Preview Newsletter
AM ACC 12/28/2017
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(ACC Mentioned) The Year in Food Policy
Dec 28, 2017 | Civil Eats
By Twilight Greenaway
It was a tumultuous year for food policy in the United States. -
(ACC Mentioned) US Chemical Output Up in November on Recovery From Hurricanes
Dec 28, 2017 | Zacks
U.S. chemical production increased in November as the industry continued to recover from the damaging effects of hurricanes – according to the latest monthly report from the American Chemistry Council ("ACC"). -
Amid Rollbacks, Replacement Realities in EPA's Future
Dec 28, 2017 | BNA Daily Environment Report
By Abby Smith and Amena H. Saiyid
Scott Pruitt has said “no” to EPA policies for much of his public life, but in 2018 the EPA administrator will have to say “yes” and put on the table replacements to the Obama-era policies he's vowed to kill. -
(ACC Mentioned) EPA, Chemical Makers Lock Legal Horns With Health, Labor Groups
Dec 28, 2017 | BNA Daily Environment Report
By Pat Rizzuto
Upcoming court cases promise to cut to the heart of a recently amended chemical oversight law and to related programs that the EPA implements. -
EPA Sends TSCA Fee Rule for White House Review
Dec 27, 2017 | Inside EPA
EPA has sent for White House review a proposed rule that would allow the agency to collect industry fees to support implementation of the recently revised Toxic Substances Control Act (TSCA), a measure industry observers have said is necessary to ensure timely chemical reviews... -
EPA Sends Proposed Rule Establishing TSCA Fees to OMB for Review
Dec 27, 2017 | National Law Review
By Lynn L. Bergeson
On December 22, 2017, the U.S. Environmental Protection Agency (EPA) sent to the Office of Management and Budget (OMB) a proposed rule establishing fees on certain submissions under amended Toxic Substances Control Act (TSCA) Sections 4, 5, and 6 -
Court Orders EPA to Take Quick Action on Lead Paint
Dec 27, 2017 | The Hill - E2 Wire
By Timothy Cama
A federal appeals court is ordering the Environmental Protection Agency (EPA) to take action within 90 days to revise standards meant to protect children from lead-based paint. -
Appeals Court Orders E.P.A. to Update Lead Paint Rules, Quickly
Dec 27, 2017 | New York Times
By Lisa Friedman
A federal appeals court on Wednesday ordered the Environmental Protection Agency to revise its nearly 17-year-old standard for dangerous levels of lead in paint and dust within one year, a rare legal move that amounts to a sharp rebuff of President Trump... -
(ACC Mentioned) Investments in This One Environmental Toxin Are Through the Roof
Dec 28, 2017 | Mind Body Green
By Emma Loewe
Plastic is one of the most ubiquitous and dangerous pollutants out there. The material is energy-intensive to create, and it persists for centuries, leaching harmful chemicals like BPA and phthalates into the environment—and our bodies. -
A More Restrained U.S. Oil Industry Among Energy Predictions for 2018
Dec 27, 2017 | Houston Chronicle
By Collin Eaton
U.S. shale drillers appear to have abandoned risky financial strategies that exacerbated the dot-com meltdown and that made the recent oil bust far more painful for Houston companies and their employees. -
Pennsylvania Congressman Requests Risk Assessment for ME2 Pipeline
Dec 27, 2017 | Natural Gas Intelligence
By Jamison Cocklin
Pennsylvania Rep. Patrick Meehan has asked Gov. Tom Wolf’s administration to back a “risk assessment” for the Mariner East (ME) 2 pipeline to help the public better understand potential hazards associated with the natural gas liquids project. -
Point Thomson Expansion Seen Boosting Prospects for Alaska LNG Project
Dec 27, 2017 | Natural Gas Intelligence
By Carolyn Davis
ExxonMobil Corp.’s plan to engineer an expansion of the Point Thomson natural gas project on the North Slope has been approved by Alaska, considered a key step as a long-awaited gas export project takes shape. -
The Oil and Gas Sector Is Changing — and So Is Geopolitics
Dec 28, 2017 | New York Times
By Robert D. Kaplan
Geopolitics is power played out against geographical settings. In this battle, ideas and ideologies matter. But it is often the most technical and complex factors — the ones we least understand and therefore discount, according to Columbia University’s Robert Jervis... -
(ACC Mentioned) Industry Backs EPA Bid to Dismiss RMP Delay Case
Dec 27, 2017 | Inside EPA
Chemical and other industry groups are backing EPA’s claims that environmentalists lack standing to challenge the Trump administration's nearly two-year delay of an Obama-era facility accident prevention rule, arguing there is no injury... -
Washington’s Carbon Overreach
Dec 27, 2017 | Wall Street Journal
By Editorial Board
Washington Governor Jay Inslee calls climate change an “existential threat,” and he has channeled President Obama in using executive powers to impose his policy response. But like Mr. Obama he suffered a major blow this month when a Washington court ruled...
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(ACC Mentioned) The Year in Food Policy
Dec 28, 2017 | Civil Eats
By Twilight Greenaway
It was a tumultuous year for food policy in the United States.
The year started off with several efforts by the Obama Administration to safeguard efforts at wide-scale food system change—such as the long-awaited formalization of new animal welfare rules in organics and the so-called “GIPSA rule,” which promised to level the playing field for small-scale meat producers in a consolidated marketplace. But once Donald Trump took office, things began to shift rapidly.
Here’s a rundown of several of the most important food policy changes that took place in 2017 (links to Civil Eats stories are in bold):
Changing Face of the USDA
Just one day before his inauguration, Trump named former Georgia Governor Sonny Perdue as the nation’s new secretary of agriculture.
At the time, food systems experts from around the nation expressed concern about Perdue’s involvement with the growth of large poultry facilities in Georgia and his overly religious approach to government, pointing to the fact that he once prayed for rain in response to drought in the state. Many also worried that Perdue and Trump’s shared anti-regulatory stance would be bad for farmers and consumers.
Then, in March, Trump proposed $21 million in cuts to the U.S. Department of Agriculture’s (USDA) budget—and some farmers protested cuts to local conservation offices.
A week after being sworn in, Perdue announced—during a visit to an elementary school in Leesburg, Virginia—that the agency would “make school meals great again” by getting rid of Obama-era school lunch standards requiring that schools serve more whole grains and less sodium, among other changes.
It soon became clear that the USDA itself was changing radically. In September, Politico reviewed the resumes of dozens of Trump agricultural appointees, and found that the president had placed former campaign workers—many of whom had no experience with agriculture, and had worked as truckers, cabana attendants, and landscapers—in the agency.
That month, Trump also nominated Sam Clovis, a birther, conservative talk-show host, and climate-change denier with no science background, to the role of chief scientist at the USDA. (Clovis withdrew his nomination in November after being linked to the current Russia investigation.)
In October, Civil Eats published a wide-ranging look at the changes Perdue had made to the USDA, including a dramatic reorganization.
In November, Vanity Fair published a detailed account of story of a group of veteran USDA scientists who had either left or been forced out of the agency over the course of the transition.
Farm Bill and Other Farm Legislation
For all the reasons above and more, concern is mounting about the 2018 Farm Bill, which has been taking shape since Congress began discussions last February.
In May, as the agriculture committees in the House and Senate began another round of farm bill negotiations, grassroots leaders gathered to discuss the people, places, and issues that have too often been shut out of funding. Some food-reform advocates have also been pushing to incentivize farms to improve their soil in the face of climate change by linking it to crop insurance, which made up a significant portion of the last farm bill.
The Supplemental Nutrition Assistance Program (SNAP), otherwise known as food stamps, and other nutrition programs account for a significant portion of the farm bill (around 80 percent of the initial projected spending in 2014). It’s also always one of the most hotly debated pieces of the legislation. This year, the House agriculture committee considered cutting soda and candy from the SNAP program, but the sugar industry invested heavily to stop it from happening.
Despite the popularity of farmers’ markets, it’s also looking unlikely that the national Farmer Markets Promotion Program (FMPP) will be prioritized in the coming bill.
In August, Oregon Representative Earl Blumenauer announced his alternative farm bill—a set of proposed legislation that he has been working with farmers, food advocates, and public health professionals to shape. The suggestions are geared toward strengthening efforts to produce healthy food, rather than animal feed and fuel.
Want to know more about how the farm bill shapes the food we eat? Civil Eats recently published an explainer from farm economist John Ikerd on Twinkies, carrots, and farm policy reality. And here’s an interview with Chellie Pingree about her plan to build a “farm bill for all.”
Organic Label
This has been a roller coaster of a year for the organic industry. As mentioned above, it started off strong with the supposed advancement of new standards for humane animal husbandry that had been long in the works. But with Brian Klippenstein—who had previously been known for his work vilifying the Humane Society of the United States with the group Protect the Harvest—leading the transition process at the USDA and Perdue at the helm, it probably didn’t surprise many when the implementation of the new rules were delayed, re-opened up for comment, and then delayed again.
The lack of federal movement on animal welfare did prompt some states to take things into their own hands by banning in-state sales of products from confined calves, hens, and pigs. And in September, the Organic Trade Association filed suit against the agency for the delay. Then, in December, the agency killed the rules and removed them from the federal registry, despite the fact that only 28 of the 47,000 comments the agency received about the issue opposed the new rules.
Big questions about the quality of organic foods from overseas also reared their head this year in a big way. Major news stories about the veracity of organic milk and organic eggs fomented doubt among many. And a year-long investigation by the Inspector General revealed weaknesses in the oversight of USDA organic program.
The decision, in November, by the National Organic Standards Board (NOSB) to continue certifying some hydroponic and aquaponics operations as organic was also highly controversial among some groups. And while some claim that water-based systems can have many of the same nutritional and environmental benefits as soil-based ones, critics of the move disagree. Not only do they feel that soil is key to organic farming, but they say the move will mainly benefit very large growerslike Driscoll’s.
All these questions have fed into a larger discussion by a number of farmers and sustainable food companies about the value of advancing a “regenerative agriculture” label. But large questions remain about whether such a label would complement or compete with the current organic label—ultimately sowing market confusion.
Meanwhile, some in the industry are pushing for an organic checkoff program, which would essentially aggregate funds from around the industry for promotion and research. (But not all farmers are on board.)
Maine representative Chellie Pingree has also proposed a bipartisan bill that would double the amount the government spends on organic research via the USDA’s Organic Agriculture Research and Extension Initiative (OREI). Called the Organic Agriculture Research Act of 2017, it appears to be moving forward and gaining momentum. And the lawmakers behind the newly introduced Organic Farming Access Act hope to use organic ag as a rural development tool (Look out for a Civil Eats story to come!)
Pesticides and Clean Water
The confirmation of Scott Pruitt as head of the Environmental Protection Agency (EPA) in February signaled a major shift in the agency’s approach to pesticides. Pruitt—the former Attorney General of Oklahoma—is a diehard opponent of the agency’s regulatory efforts, having sued the EPA more than a dozen times during the Obama administration.
In addition to beginning the agency’s move away from fighting—or even acknowledging—climate change, the agency rejected its own science and reversed a long-in-the-works ban on chlorpyrifos in March. The EPA had proposed banning the pesticide back in 2015, due to its association with developmental disabilities in children. In June, it came out that Pruitt had met with the CEO of Dow Chemical just three weeks before the decision.
We reported that California lawmakers had the opportunity to reverse the ban, and the state has included the pesticide on its Prop. 65 list of substances known to cause cancer, birth defects and reproductive harm. And while this move strengthens the case for a wider chlorpyrifos ban, so far it seems to support another narrative of California as a rare state willing to defy national trends.
Chlorpyrifos is just one part of a larger effort to roll back regulations on a myriad of toxic chemicals. The appointment of a former an executive at the American Chemistry Council signals what the New York Times calls an “abrupt new direction on legacy chemicals.”
And although EPA considered banning the spraying of the herbicide dicamba after it led to widespread crop damage in 17 states, the agency announced in October that it would allow its useto continue with some restrictions.
Pruitt’s EPA is also in the middle of a four-year assessment of neonicotinoid pesticides and, despite finding that they pose serious risks to pollinators as well as birds and mammals, it’s not clear whether the agency will move to control their use.
Meanwhile the agency also came out saying that glyphosate, the nation’s most-used weed killer, “likely doesn’t cause cancer,” contradicting a 2016 statement by the World Health Organization’s International Agency for Research on Cancer. But officials in the state of California appear to disagree; the state listed glyphosate as carcinogenic in June and Monsanto, the company that makes it, is suing the state. And the E.U. just approved the use of glyphosate for five years—instead of the 15-year extension that Monsanto lobbied for—a timeline that anti-glyphosate advocates hope will give them time to find less-harmful alternatives.
In May, the President signed an executive order to rewrite (i.e., begin roll back) the “Waters of the United States” (WOTUS) rule, making good on his promise to industrial livestock producers on the campaign trail not to regulate the waste from concentrated animal feeding operations (CAFOs). The EPA also began working to rescind the rule in June.
Pruitt has also been said to be “carrying out his agenda in secret” by the New York Times; he was found just this month to have hired a Virginia-based public relations firm known for working with the Republican Party to track press activity as it relates to pesticides, climate changes, and other key issues. The contract ended after an exposé in Mother Jones, however.
Immigration
Americans have yet to see a border wall, but the Trump administration’s crackdown on undocumented residents had a big impact on the food and farm world in 2017.
Farmers across the country reported labor shortages that have cost millions and some experts point to the likelihood that the H2A guest worker program will grow in the coming years, creating a climate that would be rife with farmworker exploitation.
A group of Democratic senators—including California’s Kamala Harris and Dianne Feinstein and Patrick Leahy of Vermont—introduced a bill that would create a Blue Card designed to protect farmworkers from deportation in May. But the political will to move it forward appears to be lacking.
Many young food and farm workers also have been living in fear of losing their livelihood as the administration moved to roll-back the Deferred Action for Childhood Arrivals (DACA) program.
Other parts of the food system are also getting hit hard. One immigration raid at a Chicago bakery (for a major supplier of McDonalds’ hamburger buns) lost 800 employees, while another group of undocumented bakery workers in New York have been holding public demonstrations against their employer for preemptively firing them, prompting important questions about what responsibility employers have to their workers in this new era.
Healthcare
We have yet to see exactly how the recently-passed GOP tax bill will ultimately impact the Affordable Care Act, but the prognosis is not good.
Earlier this year, when the debate around healthcare was actively raging, we looked at how farmers had benefited from the ACA, and how they might fare if their access to health care was taken away.
Although it was much less discussed, the Obama-era approach to healthcare also played a significant role in feeding the hungry around the country in recent years, prompting the question: Will more people go hungry if we lose the Affordable Care Act?
According to Mother Jones, the recently- passed tax bill could cause farmers relying on Obamacare to pay more for health insurance.
Climate Change
In June, Trump pulled the U.S. from the Paris Climate Accord, refusing to meet the new emissions standards enacted by former President Obama.Young Farmers
In March, young farmer advocates also re-introduced the Young Farmer Success Act, which offers a path to student-loan forgiveness for farmers who commit to a decade in the profession. The bill would amend the Department of Education’s Public Service Loan Forgiveness Program as part of a re-authorization of the Higher Education Act.
School Lunch
In late November, five months after Perdue initially promised to walk back several Obama-era changes to school meals, the USDA released an interim rule allowing schools to serve flavored 1-percent milk and get a state exemption to serve bread, pasta, tortillas, etc. that are not “whole-grain rich” (i.e., contain at least 50 percent whole grains) through the 2018-2019 school year. It also puts a stop to efforts to reduce sodium in school breakfasts and lunches.
NAFTA
Despite Trump’s copious campaign promises about revamping NAFTA to benefit working Americans, the administration’s decision to step away from this year’s negotiations have left many family farmers in a state of limbo.
As a number of experts have pointed out, a trade war with Mexico would leave growers, consumers, and restaurants in the lurch. Currently, the focus is on increasing exports to solve the ongoing farm crisis. But some see that approach as “dangerously incomplete.”
More State- and County-level Policy Changes
‘Food Freedom’ Advocates Claim Victory in Maine
The state is the latest to pass a food sovereignty law that allows consumers to buy food directly from farmers. (And our follow-up piece: Maine’s New Food Sovereignty Law Gets a Last-Minute Overhaul.)A New Law Would Legalize Selling Home-Cooked Food in California
California is trying to legalize small-scale sale of food made by home cooks. But will it allow tech startups to treat home cooks like Uber drivers? (Relatedly, see our in-depth look at tech and food: Technology Could Make or Break the Food Workforce of the Future.)NC GOP Protects Factory Farms’ Right to Pollute
After the state’s new Democratic governor vetoed a bill to limit plaintiff compensation in CAFO nuisance lawsuits, the GOP-controlled legislature overturned the veto in short order.From Coal to Kale: Saving Rural Economies with Local Food
Many counties are switching to oil and gas production as coal’s fortunes wane, but farms, food hubs, and community kitchens may keep rural areas alive.https://civileats.com/2017/12/28/the-year-in-food-policy-2017/
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(ACC Mentioned) US Chemical Output Up in November on Recovery From Hurricanes
Dec 28, 2017 | Zacks
U.S. chemical production increased in November as the industry continued to recover from the damaging effects of hurricanes – according to the latest monthly report from the American Chemistry Council ("ACC").
The chemical industry trade group said that the U.S. Chemical Production Regional Index ("CPRI") went up 1.2% in November on a monthly comparison basis. This follows a 0.5% rise a month ago and a 1.2% decline in September. The U.S. CPRI, which is measured using a three-month moving average, was created to track chemical production in seven regions nationwide.
Per the ACC, chemical production rose across all regions in the reported month. The increase reflects sustained recovery from the unfavorable impacts of disruptions from hurricanes and a rebound in manufacturing activity.
Hurricane Harvey weighed on U.S. chemical production during the third quarter. A sizable portion of total U.S. production capacity was hit by the storm. Harvey led to the shutdown of several chemical plants along the Gulf Coast – the epicenter of the U.S. specialty chemicals and petrochemicals industry. A number of major chemical producers had to shutter or cut back ethylene production, leading to reduced supply of this major chemical in the third quarter.
Encouraging November Readings
The November readings showed a rise in chemical output across the board. Production across Gulf Coast, Midwest and Ohio Valley went up 2.2%, 1.2% and 2.1%, respectively, while both Mid-Atlantic and Northeast saw a 0.9% increase. Output rose 0.8% in West Coast while Southeast saw a 1.4% gain.
By segments, chemical production was mixed in November. Gains across pesticides, fertilizers, coatings, adhesives, organic chemicals, other specialty chemicals, synthetic rubber, consumer products and pharmaceuticals were neutralized by lower production in industrial gases, manufactured fibers, dyes and pigments, plastic resins and chlor-alkali.
Per the ACC, activity for the U.S. manufacturing sector – the largest consumer of chemical products – rose 0.6% in November. The sector is a major driver for the chemical industry which touches around 96% of manufactured goods.
Overall chemical production also went up 2.4% on a year over year basis in November with all regions scoring gains.
U.S. Chemical Industry Set to Ride Growth Wave
The U.S. Chemical Industry is set for solid growth in 2018. The ACC envisions national chemical production (excluding pharmaceuticals) to rise 3.7% in 2018, further accelerating to a 3.9% growth in 2019. The growth is expected to be spurred by higher demand across light vehicles and housing markets, capital investments and improved export markets.
The trade group also expects basic chemicals production to expand 4.7% in 2018 and further gain steam with a 5.2% rise in 2019 on the heels of new capacity additions. Major export markets such as Latin America and Asia are expected to play a significant role in production growth.
The United States remains an attractive investment destination for chemical investment and domestic chemical makers continue to enjoy the advantage of access to abundant and cheaper feedstocks and energy. This is driving investment in chemical production projects.
Per the ACC, roughly 320 chemical projects have been already announced worth more than $185 billion, 62% of which is foreign direct investment. Moreover, roughly 65% of the chemical investment announced since 2010 are complete or under construction. New capacity is expected to provide a boost to chemical production as these investments come on stream.
The ACC also expects chemical industry capital spending to rise 6.3% in 2018 and 6.8% in 2019 and eventually reach $48 billion by 2022.
Moreover, the ACC sees improving export markets to contribute to solid growth of the domestic chemical industry. Strengthening export markets and increasing capital spending are driving chemical demand across key end-use markets such as light vehicles and housing.
Chemical Stocks to Consider
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Kronos has an expected long-term earnings growth of 5%. The stock has gained around 119% year to date.
Huntsman has an expected long-term earnings growth of 8%. The stock has gained around 75% year to date.
Koppers has an expected long-term earnings growth of 18%. The stock has gained around 26% year to date.
FMC has an expected long-term earnings growth of 11.3%. The stock has gained around 68% year to date.
Ingevity has an expected long-term earnings growth of 12%. The stock has gained around 30% year to date.
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Amid Rollbacks, Replacement Realities in EPA's Future
Dec 28, 2017 | BNA Daily Environment Report
By Abby Smith and Amena H. Saiyid
Scott Pruitt has said “no” to EPA policies for much of his public life, but in 2018 the EPA administrator will have to say “yes” and put on the table replacements to the Obama-era policies he's vowed to kill.
How Pruitt and his team proceed will depend on a combination of factors, including whether the Environmental Protection Agency can defend its regulatory rollbacks in court and—particularly in the climate policy arena—whether officials decide to pursue replacements at all.
“There's a lot of blocking and tackling still left to be done in terms of rules anticipated,” Dan Byers, vice president for policy at the U.S. Chamber of Commerce's Global Energy Institute, told Bloomberg Environment.
In his first year as EPA administrator after serving as Oklahoma's attorney general, Pruitt moved to roll back several Obama-era climate, air, and water rules. The agency proposed in June to rescind the 2015 clean water rule, also known as the Waters of the U.S. (WOTUS) rule, and says it plans to propose a replacement in 2018.
In October, it called for repeal of the Obama administration's carbon controls for existing power plants, or the Clean Power Plan.
The agency in March reopened the midterm review of greenhouse gas standards for passenger cars. It also has initiated reconsideration of methane limits for new oil and gas drilling operations; wastewater limits for power plants; coal ash controls; methane limits for solid waste landfills; and portions of greenhouse gas standards for trucks.
“This is not an administration that is trying to hide the ball on what it's hoping to accomplish,” Megan Berge, an attorney with Baker Botts LLP in Washington who represents several utility industry clients, told Bloomberg Environment.
‘They Must Explain Themselves’
Byers said the regulatory process likely will “begin to accelerate” in the coming year, particularly as the Senate confirms more political appointees for the agency.
Bill Wehrum is now in place as head of the EPA's air office, a post he held in acting capacity for two years during the Bush administration. Susan Bodine, the EPA's new enforcement chief, was confirmed Dec. 8 by the Senate. On Dec. 14 David Ross as confirmed to head the water office and Matt Leopold was confirmed as general counsel.
The agency likely faces many legal and regulatory quagmires ahead and will be challenged to defend its actions. The EPA will face the task of crafting replacement policies while defending its removal of Obama-era regulations.
“The lesson of many past cases is that agencies are permitted to change direction, but they must explain themselves,” Tom Lorenzen, an attorney in the environment and natural resources group of Crowell and Moring LLP, told Bloomberg Environment. The EPA will have to work to “square its new positions with the records developed by the Obama EPA.”
In 2017, the courts—at the request of the EPA—paused many cases challenging Obama-era regulations while the agency began reconsideration of those rules. It's unclear whether those cases will remain “static” or whether the agency will be able to resolve some issues at the center of litigation, Berge said.
If EPA shows tangible progress toward replacing the regulations, the courts likely will keep those cases on ice, industry groups say.
Unlimited Time?
But not all judges may be willing to give the EPA unlimited time, Bethany Davis Noll, litigation director at New York University's Institute for Policy Integrity, told Bloomberg Environment.
In July, environmental groups and Democratic-led states scored a victory when the U.S. Court of Appeals for the District of Columbia Circuit slapped down the EPA's attempt to administratively pause Obama-era methane limits for new oil and gas drilling operations while it reconsiders the regulation. Other EPA attempts to delay rules—including landfill methane limits and wastewater controls for power plants—are still under court scrutiny.
The court could strike down other EPA delays, signaling judges are paying close attention to whether the EPA's actions are within legal bounds.
“These delays are going to end up hurting them in the eventual repeals,” Davis Noll said.
The legal bar to repeal regulations is already “really high,” she said. “If they try a slipshod effort, they are not going to succeed.”
The EPA in April said it would review the data it used in 2015 to set wastewater effluent limits for operating scrubbers and transporting bottom ash at power plants.
Those effluent limits were based on an analysis of data that power companies provided to the EPA. These limits required the use of best available technology, as required under the Clean Water Act, according to Ellen Gilinsky, a consultant who served as a senior policy adviser to the EPA Office of Water under the Obama administration.
“I'm skeptical a different conclusion will be reached by doing another data collection,” unless Pruitt decides to choose limits that are based on technology that is “available” and in use by power companies instead of “best available technology” that the statute demands, she said.
Such a move would undoubtedly be challenged in court, she said.
‘Tangled Regulatory Process’
The regulatory process holds challenges of its own, particularly for the EPA's two most high-profile rollbacks.
Pruitt told House lawmakers Dec. 7 the agency aims to propose a replacement to the WOTUS rule in April, but it's unclear whether the EPA could finalize a replacement rule by the end of the year.
Complicating the EPA's efforts is a pending Supreme Court case that could determine whether cases on the merits of the WOTUS rule should be heard in federal appellate or in district court. The U.S. Court of Appeals for the Sixth Circuit placed the WOTUS rule on hold nationwide; separately, a federal district court in North Dakota put it on hold in 13 states. If the high court decides district courts are the correct venue for the litigation, the nationwide stay would be lifted, and the regulation would go into effect in all but those 13 states.
“The best way to describe it is chaos,” Samuel Brown, a former EPA enforcement attorney, said at a November seminar hosted by the National Association of Clean Water Agencies.
To guard against uncertainty, the EPA and the Army Corps of Engineers in November proposed pushing back the effective date of the WOTUS rule from Aug. 28, 2015, to at least 2020. But environmental groups say that proposal is on shaky legal ground.
“What a tangled regulatory process the EPA has woven,” Jan Goldman-Carter, director of the National Wildlife Federation's wetlands and water resources program, told Bloomberg Environment.
She said the EPA and Army Corps put themselves into a corner by sidestepping the science used to write the 2015 rule. President Donald Trump in a February executive order directed the agencies to consider an opinion from the late Justice Antonin Scalia that would limit the reach of the Clean Water Act.
Scalia held that Clean Water Act jurisdiction should extend over wetlands and streams that depend on the presence of waters that continuously flow to relatively permanent bodies of water “as opposed to ordinarily dry channels through which water occasionally or intermittently flows.”
That means “ephemeral streams” are out, Gilinsky said. She added she fears the rewritten rule will protect fewer waters and wetlands than the current regulations cover.
Some groups that support a WOTUS rewrite also question the EPA's consideration of Scalia's opinion.
“I don't think that's the right legal posture to take,” Amanda Aspatore, vice president of the National Mining Association's water law and policy division, said at the November seminar.
Instead, the agencies should look to all Supreme Court decisions dealing with the scope of the water law, said Aspatore, whose group opposes the WOTUS rule.
To Replace or Not to Replace?
The EPA could face similar challenges as it works to roll back the Clean Power Plan.
The agency is taking input on potential options to replace the power plant rule. Utilities, industry groups such as the Chamber, and some coal groups want a narrow rule that would base standards on reduction measures taken at an individual power plant. The Obama administration's rule had also included measures encouraging shifting generation from coal to natural gas and to renewable energy.
“We think, and we hope EPA thinks” standards should be based on efficiency improvements at power plants, Paul Bailey, head of the American Coalition for Clean Coal Electricity, told Bloomberg Environment. Any replacement regulation should “give states a lot of flexibility in determining what” the standards of performance are “and which plants they would apply to,” he said.
The EPA's Dec. 18 advance notice teed up consideration of those issues, opening the door to a more limited agency role in any potential replacement. But environmental groups predict legal hurdles for any proposed replacement, as well as the EPA's repeal of the Clean Power Plan.
“We're not confident at all that Pruitt's EPA is going to come out with something that achieves anything like the emissions reductions that are needed to comply with the law and get us where we need to be,” Andres Restrepo, a climate and air attorney with the Sierra Club, told Bloomberg Environment. The Sierra Club has received funding from Bloomberg Philanthropies, the charitable organization founded by Michael Bloomberg, the ultimate owner of Bloomberg Environment.
Some conservative opponents of climate regulation still hope Pruitt ultimately will target the EPA's greenhouse gas endangerment finding, which underpins the agency's climate regulations. The EPA in 2009 determined that greenhouse gases pose a danger to public health and the environment and should be regulated under the Clean Air Act.
Pruitt hasn't committed to challenging the finding. But Myron Ebell, director of the Competitive Enterprise Institute's Center for Energy and Environment, predicted the endangerment finding could create roadblocks for the EPA in court as it tries to defend its climate rollbacks.
That could “concentrate” Pruitt's mind, Ebell told Bloomberg Environment. Pruitt “doesn't like to lose. If he starts losing some cases or having to move backward, he'll then have to make a decision to reopen the finding.”
New Initiatives?
Given the EPA's rollback ambitions, state officials, industry groups, and other stakeholders are unsure how any new initiatives or pending rulemakings will fit into the agency's 2018 agenda.
The agency has several regulations in the pipeline that it plans to tackle in the coming years, including:
• a revision of the National Pollutant Discharge Elimination System program tentatively planned for December 2018;
• final water quality criteria for hazardous algae blooms; and
• bans or restrictions on the use of toxic chemicals, such as trichloroethlene and methylene chloride, in various product uses.
The EPA has announced several new efforts as well, such as an agency-wide initiative to address perfluorooctane sulfonate (PFOS) and perfluorooctanoic acid (PFOA) in soil and water and a task force review of the air permitting program New Source Review.State Involvement
State regulators hope the EPA involves states in its process to replace Obama-era policies, as well as in its work on new initiatives, Todd Parfitt, Wyoming's top environment regulator and president of the Environmental Council of States (ECOS) , told Bloomberg Environment. “Having that dialogue and engaging with the states on the different perspectives [and] how those particular programs make sense or fit into each states’ circumstances is going to be key,” Parfitt said.
The dynamic may “lead to EPA being more hands off with the states, but it will also shift more of the workload to the states,” Andrew Sayers-Fay, Alaska's water quality division director, told Bloomberg Environment.
Other state officials, though, are skeptical the EPA will involve them.
“We asked for very early and intentional engagement in replacement rule language,” John Linc Stine, director of the Minnesota Pollution Control Agency and former ECOS president, told Bloomberg Environment. “At this point, it hasn't happened.”
This story is part of a Bloomberg Environment series on issues to look for in 2018. We're publishing these Outlook articles on a wide range of topics throughout December.
http://news.bna.com/deln/DELNWB/split_display.adp?fedfid=125781663&vname=dennotallissues&fn=125781663&jd=125781663
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(ACC Mentioned) EPA, Chemical Makers Lock Legal Horns With Health, Labor Groups
Dec 28, 2017 | BNA Daily Environment Report
By Pat Rizzuto
Upcoming court cases promise to cut to the heart of a recently amended chemical oversight law and to related programs that the EPA implements.
Under the law, the agency must decide whether certain chemicals harm people or the environment. In litigation slated for more action in 2018, a federal court will try to determine whether the agency's discretion in interpreting the law allows it to exclude some chemical uses as it makes those decisions.
A separate federal court will address whether the Environmental Protection Agency has made it too easy for chemical makers to keep information out of the public eye.
Three Rules
Fifteen environmental, health, and labor organizations are challenging three chemical regulations in two federal appeals courts. The rules describe how the EPA is determining the number and safety of chemicals in commerce.
The lawsuits will affect chemical and other manufacturers’ core commercial interests including their trade secrets and ability to sell products, said the American Chemistry Council, U.S. Chamber of Commerce, American Forest & Paper Association, and 11 other trade associations in a petition that led to their intervening in the litigation.
But it also has implications for public health and the environment.
“The EPA's interpretation that it can cherry-pick the uses is inconsistent with the law and could lead the agency to underestimate human health and environmental risks,” Daniel Rosenberg, an attorney with the Natural Resources Defense Council, told Bloomberg Environment. The group is among the 15 groups challenging the rules.
The cases are an important test of the EPA's discretion to interpret the Toxic Substances Control Act amendments of 2016, Lawrence Culleen, a chemicals attorney in the Washington office of Arnold & Porter LLP, told Bloomberg Environment. Culleen works on behalf of companies that track TSCA because they use chemicals, but he does not represent any party in the three cases.
Briefs Coming in January
The three rules that the Safer Chemicals, Healthy Families coalition; Environmental Defense Fund; Alliance of Nurses for Healthy Environments; Cape Fear River Watch; and NRDC are challenging implement essential parts of amended TSCA.
The rules lay out how the EPA will create a master list of chemicals that can legally be made, sold, imported, and distributed, and determine what propriety corporate information must be kept out of the public eye.
The agency is also tasked with deciding which chemicals present few risks and which others must have their related risks further scrutinized.
Briefs will begin to be filed in January.
Conditions of Use
Most attorneys Bloomberg Environment spoke with were circumspect in their remarks, because the legal arguments aren't public. Yet, the attorneys representing industry, environmental, health, and labor agreed with one point Arnold & Porter's Culleen made.
The question of whether the EPA has the discretion to exclude some “conditions of use” from its chemical evaluations is “probably the most important” of the issues raised in two of the three lawsuits, he said.
The first case challenges the EPA's rule describing how it will rank chemicals as high or low priorities for risk evaluation. The second objects to the rule detailing how the agency will evaluate chemical risks.
The EPA declined to comment, citing its policy of not speaking about pending litigation.
Culleen and the other attorneys referred to TSCA's requirement that the EPA consider chemicals’ “conditions of use, ” meaning “circumstances, as determined by the administrator, under which a chemical substance is intended, known, or reasonably foreseen to be manufactured, processed, distributed in commerce, used, or disposed of.”
Industry groups say the statute gives the EPA the discretion to choose which uses it will examine for chemical prioritization and risk evaluation rules.
“If EPA looked at everything, it couldn't get the evaluations done,” Donald Gallo, an attorney with law firm Husch Blackwell LLP, told Bloomberg Environment. “We need to have a reasonable procedure that narrows the scope of how the risk analysis is applied,” said Gallo, who represents the Polyurethane Manufacturers Association, an intervener in all three cases.
The U.S. Court of Appeals for the Ninth Circuit in San Francisco will hear the lawsuits challenging the chemical prioritization and risk evaluation rules.
Trade Secrets
The third rule, which only the Environmental Defense Fund is challenging, describes what chemical makers must—and chemical processors may—do to make sure the chemicals they make or use are listed as active in commerce. Chemicals that aren't on the list cannot be legally made, imported, or processed.
That rule also tells companies what they have to do to justify their requests that the EPA keep certain proprietary information private.
None of the attorneys contacted by Bloomberg Environment would discuss the legal challenges involving confidential business information claims, but court documents show this is an important issue for all parties.
The EDF said the agency's active inventory rule may violate TSCA because it allows companies to claim information confidential without meeting all the law's requirements.
Companies’ confidential information's “substantial value” is being challenged, countered a trade association coalition.
Protecting trade secrets also “is a major factor in promoting innovation and research into new chemicals,” the trade associations said.
How Far in 2018?
Attorneys’ projections varied as to how far the three cases could go in 2018, but most told Bloomberg Environment they don't anticipate rulings until 2019.
The U.S. Court of Appeals for the District of Columbia Circuit will hear the inventory rule challenge.
The chemical prioritization case is (Safer Chemicals Healthy Families v. EPA, 9th Cir., No. 17-72260, 8/11/17).
The risk evaluation case is (Alliance of Nurses for Healthy Env'ts v. EPA, 9th Cir., No. 17-73290, 12/11/17).The TSCA inventory case is (Environmental Defense Fund v. EPA, D.C. Cir., No. 17-1201, 9/1/17).
This story is part of a Bloomberg Environment series on issues to look for in 2018. We're publishing these Outlook articles on a wide range of topics throughout December.
http://news.bna.com/deln/DELNWB/split_display.adp?fedfid=125781666&vname=dennotallissues&fn=125781666&jd=125781666
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EPA Sends TSCA Fee Rule for White House Review
Dec 27, 2017 | Inside EPA
EPA has sent for White House review a proposed rule that would allow the agency to collect industry fees to support implementation of the recently revised Toxic Substances Control Act (TSCA), a measure industry observers have said is necessary to ensure timely chemical reviews in the face of expected budget cuts.
EPA Dec. 22 sent its proposed “Service Fees for the Administration of [TSCA]” rule for White House Office of Management & Budget (OMB) review, a process which takes roughly 90 days. EPA plans to issue the proposed rule in February and to issue a final rule in September, according to OMB’s website.
Section 26(b)(1) of the amended TSCA “authorizes EPA to issue a rule to establish fees to defray a portion of the cost of administering sections 4, 5, and 6, and collecting, processing, reviewing and providing access to and protecting from disclosure as appropriate under section 14 information on chemical substances (including contractor costs incurred by the Agency),” the website says.
Industry officials and other TSCA reform supporters have been awaiting the fees rule; EPA staff have said the measure could help to offset expected EPA funding cuts, which many have warned risk hindering implementation of the revised TSCA.
Despite President Donald Trump's proposed 31 percent cut to the agency's fiscal year 2018 budget, former acting EPA toxics chief Wendy Cleland-Hamnett told a June conference in Washington, DC, that the agency’s TSCA implementation was not likely to be cut in Congress' eventual FY18 appropriations bill, noting that the president’s 2018 budget increases rather than cuts the chemicals program.
Nonetheless, industry attorneys, including Mark Duvall of the law firm Beveridge & Diamond, P.C., have said that issuing a fees rule should be a high priority for EPA in 2018, noting that the revised TSCA allows the agency to collect fees of up to 25 percent of the TSCA program’s resources.
https://insideepa.com/daily-feed/epa-sends-tsca-fee-rule-white-house-review-0
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EPA Sends Proposed Rule Establishing TSCA Fees to OMB for Review
Dec 27, 2017 | National Law Review
By Lynn L. Bergeson
On December 22, 2017, the U.S. Environmental Protection Agency (EPA) sent to the Office of Management and Budget (OMB) a proposed rule establishing fees on certain submissions under amended Toxic Substances Control Act (TSCA) Sections 4, 5, and 6. EPA has indicated that it expects to propose the rule in the early part of the New Year: EPA’s regulatory agenda lists February 2018 for the proposed rule and September 2018 for the final rule.
More information on the TSCA fees rulemaking and requirements is available in our blog item “EPA Hosts August 11, 2016, Public Meeting on Proposed Rule for Revised TSCA Fees,” in our memorandum “TSCA Reform: An Analysis of Key Provisions and Fundamental Shifts in the Amended TSCA,” and in our September 20, 2016, webinar “‘The New TSCA’ Webinar 4: Administration of the Act, Preemption, Fees, and Green Chemistry.”
https://www.natlawreview.com/article/epa-sends-proposed-rule-establishing-tsca-fees-to-omb-review
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Court Orders EPA to Take Quick Action on Lead Paint
Dec 27, 2017 | The Hill - E2 Wire
By Timothy Cama
A federal appeals court is ordering the Environmental Protection Agency (EPA) to take action within 90 days to revise standards meant to protect children from lead-based paint.
The San Francisco-based Court of Appeals for the 9th Circuit ruled Wednesday that the EPA has taken too long to act on a 2009 petition from health and environmental groups who want the agency to further restrict lead paint limitations.
The judges issued a “writ of mandamus,” a rare edict from a federal court that requires a litigant to take action.
The EPA told the court that it would take another six years to develop a lead paint rule, which the judges did not accept.
“EPA fails to identify a single case where a court has upheld an eight year delay as reasonable, let alone a fourteen year delay, if we take into account the six more years EPA asserts it needs to take action,” Judge Mary Schroeder, nominated by former President Carter, wrote on behalf of herself and Judge Randy Smith, a George W. Bush nominee.
The judges said the EPA also has an unambiguous duty to act. Scientific studies point toward a higher danger to children from lead paint than when Congress developed standards in the 1990s, studies that the EPA did not dispute.
“Under the [Toxic Substances Control Act] and the Paint Hazard Act, Congress set EPA a task, authorized EPA to engage in rulemaking to accomplish that task, and set up a framework for EPA to amend initial rules and standards in light of new information,” the judges said.
“The new information is clear in this record: the current standards for dust-lead hazard and lead-based paint hazard are insufficient to accomplish Congress’s goal.”
An EPA spokesman said the agency would review the Wednesday ruling, and pledged that officials would “continue to work diligently on a number of fronts to address issues surrounding childhood lead exposure from multiple sources.”
The EPA has declared lead poisoning to be the greatest environmental hazard to children under age six.
The agency agreed in 2009 to accept public comments on the lead petition and to initiate a rule-making, but did not set a time period for the rule-making.
The judges ordered the EPA to propose a new rule within 90 days and make a final rule within a year after that.
Judge Lawrence Piersol, a Clinton nominee, disagreed with the court’s decision. In his dissent, he argued that the laws cited by the other two judges do not require the EPA to take action.
- This story was updated at 3:32 P.M. EST.
http://thehill.com/policy/energy-environment/366598-court-orders-epa-to-take-quick-action-on-lead-paint
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Appeals Court Orders E.P.A. to Update Lead Paint Rules, Quickly
Dec 27, 2017 | New York Times
By Lisa Friedman
A federal appeals court on Wednesday ordered the Environmental Protection Agency to revise its nearly 17-year-old standard for dangerous levels of lead in paint and dust within one year, a rare legal move that amounts to a sharp rebuff of President Trump and Scott Pruitt, the E.P.A. administrator.
The decision also called attention to the persistent threat of lead paint to children in millions of American homes, four decades after the federal government banned it from households.
“This is going to protect the brains of thousands of children across the country,” said Eve C. Gartner, a staff attorney for Earthjustice who helped argue the case on behalf of groups pushing for tougher standards. “It’s going to mean that children that otherwise would have developed very elevated blood lead levels will be protected from the damage associated with that, assuming E.P.A. follows the court order,” she said.
The 2-to-1 decision, by the United States Court of Appeals for the Ninth Circuit, in San Francisco, means the E.P.A. must propose a new rule within 90 days, instead of the six years the Trump administration had requested to reconsider what levels of lead exposure are acceptable for children.
That request was on top of a six-year delay under former President Barack Obama, a holdup the court said was unreasonable, particularly in the face of new research on the hazards of lead paint.Continue reading the main storyRELATED COVERAGECity Filed False Paperwork on Lead Paint Inspections, Inquiry Finds NOV. 14, 2017E.P.A. Reverses Course on Ozone RuleAUG. 3, 2017Court Blocks E.P.A. Effort to Suspend Obama-Era Methane Rule JULY 3, 2017E.P.A. Chief, Rejecting Agency’s Science, Chooses Not to Ban Insecticide MARCH 29, 2017
“Indeed E.P.A. itself has acknowledged that ‘lead poisoning is the number one environmental health threat in the U.S. for children ages 6 and younger,’ and that the current standards are insufficient,” the ruling said, adding, “The children exposed to lead poisoning due to the failure of E.P.A. to act are severely prejudiced by E.P.A.’s delay.”
A spokesman for the E.P.A. said the agency was reviewing the court’s decision, and declined to say if the agency planned to appeal or seek review in the Supreme Court.
The ruling is the latest legal setback to efforts by the Trump administration to delay or roll back Obama-era regulations it maintains are overly burdensome. In July, a federal appeals court ruled that the E.P.A. must enforce the implementation of methane emissions rules that the agency had sought to delay. A month later the agency reversed a decision to delay putting into effect a rule requiring more stringent air quality standards.
Activists hailed Wednesday’s court ruling and called it long overdue.
Zakia Rafiqa Shabazz of Richmond, Va., who founded United Parents Against Lead, an advocacy group, called the ruling “a win for children.” But Ms. Shabazz said her 23-year-old son still suffered from the effects of elevated lead levels found in his blood as a young child in 1996, and said the lack of action through two administrations to strengthen lead standards had been frustrating.
“That’s the hurtful thing, how many children could have been prevented from suffering the pains of lead poisoning,” she said.
The E.P.A. set standards in 2001 for lead contamination levels in dust and soil in homes. Environmental and health groups including United Parents Against Lead and Earthjustice petitioned the agency in 2009 to tighten standards on lead in dust and soil as well as paint to “more adequately protect” children.
The E.P.A., then under Mr. Obama, acknowledged the need for stricter rules in 2011 and agreed to take action, but never did so and set no timelines for developing a new rule.
Ms. Gartner said the Obama administration never gave a good reason for its delays.
“They never contested that the standard needed to be updated,” she said. “They just didn’t prioritize protecting kids from lead.”
Petitioners in August 2016 asked the appeals court to find that the E.P.A. had unreasonably delayed a new rule. Then, the Trump administration told the court it expected to take another six years to issue a new regulation.
“They already had six years,” Ms. Gartner said. “It’s taken more than a decade to update the standard for how much lead can be in dust before it’s considered a hazard and needs to be cleaned up.”
The judges on Wednesday issued a writ of mandamus, an unusual court order that requires an official or agency to perform a certain duty, in this case for the E.P.A. to issue a proposed rule within 90 days and finalize it within a year after that. The judges said in doing so they were mindful of the agency’s arguments that officials needed more time to deliberate a complex new standard.
“We must observe, however, that E.P.A. has already taken eight years, wants to delay at least six more, and has disavowed any interest in working with petitioners to develop an appropriate timeline through mediation,” the ruling said.
Meanwhile, the court said, the risks to children from lead poisoning under standards the E.P.A. has already called insufficient are “severe.”
Judge Mary M. Schroeder, appointed by President Jimmy Carter, wrote the opinion for the three-judge panel, and was joined by Judge Lawrence L. Piersol, a Bill Clinton appointee who was filling in on the court.
Judge N. Randy Smith, appointed by George W. Bush, dissented. “I do not understand why the E.P.A. has not acted,” he wrote, but he argued that only Congress, not the courts, could mandate that the agency do so.
The judges noted that the court had issued a similar order in 2015 to force the E.P.A. to take action one way or another on a pesticide, chlorpyrifos, after the agency had taken eight years to consider a petition from environmental groups to ban the substance. Mr. Pruitt wound up denying that petition in March, an action the court said complied with its order.
Something similar could happen in the lead case, environmental activists acknowledged. But they said they hoped the E.P.A. would finally toughen the standards.
“It is time that the E.P.A. stop stalling and taking prolonged amounts of time to do the right thing,” said Ms. Shabazz.
A study published in the Journal of Pediatrics in 2016 found that — despite decades of work to reduce lead in paint, dust and water — about 3 percent of children around the country exhibit high levels of the metal in their blood. The problem is particularly acute in parts of the Northeast: The regions with the largest proportions of blood specimens with the highest lead levels were in New York, Pennsylvania and Ohio, according to the study.
The E.P.A. said in a statement that lead exposure remained a significant health threat to children. “EPA will continue to work diligently on a number of fronts to address issues surrounding childhood lead exposure from multiple sources,” the agency said.
https://www.nytimes.com/2017/12/27/us/epa-lead-paint.html?rref=collection%2Fsectioncollection%2Fscience
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(ACC Mentioned) Investments in This One Environmental Toxin Are Through the Roof
Dec 28, 2017 | Mind Body Green
By Emma Loewe
Plastic is one of the most ubiquitous and dangerous pollutants out there. The material is energy-intensive to create, and it persists for centuries, leaching harmful chemicals like BPA and phthalates into the environment—and our bodies. And yet, more than 300 million tons of it will likely be created in 2018, and recent investments by major oil companies are projected to fuel a 40 percent rise in plastic production over the next decade.
Plastic is present in so much these days—from our takeout containers to our cellphones—that it's easy to forget that it has only been mass-produced since the 1940s. And as the price of natural gas has decreased over the years, plastic has only become cheaper and cheaper to make on a large scale.
According to new reports by the American Chemistry Council, companies like Exxon Mobil Chemical and Shell Chemical have spent $180 billion on the plastic market since 2010, despite scientific proofthat its continued production will be detrimental to the future of the environment.
“We could be locking in decades of expanded plastics production at precisely the time the world is realising we should use far less of it,” Carroll Muffett, president of the U.S. Center for International Environmental Law, tells the Guardian.
This news makes it even more clear that plastic production will continue to increase as long as it remains profitable. As consumers, we can take a stand by avoiding plastic—especially single-use plastics—whenever possible. Here are a few resources to help you do it:
· How to grocery shop so you use less plastic
· How to minimize your plastic exposure at home
· How to use less plastic in your beauty routine
· How to order goods online so you don't use as much plastic packaging
· How to dispose of the plastic you do use
https://www.mindbodygreen.com/articles/investments-in-plastics
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A More Restrained U.S. Oil Industry Among Energy Predictions for 2018
Dec 27, 2017 | Houston Chronicle
By Collin Eaton
U.S. shale drillers appear to have abandoned risky financial strategies that exacerbated the dot-com meltdown and that made the recent oil bust far more painful for Houston companies and their employees.
In recent months, investors have demanded executives focus on delivering investment returns and fueling operations with their own cash, instead of running up large debts or diluting shares in stock sales to pump ever-increasing amounts of oil.
It's a big change for a boom-and-bust industry, but so far, oil companies seem compliant, even restrained: though oil prices have surged toward $60 a barrel in recent weeks, the number of working U.S. oil rigs hasn't skyrocketed. In fact, the oil-rig count has barely budged since early November.
"The hype is over," said Chris Midgley, global head of analytics at S&P Global Platts. "We're seeing a chance in their behavior and mindset. The dot-com boom mentality has dissipated. Now there's a really strong focus on accountability."
Midgley believes investor pressure will keep the U.S. oil industry in line in 2018 after energy companies under-performed in the S&P 500 Index this year. He also thinks banks will tighten their purse strings for oil producers; that oil field service companies will have to raise prices; and that the world's oil stockpile will decline next year.
Those are just some of the things Midgley and others predict for 2018, a year that could bring the oil industry further out of its financial straits, as long as crude prices remain elevated.
Another thing that might happen next year is a wave of corporate acquisitions of companies who exited bankruptcy court led by new owners: their former bondholders.Dallas law firm Haynes & Boone, which tracked the bankruptcy cases of more than 130 debt-laden North American oil companies, said most of the time, bondholders end up as shareholders after a company is reorganized in bankruptcy proceedings.
"They're interested sellers because they never intended to own an oil company," said Buddy Clark, a Houston partner and co-chair of the energy practice group at Dallas-based law firm Haynes & Boone. "Those bondholders are not oil men. They're bond traders."
Higher oil prices, Clark said, could mean more of these transactions.Higher prices could also mean oil companies will pursue litigation more often, said Brit Brown, Houston managing partner at the law firm Akerman.
The oil downturn, Brown said, had led companies to cut their in-house legal departments, forcing the departure of experienced personnel that had built relationships with other companies over the years – relationships that were quite useful in heated disputes.
During the downturn, companies were shying away from litigation and arbitration because it not cheap, or quick. But now, oil-company budgets are stabilizing, in-house legal departments are being rebuilt and companies are assessing "their legal docket, what needs to be addressed and what needs to be let go," Brown said.
"There seems to be a greater willingness to pursue a legal right," he said. "Smaller and midlevel commercial disputes are now being raised."
Unless the oil market sinks again, the benefits of higher crude prices will have to spread out across the energy industry. Next year, Midgley said, oil field service companies will have to raise their prices to avoid financial disaster. A majority of both drilling contractors and hydraulic fracturing companies are on negative credit watch at S&P.
"That's unsustainable," Midgley said. "Prices have to go up. That's a very strong indicator costs have to move in one direction only. They have to start earning returns, as well."
Related: Oil field costs expected to rise in 2018
That could make it more expensive to pump oil next year. Investors are expected to keep a closer eye on the economics of wells in the oil patch. They've taken companies to task for advertising high rates of return on wells that don't take into account other factors that reduce the ultimate investment return, such as lease and debt costs. For some of these wells, returns are a tenth as profitable as advertised.
"You're looking at $65 a barrel oil being roughly the breakeven level," Midgley said. "The industry is being held a lot more accountable."
http://www.chron.com/business/energy/article/A-more-restrained-U-S-oil-industry-among-energy-12457776.php
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Pennsylvania Congressman Requests Risk Assessment for ME2 Pipeline
Dec 27, 2017 | Natural Gas Intelligence
By Jamison Cocklin
Pennsylvania Rep. Patrick Meehan has asked Gov. Tom Wolf’s administration to back a “risk assessment” for the Mariner East (ME) 2 pipeline to help the public better understand potential hazards associated with the natural gas liquids project.
Meehan, a Republican, represents portions of southeast Pennsylvania, including suburban Philadelphia, where dozens of spills have been reported during ME 2 construction. He sent a letter to Wolf earlier this month calling for the risk assessment after “numerous meetings with constituents alarmed about the potential safety implications” of the project. He said residents from his district have “repeatedly requested” that the state conduct and publicize a risk assessment.
While Meehan acknowledged the economic benefits of the project, and said he was encouraged by a settlement that Sunoco reached with environmental groups calling for more safeguards during construction, he said residents “remain worried” amid reports of undisclosed drilling fluid leaks and unauthorized construction methods.
“A risk assessment would be a welcome and responsible step in providing residents with the information they need to better understand the construction and operation of this pipeline and any potential effects it may have on a densely populated community,” Meehan wrote in the letter.
The 350-mile pipeline would carry ethane, butane and propane from Ohio, Pennsylvania and West Virginia to the Marcus Hook Industrial Complex near Philadelphia for domestic and international distribution. While state courts have acknowledged the project’s mixed intrastate and interstate nature, it has certificates of public convenience from the Pennsylvania Public Utility Commission (PUC), giving Wolf and state regulators oversight of the project. ME2 would run parallel to the ME 1 pipeline that is already in service.
Sunoco continues to maintain that its operating procedures transcend federal and state guidelines, noting that it has worked closely with state regulators throughout the construction process.
The administration has said the governor is open to a risk assessment, but it would ultimately be up to the PUC to conduct one. The commission is currently reviewing Meehan’s request, a spokesman said.
Regulatory setbacks have plagued the project since last year, forcing parent Energy Transfer Partners LP (ETP) to delay the in-service date to 2Q2018. Most recently, the PUC ordered construction halted on a valve station in West Goshen, PA, after it discovered that the company planned to install the equipment at a location not specified in a settlement agreement with the township. The junction was lifted last week after Sunoco abandoned plans to build the valve station.
The company still has plans for a third ME pipeline that would run parallel to ME 2. The three pipelines, combined with Mariner West, which moves Marcellus ethane to Canada, would have a capacity of up to 800,000 b/d. ETP said in November bout 99% of the ME 2 mainline should be buried by the end of this year.
http://www.naturalgasintel.com/articles/112878-pennsylvania-congressman-requests-risk-assessment-for-me2-pipeline
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Point Thomson Expansion Seen Boosting Prospects for Alaska LNG Project
Dec 27, 2017 | Natural Gas Intelligence
By Carolyn Davis
ExxonMobil Corp.’s plan to engineer an expansion of the Point Thomson natural gas project on the North Slope has been approved by Alaska, considered a key step as a long-awaited gas export project takes shape.
Point Thomson is on state acreage along the Beaufort Sea, 60 miles east of Prudhoe Bay. It includes 28 state leases on 93,000 acres. Gaining approval to expand gas output is considered key in helping to firm up the planned liquefied natural gas (LNG) export project underway by the state-run Alaska Gasline Development Corp. (AGDC), which took over the project last year from ExxonMobil, BP plc and ConocoPhillips.
In the past few weeks, the LNG export project has gained traction as several big Asian operators provided conditional support. AGDC last month asked the Federal Energy Regulatory Commission to advance a review of the project.
Gov. Bill Walker, in announcing the Point Thomson expansion approval, also keyed it to the export project
“The Alaska LNG Project has been endorsed by the Trump administration and the Chinese government,” Walker said. “Interest in this project has grown immensely in the last 45 days due to the historic joint development agreement between state officials, Sinopec, the Bank of China and the Chinese Investment Corp.
“Our approval of the Point Thomson to Prudhoe Bay pipeline plan adds to the momentum of the Alaska LNG project and demonstrates the commitment of the Point Thomson working interest owners to move gas from Point Thomson into AGDC’s 800-mile pipeline,” he said.
The expansion project also would increase oil production from Point Thomson by 50,000 b/d, he noted.
The Alaska Division of Oil and Gas had approved ExxonMobil’s plan to continue liquid condensate production from Point Thomson, but earlier this year officials rejected the expansion of the field, calling it "vague" and noncommittal. However, ExxonMobil in October provided a response addressing the state's concerns.
“It’s clear that ExxonMobil is committed to commercializing North Slope gas, particularly from Point Thomson,” said Alaska Natural Resources Commissioner Andy Mack. “This helps align the company’s work in Alaska with the State of Alaska and AGDC.”
ExxonMobil in early 2016 had ramped up production at Point Thomson, its first operated project on the North Slope, where initial output was expected to be 5,000 b/d of condensate and 100 MMcf/d of natural gas.
The Point Thomson reservoir holds an estimated 8 Tcf of gas and associated condensate, a resource that represents about one-quarter of the known gas on the North Slope. Through 2015 ExxonMobil and its Point Thomson partners had invested close to $4 billion to develop the production facilities.
http://www.naturalgasintel.com/articles/112882-point-thomson-expansion-seen-boosting-prospects-for-alaska-lng-project
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The Oil and Gas Sector Is Changing — and So Is Geopolitics
Dec 28, 2017 | New York Times
By Robert D. Kaplan
Geopolitics is power played out against geographical settings. In this battle, ideas and ideologies matter. But it is often the most technical and complex factors — the ones we least understand and therefore discount, according to Columbia University’s Robert Jervis — that carry the greatest weight. There may be no factor more influential in contemporary geopolitics and yet least understood by journalists and policymakers than the energy revolution, which is less about renewables like wind and solar power than about how the oil and gas sector itself is changing. A Harvard professor and former assistant to President George W. Bush, Meghan L. O’Sullivan, has dissected the intricacies of this industry to offer a riveting and comprehensive geopolitical theory in “Windfall.”
The decline in crude oil prices from $100 per barrel to around $60 and below over the past two years, along with the widespread ability to extract shale gas through hydraulic fracturing of rock, or fracking, has moved the United States from being “the world’s thirstiest consumer of overseas oil to a position of greater self-sufficiency,” O’Sullivan writes. Falling energy prices have also stabilized Europe’s economy, helped Japan manage the aftermath of the Fukushima nuclear disaster, allowed China to more aggressively pursue its new Silk Road strategy across Eurasia (while reducing the pain of a decelerating economy), kept Russia from becoming an energy superpower and weakened the prospects for energy-rich sub-Saharan African countries. “On the whole,” the author says, “the new energy abundance is a boon to American power — and a bane to Russian brawn.” In fact, it was new extraction techniques in tight oil and shale gas that helped ease America out of the recession.
But triumphalists beware. Though the United States is now the world’s largest energy producer, it can never be the swing producer of hydrocarbons that Saudi Arabia once was, able to determine world prices by simply deciding how much to pump. That is because the United States is not an autocracy with a national oil company, but a vast network of hundreds of small producers making their own decisions and taking their own risks.Photo
At the same time, the energy revolution has laid the basis for a more politically and economically unified North American continent. For this reason, O’Sullivan criticizes Barack Obama for alienating Canada with his delays of the Keystone XL pipeline and Donald Trump for alienating Mexico with his insults and talk of a “wall” between the two countries. O’Sullivan’s book lays out Trump’s ignorance of the whole United States-Mexico relationship. In 2015, the two countries traded “more than $1 million of goods and services every minute.” Rather than “simply trading in final products, the United States and Mexico build goods together, utilizing complex supply chains that crisscross the border,” a grid-work that includes 20 natural gas pipelines.
It was on the American side of the Gulf of Mexico where a floating storage and regasification unit was deployed in 2005 for the first time. Once natural gas is shipped in liquefied form, it can be converted back into gas upon arrival across the sea for actual use. Such units are now helping countries in Central and Eastern Europe receive gas from abroad, lessening their dependence on Russia for energy and creating a more globally integrated energy system. No longer dependent on continental pipelines, countries can now receive more gas by sea. This, in turn, has led to cheaper prices worldwide and stark geopolitical implications. China, for one, has benefited. It became less reliant on piped gas from Russia just at the moment when Moscow, reeling from the shale gas boom, was desperate for a natural gas export deal. The result was price concessions to Beijing that Russia otherwise would not have made.Continue reading the main story
For Russia, the rise of liquefied natural gas has placed the country in an increasingly greater disadvantage in competing with China for markets and influence in former Soviet Central Asia. Russia may still have an advantage because of its energy reserves, but it cannot wield energy for political ends as bluntly as it used to. While Russia is weakened, O’Sullivan posits that China will become in some respects a better global actor, since cheaper gas and oil will gradually reduce China’s need for friendship with energy-rich autocratic regimes and, as O’Sullivan observes, “reinforces Chinese confidence in one of the key elements of the liberal international order: the market.”
Though not wholly original, O’Sullivan writes with great clarity about a frankly dry and complicated subject. In tackling the Middle East, she observes a number of devastating ironies. Cheap oil does not spell the end of Middle East oil producers. It actually helps them, since it could price out high-cost American, Canadian and European oil. A United States that is more self-sufficient in energy will still have to be active in the Middle East to fight terrorism, resist nuclear weapons proliferation, support Israel and bolster other regional allies. Cheap oil spurs economic reform in Saudi Arabia, but also weakens the cause of Kurdish independence, since a successful Kurdish state will depend on oil revenues. Because energy is still only one factor in geopolitics, albeit a crucial one, power shifts will usually be oblique rather than immediately obvious.
Yet will Saudi Arabia have a revolution? Will Russia eventually become a low-calorie version of the former Yugoslavia? Will oil-rich Nigeria collapse, or oil-rich Venezuela continue to implode? Much will depend on the price of hydrocarbons in the years and decades ahead. In geopolitics, a $40-per-barrel world will be vastly different from a $100-per-barrel one. Rather than the usual policy pablum, “Windfall” is a smart, deeply researched primer on the subject.
Robert D. Kaplan is the author of “Earning the Rockies: How Geography Shapes America’s Role in the World.” He is a senior fellow at the Center for a New American Security and a senior adviser at Eurasia Group.
WINDFALL
How the New Energy Abundance Upends Global Politics and Strengthens American Power
By Meghan L. O’Sullivan
479 pp. Simon & Schuster. $29.https://www.nytimes.com/2017/12/28/books/review/windfall-meghan-osullivan.html
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(ACC Mentioned) Industry Backs EPA Bid to Dismiss RMP Delay Case
Dec 27, 2017 | Inside EPA
Chemical and other industry groups are backing EPA’s claims that environmentalists lack standing to challenge the Trump administration's nearly two-year delay of an Obama-era facility accident prevention rule, arguing there is no injury to the plaintiffs because the delay effects one aspect of the rule that overlaps with existing regulations.
In a Dec. 22 filing in the case, Air Alliance Houston, et al., v. EPA and E. Scott Pruitt, petrochemical industry groups argue that EPA's June 14 delay of the Obama EPA’s final rule updating the agency's Risk Management Plan (RMP) program with new requirements postpones the effective date of a single provision because other compliance dates are well in the future.
The “narrow action falls well within EPA’s authority and was eminently reasonable in light of concerns that the RMP Amendments could jeopardize the security of regulated facilities and otherwise lead to unwelcome effects,” industry intervenors, including the American Chemistry Council, the American Petroleum Institute, and the U.S. Chamber of Commerce, say in their brief.
The intervenors also charge that requirements in the existing RMP rule, and in the Occupational Safety and Health Administration's Process Safety Management rule, already ensure coordination between facilities and first responders, precluding petitioners' claims that they have suffered injury from delay and therefore have standing to sue.
The delay does not “displace any robust protections of that program or otherwise disturb the many other pre-existing safety regulations that apply to industrial facilities,” the groups say. “Petitioners’ failure to appreciate the true nature of the Delay Rule sinks their petitions for review, both jurisdictionally and on the merits.”
Environmentalists are challenging EPA's rule delaying from June 19, 2017, to Feb. 19, 2019, the effective date of the Obama EPA's RMP update rule, in order to allow the Trump EPA time to revise the rule after it accepted an industry petition for reconsideration.
The rule issued under former President Barack Obama’s August 2013 executive order on boosting the safety and security of industrial plants includes new requirements for facilities to conduct independent audits and analysis of safer technologies, and also streamlines requirements for facilities to disclose data to first responders and the public.
EPA sought to dismiss advocates’ challenge to the delay in a Dec. 8 filing, arguing that since the RMP update rule's “substantive provisions” are still scheduled to take effect in 2021 and 2022 as originally intended, environmentalists and labor intervenors have suffered no injury that would give them standing to bring the lawsuit.
EPA also defended its delay as reasonable and reiterated a claim that the Bureau of Alcohol, Tobacco, Firearms and Explosives’ finding that arson, rather than an accidental fire, caused the West, TX, chemical plant explosion that helped prompt the RMP update undermined the Obama administration's rulemaking process.
https://insideepa.com/daily-feed/industry-backs-epa-bid-dismiss-rmp-delay-case
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Dec 27, 2017 | Wall Street Journal
By Editorial Board
Washington Governor Jay Inslee calls climate change an “existential threat,” and he has channeled President Obama in using executive powers to impose his policy response. But like Mr. Obama he suffered a major blow this month when a Washington court ruled that he exceeded his authority under state law.
Washington lawmakers have declined to pass Mr. Inslee’s signature cap-and-trade legislation, and in 2016 voters rejected a carbon-tax ballot measure. So “now we have to do it administratively,” the Sierra Club’s Doug Howell said last year.
Mr. Inslee suddenly discovered authority to act unilaterally under the Washington Clean Air Act and a 2008 law that required greenhouse gas reductions. The Department of Ecology’s subsequent Clean Air Rule required the state’s largest emitters to reduce carbon emissions by 1.7% annually, or else buy carbon credits or invest in carbon-offsets.
This sweeping regulation affected manufacturers, waste facilities and government buildings, and it imposed a de facto tax on “indirect emitters” like oil and natural gas suppliers. Regardless of their actual emissions, the Inslee Administration wanted to penalize businesses for peddling energy products it doesn’t like. And it estimated that indirect emitters were responsible for around three-fourths of the carbon emissions covered under the regulation—though they can’t control what others emit.
The Department of Ecology’s own economic impact analysis found that the Clean Air Rule’s total compliance costs could run as high as $6.9 billion over 20 years and result in 3,200 to 4,500 job losses by 2035. And in a Dec. 15 oral ruling, Thurston County Superior Court Judge James Dixon found that the Inslee Administration lacked the legal authority to regulate indirect emitters.
The decision is a victory for the rule of law and another rebuke to progressives who try to ignore democratic consent to impose their climate agenda by regulatory fiat. Democrats now control Washington’s House and Senate, and if they want to pass Mr. Inslee’s agenda, including a new carbon tax, they have the power to do so the old-fashioned way—with legislative votes. Washington residents can then hold them responsible for the enormous costs.
https://www.wsj.com/articles/washingtons-carbon-overreach-1514419499
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