Preview Newsletter
ACC AM 8/17/17
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(ACC Blog) On The Road With #ACCaugust 3.0
Aug 17, 2017 | American Chemistry Matters
ACC’s Political Mobilization is back on the road for #ACCaugust! During the Congressional summer recess we will be hosting numerous events with elected officials throughout the U.S. We’ll be fanning out across the country to further our industry’s advocacy goals through our grassroots initiative #ACCaugust. -
(ACC Mentioned) Litigation Begins In Multiple Courts Over EPA Efforts To Implement Revised TSCA
Aug 16, 2017 | Inside EPA
The bipartisan backing for last year's law overhauling the 1976 Toxic Substances Control Act has given way to environmentalists' litigation challenging two of the Trump EPA's initial rules for how the agency will assess the risks from chemicals in line with the updated law. -
US EPA Plans Webinar On TSCA 'Fast-Tracked' PBTs
Aug 17, 2017 | Chemical Watch
The US EPA is hosting a webinar on 7 September to explain its process for gathering information on five persistent, bioaccumulative and toxic (PBT) substances that will be subject to rapid risk management action under the new TSCA. -
UPDATE: ‘Erin Brockovich’ Carcinogen in 250 Million Americans’ Drinking Water
Aug 17, 2017 | Environmental Working Group
By Robert Coleman
In 2016, an EWG report found that chromium-6 – a cancer-causing compound made notorious by the film “Erin Brockovich” – contaminated the tap water supplies of 218 million Americans in all 50 states. But our just-released Tap Water Database shows the problem is even worse than that. -
Mercury Treaty Now in Force; Brings New Focus on Alternatives
Aug 17, 2017 | BNA Daily Environment Report
By Bryce Baschuk
The entry into force of the Minamata Convention on Mercury Aug. 16 will spur companies worldwide to restrict their use of mercury and pursue alternatives to mercury added products. -
Echa Seeks Views On Authorisation Applications For Chromates
Aug 17, 2017 | Chemical Watch
Echa has opened consultations on authorisation applications for six uses of chromates. -
Trump Push for Natural Gas Exports Opposed by Manufacturers
Aug 17, 2017 | BNA Daily Environment Report
By Ari Natter
President Donald Trump's effort to boost U.S. energy is facing push back from manufacturers who say exporting more natural gas may undercut his “America First” jobs focus. -
Manufacturers Urge Perry To Slow LNG Exports
Aug 16, 2017 | Houston Chronicle
By James Osborne
American manufacturers continue to ramp up pressure on the Trump administration to curb the rapid development of LNG export facilities, arguing that more exports could significantly deplete American natural gas supplies within a little more than three decades. -
U.S. Natural Gas Market Sees Big Benefits From Nafta
Aug 16, 2017 | Bloomberg View
By Shelley Goldberg
As Congress begins to examine the North American Free Trade Agreement at the behest of President Donald Trump, lawmakers need to ensure that nothing they decide disrupts one of the more relevant industries in the pact: energy -- in particular, natural gas.Play VideoU.S. Seeks Major Trade Overhaul as Nafta Talks Begin -
Court Upholds Freeport LNG Approval, Striking Down Sierra Club Challenge
Aug 17, 2017 | Natural Gas Intelligence
By Jeremiah Shelor
In a win for the natural gas industry, the U.S. Court of Appeals for the District of Columbia Circuit denied a Sierra Club appeal challenging the Department of Energy's (DOE) authorization of the Freeport liquefied natural gas (LNG) terminal on Quintana Island, TX, to export to non-free trade agreement (FTA) countries. -
Beaver County Ethane Cracker Hailed Among Infrastructure Projects
Aug 17, 2017 | Pittsburgh Business Times
By Paul J. Gough
Shell Chemical Appalachia's $6 billion petrochemical plant being built in Beaver County was touted Tuesday afternoon by national energy and union leaders talking up the importance of pipeline construction to jobs and economic development. -
Firefighters Seek To Block Industry Tool Said To Ease RMP Compliance
Aug 17, 2017 | Inside EPA
By Dave Reynolds
Washington state firefighters are urging Democratic senators to halt development of a novel dispersion modeling approach for assessing risks from toxic gas releases, arguing the federal agency and industry collaboration underestimates risks to the public in filings with EPA and other agencies, though an industry group says the method is based on sound science and may still be revised. -
Trump Wins Industry Praise for Ordering Faster Federal Permitting of Infrastructure
Aug 16, 2017 | Natural Gas Intelligence
By Charlie Passut
Several trade associations representing the oil and natural gas industry applauded President Trump for signing an executive order (EO) directing the federal government to expedite its review and permitting of major infrastructure projects. -
Lawmakers Weigh Environmental Effects Of Trump's Order
Aug 16, 2017 | E&E News PM
By Arianna Skibell
Members of the House United for Climate and Environmental Justice Task Force are condemning President Trump's infrastructure order as a gag on public comment that will put the environment at risk for the sake of "corporate profit." -
Methane NSPS Delay Faces Same High Bar As Vacated Effort, EPA Critics Say
Aug 16, 2017 | Inside EPA
By Dawn Reeves
EPA's proposal to delay implementation of Obama-era methane rules for new oil and gas facilities for two years faces the same legal problems as the agency's earlier 90-day pause that was vacated by an appellate court, according to formal comments from former agency officials, environmentalists and legal experts. -
CSAPR Supporters Oppose Industry Bid To Delay Suit
Aug 16, 2017 | Inside EPA
Groups that are defending EPA's updated Cross-State Air Pollution Rule (CSAPR) emissions trading rule are opposing power industry efforts to postpone briefing in litigation over the rule by four months, charging that industry is effectively seeking to stay the litigation even though deadlines for such motions have long passed. -
Practitioner Insights: Environmental Fraud—New or Not?
Aug 17, 2017 | BNA Daily Environment Report
By Douglas Hileman,
“Fraud” is a term typically associated with Bernie Madoff, Ponzi schemes, and other situations where perpetrators have achieved financial gain. But fraud in the environmental area hasn't captured recent headlines until Volkswagen was found to have installed emissions cheating software in their diesel models, a decision that has cost VW more than $20 billion to date. -
Climate Lessons from California
Aug 16, 2017 | The New York Times
By Noah S. Diffenbaugh
California faces serious risks from climate change. Some are already being felt, like the severe heat this summer and recent episodes of extremely low snowpack in the mountains, which the state depends on for much of its water. Those are among the key messages in a new climate science report now under review in the White House. The good news is that California has been working hard to catch up with the climate change that has already happened, and to get ahead of what is still to come.
Industry and Association News
LCSA News
Chemical Management News
Energy News
Chemical Security News
Transportation and Infrastructure News
Environment News
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(ACC Blog) On The Road With #ACCaugust 3.0
Aug 17, 2017 | American Chemistry Matters
ACC’s Political Mobilization is back on the road for #ACCaugust! During the Congressional summer recess we will be hosting numerous events with elected officials throughout the U.S. We’ll be fanning out across the country to further our industry’s advocacy goals through our grassroots initiative #ACCaugust. Through plant tours, in-district meetings, and industry roundtable discussions, we will meet with Members of Congress to raise awareness of issues important to our industry and employees and showcase the economic benefits of the business of chemistry where it matters the most—in their respective districts.
You can keep track of our progress here on the ACC blog, on our @AmChemMatters twitter account, or our Facebook page. Participate in the experience by joining the conversation using the hashtags #ACCaugust and #ChemistryMatters.
Take our virtual #ACCaugust tour with us! Zoom in and out and pan around to see where we’ve been and where we’re going!On the road with #ACCaugust 3.0by American Chemistry on AUGUST 16, 2017 in INDUSTRY, MEDIA, POLICYFacebookTwitter1Google+LinkedInreddit
ACC’s Political Mobilization is back on the road for #ACCaugust! During the Congressional summer recess we will be hosting numerous events with elected officials throughout the U.S. We’ll be fanning out across the country to further our industry’s advocacy goals through our grassroots initiative #ACCaugust. Through plant tours, in-district meetings, and industry roundtable discussions, we will meet with Members of Congress to raise awareness of issues important to our industry and employees and showcase the economic benefits of the business of chemistry where it matters the most—in their respective districts.
You can keep track of our progress here on the ACC blog, on our @AmChemMatters twitter account, or our Facebook page. Participate in the experience by joining the conversation using the hashtags #ACCaugust and #ChemistryMatters.
Take our virtual #ACCaugust tour with us! Zoom in and out and pan around to see where we’ve been and where we’re going!
Locations are subject to change
Where we’ve been
Sen Chris Coons visiting Wilmington, PA | August 16, 2017
Sen. Bob Casey visiting Covestro, Pittsburgh, PA | August 16, 2017
Rep. Lisa Rochester visiting BASF, Newport, DE | August 15, 2017
Rep. Warren Kampf visiting Trinseo, Berwyn, PA | August 14, 2017
Rep. Mike Turner visiting DuPont, Dayton, OH | August 11, 2017
Rep. Dave Loebsack visiting ChevronPhillips, Bloomfield, IA | August 11, 2017
Rep. Mike Coffman visiting Colorado Chamber of Commerce, Denver, CO | August 9, 2017
Rep. Doug Collins visiting PPG Industries, Inc., Oakwood, GA | August 9, 2017
Sen. Rob Wittman visiting SON Metal Fabrication, Ashland, VA | August 9, 2017
Rep. Glenn Thompson visiting Solvay, Lock Haven, PA | August 8, 2017Rep. Garret Graves visiting Hexion Inc., Geismar, LA | August 4, 2017
Rep. Daniel Lipinski visiting Nalco Company, Chicago, IL | August 4, 2017
Rep. James Cormer visiting Ashland Inc. in Lexington, KY | August 2, 2017
Rep. James Cormer visiting Arkema Inc. in Lexington, KY | August 2, 2017
Rep. Larry Bucshon visiting ORG Chem Group in Troy, IN | August 2, 2017
Rep. David Young visiting Monsanto in Ankeny, IA | August 1, 2017
https://blog.americanchemistry.com/2017/08/on-the-road-with-accaugust-3-0/
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(ACC Mentioned) Litigation Begins In Multiple Courts Over EPA Efforts To Implement Revised TSCA
Aug 16, 2017 | Inside EPA
The bipartisan backing for last year's law overhauling the 1976 Toxic Substances Control Act has given way to environmentalists' litigation challenging two of the Trump EPA's initial rules for how the agency will assess the risks from chemicals in line with the updated law.
Critics of the rules have filed suit over two of the TSCA implementation rules in the U.S. Courts of Appeals for the 2nd, 4th, and 9th Circuits. They're challenging a June 22 rule establishing chemicals as either high- or low-priority for risk evaluation, and a separate rule issued the same day that outlines how EPA will assess the health risks from high-priority chemicals.
The strategy of filing with multiple courts is sometimes known as “forum shopping,” pursuing suits in several courts with the hope of having the case heard in a court where a more-favorable outcome for the petitioners might be likely. Keep reading Inside EPA for upcoming coverage of the legal strategy explaining why the TSCA rules' critics are taking this approach:
Environmentalists File First Suits Over TSCA Prioritization, Review Rules
Several environmental groups have filed multiple suits over two of EPA's initial rules for implementing the revised Toxic Substances Control Act (TSCA), pursuing challenges in several federal appellate courts claiming that the regulations violate the provisions of the updated toxics law and the Administrative Procedure Act.As Inside EPA explained in one of last week's Insider specials, the lawsuits were expected given the strong push-back from environmental groups and some Democratic lawmakers over the initial round of TSCA rulemakings. These EPA critics say that the Trump administration is weakening the regulatory requirements far beyond what the Obama EPA proposed.
The takeaway? It's highly likely that the regulatory landscape for implementing TSCA reform remains uncertain for years, as the various cases work their way through the lengthy process of opening briefs, reply briefs, oral argument and notices of supplemental authority -- those filings with the court that are allowed even after briefing and argument. And even then, circuit courts can take months or more to issue a ruling in a specific case.
The legal fights might even open the door for the Supreme Court to intervene if one circuit court sets a precedent on TSCA implementation that conflicts with a ruling from another circuit court. While it's typically hard to get the high court to take an appeal, the justices often step in if there's a clear split among the lower courts that a national ruling could resolve.
But courts will have to weigh in on toxics-specific policies that involve gauging whether EPA's various risk assessment processes meet the standards set out in the revised TSCA for deciding whether existing and new chemicals are safe to enter the marketplace.
Environmentalists, as well as one of the leading Senate Democratic architects of TSCA reform, argue that the agency's initial rules fall far short of what the law requires:
EPA's Early TSCA Rules Ripe For Suits From Environmentalists, Industries
EPA's suite of early rules and guidance under the revised Toxic Substances Control Act (TSCA) appears ripe for a number of legal challenges from environmentalists, the chemical industry and other sectors, sources say, due to initial divided reaction to the rules and the massive scope of regulatory provisions in the complex policies.Environmentalists, public health groups and others say that the Obama EPA's proposed versions of the two rules were significantly stronger than the final rules. They blame the Trump EPA's deregulatory and pro-business agenda for weakening the regulations.
In particular, Environmental Defense Fund and others continue to criticize the appointment of former American Chemistry Council (ACC) official Nancy Beck as principal deputy assistant administrator in EPA's Office of Chemical Safety and Pollution Prevention (OCSPP) that is writing the TSCA implementing rules. They fear that her industry background means she is leading the charge on watering down the rules to the level that ACC and other industry groups want.
They also fault President Donald Trump's nomination of former EPA risk assessor Michael Dourson to head OCSPP, fearing he will continue the deregulatory trend:
Trump's Pick For EPA Toxics Chief Draws Criticism Over Industry Ties
President Donald Trump's nomination of Michael Dourson, a risk assessor who left the agency in the 1990s, to be the agency's next toxics chief is drawing criticism from environmentalists, who charge he is the latest nominee for the office with close industry connections that raise doubts about implementation of the new Toxic Substances Control Act (TSCA).Beck's position didn't require a Senate confirmation hearing or vote, but Dourson will have to testify before the upper chamber's environment panel on his nomination before the committee holds a vote -- so expect Democrats to use that event to highlight their concerns over the TSCA rules, and try to extract agreements from Dourson on future policy steps.
Even though OCSPP continues to lack a Senate-confirmed chief, the office is pushing ahead with various policies to implement the revised TSCA. And environmentalists and other agency critics also fault those rules, suggesting yet more lawsuits ahead.
For example, they disagree with what they see as a too-narrow scope of the uses of a chemical that EPA will consider when assessing risks from a new substance:
Environmentalists, Udall Fault EPA's TSCA New Chemical Review Process
Environmentalists and Sen. Tom Udall (D-NM) are faulting EPA's “operating principles” for streamlined review of new chemicals under the revised Toxic Substances Control Act (TSCA), saying it fails to adequately address “reasonably foreseen uses” -- the same narrow approach EPA is using for existing chemicals that critics say is unlawful.It's unlikely that environmentalists and EPA will come to any regulatory agreements any time soon, so look to the courts -- and our exclusive coverage of the legal battles -- for signs of how the fight over implementing TSCA reform might ultimately be decided.
https://insideepa.com/insider/insider-august-16-2017
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US EPA Plans Webinar On TSCA 'Fast-Tracked' PBTs
Aug 17, 2017 | Chemical Watch
The US EPA is hosting a webinar on 7 September to explain its process for gathering information on five persistent, bioaccumulative and toxic (PBT) substances that will be subject to rapid risk management action under the new TSCA.
The Lautenberg Chemical Safety Act required them to take "expedited" action on certain PBTs, by skipping their risk evaluation and proceeding directly to imposing rules to reduce their exposure "to the extent practicable".
Proposed risk management rules are due by 22 June 2019, with final rules to follow within 18 months.
The agency announced in October 2016 that it will take action on the following five substances:
· decaBDE, a brominated flame retardant used in textiles, plastics, wiring insulation, and building and construction materials;
· hexachlorobutadiene (HCBD), used as a solvent in the manufacture of rubber compounds and as hydraulic, heat transfer or transformer fluid;
· pentachlorothiophenol (PCTP), used as a sulfur cross-linking agent to make rubber more pliable in industrial uses;
· tris(4-isopropylphenyl) phosphate (IPTPP), used as a flame retardant in consumer products and as a lubricant, hydraulic fluid, and in other industrial uses; and
· 2,4,6-tris(tert-butyl) phenol, an antioxidant that can be used as a fuel, oil, gasoline or lubricant additive.
It has published preliminary information on exposure and use for each of the five PBT chemicals, as well as what it expects to consider in the development of the proposed rules. The agency is requesting that any stakeholder input be submitted by 9 December.
https://chemicalwatch.com/58252/us-epa-plans-webinar-on-tsca-fast-tracked-pbts
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UPDATE: ‘Erin Brockovich’ Carcinogen in 250 Million Americans’ Drinking Water
Aug 17, 2017 | Environmental Working Group
By Robert Coleman
In 2016, an EWG report found that chromium-6 – a cancer-causing compound made notorious by the film “Erin Brockovich” – contaminated the tap water supplies of 218 million Americans in all 50 states. But our just-released Tap Water Database shows the problem is even worse than that.
Based on test results obtained directly from almost 50,000 local water utilities, drinking water supplies for about 250 millionAmericans are contaminated with chromium-6. For about 231 million people, drinking water supplies have average levels of chromium-6 exceeding the one-in-a-million cancer risk level determined by California state scientists.
That may still underestimate the number of people exposed because water from most smaller utilities and private wells usually is not tested for chromium-6. Although it’s been almost a decade since the National Toxicology Program found the compound caused cancer in rodents when ingested, there are no federal regulations on chromium-6 in drinking water and no federal requirements for regular monitoring of chromium-6 in tap water.
There are a couple of possible reasons for the new, higher numbers in the Tap Water Database.The Environmental Protection Agency classifies utilities that purchase finished water from other public utilities as consecutive systems, which are only required to test for disinfectant byproducts, lead and copper. The database suggests that many consecutive systems are buying finished water tainted with chromium-6 from other utilities. To see if your water supplier is a consecutive system and may be purchasing contaminated finished water, look up your supplier in the Tap Water Database.California is the only state that set a public health goal and legal limit* for chromium-6, and requires water utilities to test for the chemical. EWG’s 2016 report was based on data from the EPA’s Unregulated Contaminant Monitoring program. The EPA-mandated testing involves only a small number of water utilities that serve less than 10,000 people.
We urge the federal government to follow California’s lead and set a nationwide legal limit on chromium-6 in drinking water, and require both large and small utilities to test for it. While the legal limit set by California in 2014 was too high to fully protect human health, it represented a step in the right direction. And until regular nationwide testing is required, we can’t know the true extent of contamination in public water utilities.
For now, we invite everyone to use our database to find out if there is chromium-6 in your water. If so, contact your local elected officials to express your outrage and use EWG’s Water Filter Guide to find a water filter that is certified to remove the contaminant.
http://www.ewg.org/enviroblog/2017/08/update-erin-brockovich-carcinogen-250-million-americans-drinking-water#.WZVfnzMjGUk
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Mercury Treaty Now in Force; Brings New Focus on Alternatives
Aug 17, 2017 | BNA Daily Environment Report
By Bryce Baschuk
The entry into force of the Minamata Convention on Mercury Aug. 16 will spur companies worldwide to restrict their use of mercury and pursue alternatives to mercury added products.
The convention seeks to protect human health and curb environmental contamination by obligating its parties to broadly limit the use and export of mercury and restrict mercury emissions into the air, soil, and water.
The legally binding treaty—named after Japan's Minamata Bay where industrial pollution led to widespread mercury poisoning in the 1950s—requires its signatories to phase out many common mercury-added products by 2020 and mercury-bearing processes by 2025. The U.S. and the European Union are among the 74 participants of the Minamata Convention, which also includes China, the world's largest producer of mercury.
“The treaty is designed to foster a simultaneous reduction in global mercury demand and supply,” said Michael Bender, director of the Vermont-based Mercury Policy Project.
Inorganic mercury can become the more toxic methylmercury when discharged to lakes and other water bodies. Methylmercury is a neurotoxin that can affect IQ and cardiovascular health at sufficient concentrations.
Mercury Phase Out
Some companies have already begun the process of phasing out mercury products. Furniture retailer Ikea announced in 2015 that it would sell only LED lightbulbs that do not contain mercury, unlike traditional fluorescent light bulbs.
“Mercury-added products represent one-third of total mercury demand and consumption,” Bender told Bloomberg BNA. “So, by phasing out mercury-added products by 2020, this rather rapidly reduces global mercury demand.”
Mercury is added to a variety of products, including batteries, watches, cameras, clocks, dental amalgam, automobile headlights, neon signs, laboratory chemicals, preservatives, fixatives, buffers, dyes, barometers, and thermostats.
Abbott Laboratories, Dell Inc., Energizer Battery Manufacturing Inc., and Ford Motor Co. are among the manufacturers with products that can contain mercury, according to the Interstate Mercury Education & Reduction Clearinghouse..
In addition, mercury cell chlor alkali factories make chlorine and caustic soda. Increasingly, chlorine producers are moving away from mercury cell to membrane technology, which has much less impact on the environment, according to Euro Chlor, an association of producers.
Gold Production
The Minamata Convention prohibits new primary mining of mercury, and bans mined mercury traded for certain uses—such as for artisanal and small-scale gold mining—the largest emissions source worldwide, Bender told Bloomberg BNA via email.
Members of the convention are obliged to promote mercury-free gold processing methods and end the practice of burning the mercury-gold amalgam in residential areas.
The treaty also obligates countries to promote heath care services for people who are exposed to mercury and protect vulnerable populations, including children and women of child-bearing age.
International Export Bans
The convention seeks to reduce the transboundary movement of mercury and promote more national mercury export bans such as those adopted by the U.S. and the EU.
Minamata Convention participants will gather for their first conference of the parties in Geneva from Sept. 24–29 to mark the convention's entry into force and discuss compliance.
http://news.bna.com/deln/DELNWB/split_display.adp?fedfid=119020590&vname=dennotallissues&fn=119020590&jd=119020590
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Echa Seeks Views On Authorisation Applications For Chromates
Aug 17, 2017 | Chemical Watch
Echa has opened consultations on authorisation applications for six uses of chromates.
Wesco Aircraft EMEA has two applications – one for the use of strontium chromate in primers applied by aerospace and defence companies and their supply chains.
The other is a joint application, with PPG Central (UK) as only representative (OR) of PRC DeSoto International and Cytec Engineered Materials as OR of Cytec Industries, to use dichromium tris(chromate) for chemical conversion coating applications by aerospace and defence companies and their supply chains.
Aviall Services and Finallin have applied for authorisation for two uses of pentazinc chromate octahydroxide – in the formulation of a mixture, and, secondly, in wash, fuel tank and aluminised primers for the purpose of corrosion protection in aeronautic applications.
ZF Friedrichshafen has applied to use chromium trioxide as a functional chrome plating of piston rods for automotive and rail applications.
And the company Microbeads wants permission for industrial use of 1,2-dichloroethane (EDC) as a swelling agent, during the sulfonation reaction of crosslinked polystyrene beads in the manufacture of ion exchange resins for purification of radioactive waste.
The consultation opened on 16 August and ends on 11 October.
https://chemicalwatch.com/58254/echa-seeks-views-on-authorisation-applications-for-chromates
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Trump Push for Natural Gas Exports Opposed by Manufacturers
Aug 17, 2017 | BNA Daily Environment Report
By Ari Natter
President Donald Trump's effort to boost U.S. energy is facing push back from manufacturers who say exporting more natural gas may undercut his “America First” jobs focus.
The Industrial Energy Consumers of America asked the administration Aug. 16 for a moratorium on U.S. approvals for liquefied natural gas projects. The trade association, which represents U.S. manufacturers that depend on cheap energy to fuel their factories, sent a letter to Energy Secretary Rick Perry Aug. 16.
It's “inconsistent with President Trump's fair trade and America-first policy,” Paul N. Cicio, the group's president, said in a phone interview. “It's a stunningly breathtaking amount of natural gas that could be exported.”
The dispute between oil and gas companies and manufacturers is but one among business groups over Trump's agenda. Oil companies oppose Trump's idea to require that pipelines be made in the U.S.; agriculture producers oppose some of his trade policies; and refiners have pushed the White House to drop consideration of sanctions on Venezuelan oil imports.
In its letter, the energy consumers group says that exports could drain as much as two-thirds of U.S. natural gas resources by 2050. The group doesn't disclose its members, but its 2015 tax filing says it represented The Dow Chemical Co., Corning Inc. and other factory owners. The chief executives of both companies, Andrew Liveris for Dow and Wendell Weeks for Corning, are members of the president's manufacturing council.
Neither Dow nor Corning responded to requests for comment.
More Approvals
“We remain alarmed at the volume of LNG exports that have been approved for periods of 20-30 years,” the group says in its letter. “Of greatest concern, is that the administration has said publicly that it will approve more applications to export” to countries that don't have a free-trade agreement with the U.S.
The dispute shows how Trump's formulation of American energy dominance could have a downside for other U.S. companies, said Kevin Book, managing director of Washington-based ClearView Energy Partners LLC.
“The question isn't about the next five years, it's about the next 20 years,” Book said in an interview. “For anyone who is making an industrial investment in the U.S. these days is thinking very much in that time frame.“
U.S. natural gas futures have risen since the first cargo of liquefied shale gas left Louisiana's shores last year—and more of the fuel is slated to set sail this year as Cheniere Energy Inc. starts up another LNG plant at its Sabine Pass terminal.
Meanwhile, the natural gas industry rejects the idea the U.S. doesn't have enough natural gas supplies to do it all.
“It advances our national security interests by providing allies access to diverse sources of energy, improves the global environment and contributes to correcting the U.S. trade deficit,” said Charlie Riedl, executive director for the Center for LNG, which represents companies such as Golden Pass LNG, a Texas export terminal being developed by a joint venture of Qatar Petroleum, ExxonMobil Corp. and ConocoPhillips. “The U.S. has a limited window to take advantage of new demand.“
The number of countries seeking to import U.S. liquefied natural gas has increased to 39 from 10 in 2000, according to the Washington-based trade group.
http://news.bna.com/deln/DELNWB/split_display.adp?fedfid=119020595&vname=dennotallissues&fn=119020595&jd=119020595
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Manufacturers Urge Perry To Slow LNG Exports
Aug 16, 2017 | Houston Chronicle
By James Osborne
WASHINGTON - American manufacturers continue to ramp up pressure on the Trump administration to curb the rapid development of LNG export facilities, arguing that more exports could significantly deplete American natural gas supplies within a little more than three decades.
In a letter to Energy Secretary Rick Perry on Wednesday, the Industrial Energy Consumers Alliance asked that he stop approving new LNG export terminals that will send American natural gas to countries without which the United States has a free trade agreement - as it does with Mexico and Canada.
"It is time for the U.S. Department of Energy to put American residential and industrial consumers first by establishing a moratorium on further LNG export approvals to non-free trade agreement countries, and put consumer safeguards in place," said Paul Cicio, president of the Industrial Energy Consumers Alliance.
The Trump administration has described the burgeoning U.S. LNG industry as critical to its plans to expand the domestic energy industry, building on initiatives taken by former President Barack Obama. But as gas exports rise, many economists suspect that so, too, will domestic gas prices, raising energy costs in this country - a particular concern for large energy consumers such as manufacturers.
The Australian government announced earlier this year it was curbing LNG exports as domestic gas prices in that country, one of the world's largest LNG exporters, skyrocketed. That has driven up energy costs and raised protest from that nation's manufacturing sector.
"It's not a threat. This will be export controls," Prime Minister Malcolm Turnbull recently told Australian Broadcasting Corp. radio. "They will not be able to export gas if that has the consequence of reducing the availability of gas for the Australian market."
Here in the United States, the Department of Energy had approved the opening of 11 LNG export facilities as of May, primarily along the Texas and Louisiana Gulf Coast. Cheniere Energy of Houston last year became the first U.S. company to export LNG, shipping the fuel overseas from its terminals along Sabine Pass.
Developers maintain the magnitude of the reserves in the United States prohibit a scenario like the one in Australia happening in the United States.
"Numerous independent academic papers have shown that LNG exports will be advantageous for the United States, including the Department of Energy's own study," Charlie Riedl, director of the Center for Liquefied Natural Gas, a nonprofit funded by the LNG industry, said in April. "This is not a zero sum game. The U.S. has more than enough natural gas to benefit from exports and provide affordable natural gas to consumers and manufactures at home."
But the Industrial Energy Consumers Alliance is arguing the Obama administration failed to consider the "cumulative impact" of approving terminals to exports to both countries with and without free trade agreements with the United States. Citing federal projections and other data, the alliance claims that the U.S. will use almost 60 percent of its "technically recoverable" gas reserves by 2050 and likely even more if President Donald Trump approves more terminals.
But estimates on domestic reserves are notoriously conservative, and executives in the natural gas industry believe that as they continue to hone hydraulic fracturing techniques and explore more shale deposits, they will tap way more gas than the federal estimate of 2,214 trillion cubic feet of gas reserves.
A report by the Potential Gas Committee, a research group funded by the American Petroleum Institute and other oil and gas interests, said that if the 1966 estimate of 600 trillion cubic feet had remained static, "the U.S. would have run out of natural gas 10 years ago."
http://www.houstonchronicle.com/business/article/Manufacturers-urge-Perry-to-slow-LNG-exports-11825039.php
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U.S. Natural Gas Market Sees Big Benefits From Nafta
Aug 16, 2017 | Bloomberg View
By Shelley Goldberg
Nafta has been a boon to the U.S. energy sector and to employment.
As Congress begins to examine the North American Free Trade Agreement at the behest of President Donald Trump, lawmakers need to ensure that nothing they decide disrupts one of the more relevant industries in the pact: energy -- in particular, natural gas.Play VideoU.S. Seeks Major Trade Overhaul as Nafta Talks Begin
U.S. producers need Mexico, their largest customer. The glut of production in the U.S. far exceeds domestic demand; thus, exports prevent a collapse in natural gas prices. More than a quarter of Mexico’s electricity is powered by U.S. natural gas, leaving it vulnerable in a trade battle. Trade disputes mean U.S. producers would suffer a serious loss of income, while Mexico would face an energy shortage that could wreak havoc on its economy, drive up crime and potentially create a new refugee crisis.
In many ways, Trump’s support of the U.S. energy sector conflicts with his desire to see the 23-year-old agreement revamped or even ended. While Trump believes the agreement has stripped Americans of jobs and opportunities, Nafta has actually been a boon to the energy sector and to employment.
Natural gas exports to Mexico, which have been increasing across the U.S. border since 2010, reached near-record highs this year through May, averaging 4.04 billion cubic feet per day, up from an average of 3.78 billion in 2016. The U.S. had an energy trade surplus with Mexico of more than $11 billion last year. The value of U.S. energy exports to Mexico in 2016 was more than twice the value of the energy imports. Mexico accounts for more than 60 percent of all U.S. natural gas exports, according to the Energy Information Administration.
The U.S. is emerging as a net natural gas exporter with exports exceeding imports in three of the first five months of this year, putting the U.S. on course to reverse 60 straight years during which the nation was a net importer.
At least 17 pipelines carry more than 4 billion cubic feet of natural gas daily to Mexico, with four additional cross-border pipelines to be completed over the next two years and many more planned after that. While the U.S. still is a net gas importer from Canada, exports to eastern Canada have steadily increased since the completion of the Vector Pipeline in 2000.
The story has been similar for liquefied natural gas, or LNG. Last year, Cheniere Energy Inc. shipped the first cargoes from its Sabine Pass terminal in Louisiana, marking the start of LNG exports from the lower 48 states. Sabine Pass averaged a record 1.96 billion cubic feet per day of exports in May, according to the EIA. Numerous domestic LNG export projects are in development by companies such as Dominion Energy Inc.
There’s been a gradual and sustained increase of exploration activity in Mexico, particularly in deepwater regions. The number of active offshore exploration rigs in Mexico reached a 10-year high in June 2017, and the sector may be only just beginning to see the effects of the energy reforms. Mexico began deregulating the industry in 2013 amid declining domestic gas production.
Anti-Nafta organizations such as the AFL-CIO argue that the pact has been skewed toward corporations and against the advancement of workers' wages and benefits, while increasing trade at the cost of eliminating jobs and depressing wages.
Yet from 2009 to September 2016, employment in the nation’s oil and gas extraction industry including support services grew by 6 percent to 392,869 total jobs, according to the Department of Energy. Natural gas generation workers accounted for 47 percent of all fossil fuel electric generation employment. Natural gas fuels, supporting 309,993 jobs, are the second-largest category of employment behind petroleum. Together, natural gas generation and fuels support 398,235 jobs nationally. Almost four in 10 workers in natural gas electricity generation are female, and 15 percent are Hispanic or Latino. The fuels sector has a higher proportion of workers who are 55 and older (24 percent), while generation has more unionized workers (14 percent).
The U.S. needs to focus on maintaining strong yet fair trade by modernizing and improving Nafta in ways that expand trade and investment. The industry has the support of Energy Secretary Rick Perry and Secretary of State Rex Tillerson, who happens to be the former CEO of Exxon Mobil Corp. U.S. gas exports to Mexico are expected to double by 2019, most of which will come from Texas, the home state of both men.
https://www.bloomberg.com/view/articles/2017-08-16/u-s-natural-gas-market-sees-big-benefits-from-nafta
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Court Upholds Freeport LNG Approval, Striking Down Sierra Club Challenge
Aug 17, 2017 | Natural Gas Intelligence
By Jeremiah Shelor
In a win for the natural gas industry, the U.S. Court of Appeals for the District of Columbia Circuit denied a Sierra Club appeal challenging the Department of Energy's (DOE) authorization of the Freeport liquefied natural gas (LNG) terminal on Quintana Island, TX, to export to non-free trade agreement (FTA) countries.
The Sierra Club argued that DOE failed to meet its obligations under the Natural Gas Act (NGA) and the National Environmental Policy Act (NEPA) by not sufficiently examining the indirect effects of approving LNG exports from the Freeport terminal. DOE did not properly weigh the impacts of increased domestic natural gas production and the cumulative environmental effects of other export projects, the environmental group contended.
An opinion accompanying Tuesday's decision noted that DOE under the Obama administration -- in response to a number of non-FTA LNG export applications -- commissioned two studies to examine the impacts of increased natural gas exports. The judges concluded that the types of indirect effects Sierra Club wanted DOE to analyze went beyond the "reasonably foreseeable" standard required under NEPA.
Citing past case law, the court found that DOE "was not required to 'foresee the unforeseeable.' Its determination that an economic model estimating localized impacts" of increased domestic production induced by increased LNG exports "would be far too speculative to be useful is a product of its expertise in energy markets and is entitled to deference.
"...We cannot say that the Department failed to fulfill its obligations under NEPA by declining to make specific projections about environmental impacts stemming from specific levels of export-induced gas production."
As for Sierra Club's challenge of DOE's public interest evaluation under the NGA, the court found that the group's list of environmental concerns "fails to overcome the presumption in favor of exports.
"Notably, even if the department determined the impacts were significant, it could still find that the public interest weighs in favor of allowing exports," the opinion read. "...Sierra Club has given us no reason to question the Department's judgment" that Freeport's application for LNG exports is consistent with the public interest.
"We are disappointed with the court's refusal to require DOE to use available tools to inform communities of the impact of this additional fracking prior to approving exports," said Nathan Matthews, a Sierra Club staff attorney. "This LNG export approval creates unnecessary risks for the people of Freeport, Texas, and for every community that is saddled with fracking rigs next to their homes, schools, and public spaces."
The American Petroleum Institute (API) praised the court's decision.
"Increased natural gas exports will create jobs and increase the energy security for our nation and our allies throughout the world," API Vice President Marty Durbin said. "The court's action today to deny the petition for review of Freeport LNG's export authorization is great news for other planned LNG export projects around the country. Moving forward, we must put in place smart, common-sense regulations that will continue to drive innovations in technology that will increase opportunities for American LNG throughout the world."
According to the Energy Information Administration (EIA), 2017 is poised to mark a turning point in United States' transition from a net natural gas importer to a net exporter, driven in large part by LNG exports out of Cheniere Energy Inc.'s Sabine Pass LNG terminal. Cheniere said last week that Train 4 at Sabine would soon produce its first commissioning cargoes.
In related news on Wednesday, Houston-based Commonwealth LNG said FERC has accepted its application to initiate the pre-filing process for an export facility near Cameron, LA. The project is to have capacity to liquefy and ship 9 million metric tons/year of LNG.
“This is the culmination of over two-and-a-half years of work by the Commonwealth management team and our LNG consultants, advisers and vendors,” said COO Scott Johnson.
Pending a successful environmental review and receipt of a FERC order, Commonwealth expects to begin construction in 2019, with commercial operation in 2022.
Meanwhile, Veresen Inc. management said the company intends to re-file for approval of its Jordan Cove LNG project in Oregon.
Legislation to streamline federal approval of LNG exports was recently introduced in the Senate, with the Industrial Energy Consumers of America (IECA) coming out against the legislation.
The IECA on Wednesday continued calling for DOE to place a moratorium on LNG exports to non-FTA countries, citing the impact of increased commodity prices on domestic consumers.
"The Obama administration's 'public interest' LNG export studies, which are still being used to justify LNG export approvals to non-FTA countries, did not consider 'cumulative' export volume to FTA and non-FTA countries and how it could contribute to consumption of vast amounts of U.S. natural resources nor its economic impact," IECA wrote.
Using data from EIA's 2017 Annual Energy Outlook on exports via LNG and to Mexico and comparing that to EIA's data on technically recoverable domestic natural gas resources, IECA concluded that in a scenario where LNG exports rise to 12.1 Bcf/d by 2035 "58% of all U.S. technically recoverable natural gas resources are consumed by 2050, only 33 years."
Meanwhile, President Trump on Tuesday signed an executive order calling for expedited federal approval of infrastructure projects.
In light of Trump’s executive order, “we would reiterate a theme we raised in the wake of the election,” analysts with ClearView Energy Partners wrote in a Tuesday note to clients examining the Freeport LNG appeals court ruling. “Under the Obama administration, agencies expanded the scope of their environmental reviews, much to the frustration of project applicants frustrated with delays.
“However, many of those reviews have withstood judicial scrutiny -- indeed, the D.C. Circuit rejected all four challenges to FERC’s NEPA review of LNG export facilities to date before upholding DOE today. In that context, a significant reversal of course on permit reviews by the Trump administration -- if quicker-paced reviews turn out to be materially less robust -- could create incremental judicial review risk for future projects.”
http://www.naturalgasintel.com/articles/111423-court-upholds-freeport-lng-approval-striking-down-sierra-club-challenge
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Beaver County Ethane Cracker Hailed Among Infrastructure Projects
Aug 17, 2017 | Pittsburgh Business Times
By Paul J. Gough
Shell Chemical Appalachia's $6 billion petrochemical plant being built in Beaver County was touted Tuesday afternoon by national energy and union leaders talking up the importance of pipeline construction to jobs and economic development.
Sean McGarvey, president of North America’s Building Trades Unions that commissioned the study, singled out the Beaver County plant as part of energy and manufacturing infrastructure spending that is having a long-term impact on the national economy. He also mentioned potential petrochemical plants in southeastern Ohio down the Ohio River, as well as another proposed ethane cracker in West Virginia.
"You're talking about thousands of jobs in those three facilities," McGarvey said.
Shell has said that the yearslong construction process for the Potter Township plant would involve 6,000 construction workers and create around 600 permanent jobs for running the plant.
"That's where the long-term, really, really deep economic impact ... happens," McGarvey said.
American Petroleum Institute President and CEO Jack N. Gerard also praised an expected executive order from President Donald Trump that he said would streamline the environmental permitting process for pipeline construction to about two years. Some in the oil and natural gas industry wait between seven and 10 years for the proper permitting, Gerard said.
"It makes no sense at all," he said.
He said streamlining the processes would help attract investment and capital.
"We applaud the president's efforts … so you don't have government regulation, red tape, stifling the very job creation you're trying to achieve,' Gerard said.
https://www.bizjournals.com/pittsburgh/news/2017/08/16/beaver-county-ethane-cracker-mentioned-on-national.html
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Firefighters Seek To Block Industry Tool Said To Ease RMP Compliance
Aug 17, 2017 | Inside EPA
By Dave Reynolds
Washington state firefighters are urging Democratic senators to halt development of a novel dispersion modeling approach for assessing risks from toxic gas releases, arguing the federal agency and industry collaboration underestimates risks to the public in filings with EPA and other agencies, though an industry group says the method is based on sound science and may still be revised.
In an Aug. 2 letter to Sen. Maria Cantwell (D-WA) and other senators, Washington Fire Chiefs Executive Director Wayne Senter argues that chemical and railroad industries are pushing the new assessment approach -- developed in conjunction with the Departments of Homeland Security (DHS) and Defense (DOD) -- that downplays risks from potential disasters by dramatically reducing the distance toxic gases are projected to travel.
“The industry-initiated but federal agency-enabled and Congressionally-funded effort . . . has all along explicitly aimed at significantly modifying in a risk-minimizing direction the downwind toxic cloud estimates in all of the major national emergency response guidance documents, including . . . chemical facility submissions to the US EPA's Risk Management Program (RMP),” Senter writes.
Sens. Tom Carper (D-DE) and Claire McCaskill (D-MO) are copied on the letter, as is Mark Light, executive director of the International Association of Fire Chiefs.
The fire fighters' efforts may have gotten a boost as recent DHS tests conducted in 2015 and 2016 appear to confirm that the new industry method -- adopted in guidance issued by the Chlorine Institute (CI) -- may underestimate risks, a point that EPA is publicly acknowledging.
“The more recent and larger-scale chlorine release tests conducted by DHS in 2015 and 2016 appear to demonstrate that the revised Chlorine Institute guidance may significantly under-predict the consequences of large chlorine releases,” the agency said in a statement to Inside EPA.
The agency added that it has made “no recent changes to its requirements or guidance for conducting offsite consequence analyses” under the RMP regulations.
Senter's letter to Cantwell continues months of pushback from the Washington state firefighters association and an environmentalist. This spring, Senter sought to enlist the help of the U.S. Chemical Safety Board (CSB) in opposing the novel assessment method, and an environmentalist unsuccessfully sought a staff opinion on the method.
In his group's April 6 letter to CSB, attached to the Cantwell letter, Senter says facilities have already used the approach to comply with reporting RMP requirements, even though it has not been peer reviewed and is “utterly nonesense.”
Senter contends that the new approach yields dramatically reduced estimates of the reach of a toxic chemical release than past CI guidance, saying that a toxic plume once estimated to travel 15 miles would span only 1,184 feet or 0.2 miles under the new approach.
“Many fire chiefs find this new industry information utterly lacking in credibility for use in a real release event, and some emergency managers say they will refuse to use it for pre-planning,” Senter told CSB. “We ask your assistance in publicly challenging the current ill-advised industry push for an astonishing risk minimization on paper, by demanding full transparency in the assumptions and models and field test data and a full discussion with the emergency response community and the public and with the federal agencies being directly targeted for re-calculation of their long-standing toxic gas risk guidance; DOT/PHMSA, NOAA, DOT and EPA.”
RMP Rule
The risks posed by potential release of toxic chemicals were the driving force behind the Obama EPA's Jan. 12 final rule overhauling the agency's RMP facility accident prevention rule with new requirements for certain facilities to conduct third-party audits, hazard analysis, and streamline disclosure of toxic chemical holdings.
EPA Administrator Scott Pruitt, while Oklahoma's state attorney general, opposed the proposed rule, faulting disclosure provisions as worsening terror threats.
Now leading EPA, Pruitt has delayed the update rule nearly two years and is weighing significant revisions, despite opposition from environmental, labor and first-responder groups. But if industry groups and federal agencies are able to implement the new toxic release assessment method, it could further ease RMP and other requirements on industry.
A 2014 DHS fact sheet says that it is leading a collaborative project with government, industry and academia that will use large-scale outdoor chlorine release trials to fill data gaps on toxic inhalation hazards from chemical releases.
It says the new modeling method seeks to incorporate real-world variables, such as gases' reactions with soil and vegetation, into dispersion estimates. It also says the project seeks to fill information gaps for toxic inhalation hazards that have never been tested or validated at scales representative of releases from rail cars or storage tanks.
An industry source says this differs from previous methods that have been based on computer modeling that uses conservative assumptions and have overestimated risks.
But Senter says DHS and DOD have supported testing of the new method, and that some facilities have already used the approach to comply with EPA's RMP rule requirements for submitting an analysis of potential off-site consequences of a facility release. “Federal taxpayers should not continue to fund a complacency-inducing and unreviewed campaign which is dangerous for the emergency responders and the communities at risk for [Toxic Inhalation Hazard] releases,” he says.
Senter says industry has long touted the approach, including in CI's 2015 update to its “Pamphlet 74 Guidance on Estimating the Area Affected by a Chlorine Release.”
“Congress should not allow the risk minimization campaign to stay mainly in the shadows, as currently enabled by the secretive US DHS and US DOD agencies keeping locked away from the at-risk public the most important information underlying the risky changes quietly being infiltrated into industry and federal emergency guidance.”
He notes that while early DHS test results using the method suggested that chlorine and other toxic gases may not travel as far downwind as previously believed, recently released DHS data show the releases travel far.
“The new data, unlike results from the previous 2010-2015 smaller scale tests which had been designed mainly to show clouds 'held up' at the release point in various ways, show a long chlorine gas cloud plume, dangerously far downwind. This measurement data decisively undermines the chlorine industry's current risk-minimizing efforts and can help protect the safety-conservative estimates” emergency responders rely on, he says.
He urges the three senators to “ensure that the new sobering field test data is publicized vigorously and directly to the whole Congress, the emergency response community and the public.”
But a CI official says in an email that the 2015 update to the group's guidance brings new science to distance estimates that previously were conducted using conservative and hypothetical computer modeling. The approach stems from a project DHS' Chemical Security Analysis Center began in 2010 and CI joined in 2015.
While Senter argues more recent testing undermines the approach, the CI source says that the 2015 update to Pamphlet 74 incorporates test results conducted in 2010, and that it will be updated again to account for more recent testing when those results are published.
“CI members’ primary concern as it relates to dispersion modeling is accuracy. Accurate models assist them in their planning and response efforts in the unlikely event of a release,” the source says, adding that CI members would respond to emergencies alongside local responders. “CI members want models that use the best available science and that is what Pamphlet 74 does.”
EPA Query
In a March 21 letter to James Belke, of EPA's Office of Land and Emergency Management, Fred Millar, an environmental consultant who used to work for Friends of the Earth, queried the agency on the validity of the new gas model and asked whether use of the model is appropriate for complying with RMP reporting requirements.
Citing 1999 EPA guidance on conducting RMP off-site consequence analysis, Millar acknowledges that facilities may use industry approaches to estimate risks from toxic releases, but he argues that EPA guidance suggests that the agency should have a role in assessing the validity of methodologies used to comply with the rule.
Millar asks EPA's Belke a variety of questions, including whether the agency has been provided with models and assumptions underlying the new approach, how widely-accepted the approach is by industry and how commonly it is being used, and whether EPA has standards for assessing whether the model is appropriate for RMP compliance.
Millar tells Inside EPA that EPA has not provided answers to his letter.
In the email to Inside EPA, CI, the industry group, says that DHS selected chlorine to test a new dispersion method because prior modeling tools had been proven to overestimate how far toxic gases would travel in case of a release. While CI members have provided chlorine for testing the experiments were conducted by DHS and its academic partners, the email says.
The source says that CI's primary interest in dispersion modeling is accuracy for emergency planning and suggests that firefighters are misinterpreting the institute's guide. The source says the updated guide presents modeling results in terms of dosage -- a factor of concentration multiplied by time.
“To the casual reader, because these results are depicted graphically, this can appear that the footprints represent the predicted size of the cloud,” the source says. “The footprints, as explained in Appendix B, specifically section B.1, are dosages. This measure expresses risk in clear, clinical terms required to assist emergency responders.”
The source also says the CI members and DHS officials briefed EPA staff on the new modeling approach in 2015 before CI updated its new guidance. While EPA officials asked questions during the meeting, they have not followed up to request additional information or to seek further discussions, the CI official says.
https://insideepa.com/daily-news/firefighters-seek-block-industry-tool-said-ease-rmp-compliance
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Trump Wins Industry Praise for Ordering Faster Federal Permitting of Infrastructure
Aug 16, 2017 | Natural Gas Intelligence
By Charlie Passut
Several trade associations representing the oil and natural gas industry applauded President Trump for signing an executive order (EO) directing the federal government to expedite its review and permitting of major infrastructure projects.
But in separate statements, the associations -- specifically, the American Petroleum Institute (API), the Interstate Natural Gas Association of America (INGAA), the American Gas Association (AGA) and the Association of Oil Pipe Lines (AOPL) -- warned that the industry needs regulatory certainty before committing capital needed to build oil and gas pipelines, and that a myriad of federal agencies must ultimately agree to streamline their permitting processes in order for the EO to succeed.
Industry reaction
Shortly after Trump signed the EO on Tuesday, API President Jack Gerard said the measure was an important step in shortening the federal permitting process, which the industry and Trump have both said are too long and an impediment to energy development and creating jobs.
"Ensuring we have a robust energy infrastructure system that protects the environment and keeps pace with growing production and demand is essential to helping American families and businesses have reliable access to affordable energy," Gerard said. "The business community, including the oil and natural gas industry, relies upon a cost-effective regulatory system that promotes the certainty and predictability necessary to make the massive capital investments required to bring energy and other projects to the U.S. economy.
"We welcome the administration's action to streamline the regulatory process in developing and transporting our nation's oil and natural gas resources. It is good for our economy, consumers, and strengthening our national security."
INGAA CEO Don Santa told NGI's Shale Daily that his organization was pleased with the EO's provisions to hold federal agencies accountable for their roles in environmental reviews of infrastructure projects.
"The direction signaled by the EO is consistent with INGAA's interstate natural gas pipeline infrastructure priorities and efforts in the current Congress to perfect the provisions of the Energy Policy Act of 2005 via legislation, such as the House-passed HR 2910," Santa said Wednesday. HR 2910 calls for strengthening FERC's lead agency role and further defines the process for federal and state regulatory agencies involved in the permitting process for interstate natural gas pipelines. The bill passed the House of Representatives with bipartisan support in July.
"Of course, accomplishing the stated goals of the EO will depend on the commitment of the wide range of federal offices with a role in infrastructure permitting," Santa said. "We are hopeful that these federal offices will share a commitment to achieving the ends sought by the EO."
AGA CEO Dave McCurdy said Wednesday that natural gas "is a critical piece of the energy future for our nation, and streamlining the infrastructure process to help ensure more Americans can use this clean, efficient fuel in their homes and businesses is critical."
AOPL spokesman John Stoody added that "there is no reason thorough, environmentally protective federal reviews of proposed pipeline projects need to take as long as they do now. We hope these changes will bring a meaningful improvement to our ability to provide jobs for American workers and build new pipeline project."
What the EO contains
The EO calls for the director of the White House's Office of Management and Budget (OMB) to work with the Federal Permitting Improvement Steering Council (FPISC) within 180 days to establish cross-agency priority (CAP) goal on streamlining the infrastructure permitting process. It stipulates that environmental reviews and authorizations by federal agencies for major infrastructure projects "should be reduced to not more than an average of approximately two years."
OMB and FPISC will also have 180 days to "issue guidance for establishing a performance accountability system to facilitate achievement of the CAP goal." That system will use a scoring mechanism to track federal agencies' progress on infrastructure projects.
The EO also includes a "one federal decision" provision, which will be used to determine whether an infrastructure project goes forward. OMB and the White House's Council on Environmental Quality with develop the framework for implementing the provision, with consultation by FPISC.
"Each major infrastructure project shall have a lead federal agency, which shall be responsible for navigating the project through the federal environmental review and authorization process, including the identification of a primary federal point of contact at each federal agency," the EO states. "All federal cooperating and participating agencies shall identify points of contact for each project, cooperate with the lead federal agency point of contact, and respond to all reasonable requests for information from the lead federal agency in a timely manner."
Under the EO, the Interior (DOI) and Agriculture departments will be the lead agencies, where appropriate, "for facilitating the identification and designation of energy right-of-way corridors on federal lands for government-wide expedited environmental review for the development of energy infrastructure projects."
DOI was also ordered to provide OMB with "a strategy and recommendations for a multi-agency reorganization effort that would further the aims" contained in the EO.
http://www.naturalgasintel.com/articles/111426-trump-wins-industry-praise-for-ordering-faster-federal-permitting-of-infrastructure
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Lawmakers Weigh Environmental Effects Of Trump's Order
Aug 16, 2017 | E&E News PM
By Arianna Skibell
Members of the House United for Climate and Environmental Justice Task Force are condemning President Trump's infrastructure order as a gag on public comment that will put the environment at risk for the sake of "corporate profit."
"Removing existing protections and stripping away long-term planning requirements will mean more waste, more accidents, and shorter useful lives for the projects we build. These changes are a deep disservice to the American public, and the president should be ashamed," the task force said in a statement to E&E News.
The task force is chaired by Reps. Don McEachin (D-Va.), Nanette Barragán (D-Calif.) and Pramila Jayapal (D-Wash.), who are members of the Congressional Black Caucus, Congressional Hispanic Caucus and Congressional Asian Pacific American Caucus, respectively. All are freshmen.
The Democrats launched the task force in response to proposed cuts to U.S. EPA, fearing that minority and low-income communities would be hit the hardest.
"As sea levels rise, and as floods and extreme storms become more common, it will become ever more necessary that we acknowledge and plan for those realities," the task force said.
Issued yesterday, Trump's executive order calls for streamlining infrastructure permits and rescinds a 2015 Obama administration directive requiring federal agencies to account for rising sea levels when funding proposed projects. President Obama billed the original directive as a climate change measure, noting that the number of flood-prone areas is likely to increase nationally as sea levels rise, putting more infrastructure at risk (Greenwire, April 15).
The scrapped Obama directive, which sought to address the lack of coordination across governments on flood adaptation, required public projects like government-subsidized housing to be built 2 feet above the 100-year flood standard. Critical infrastructure like hospitals required 3 feet.
Environmental groups, spending watchdogs and engineers derided the decision to toss Obama's so-called federal flood risk management standard, saying the action overlooked mounting evidence that climate change will affect flood plains and risk taxpayer dollars (Climatewire, Aug. 16).
"Instead of making bipartisan plans to rebuild America's crumbling infrastructure, Donald Trump has once again put big corporations ahead of our health and safety," the House task force said.
"What we need instead are fair, inclusive decision-making processes that give all Americans a voice; a prudent, farsighted approach to how we spend scarce public dollars on infrastructure; and a more sustainable economy built on well-paying green jobs."
The bipartisan House Climate Solutions Caucus expressed mixed reactions to the infrastructure order, which came just days after NOAA released a report stating that sea levels are at a record high.
Republican Co-chairman Carlos Curbelo of Florida slammed the order as not fiscally conservative.
"It's irresponsible, and it will lead to taxpayer dollars being wasted on projects that may not be built to endure the flooding we are already seeing and know is only going to get worse," he said in a statement.
"Sea level rise and the risk of severe flooding are a reality for communities across the country. When you're on the front lines like South Florida, we know the importance of having more resilient building codes to protect our infrastructure, especially when taxpayer dollars are used."
Curbelo's Republican colleagues in the caucus were not all in alignment on how the order factors in climate change. Rep. Patrick Meehan (R-Pa.) said he was pleased to see the administration taking strong steps to cut through the "red tape and bureaucracy," adding it also would protect the environment.
"We can and should overhaul our national infrastructure while being good stewards of our environment, and the Executive Order issued yesterday will help ensure that appropriate environmental reviews are undertaken in a timely and efficient manner," he said in a statement to E&E News.
"Modernizing our infrastructure will create jobs, make us more competitive on the world stage, make our communities safer and benefit the environment."
Meehan also plans to introduce legislation next month to boost investment in "green" infrastructure, according to a congressional aide.
The order came as Congress is gearing up to reauthorize the National Flood Insurance Program and after the release of a draft study by 13 federal agencies stating that rising temperatures are leading to more intense and frequent rainstorms, extreme weather events, and higher seas.
https://www.eenews.net/eenewspm/2017/08/16/stories/1060058868
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Methane NSPS Delay Faces Same High Bar As Vacated Effort, EPA Critics Say
Aug 16, 2017 | Inside EPA
By Dawn Reeves
EPA's proposal to delay implementation of Obama-era methane rules for new oil and gas facilities for two years faces the same legal problems as the agency's earlier 90-day pause that was vacated by an appellate court, according to formal comments from former agency officials, environmentalists and legal experts.
Part of the problem for EPA, these sources say, is that it might have to overhaul the legal justification for its proposal to pause major parts of the methane rule, an effort that could take significantly longer than agency officials had planned.
The Environmental Protection Network (EPN) -- a group of more than 75 former EPA officials including political appointees from both parties -- says in its undated comments that the proposal “fails to give adequate -- or really any -- reasonable justification or legal basis for its proposed delay.”
Arguing that the proposed delay of key requirements of the methane new source performance standards (NSPS) does not consider lost public health and environmental benefits, EPN says the plan “fails to comply with the law and cannot move forward.”
The former officials add: “The proposal, along with many other recently proposed or final actions to invalidate or delay lawfully adopted environmental rules, flies in the fact of the animating principles of the Clean Air Act and the steady progress this country has made to protect Americans from the adverse health effects of pollution.”
At issue is a June 16 proposed rule from EPA to delay by two years several requirements of the methane NSPS. In its proposal, EPA cites the original 90-day administrative pause now scrapped by the court, writing that, “[w]hen we have issued similar stays in the past, it has often been our practice to also propose a longer stay through a rulemaking process.”
But EPN identifies this as a chief flaw, charging that the proposal to delay the methane NSPS “rests exclusively on the Agency's assumption that it can simply extend a stay of that rule” under Clean Air Act section 307(d)(7)(B), which authorizes a stay of no more than 90 days, linked to its reconsideration proceedings.
EPA used that same authority for its 90-day stay of the same rule -- issued to avoid compliance deadlines while the agency prepared the current proposal -- but the U.S. Court of Appeals for the District of Columbia Circuit in a July 3 ruling “determined that the foundational basis for even a 90-day stay” under that air law section “does not exist,” EPN says.
The full court in an 8-3 decision Aug. 10 declined industry and some states' request to reconsider that ruling, putting the rule back in place and leaving the industry in regulatory limbo.
With section 307 ruled out as a viable path to stay the rule, EPN says, “EPA could justify a delay of compliance dates in the original rule only by using the full range of originally required rulemaking procedures to amend that rule under the originally applicable substantive legal standards.” Also, it would have to meet those standards “with the same rigor as the original rule.”
Similarly, a large coalition of environmental groups -- including Sierra Club, Environmental Defense Fund (EDF), Clean Air Task Force, Natural Resources Defense Council and others -- say in Aug. 9 comments that the “only way that EPA may revise the rule, including extending its compliance dates, would be through a [s]ection 307(d) rulemaking revision proceeding.”
For such a proceeding to be lawful, the coalition says, EPA must “reasonably explain the basis for the revision based on the record before the agency. . . a process EPA has not yet even begun. EPA must explain how the revision is consistent with its statutory mandate and is good policy. That is no simple task. Halting key Rule provisions would allow significant amounts of climate-destabilizing methane emissions . . . to be released into the atmosphere. . . . Such a result is directly contrary to EPA's mandate.”
Quantified Emissions
The environmentalist coalition says that in EPA's “attempts to justify the proposed stays on the basis of the moderate costs to industry that would be avoided by staying rule requirements, the agency has entirely failed to quantify, characterize, or otherwise consider the harm to communities associated with its proposed stay.”
EDF in separate Aug. 9 comments calculates that a two-year stay of the NSPS would result in nearly $8 million in lost climate benefits, using more conservative estimates than EPA used in its original NSPS. Under this analysis, nearly 41,000 well sites, 272 compressor stations and 1,090 pneumatic pumps could avoid conducting leak detection and repair, and other requirements of the rule.
The group also included higher estimates of increased emissions due to the stay that are based on the regulatory impact analysis (RIA) for the June 2016 final NSPS.
The proposed stay “will allow thousands of sources to avoid implementing emissions control standards set forth in the 2016 Rule,” EDF says, which would allow those sources to emit significant amounts of methane, volatile organic compounds (VOCs) and hazardous air pollutants that otherwise would have been avoided.
“The adverse public health and welfare impacts of these pollutants such as increased mortality, morbidity and cancer risks associated with VOCs, benzene and formation of secondary pollutants, the contribution of methane to tropospheric ozone, and crop and plant damage have not been fully monetized and are extensive.”
Both the estimates derived from the RIA and the group's more conservative projections show that “the foregone benefits for the public due to EPA's proposed stay far outweigh the costs avoided by industry,” EDF says.
Underscoring EPA's potential legal troubles, the Institute for Policy Integrity (IPI) at New York University law school argues in its Aug. 9 comments that the proposed stay is arbitrary and capricious because EPA fails to provide a reasoned explanation for it.
“As the D.C. Circuit made clear when vacating EPA's prior attempt to stay the [NSPS,] EPA has no 'inherent authority' to stay a rule. Accordingly, the agency 'must point to something in either the Clean Air Act or the [Administrative Procedure Act (APA)] that gives it authority to stay.' . . . Here, EPA cites no statutory authority for the Proposed Stays. That is sufficient reason to render them illegal,” the IPI comments say.
State attorney generals from California, Illinois, Iowa, Maine, Maryland, Massachusetts, New Mexico, New York, Oregon, Pennsylvania, Rhode Island, Vermont, Washington and the District of Columbia along with the state of Colorado and the city of Chicago made similar arguments in their earlier comments.
EPA has technically proposed two separate stays -- one for 90 days and another for two years. It had said the proposed 90-day stay would be a “gap filler” between the first three-month stay issued administratively June 5 and the longer pause.
However, that strategy suffered a major blow July 3 when the D.C. Circuit vacated the original 90-day stay. A 2-1 panel ruling in Clean Air Council, et al. v. EPA backed environmentalists' arguments that EPA improperly used its Clean Air Act section 307 authority to delay the rule because its reconsideration proceedings under the same section were not mandatory.
Oil and gas industry groups and some states asked the D.C. Circuit to reconsider the case en banc, but EPA did not pursue an appeal. That effort failed on the court's 8-3 order issued Aug. 10.
Industry Support
Now, industry groups and supportive states are seeking to provide legal cover for EPA to pause the rule's requirements to find and repair methane leaks at new oil and gas equipment.
For example, the American Petroleum Institute's (API) July 27 comments on the two-year delay proposal argued that EPA can select from a menu of legal authorities to justify the proposal, including that the agency revise its past interpretation that stays issued under APA section 705 are limited to rules that have not yet taken effect.
In undated comments, the North Dakota Department of Mineral Resources and the state Department of Health argue that EPA can go even further and entirely repeal certain provisions of the NSPS.
The comments hinge on the claim that the applicability standards of the NSPS' fugitive emissions requirement were included without being proposed for comment, and that alone is justification for repeal. A similar requirement that lacked the opportunity for comment was the wellsite pneumatic pump standard because the certification requirement for an exemption was never proposed, the North Dakota agencies say.
“These significant deficiencies . . . justify repeal of the rule's fugitive emissions requirements, the well site pneumatic pump standards and the requirement for certification by a professional engineer, particularly given” EPA's ongoing reconsideration proceeding and President Donald Trump's March energy executive order that directed the agency to review the entire rule.
The North Dakota comments say EPA's proposal also has support from other like-minded states. Also, the Texas Alliance of Energy Producers (TAEP) says in Aug. 9 comments that proposed stay is “reasonable and authorized under the law.”
The group says regardless of whether the rule is “characterized as a 'stay' or extension of compliance deadlines, TAEP's individual producers are disproportionately impacted by the Proposed rule. The EPA has legal authority to finalize the Proposed Rule and utilize the two-year period to evaluate the factual issues ignored by the previous Administration.”
It also seeks to counter the environmentalists' arguments related to the rule's effect on methane emissions, saying the impact of the proposed stay on the environment is “minimal or speculative at best” while the NSPS' effect on TAEP and its members “is significant.”
In contrast, Aug. 8 comments from the Sabin Center for Climate Change Law at Columbia University say that the stay will result in lost environmental benefits and “resulting in the waste of a valuable resource.” The center cites the original rule's RIA that shows it could capture an additional 16 billion cubic feet of gas, worth $63 million, each year. The rule's leak control requirements alone are estimated to capture more than half of that amount, valued at $39 million.
“Staying that requirement for two years could, therefore, result in the loss of nearly $80 million worth of gas,” Sabin Center writes.
And Sabin notes that staying the leak control requirement could also result in fewer jobs in the oil and gas sector, since fewer people would be needed to control leaks. The RIA estimated 660 full-time staff would be needed to perform leak control work by 2020.
The Center for Methane Solutions (CMES) -- which represents companies in the methane mitigation industry -- also said in Aug. 4 comments that it is “disappointed by EPA's decision to impose a delay” in the rule's effectiveness, and that the NSPS was promulgated “with considerable input and devised reasonably achievable compliance requirements.”
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CSAPR Supporters Oppose Industry Bid To Delay Suit
Aug 16, 2017 | Inside EPA
Groups that are defending EPA's updated Cross-State Air Pollution Rule (CSAPR) emissions trading rule are opposing power industry efforts to postpone briefing in litigation over the rule by four months, charging that industry is effectively seeking to stay the litigation even though deadlines for such motions have long passed.
Though industry's motion “is nominally styled as a request to extend briefing deadlines, Movants' rationale makes clear that the motion is in reality an attempt to 'stay' this litigation,” environmental groups including Sierra Club and Earthjustice, as well as the State of Delaware, argue in their Aug. 16 filing.
The U.S. Court of Appeals for the District of Columbia Circuit has already suspended briefing in the case, State of Wisconsin, et al. v. EPA, so the litigants are now arguing about how the court should proceed if and when it resumes briefing.
Utility industry groups asked for a delay in order to allow EPA to decide on their administrative petitions for reconsideration of the 2016 CSAPR update. The rule tightens state emissions caps in order to help states meet EPA's 2008 ozone national ambient air quality standard (NAAQS) of 75 parts per billion (ppb), tougher than the 1997 NAAQS expressed as 84 ppb that the original 2011 CSAPR rule was designed to meet.
Industry groups and states opposed to the rule say it is needlessly stringent.
EPA says it does not oppose a briefing postponement, but opposes industry's request that the court force the agency to provide status updates on its responses to the reconsideration petitions.
But environmentalists argue that industry's motion to postpone briefing is untimely and fails to meet legal requirements. Procedural motion deadlines in the suit have long passed and industry cannot show “good cause” or “extraordinarily compelling reasons” that would be legally required to postpone briefing, environmentalists say, noting that petitions for administrative reconsideration were pending when industry provided input on the original briefing schedule, under which briefing was to begin Aug. 21.
If the court grants industry's request, industry and state petitioners opposed to the CSAPR update will instead file opening briefs Dec. 19.
If the court grants this request, environmental groups ask their issues be severed and briefed on a faster schedule. The groups seek to defend CSAPR from industry attacks, but also to strengthen it.
https://insideepa.com/daily-feed/csapr-supporters-oppose-industry-bid-delay-suit
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Practitioner Insights: Environmental Fraud—New or Not?
Aug 17, 2017 | BNA Daily Environment Report
By Douglas Hileman,
“Fraud” is a term typically associated with Bernie Madoff, Ponzi schemes, and other situations where perpetrators have achieved financial gain. But fraud in the environmental area hasn't captured recent headlines until Volkswagen was found to have installed emissions cheating software in their diesel models, a decision that has cost VW more than $20 billion to date. One positive aspect of the VW scandal may be raised awareness of environmental fraud, and for environmental professionals and their stakeholders to take action. This article examines fraud concepts, how environmental fraud can occur, and steps to reduce the likelihood and impact of environmental fraud.
Concepts
Fraud is any intentional misrepresentation or deceit (by commission or omission) with the intent of achieving unfair or unlawful gain at the expense of another party. In 1973, sociologist-criminologist Donald Cressey published a hypothesis about what drives people to violate trust and commit fraud. His hypothesis was three elements must be presented for fraud to occur: pressure (or incentive), rationalization, and opportunity. The “Cressey Fraud Triangle” has become the standard for considering and analyzing fraud.
Whether an act or omission, in fact, is fraud is determined by the judicial or other adjudicative system. Fraudulent activities pose risks to an organization's financial position, operations, compliance, or reputation.
Pressure
The pressure or motivation often is financial. People may be motivated to display signs of wealth, such as expensive cars or extravagant vacations. Other financial drivers may be less visible, such as a gambling addiction or medical bills. Money is certainly involved in environmental management. Transporters who accepted hazardous waste (and payment), accumulated or dumped it, and produced paperwork indicating proper disposal committed fraud. Financially motivated fraud was the driver for many of the environmental legacies we are still cleaning up today.
The pressure doesn't have to be financial. An individual could feel peer pressure to obtain a promotion or professional accolades. The pressure may not even be personal. A manager at a marginally profitable facility could feel pressure to divert waste from proper (and expensive) disposal facilities, or shut off pollution-control equipment to reduce costs and keep staff employed. An individual could falsify records to avoid attention from regulators or to pass an audit.
Rationalization
Rationalization is the justification for the fraudulent activity. “Everybody does it” or “I don't get paid what I deserve” or “it's not that big of a deal’ are common rationalizations.
Opportunity
The third element necessary for environmental fraud to occur requires the most experience in environmental compliance, operations, and reporting: opportunity. Environmental requirements extend to far-flung aspects of an organization, and the opportunity for fraudulent activities extends just as far.
Preventive controls can reduce the likelihood of fraudulent activities. Preventive controls include documented policies and procedures, segregation of duties (tasks and approvals are done by different people), protection of assets, avoiding related-party transactions, and appropriate oversight.
Detective controls can help identify activities that could suggest that fraud is occurring. Detective controls include audits and data analytics. Compliance, contracts, and external reporting are among the areas that pose opportunities for fraudulent activities. Scenarios and examples of controls for each are presented below.
Compliance
Environmental regulations include operational requirements, restrictions on what materials can be purchased and used, how those materials are stored and disposed of, and requirements to conduct inspections, maintain documents and records, and submit routine and non-routine reports.
There can be pressure to ignore or override compliance requirements to increase production, reduce costs, or preserve jobs. Rationalization can include those noted above, or a belief in regulatory overreach. Preventive controls include written procedures, process controls and instrumentation, and standardized reports.
There are still many opportunities to generate misleading or false environmental information. For example, operators may take samples of wastewater only when they know production is slow and the results will meet permit limits. An employee could adjust the time of an incident on a form or electronic log so that it appears the company reported it to authorities within the prescribed time. Supervisors can have employees sign log sheets for training—and not provide the training, to avoid the cost of overtime or curtailing production.
Environmental audits can be a detective control to identify the possibility of fraudulent activities. Consider a scenario where facility employees tell an environmental auditor that they inspect emergency response equipment weekly. An employee provides a stack of completed inspection forms, each showing compliance for all equipment. During the site inspection, however, the auditor observes nearly one-third of the equipment to be obstructed, missing, or nonexistent.
Environmental auditors note a gap and specify corrective actions. They typically do not consider the possibility of fraudulent activities. Financial auditors and internal auditors conduct fraud brainstorming in engagement planning, and perform procedures to look for signs of fraud. Auditors are not expected to prove that fraud occurred, but they should recognize signs of fraudulent activities and escalate identified issues.
In the scenario above, did the employees make a simple mistake, or put a positive spin on their program—or is does it suggest fraudulent activities? A fraud risk assessment could envision other scenarios where records also may have been falsified. For each, the fraud risk assessment team would assign an associated likelihood that the scenario occurred and the potential impact if fraudulent activities occurred. It would be reasonable to identify all the compliance records that the “inspector” is responsible for, and to examine relevant documents and records.
Additional procedures could examine whether there are false statements regarding environmental compliance on reports submitted to regulatory authorities or to customers for government contract work. Data analytics could be used to review payroll, attendance records, and where the employee used their electronic ID for access to determine if the “inspector” was actually present on relevant dates and times. Based on the risk assessment, the audit team could perform additional procedures.
Any effort involving the possible detection of fraudulent activities (such as a well-structured environmental audit) also should anticipate procedures if potential fraudulent activities are encountered. Given the potential enforcement and legal implications, it is essential that counsel be included in these procedures. A good practice is to establish escalation procedures that include criteria for potentially fraudulent activities, notification procedures, and guidelines for what (or whether) additional procedures should be done and by whom.
In the scenario just covered, one approach would be for the environmental auditor to notify the specified parties (including legal), carve out that component of the audit, and proceed with additional procedures only if directed.
Contracts
Contracts between an organization and suppliers could include environmental provisions. The provisions may be general, such as a requirement to be in compliance with applicable regulations. Provisions may be more specific, such as conformance with an industry code of conduct [including environmental provisions] or implementation of an ISO Environmental Management System.
Contracts impose pressure on both sides to achieve the most successful outcome at the lowest cost or obligation. The pressure for a supplier to achieve sales and avoid additional questions from the prospective customer can be incentives to provide a rosy picture of environmental compliance and performance. If the supplier has to answer only yes or no to one question on a supplier checklist, this also provides a simple opportunity to provide the “correct answer.” If the supplier provides false information, they could be subject to local enforcement or exposure by nongovernmental organization. This, in turn, poses risk to customers of disruption in the supply chain or damage to their reputation. The customer can implement preventive controls by more robust pre-engagement due diligence and require the supplier to periodically provide evidence of environmental performance.
The customer can implement detective controls in the form of thoughtful, robust procedures in supplier audits, or independent monitoring of media and industry conferences of suppliers’ environmental performance.
Transactions
Transactions impose pressure on both sides to achieve the greatest possible outcome at the lowest cost. Buyers and sellers could feel obliged to make overly optimistic statements, or omit information that could adversely affect their gain from a transaction. The opportunity for fraudulent activities includes failure to disclose relevant compliance or operational information, or coaching employees to provide information that minimizes risks. The buyer risks completing an acquisition that includes unanticipated constraints in meeting business goals; these can be compounded by fraudulent activities.
There are risks of unanticipated costs to address contingent environmental liabilities. Pre-acquisition due diligence is a preventive control to reduce the likelihood of the Environmental Protection Agency's All Appropriate Inquiry (AAI) Rule has offered a mechanism since 2005 for a standardized baseline to assess a property's environmental conditions and the likelihood of contamination.
The AAI rule does not include risks associated with compliance. A seller may feel pressure to conceal or alter information that indicates noncompliance. Business imperatives may not allow full due diligence, or assessment of environmental risks that could require capital or constrain future operations. In 2008, the EPA published a policy that provides relief from penalties if new owners conduct environmental audits and self-report findings. This provides an incentive to perform an environmental audit, but the EPA policy does not provide relief for achieving compliance. This could involve capital investments—which also could involve curtailing production to install. The buyer faces a related risk if environmental constraints (compliance, availability of resources) prevent changes, or expansion of operations to meet business objectives.
As a preventive control, the buyer can include contractual language that allocates responsibilities for management and costs associated with gaps in environmental compliance. An environmental audit with objectives aligned with the EPA new owner policy and the buyer's objectives would be good practice. A fraud risk assessment during engagement planning—and testing as part of audit procedures—could identify suspicious data or information that deserves additional attention.
If an environmental audit identifies gaps, additional procedures can evaluate whether the gaps arose from information that was false, misleading, misrepresented, or willfully withheld. If this is the case, the buyer may feel more strongly about pursuing available remedies.External Reporting
Regulations have required reporting of compliance-related information for decades. External reporting on environmental matters has expanded dramatically in the past 20 years and shows no signs of slowing down.
The Global Reporting Initiative was founded in 1997 to encourage voluntary reporting of environmental, social, and governance practices and performance. The CDP (formerly Carbon Disclosure Project) encourages voluntary reporting of greenhouse gas emissions, and water use and management. The Sustainability Accounting Standards Board was founded in 2011 with the objective of encouraging more complete disclosures of material ESG issues in the Management Discussion & Analysis section of the Form 10-K, and has developed a framework and guidance to do so using existing SEC law. These are a few of the more prominent frameworks for external reporting of environmental matters.
Generators of this information may feel pressure to “keep up with the competition” with their reports, or to achieve bragging rights about their accomplishments. Individuals can rationalize incomplete or false reporting as puffery or marketing spin. Overall, preventive controls over information compiled for voluntary reporting are not well-developed, so there is ample opportunity to provide false or misleading information.
Audits can be a detective control and can incorporate fraud risk assessment and testing procedures that are standard for Internal Audit. One such audit reviewed the support for content in a company's external environmental report. The company stated the goal of reducing waste generation by 20 percent throughout a five-year period; in the third year, the company was exactly on track to achieve its goal. The audit procedures found significant differences in the progress that individual facilities were making towards the goal. The differences did not appear to correlate with logical factors, such as changes in operations or production levels. The controls were weak for defining “waste,” calculating amounts, and allocating those amounts to a unique reporting period. Some shipments slipped between the cracks and were not counted; there were no instances of double-counting. This could be regarded as a simple gap. The auditor performed additional procedures and learned that achieving this goal counted for a significant portion of the bonus compensation of facility managers. Weak controls would allow facility managers to meet goals by adjusting the schedule for waste pick-up, including delaying shipments beyond dates required by regulation.
This scenario could be an example of facility managers manipulating the company's system for short-term personal gain. This gain came at the expense of other managers who were playing by the rules. The risk also could extend outside the organization, however. Companies submit reports on waste generation to regulatory authorities. If data on public record does not match data in voluntary reports, this puts the organization at risk of attracting unwanted attention from regulators or environmental analysts or NGOs.
Consequences of fraudulent activities in external reporting can extend far beyond this simple scenario. Stakeholders use the content of environmental reports for decisions with financial and reputational impact, such as investment decisions, approval as a vendor, favorable product placement, and industry awards. External reports are publicly available. With the development of more IT tools and online analytics, it's becoming easier to compare statements and data across different external reporting channels. Investors, analysts, NGOs, or competitors can raise uncomfortable questions—or allegations of fraud.
SUMMARY
There are pressures or motivations, justification, and opportunities for individuals to engage in fraudulent activities. The high-profile Volkswagen emissions testing scandal, and its $20 billion price tag, has raised the awareness of environmental fraud. Stakeholders’ use of environmental data and information has become more substantial, raising the impact of false or misleading information. The internet and analytical tools have made discrepancies easier to identify. Social media has accelerated and amplified the potential impact of discrepancies, and allegations of fraud.
Companies should improve preventive controls to reduce the likelihood of fraudulent activities. They should add fraud practices (standard in financial and Internal Audit) to environmental audits, to improve detection of possible fraudulent activities, and to reduce the impact of those that occur.
Area of Potential Environmental Fraud
Potential Consequences
Preventive Control
Detective Control
Compliance
Regulatory enforcement
Robust policies, procedures
Environmental Audit
Contracts
Inability to meet goals from transactions
Strong contractual provisions
Environmental Audit
External Reporting
Unwanted attention from NGOs
Strong internal controls
Environmental Audit
Douglas Hileman, FSA, CRMA, CPEA, P.E., leads a consultancy that focuses on nonfinancial reporting, risk management, and auditing. He has 40 years of experience, including in-house operations and compliance, environmental auditing, Internal Audit, and external assurance.
http://news.bna.com/deln/DELNWB/split_display.adp?fedfid=119020609&vname=dennotallissues&fn=119020609&jd=119020609
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Climate Lessons from California
Aug 16, 2017 | The New York Times
By Noah S. Diffenbaugh
Stanford, Calif. — California faces serious risks from climate change. Some are already being felt, like the severe heat this summer and recent episodes of extremely low snowpack in the mountains, which the state depends on for much of its water. Those are among the key messages in a new climate science report now under review in the White House. The good news is that California has been working hard to catch up with the climate change that has already happened, and to get ahead of what is still to come.
The past five years have painted a clear picture of what is in store for California, according to numerous scientific studies that underpin the new assessment: Rising temperatures will bring more frequent and severe hot spells, intensifying heat stress; more precipitation will fall as rain rather than snow, increasing storm water runoff; snow that does fall will melt earlier in the year, leaving less for the warm, dry season; and more moisture will be drawn out of soils and vegetation, increasing stress on crops and ecosystems. All of this will lead to more frequent and severe water deficits, punctuated by wet periods with increasing flood risk.
Add rising sea levels, more extensive flooding during storm surges and the acidification of the coastal ocean, and California faces a phalanx of climate-related dangers to human health, agriculture, industry, economic productivity, and terrestrial and marine ecosystems.
As the new report makes clear, California is not the only state facing such risks. However, California has been particularly ambitious in its efforts to reduce greenhouse gas emissions and to build resilience in the face of climate change uncertainty. The state’s hard work over the past two decades has yielded several lessons for cities, states and countries that face intensifying climate-related stresses.Continue reading the main story
The first is that it is possible to reduce greenhouse gas emissions while also enjoying a thriving economy. Since 2001, California’s economy has grown, while its greenhouse gas emissions have fallen. The state recently renewed its landmark cap-and-trade program, which limits total statewide emissions while allowing a marketplace to determine the price polluters must pay. The goal is to reduce greenhouse gas emissions to 40 percent below 1990 levels by 2030.
This goal is ambitious and provides a powerful example for those seeking to simultaneously create jobs, stimulate innovation and reduce emissions. But the reduction still won’t be enough to stabilize the climate. That will require bringing global greenhouse gas emissions effectively down to zero, so still greater reductions will be needed to meet the United Nations targets.
The second lesson is that adapting to climate change requires understanding how the climate is changing. California has mandated regular scientific assessments of historical changes and possible future trajectories. This scientific process has yielded deep insights about the nature of what’s happening in California. And those insights have provided a foundation for decision making, like incorporating trends in temperature, snowpack and runoff into managing the state’s crucial groundwater reserves, and the planning and operation of its infrastructure.
In contrast to the obfuscation and denial about climate science by the Trump administration and much of the Republican congressional caucus, California has invested heavily in understanding climate change and in finding “climate-smart” solutions that can create jobs, improve energy efficiency and decrease emissions, while also building resilience to the climate change that has happened and to a range of possible future outcomes.
The third lesson is that, despite all of the progress, we need to work harder to ensure equity and justice for all residents in the face of a changing climate. It is well documented that poverty increases vulnerability to climate-related stresses. For example, during severe heat events, those who cannot afford air-conditioning or who must labor outdoors are considerably more vulnerable than those who have access to indoor air-conditioning. Likewise, during the recent drought, thousands of Californians suffered without running water for months, highlighting the severe inequality and associated vulnerability in the state. The government has sharpened its focus on ensuring that revenues from the cap-and-trade program benefit disadvantaged communities, but environmental justice remains a critical concern.
The United States recently officially informed the United Nations that it plans to withdraw from the Paris climate agreement, as President Trump vowed to do. His rejection of climate science and the international community’s efforts to address the intensifying risks of global warming stands in stark contrast to the extensive scientific evidence that climate change is now being felt across America.
In response to President Trump’s abdication of international climate leadership, many states, cities and corporations are searching for ways to fill the void. California offers lessons of what has worked, and what is still left to be done.
https://www.nytimes.com/2017/08/17/opinion/california-climate-snow-heat-trump.html?_r=0
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