has begun to stabilize along with prices for brown and white sand, Deckard said.
“It really does feel that the industry is recognizing that pricing just reached unsustainable levels for the sand industry” she said. “We are seeing a stabilization there, both in coated products and in sand. And the increase is definitely being driven 100% by customers bringing resin-coated sand back into their well design and starting to think about productivity and long-term estimated ultimate recoveries.”
Still, some customers are walking away from orders, given the recent pullback in oil prices, she told analysts.
“But that’s really not something new to the industry. You definitely do have jobs, sometimes they pull out and sometimes they push…But we certainly understand that our customers are out bidding jobs and that they are going to need a little bit of flexibility and we just try to work together to minimize the cost to both of us for shifting projection…”
No Saturation Point Yet, Says Emerge CEO
Proppant intensity per well showed a big gain in the first half of the year for Superior Silica Sands LC, an affiliate of Emerge Energy Services LP. Preliminary data suggested intensity is up 20-30% versus exit rates in 2015, said Emerge Chairman Ted Beneski during a recent conference call.
Like U.S. Silica, Superior is seeing higher demand for finer grade sand than for coarser grades — for now.
“While this trend is a severe divergence from patterns just 12 months to 24 months ago, we think that operators will ultimately migrate back to coarser grades,” he said. “In fact, an informal survey of our customer base indicates a unanimous opinion that coarse sand demand will return. It is simply a matter of time…
“We continue to believe that demand from northern white sand will return to much healthier levels when operators convert back to a more quality focused long-term mindset when evaluating their well designs compared to the current short-term, low-cost mentality we see from the industry.”
CEO Richard Shearer said customers “are moving forward very cautiously because of the price of oil. There was more consensus of optimism in the marketplace as oil was in the high $40s, even tipping $50/bbl... More recently, however, with oil having dipped back down to around $40/bbl, I think some customers, not all by any means, but some customers have now had second thoughts about how they should move forward in the second half.” It’s likely to be a “mixed bag” to the end of the year with some customers committing to new crews and more drilling in certain basins, while others hold steady.
“We are, like everyone, seeing proppant intensity as a real driver and another reason for our optimism in the frack sand space,” Shearer said. “Even in the first half of this year, it looks as though the proppant intensity has increased 25-35%, just made around with a couple major customers of ours who attest to that fact that they've seen a 30% increase in the first half of this year. They're continuing to add more and more sand downhole because of the yield from the well certainly continues to improve based on proppant intensity.”
Depending on the basins, the well and the sand intensity vary, he said. “But on average, you're probably looking at 3,800 tons to 4,000 tons per well. I know we were bragging just 12 months, 14 months ago about a well that was known to take 10,000 tons of frack sand, that was a huge number.
“That's getting more and more common now,” Shearer said. “I literally just did hear about a well that took 25,000 tons of frack sands. So, it's a reason for optimism for sure. We think that we'll continue to see that proppant intensity go up.” If Shearer had to guess about what’s ahead for 2017, he said it would be “reasonable” to assume proppant intensity will increase 15-20% at least.
“Nobody is talking in the market about a saturation point being achieved as yet.”
http://www.naturalgasintel.com/articles/107364-eps-pushing-proppant-intensity-ever-higher-say-frack-sand-operators
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U.S., India Boost Clean Energy Partnership With $30 Million
Aug 11, 2016 | BNA Daily Environment Report
By Rebecca Kern
The U.S.-Indian Partnership to Advance Clean Energy Research (PACE-R) will be expanded with an additional $30 million in public-private funding, according to an Aug. 9 Energy Department funding opportunity announcement.
The Energy Department and the Indian Ministry of Science and Technology each will contribute $1.5 million annually for five years, totaling $15 million, subject to congressional appropriations. The U.S. and Indian private sectors will match the government funding with an additional $15 million.
“Smart grid and storage technology will transform how we produce and consume electricity, which has the potential to decrease carbon pollution by scaling up renewable energy deployment,” Energy Secretary Ernest Moniz said in the funding announcement.
The funds will be used for research in both countries on smart grid and energy-storage technology. The work will begin when an award selection is made, which is expected in 2017, the DOE said.
The U.S. and India started the Partnership to Advance Clean Energy (PACE) in 2009 to support research and development of clean energy technologies in both countries. They expanded the initiative to include PACE-R focused on research, and both governments initially provided a combined $50 million over five years starting in 2012 to research solar energy, energy efficiency in buildings and next-generation biofuels.
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DOT Tweaks Crude-by-Rail Regulations in Final Rule
Aug 11, 2016 | BNA Daily Environment Report
By Ari Natter
Transportation Department regulations for trains hauling crude oil and other flammable materials would be tweaked under a final rule announced Aug. 10.
The rule (RIN:2137-AF17), required by transportation legislation enacted in 2015, mandates that all new tank cars be equipped with a thermal protection blanket and that older tank cars retrofitted to the new design standard be equipped with top fittings protection, according to the Pipeline and Hazardous Materials Safety Administration.
The rule also requires a faster phase-out of older model tank cars that ship “highly flammable, unrefined petroleum products” and expands new tank car requirements to all trains hauling flammable liquids, regardless of the length of the train, PHMSA said.
The original rule, unveiled in May 2015, required trains hauling 20 tank cars of crude oil or ethanol in a continuous block or 35 tank cars of those products total, to use retrofitted or new tank cars starting in 2017.
The rule, which followed a series of fiery accidents involving the transportation of crude oil from the Bakken and other regions, also set speed restrictions for certain trains in some areas, mandated the use of industry-opposed pneumatic breaks and required information sharing among other requirements.
Broad transportation legislation enacted in December 2015, the Fixing America's Surface Transportation Act of 2015 (FAST Act) (Pub. L. No. 114-94), required the changes, which were made by PHMSA and the Federal Railroad Administration.
The rule has yet to be published in the Federal Register.
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(ACC Mentioned) Plastic and Recycling Niches Unite to Close the Loop
Aug 10, 2016 | Waste 360
By Arlene Karidis
Plastics continue to flood the waste stream, yet not nearly enough is returned to manufacturers for them to crank out their products at capacity. Instead, volumes of the would-be valuable commodity are stockpiling at landfills.
One problem is that processing some postconsumer resins can be a lot of work, often with little to no return. And another is that packaging continues to evolve, posing technical challenges to recyclers.
To tackle these issues, the plastics and solid waste and recycling industries have joined forces to devise best practices. Among the outcomes of those efforts is an innovative way to deal with foam polystyrene. There are also now incentives to encourage MRFs to process more quality PET. And stakeholders are assessing technologies to handle flexible film without having to overhaul existing MRF infrastructures.The PET challenge
“It’s highly recyclable and collected in almost every recycling program in the country, yet the recycling rate for PET is about 31 percent. Even if every container in the U.S. was recycled, it still would not meet demand,” says Resa Dimino director, public policy for NAPCOR, the trade association for the North American PET industry.
(Dimino will speak on a Waste360 Recycling Summit panel on “Market Updates and Packaging Evolution” on Tuesday, Sept. 20. She will be joined by Jordan Tony of Moore Recycling Associates and Emily Tipaldo of the American Chemistry Council (ACC). The session will be moderated by Michael Timpane of RRS)
The limited supply correlates with declining quality. So PET reclaimers buy more, mainly from MRFs, to produce the same marketable volume as before, and invest more in cleaning and processing, as other materials end up in their stream.
NAPCOR and the Association of Plastic Recyclers have developed a bale specification mechanism and protocol for measuring PET in a bale.
“It’s a model driven by the idea that if you give clear guidance on investing in improving bale quality, the market can respond,” says Dimino.Dealing with what’s fairly new
NAPCOR is also exploring viable approaches for thermoform used for example in cups and clam shells. While most recycling systems can sort PET bottles, thermoform is heavier and flatter and labels have aggressive adhesives, features which present processing issues.
“Most PET recyclers buying curbside material can process thermoform at some level. So we are moving in the right direction, but it’s challenging,” says Dimino.Film to corner the market
PE film production is set to increase in the U.S. over the coming years due to an advantageous energy market and manufacturing capabilities, according to Tipaldo, director, plastics packaging and consumer products with the ACC.
Film has upstream sustainability benefits. It requires little material, and because it’s light weight, shipping and distribution require less gas and energy.
“But film can pose mechanical and safety challenges in MRFs. It has mixed with paper; it gets wrapped around disc screens, and employees have to cut this stuff out directly on the screens, which presents a hazard,” says Tipaldo.
U.K.-based REFLEX, a collaboration between global brands, is assessing whether radio-frequency identification (RFID) technology can effectively separate film from other materials. And Materials Recovery for the Future has done MRF trials that conclude that, with adequate screening and optical sorting capacity, most flexibles in a single-stream facility may potentially be captured.
Plans are to launch a pilot at a MRF exploring cost for equipment retrofits and to determine what level of investment will equal what level of recovery. Then the focus will turn to identifying end markets and laying out a business case for investments in upgraded systems.
“We still need to focus on collection. This research is only focused on sortation, and more fine-tuning needs to be done. But I say we are onto something,” says Tipaldo.A gap between capacity to reclaim HDPE and supply
Brand companies are using less HDPE as they go to lightweight pouches and condensed detergents. Still, it consistently has market value, says Tony, a research associate at Moore Recycling Associates.
“PRFs are helping increase supply by buying mixed bales from MRFs, and mining out polypropylene and HDPE,” he says.Turning foam polystyrene into cash
Because of its low density, foam has historically required a lot of space to transport in sufficient volume. But it is now being ground and pressed into blocks.
You can fit 40,000 pounds of densified polystyrene on a trailer, which is on par with other plastics, Tony says, of what he describes as a versatile material, used in products from picture frames to surfboards.
“There are 424 foam polystyrene drop-off and curbside points in the U.S.,” he says. So it is a growing trend, and the technology is helping to drive this.”
http://beta.waste360.com/plastics/plastic-and-recycling-niches-unite-close-loop?utm_test=redirect&utm_referrer=https%3A%2F%2Fwww.google.com%2F
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(ACC Mentioned) Study Finds Unlikely Sustainability Champion In Plastics
Aug 11, 2016 | Middle Eastern Plastics
Plastics have come out on top as the unlikely green champion when tested against other materials for consumer goods and packaging in a study highlighted by the Gulf Petrochemicals and Chemicals Association (GPCA).
Research by Trucost, a leading environmental research organisation, that finds the environmental cost of using plastics in consumer goods and packaging is nearly four times less than if plastics were replaced with alternative materials.
The study is based on natural capital accounting methods, which measure and value environmental impacts—such as consumption of water and emissions to air, land and water—which are not typically factored into traditional financial accounting.
Previous reports, such as “Valuing Plastics” (2014) by Trucost and “The New Plastics Economy: Rethinking the Future of Plastics” (2016) by the World Economic Forum Ellen MacArthur Foundation and McKinsey & Company, only examined the environmental costs of using plastics.
Trucost’s latest study, “Plastics and Sustainability: A Valuation of Environmental Benefits, Costs, and Opportunities for Continuous Improvement,” builds on earlier research by comparing the environmental costs of using plastics to alternative materials and identifying opportunities to help lower the environmental costs of using plastics in consumer goods and packaging.
Dr Abdulwahab Al-Sadoun, Secretary General, GPCA, said: "The use of plastics in everyday situations, such as shopping, has been frequently in the news of late. Trucost has conducted an in-depth study into the plastics industry and alternatives to traditional materials, with the astounding result that alternative materials actually come with a substantially higher environmental cost. This is crucial to consider when discussing the future use of plastics in consumer goods throughout the GCC."
These significant results disrupt a common misperception around plastics. The latest research has found that replacing plastics in consumer products and packaging with a mix of alternative materials that provide the same function would increase environmental costs from $139 billion to $533 billion annually. That’s because strong, lightweight plastics help us do more with less material, which provides environmental benefits throughout the lifecycle of plastic products and packaging.
The study also concluded that the environmental costs of alternative materials can be lower per ton of production but are greater in aggregate due to the much larger quantities of material needed to fulfil the same purposes as plastics.
In addition, the report’s authors recommend steps to help further reduce plastics’ overall environmental costs, such as by increasing the use of lower-carbon electricity in plastics production, adopting lower-emission transport modes, developing even more efficient plastic packaging, and increasing recycling and energy conversion of post-use plastics to help curb ocean litter and conserve resources.
“We are very excited to present ‘Plastics and Sustainability,’ the largest natural capital study ever conducted for the plastics manufacturing sector,” said Libby Bernick, Senior Vice President – North America for Trucost. “This report provides the clearest picture to date of the relative costs and benefits of plastics compared to alternative materials as well as important opportunities to enhance the environmental performance of using plastics in consumer goods.”
“We now have a fuller picture of the environmental benefits of using plastics,” said Steve Russell, Vice President of Plastics for the American Chemistry Council, which commissioned the study.
“From lighter, more fuel-efficient cars to smart packaging that helps our favourite foods last longer; our industry is committed to on-going innovations that will advance sustainability across major market sectors and the globe.”
“There is now quantifiable proof that plastics, in its various forms, play a significant role in providing innovative plastics solutions to societal challenges,” said Craig Halgreen, Vice-President, Corporate Sustainability, Borouge & Leader, Plastics Committee Sustainability Taskforce, GPCA. “This report emphasises the importance of product innovation and eco-friendly after-life solutions such as sustainable municipal waste collection and management practices. It also highlights the responsible role of mechanical recycling in creating a circular economy and reducing plastics marine litter.”
“The GCC currently produces 26.5 million tons of plastic each year, according to our research,” concluded Dr Al-Sadoun. “This study proves that these enterprising manufacturers are on track towards achieving sustainability targets—a focus that is increasingly in public conversation due to the various national strategies of the Arabian Gulf’s leadership.”
http://www.mideastplast.com/news/study-finds-unlikely-sustainability-champion-in-plastics/
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Stronger Ozone, Soot Regs Would Save 9,000+ Lives — Study
Aug 11, 2016 | E&E News PM
By Sean Reilly
U.S. EPA could head off thousands of deaths and illnesses each year by further tightening air quality standards for ground-level ozone and fine particulates, a public health advocacy group said in an analysis released today.
In all, more than 9,300 lives would likely be saved by reducing the eight-hour benchmark for ozone to 60 parts per billion and the annual standard for fine particulates — often described as soot — to 11 micrograms per cubic meter, according to the report by the American Thoracic Society. That estimate is close to the number of deaths caused by drunken driving accidents in recent years.
Stricter pollution curbs would lower the annual number of heart attacks, emergency room visits and other "serious health events" by 22,400, the report added, and similarly cut "adverse impact days" — when breathing problems may keep people from going to work and school or otherwise leave them physically inactive — by 19.3 million.
The study, whose corollary is that many people are needlessly dying or getting sick, draws on air quality data from 2011 to 2013; the findings are not affected by last year's tightening of the ozone standard.
The report is a first for the thoracic society, a New York City-based organization that claims a membership of more than 15,000 doctors and other health care professionals. The group compiled the analysis with New York University's Marron Institute of Urban Management.
The two organizations also launched a website allowing users to search by ZIP code to see whether their surrounding area meets current EPA standards and see the potential local impact of reducing standards to the thoracic society's recommendations.
"As an organization of health care providers and researchers, we know firsthand the toll air pollution takes on people's health, particularly the young and elderly," Dr. David Gozal, the society's president, said in a news release. "The report begins to quantify that toll and provides information that, we believe, should inform the setting of national air pollution standards."
Short of a court-ordered decree, however, changes to current standards are years away, at best. EPA's latest review of the thresholds for fine particulates, linked to a variety of heart and lung ailments, isn't set to conclude until 2021. The next review of ground-level ozone standards, although not yet scheduled, will likely also spill into the next decade.
Ozone, an invisible gas that irritates lung passageways, can help trigger asthma attacks and make it harder for people with emphysema to breathe. It is formed by the reaction of volatile organic compounds and nitrogen oxides in sunlight.
The previous standard, set in 2008, had been 75 parts per billion. EPA is currently battling lawsuits by both industry groups arguing that the standard should have been left unchanged and environmental organizations that say it should have been cut to 60 ppb. In a forceful defense filed last month with the U.S. Court of Appeals for the District of Columbia Circuit, the agency's lawyers argued that Administrator Gina McCarthy's judgment was "sound" in setting the standard neither higher nor lower than necessary (Greenwire, Aug. 1).
But in a friend-of-the-court brief submitted this spring on behalf of the environmental groups challenging the new standard as too weak, the thoracic society and the American Lung Association said that EPA failed to fully account for ozone's impact on children and other vulnerable populations and that the latest science shows damaging health effects below the 70 ppb level.
The report released today "underscores the need for strong clean air protections, especially for the most vulnerable," Harold Wimmer, the lung association's president and CEO, said in a separate release. Even though the updated ozone standard is not as strict as the group recommended, Wimmer called for its full implementation and enforcement. He also urged EPA to strengthen limits on fine particulates.
http://www.eenews.net/eenewspm/2016/08/10/stories/1060041455
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EPA Says Ruling Bolsters Plant Standards
Aug 10, 2016 | E&E News PM
By Sean Reilly
A federal appellate court's recent ruling on contested air pollution standards for boilers bolsters U.S. EPA's defense of another set of regulations on how states must address excess industrial plant shutdown and startup emissions and equipment breakdowns, the agency's lawyers said in a filing today.
Those regulations, published in mid-2015, rescinded "affirmative defense" provisions that states had allowed companies to use to shield themselves from civil penalties for violations stemming from such "startup, shutdown and malfunction" events.
States and other parties are challenging the standards before the U.S. Court of Appeals for the District of Columbia Circuit.
In today's letter, Justice Department attorneys representing EPA said the appeals court's unanimous ruling last month in the boiler case "rejected arguments" that the agency improperly addressed emissions standards during malfunction events. The ruling also supported EPA's position on affirmative defense, they said.
In last month's ruling, the court threw out part of EPA's boiler standards but rejected all of industry's challenges (Greenwire, July 29).
http://www.eenews.net/eenewspm/2016/08/10/stories/1060041456
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EPA, Critics Seize On Boiler MACT Ruling To Bolster Claims In Other Suits
Aug 10, 2016 | Inside EPA
By Stuart Parker and Lee Logan
EPA and its critics are seizing on the appellate ruling that vacated and remanded parts of the agency's boiler and incinerator air toxics rules in order to support their claims in suits over other EPA rules, with the agency saying it boosts its defense of a rule forcing changes to state air plans and manufacturers saying it undermines EPA's utility climate rule.
The U.S. Court of Appeals for the District of Columbia Circuit issued its ruling July 29 in the boiler maximum achievable control technology (MACT) suit United States Sugar Corp. v. EPA. The judges in their per curiam opinion vacated air standards for all the “subcategories” of boilers for which the agency failed to consider all sources in those different categories of units, while rejecting industry claims that the MACT was too strict.
Now the Department of Justice (DOJ) on EPA's behalf and manufacturing groups separately are now claiming that the decision either boosts or undermines the agency's defense of unrelated air rules.
For example, DOJ filed an Aug. 10 letter with the D.C. Circuit saying the MACT ruling helps EPA's defense in Walter Coke, et al. v. EPA, a case in which industry and states are challenging EPA's rule requiring them to scrap state implementation plan (SIP) exemptions from air rules for industry during periods of startup, shutdown and malfunction (SSM).
EPA's rule requires 36 states to remove SSM exemptions by Nov. 22 from SIPs, which are blueprints for Clean Air Act compliance. The agency is taking this step to comply with prior rulings of the D.C. Circuit finding these exemptions unlawful, but some states and industry claim EPA lacks the authority for the rule.
DOJ counters that the D.C. Circuit in U.S. Sugar bolsters EPA's reasoning for ending the SIP exemptions, because the court similarly found no basis to allow waivers in the MACT rules.
The appellate court in the boiler MACT ruling “rejected arguments that EPA improperly addressed emissions during malfunction events in the boiler standards or during startup, shutdown and malfunction events in the incinerator standards,” DOJ says. “The U.S. Sugar decision supports EPA’s issuance of the SIP Call.”
DOJ's Arguments
DOJ says, “First, U.S. Sugar reiterated that EPA 'lacked discretion to' and 'had no option' to exempt sources from compliance during any periods of operation (e.g., startup, shutdown and malfunction).”
Second, the letter says, the MACT ruling “affirmed that affirmative defenses are 'impermissible intrusion[s] on the judiciary’s role' to determine liability and remedies for violations.”
DOJ quotes from the D.C. Circuit panel in U.S. Sugar that cited the court's 2014 decision in NRDC v. EPA, in which the court rejected EPA's adoption of “affirmative defenses” as an alternative for blanket SSM exemptions. Affirmative defenses shield industry from civil liability in the event of certain malfunctions deemed unavoidable by EPA, so long as the polluter has taken reasonable steps to prevent such breakdowns.
“Finally, U.S. Sugar recognized that given the range of possible malfunctions, any work-practice standard for malfunctions would likely be 'hopelessly generic,'” DOJ says. Industry groups in Walter Coke have suggested that EPA could rely on “general duty-type provisions as providing 'continuous' emission limitations” in lieu of banning air rule waivers, but DOJ says the MACT ruling proves EPA's claim that this view is “unavailing.”
DOJ says that EPA's chosen method of applying case-specific “enforcement discretion” to exempt malfunctions -- rather than allowing broader waivers -- is consistent with the air law's “enforcement structure.”
Environmentalists in their attacks on SSM provisions have focused on what they say is the air law requirement that air emissions limits apply continuously, a point industry groups contest.
ESPS Litigation
Meanwhile, in an Aug. 8 letter to the D.C. Circuit, more than a dozen manufacturing groups cite the court's ruling in U.S. Sugar to support their case, West Virginia, et al. v. EPA, et al, over EPA's existing power plant greenhouse gas rule, known as the existing source performance standards (ESPS).
The D.C. Circuit in U.S. Sugar rejected an industry challenge to EPA's rejection of facility-wide emissions averaging to demonstrate compliance with its rule on commercial and industrial solid waste incincerators, or CISWI, which it regulated under air law section 129, which outlines requirements for regulating certain CISWI units.
EPA had argued that it could not allow such averaging because Clean Air Act section 129 treats “units” as separate from “facilities,” with standards applying to each unit within a facility, and the court agreed.
In the ESPS case, the manufacturing groups note that challengers fault EPA's rule issued under section 111(d) of the air law because power plants can meet the standards “only by averaging their emission rates with those of lower- or zero-emitting facilities, including renewable energy facilities that are not 'sources,' are not regulated under section 111, and may be located far away.”
The “fence line” issue -- industry's argument that EPA's ESPS unlawfully set GHG limits for coal and gas plants based on “generation shifting” to lower- or zero-emitting power plants -- is expected to be the marquee legal fight in West Virginia, which is slated for Sept. 27 oral argument before the full D.C. Circuit, rather than a smaller panel as is typical for environmental cases.
Because U.S. Sugar rejected facility-wide emissions averaging, the manufacturing groups say that bolsters their argument that “where the statute’s text specifies a performance standard 'applicable to' individual sources, EPA cannot command a standard based on averaging the regulated source’s emissions with those of other sources or non-sources.”
They add that even under section 112, which provides authority for the boiler MACT and allows emission averaging, “EPA itself has acknowledged that averaging can only be 'among the various emitting units . . . located at that facility.'” As such, the industry groups charge, section 111 “prohibits standards based upon, and requiring compliance by, averaging the emissions of a regulated section 111 source with that of another source or non-source.”
http://insideepa.com/daily-news/epa-critics-seize-boiler-mact-ruling-bolster-claims-other-suits
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Boiler Ruling Supports Malfunction Position, EPA Says
Aug 11, 2016 | BNA Daily Environment Report
By Patrick Ambrosio
The Environmental Protection Agency's decision to require amended state pollution plans for malfunctions is supported by a recent federal appeals court decision on industrial boiler standards, the agency argued in a court filing (Walter Coke Inc. v. EPA, D.C. Cir., No. 15-1166, letter filed 8/10/16).
The U.S. Court of Appeals for the District of Columbia Circuit in July upheld the EPA's decision to rely on enforcement discretion to address regulatory violations related to unavoidable equipment malfunctions under the agency's hazardous air pollution standards for industrial boilers and incinerators. The court rejected industry arguments that the agency's approach violated a Clean Air Act requirement that hazardous air pollution standards must be achievable (U.S. Sugar Corp. v. EPA, 2016 BL 245584, D.C. Cir., No. 13-1107, 7/29/16).
That U.S. Sugar Corp. decision supports the EPA's handling of state implementation plans for startup, shutdown and malfunction, the agency said in a letter filed with the D.C. Circuit Aug. 10. The agency, in a 2015 rule known as a “SIP Call,” required 36 states to revise their pollution plans to remove “affirmative defense” provisions that shielded power plants and other industrial facilities from being subject to civil penalties over emissions violations related to malfunctions.
Rule Is Subject of Litigation
The SIP Call rule (RIN:2060-AR68) is the subject of litigation brought by a number of industry associations and states, which alleged in their opening briefs that the EPA lacked the authority to require the states to change pollution plans that were previously approved. The EPA, in a brief filed days before the U.S. Sugar Corp. ruling, argued that it had the authority to disapprove of state plans that included provisions in violation of “bedrock principles” of the Clean Air Act.
The EPA's letter to the court followed up on that brief with arguments that U.S. Sugar Corp. strengthened the agency's argument because the court:
• reiterated that the agency lacks the discretion to exempt industrial sources from compliance at any time during operation;
• said that affirmative defense provisions are an “impermissible intrusion” on the judiciary's role to determine the liability and appropriate remedy for a Clean Air Act violation; and
• recognized that any sort of separate work practice standard would be “hopelessly generic” given the number of possible malfunctions that could occur.
Briefing in the SIP Call litigation is scheduled to continue through Oct. 31. The next briefs, from environmental organizations that have intervened in support of the rule, are due to the court by Aug. 29.
http://news.bna.com/deln/DELNWB/split_display.adp?fedfid=95329286&vname=dennotallissues&fn=95329286&jd=95329286
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Eyeing Democratic Majority, Senators Rethink Climate Strategy
Aug 11, 2016 | BNA Daily Environment Report
By Dean Scott
Hillary Clinton is surging not only in national polls but also in key swing states—and that is good news for a bloc of Senate Democrats who hope to put climate change back on the front burner and fill a vacuum of leadership triggered by the departure of once-towering Senate figures on the global warming issue.
Control of the Senate was already up for grabs, given Republicans who now hold a 54–46 majority must defend 24 seats; Democrats are defending only 10. Clinton, the Democratic presidential nominee, has opened a post-convention lead of as many as eight points in national polls, but more crucial to Senate Democrats is leading in multiple swing states they need to capture Senate control.
There is no single strategy at this point for how a Democratic-controlled Senate would pursue climate change bills in the 115th Congress. But it is already under discussion, according to Bloomberg BNA interviews with more than a half-dozen Democrats, each of whom have been staking out areas of expertise for a future legislative push. Some favor initially taking an incremental approach—say, improving energy efficiency or focusing on super climate pollutants—and building on those successes before pushing more comprehensive legislation, such as a cap-and-trade approach or a tax on the carbon content of fuel.
“The question is, do you want to take some preliminary steps right off the bat that bring a few Republicans on board?” said Sen. Chris Murphy (D-Conn.), who is pushing a bill to cut certain super climate pollutants such as hydrofluorocarbons. “Or do you want to go headlong into a fight over pricing carbon” with little chance of passage anytime soon, he said.
“I think there's some low-hanging fruit that we can get to before we tackle the issue of controlling carbon. I think there's a potential bipartisan agreement on controlling methane, HFCs and black carbon—that might be a wise starting point for us,” Murphy said.
Democrats need a net gain of only four seats if Clinton wins the White House Nov. 8—her vice president would decide a tie—or five if Republican nominee Donald Trump wins the presidency.
Carving Out Positions
But if they take the majority this fall, Democrats will be sitting down to strategize on a climate legislative agenda with no clear leader, following the retirement this year of the top Democrat on the Environment and Public Works Committee, Sen. Barbara Boxer (D-Calif.).
Retiring after 23 years in the Senate, Boxer now joins four former colleagues who also led ultimately fruitless campaigns for Senate action on a climate bill: Sen. John Kerry (D-Mass.), now secretary of state; Joe Lieberman (I/D-Conn.) who with Sen. John McCain (R-Ariz.) brought the first cap-and-trade bills to the floor more than a decade ago; and Sen. John Warner (R-Va.), who with Lieberman had the last climate bill on the Senate floor in 2008.
Senate Democrats say they are ready to step into that vacuum.
“Sen. Boxer has been an incredible leader in this regard, she really has been. But there are others, and I think she'd be the first to acknowledge that,” said Sen. Ben Cardin (D-Md.), who is in line to chair the Foreign Relations Committee if Democrats win the Senate. “We may not have the numbers but we have intensity, and we're winning the battles. I think you're going to see that type of strategy moving forward.”
New Voices Emerge
Many Senate Democrats ready to step into the limelight for climate action weren't in the chamber for the last big showdown on the floor over climate legislation in 2008, when it fell 12 votes shy of the 60 needed on a procedural vote. In addition to Murphy, they include Sen. Ed Markey (D-Mass.), co-author of cap-and-trade legislation that cleared the House in 2009, as well as Sens. Brian Schatz (D-Hawaii) and Jeff Merkley (D-Ore.). Markey, Murphy and Schatz are relatively new to the Senate, but they each in recent years have staked out areas of climate expertise: Murphy and Schatz, for example, are both internationalists in prodding the U.S. to lead on global climate action but also see themselves as political realists who point to the need for building on passing smaller bills and gradually broadening support for a comprehensive approach.
Those more junior senators have plenty of company among more senior Democrats who stress that they are just as committed to moving climate legislation; several of them are poised to chair committees where they could have more of an impact than their junior brethren in actually moving bills.
They include Maryland's Cardin—an internationalist focused on climate impacts on the Chesapeake Bay—at the helm of the foreign relations panel, and Sen. Tom Carper (D-Del.), who could have his choice to gavel either the Environment and Public Works Committee or the Homeland Security and Governmental Affairs Committee under a Democratic majority. And lastly, there is Sen. Sheldon Whitehouse (D-R.I.), known for his weekly speeches on the Senate floor highlighting climate change and the co-sponsor along with Schatz on carbon tax legislation.
Carper gets high marks from Senate colleagues of both parties for working across the aisle and shying away from outright attacks on Republicans who oppose climate action, which has led to some grumbling among environmental groups that he lacks the passion needed to move a climate bill as chairman. Carper rejects that suggestion.
“Whether ranking at EPW or chair—or for that matter at Homeland Security—one of the critical issues of our time is how we will deal with sea level and climate change. I have cared about this since I got here” in the Senate, “and the flame burns strong,” Carper said.
Tom Lawler, previously Carper's chief policy adviser, said there shouldn't be concern over Carper's commitment.
“Among environmental groups, I think there are in fact people that perceive that and it's a complete misperception” of Carper's commitment to addressing climate change, Lawler said. “The difference here is Sen. Carper works very, very hard on whatever issues, to not take up a bludgeon” to colleagues but instead find common ground, he said, adding that a cooperative approach is imperative to get 60 votes for a climate bill in the Senate. “There's been a lot of speeches on climate change the last eight to 10 years, on both sides of the aisle and a lot of going to separate corners” instead of working toward a consensus, said Lawler, now with Lawler Strategies consultancy. “We've all kind of gone through those first stages of contemplating the issue and the next couple years will be a sweet spot for trying to pass some legislation.”
Environment Committee's Role Unclear
Still unclear is whether any comprehensive climate legislation will follow the traditional path that has routed environmental bills through the Environment and Public Works Committee. A carbon tax would likely be handled by tax committees such as the Senate Finance Committee and likely be negotiated with the next president as part of a broader tax overhaul—which could sideline the EPW panel and, to some degree, its chairman.
Other reliable votes for climate change legislation include Sen. Maria Cantwell (D-Wash.) and Maine Republican Sen. Susan Collins, who together tried but failed to get traction on their streamlined alternative to the Waxman-Markey legislation—which they termed a cap-and-dividend bill—six years ago. Cantwell isn't convinced that putting Democrats in charge of the Senate alone will make the difference in moving climate legislation.
“You're thinking who is in charge is the factor here, but I think really the issue is we are seeing more and more and more impacts” from rising sea level and increasing global temperatures, Cantwell said. “What people have to realize is that mitigation and adaptation are here—whether you are talking about floods or increased wildfires—we're going to have to spend more time on the impacts of these issues,” she said.
Green Climate Defender
Merkley, the Oregon Democrat, has staked out some international territory of his own by taking the lead in what is now a yearly battle over a $500 million U.S. contribution to the United Nations Green Climate Fund. Congressional Republicans have tried but failed to derail GCF funding since the Obama administration in 2014 first pledged $3 billion over four years to the fund; Merkley has been successful the past two years in striking a Republican prohibition against such spending in the Senate Appropriations Committee.
The U.S. must do its part to address climate change both domestically and internationally, according to Merkley. The U.S. has pledged to cut its greenhouse gas emissions 26 percent to 28 percent by 2025 from 2005 levels as its contributions to global climate action under the 2015 Paris Agreement. But it has to contribute in other ways internationally, such as helping developing nations adapt to climate impacts and cut their emissions under the Green Climate Fund, he said.
“First, there's a growing bipartisan understanding of the importance of this effort, one that involves the United States certainly pivoting off of fossil fuels,” Merkley said. “But we can't change the trajectory of the planet by ourselves and that requires a lot of cooperation and partnership.”
Carbon Tax Skepticism
Markey, who helped steer a cap-and-trade bill with Rep. Henry Waxman (D-Calif.) through the House seven years ago only to watch it die with barely a whimper in the Senate, said the climate challenge can be met only with broad legislation that cuts U.S. emissions and boosts clean energy and addresses climate impacts.
But he questions whether the Senate is on the cusp of moving either a carbon tax or a broader approach similar to his 2009 bill, which set mandatory emissions caps that decline over time through an emissions trading approach and mandated states get a portion of their energy from renewable sources.
“Waxman-Markey was comprehensive and I continue to believe you have to deal with this that way,” Markey said. But he showed little enthusiasm for what many economists see as a far simpler approach of taxing the carbon content of fossil fuels, an approach backed by some Democrats including Schatz of Hawaii and Whitehouse of Rhode Island. Any carbon tax proposal “has to make sure that the poor and the middle class [are] completely held harmless, which would also be a significant legislative challenge,” Markey said.
He points to a June vote on the House floor—a resolution putting the chamber on record as opposing a carbon tax—as a bellwether of resistance to that approach by an overwhelming number of Republicans and even a few Democrats.
The resolution (H. Con. Res. 89) passed 237–163; not a single Republican voted against it. “I was not happy that every single Republican in the House voted for a resolution saying a carbon tax should never be adopted under any circumstances, joined by a half a dozen Democrats,” Markey said.
“That vote is just so recent” to suggest there is any hope of moving a carbon tax soon, he said.
Top-Tier Issue
Hawaii's Schatz said a Democratic-controlled Congress would consider climate change a top-tier issue for the party to take up.
“It's at the very top of the list. There's a broad understanding—we get it,” Schatz said. “This is a planetary emergency and we need to get to 60 votes, which means this needs to be a middle-of-the-road, bread-and-butter Democratic issue.
“American leadership is essential and that requires the Senate to step up and do its job. And this is something I think we can make progress on in 2017 should we take the Senate,” Schatz said, even as he acknowledged that climate legislation faces an uphill battle regardless of who controls the chamber.
Progress will require moving beyond the traditional constituency of climate activists and environmental groups that back either a cap-and-trade approach or a carbon tax, Schatz said.
“The next step for the climate movement in the Senate is to mainstream it—we can't afford to have a bloc of environmentalists working on this issue as if it is just a constituency that needs to be placated,” he said.
Resigned to Incremental Approach
But Schatz and his Democratic colleagues will have to overcome widespread skepticism that 60 votes will be there to move climate legislation eight years after Lieberman, Warner and Boxer were defeated in their last attempt on the Senate floor.
One obstacle going forward is the dwindling support for climate legislation among Republicans; of the six Republicans voting to proceed on the 2008 bill, only one is still in the Senate today: Maine Republican Collins.
Collins is considered a reliable vote for environmental and climate legislation. Her 65 percent lifetime score on key environmental votes from the League of Conservation Voters rates her higher even than some Democrats, including West Virginia Sen. Joe Manchin (43 percent) and Indiana Democratic Sen. Joe Donnelly (56 percent).
But Collins is wary of talk that Democrats could make another run at comprehensive legislation, blaming environmental groups for refusing to get behind incremental changes that over time she believes can make a dent in emissions.
“I have always felt that the approach on climate change should be to do this in a step-by-step approach,” she said, by pursuing smaller bills on energy efficiency or the measure she co-sponsored with Murphy, the Connecticut Democrat, targeting especially potent greenhouse gas emissions such as hydrofluorocarbons and black carbon.
“In other words, chalk up some small victories instead of trying to solve the huge problems or pursue highly controversial and divisive issues like the carbon tax,” Collins said. “The fact is, a carbon tax and other controversial proposals will not make it through Congress.”
So far though, that incremental approach hasn't yielded much in the way of dividends.
The Murphy-Collins Super Pollutants Act of 2015 (S. 2076) hasn't picked up any additional co-sponsors; another bill (S. 2194) that Collins co-authored with Sen. Dick Durbin (D-Ill.)—the Clean Cookstoves and Fuels Support Act, to curb black carbon and soot emitted from cook stoves—has been met with the same indifference by senators of both parties.
“I just don't understand why those [bills] aren't priorities,” Collins said. “And I do not understand why the environmental movement does not embrace these smaller steps, which I fully recognize are just beginnings. But if we could start winning some smaller victories it would make a difference. Instead we have nothing—because some environmental groups in particular are so focused on just getting a carbon tax that they ignore all these other efforts.”
Long Shot: Carbon Tax
Among all the senators Bloomberg BNA interviewed, there appeared to be no cohesive direction for climate legislation going forward. The big alternative to a complex cap-and-trade approach is the carbon tax, which economists often favor as the simplest approach to putting a price on carbon.
Doing so could allow cuts in the corporate income tax rate or payroll taxes—or both—but some of its supporters acknowledge they face an uphill battle pushing a new tax in Congress.
Even Whitehouse, the Rhode Island Democrat working with Schatz to push a carbon tax, admits that the fate of a carbon tax is linked to whether Congress takes up a broad overhaul of the U.S. tax system. And talks of a grand bargain between Democrats and Republicans is a perennial discussion that doesn't appear to bring it any closer to fruition.
“Yes, it's always next Tuesday” for an overhaul of the tax code, Whitehouse said. Talk of a grand bargain that could bring fundamental reforms of entitlement programs and the tax code between President Barack Obama and then-House Speaker John Boehner (R) dissolved into disappointment in the summer of 2011; it has gotten only occasional traction since then.
“But even if that's true, there is a decision coming down the pike on which way to go on U.S. legislation,” the Rhode Island senator said. And a cap-and-trade system—which would cap U.S. emissions and require fossil fuel and other industries to purchase carbon permits for every ton of greenhouse gases they emit—is done, Whitehouse said.
“The cap-and-trade approach is tainted by all the Wall Street market failures that we've had to live through … that is added weight to that approach that I don't think needs to be carried in order to get a solution” in addressing climate change, Whitehouse said.
A carbon tax could gain at least one more supporter in the Senate next year if Rep. Chris Van Hollen (D-Md.)—perhaps the lead voice for that approach in the House—wins his race to succeed retiring Sen. Barbara Mikulski (D); he is heavily favored to do so.
Introduced by Whitehouse and Schatz in June 2015, their American Opportunity Carbon Fee Act (S. 1548) would set a $45 a ton fee on carbon dioxide and other greenhouse gas emissions, beginning in 2016. Whitehouse said the fact that a carbon tax can raise such large sums—some carbon tax proposals could raise hundreds of billions of dollars a year—make it an attractive option to allow long-sought reductions in the corporate tax rate.
The Rhode Island Democrat also is mulling a tweak that would use some of the revenue to help students cut their ballooning student loan payments.
“Once the prospect of a carbon fee becomes somewhat real, then the prospect of how you use those revenues becomes somewhat real, and that's an advantage,” Whitehouse said. “And as some very powerful lobbying interests have said to me, ‘It's the unicorn right now Sheldon—when it becomes a horse, we'll want to ride it.' ”
http://news.bna.com/deln/DELNWB/split_display.adp?fedfid=95329257&vname=dennotallissues&fn=95329257&jd=95329257
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In California's Climate Debate, State Lawmakers Push For More Authority
Aug 10, 2016 | Los Angeles Times
By Liam Dillon
With negotiations over extending California’s landmark climate change programs struggling during the last month of the state’s legislative session, lawmakers are once again pushing for changes at the agency responsible for making the greenhouse gas reductions work.
The target is the California Air Resources Board, which regulates pollution under the climate change program and determines how billions of dollars generated by that effort gets spent.
Over the last two weeks, a bipartisan group of assembly members have pushed to audit the agency’s spending and held an oversight hearing to see if its greenhouse gas reduction programs are meeting emission targets. That’s on top of legislation aimed at increasing lawmakers’ authority over the agency and its spending formulas.
The main bill, from Assemblyman Eduardo Garcia (D-Coachella), would create a formal legislative committee to vet climate policies and force greater transparency in the agency’s decision-making among other changes.
“The fundamental question here is, does the Legislature want to play a role in determining what the clean energy policies of California look like?” Garcia said. “Or do we want the executive office to continue driving the ship? And right now, that’s really where things are at.”
Garcia’s bill is tied to other legislation that would extend the state’s climate reduction targets past 2020 as well as the cap-and-trade program, which functions by capping how much greenhouse gas can be emitted into the atmosphere and requires companies to obtain permits to pollute.The new greenhouse gas goals wouldn’t go into effect unless Garcia’s bill passes too.
Garcia said he was open to adding more teeth to his legislation, and many of his colleagues in the Assembly are pushing for even more scrutiny.
Assemblyman Adam Gray (D-Merced) spearheaded the recent effort to audit the agency’s climate change spending, saying that the Air Resources Board doesn’t focus enough attention on California’s most polluted communities and that lawmakers needed to spend more time examining the state’s most important bureaucracies.
“I don’t think there’s a more glaring example of [an agency] out of control,” Gray said of the Air Resources Board.
Assemblyman Mike Gatto (D-Glendale), who signed on to Gray’s audit request, said many Assembly members have formed what he called a “coalition of the weary” — those who for years have wanted to gain greater say over how the climate change program works.
“There is no conflict at all in wanting to make sure that money is being spent right and making sure that we keep the eye on the prize, which is working to reduce pollution,” Gatto said.
After frustration bubbled up during another climate change debate last year, lawmakers passed a bill that gave them their first two appointees on the agency’s 14-member board, both of whom are supposed to represent disadvantaged communities.
Still, some environmental advocates believe that the Air Resources Board now has become a convenient target for some lawmakers looking for excuses not to vote to extend the climate programs. Bill Magavern, policy director for the Coalition for Clean Air, noted that Gray’s request came too late to be considered by the Legislature’s audit committee this year, and after the Air Resources Board had provided lawmakers with significant information about its programs.
“It’s very legitimate for legislators to do oversight of ARB and other agencies,” Magavern said. “But some of what we’re seeing is more in the nature of political posturing and outright harassment of the agency.”
Gray is one of the business-aligned Democrats who are considered key to extending climate change targets, especially if Gov. Jerry Brown and legislative leaders push for a bipartisan supermajority vote. He said his concerns have to be addressed before he would consider supporting such an extension.
“At the same time that we extend the program, we’ve got to implement these changes to make sure we're doing cost-effective, efficient programs,” Gray said.
http://www.latimes.com/politics/la-pol-sac-lawmakers-wary-climate-change-bill-20160811-snap-story.html
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