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ACC PM 3/2/18
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(ACC Mentioned) Here’s What Equities Analysts Are Saying About Trump’s Tariffs
Mar 2, 2018 | Bloomberg
By Aoyon Ashraf, Esha Dey and Felice Maranz
U.S. President Donald Trump’s talk of trade war and plans to impose import tariffs of 25 percent on steel and 10 percent on aluminum products wreaked havoc on the market, putting the S&P 500 Index on track for its worst week in a month. -
Natural Gas, Oil Industry Rips Trump’s Steel Tariff Proposal
Mar 2, 2018 | Natural Gas Intelligence
By Carolyn Davis
The U.S. oil and natural gas industry is blasting President Trump’s plan to impose tariffs on imported steel and aluminum, claiming the decision would destroy jobs by raising the costs and even scuttling infrastructure projects, but the president appeared unwilling to compromise. -
Trump Tariffs Open New Front in U.S. 'Economic Nationalism'
Mar 2, 2018 | E&E Energywire
By Peter Behr and Jenny Mandel
Fulfilling a campaign promise to his political base, President Trump said he will hit U.S. allies and rivals with tough tariffs next week on steel and aluminum imports, risking disruptions to energy and other industries at home and escalating trade conflicts abroad. -
(ACC Mentioned) Trade Group Accuses Enviros of Reform Bill 'Misinterpretation'
Mar 1, 2018 | E&E Greenwire
By Corbin Hiar
The chemical industry's top trade group today accused its erstwhile partners in the Toxic Substances Control Act reform effort of intellectual dishonesty. -
Endocrine Society 'Disappointed' by FDA's Packaging Chemical Stance
Mar 2, 2018 | New Food
By George Smith
The Endocrine Society has called the FDA’s conclusion that BPA is safe for the currently authorised uses in food containers and packaging “premature”. -
EPA Changes Methane Rule, Pollution-Reduction Guidelines
Mar 2, 2018 | E&E Energywire
By Mike Soraghan and Sean Reilly
The Trump administration made a new change to U.S. EPA's methane rule yesterday, saying that leaks need not be fixed during unplanned or emergency shutdowns. -
As EPA Prepares First WIFIA Loan, Infrastructure Program Faces Challenges
Mar 2, 2018 | Inside EPA
By Lara Beaven
EPA is expected to issue its first loan under the Water Infrastructure Finance and Innovation Act (WIFIA) program this month, but the novel program, intended to supplement traditional federal financing through the state revolving funds (SRFs), is facing numerous challenges from lawmakers and the Trump administration seeking to expand its scope and create set-asides for certain projects. -
Inslee Throws in Towel on Carbon Tax
Mar 2, 2018 | E&E Climatewire
By Benjamin Storrow
Supporters of a Washington carbon tax admitted defeat yesterday, in a stinging blow to Gov. Jay Inslee (D) and greens hoping for a landmark win in climate policy. -
N.J. Leaves Legal Fight after Electing Democratic Governor
Mar 2, 2018 | E&E Climatewire
By Niina Heikkinen
New Jersey is officially out of litigation over the Obama administration's signature climate rule. -
GAO Expanding Climate Adaptation Work
Mar 2, 2018 | Inside EPA
The Government Accountability Office (GAO) is expanding its climate adaptation work, beginning a study examining the benefits of adaptation and the current federal approach to funding adaptation projects.
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(ACC Mentioned) Here’s What Equities Analysts Are Saying About Trump’s Tariffs
Mar 2, 2018 | Bloomberg
By Aoyon Ashraf, Esha Dey and Felice Maranz
U.S. President Donald Trump’s talk of trade war and plans to impose import tariffs of 25 percent on steel and 10 percent on aluminum products wreaked havoc on the market, putting the S&P 500 Index on track for its worst week in a month. While the implication for a potential import tariff is most pronounced within the steel and aluminum sector, it stretches beyond those two groups to sectors ranging from U.S. autos to packaging and beverage companies.
U.S. metals producers retreated Friday, a day after surging on the Trump administration’s tariff plan, with U.S. Steel Corp. and Nucor Corp. leading the sector lower. The Van Eck Vectors Steel ETF fell as much as 3.6 percent, its biggest loss in a month.
Here is what some analysts say about the potential impact from the decision and how to trade each of these sectors.Materials and ChemicalsThe timing and magnitude of Thursday’s announcement caught Longbow Research’s analyst Chris Olin’s contacts off-guard, in what he called “one of the craziest days” for the domestic steel industry. He thinks the buyers of carbon steel will continue to replenish their inventories over the next few weeks, potentially creating near-term “supply panic” and raising hot-rolled coil prices by the second quarter of 2018. The mini-mills could also see a margin tailwind due to better pricing spreads on selected products.
Some countries or product groups may also get an exemption from the levies, Bank of Montreal’s analyst David Gagliano said, citing U.S. Steel Corp. and AK Steel Holding Corp. as prime beneficiaries. He maintains a preference for Steel Dynamics Inc. and thinks that Stelco Holdings Inc. also stands to gain due to rising prices on U.S.-linked pricing indices, and the relatively limited volumes of product it sells directly into the U.S. Within aluminum sector, Century Aluminum Co.’s primary focus on the U.S. provides a greater defense than more internationally exposed peers such as Alcoa Corp.
Trump’s steel dreams may “end in tears if he doesn’t pivot”, as inflexibility could lead to a trade war with casualties on all sides, Bloomberg Intelligence analyst Andrew Cosgrove wrote. Amending and blending suggested options on steel imports may accomplish his goal of reducing shipments while appeasing many trading partners and downstream steel buyers, Cosgrove said.
But Credit Suisse’s Curt Woodworth doesn’t expect Trump to back down from 25 percent tariff on steel. A tariff at that level would drive a roughly $100- to $150-per-ton rise in spot steel prices in the short-term. He remains bullish on the sector and his top picks remain U.S. Steel, Commercial Metals Co., Nucor Corp. and Steel Dynamics. Cleveland-Cliffs Inc. could also benefit as a $50-per-ton move in hot-rolled coil prices could add about $50 million to its free cash flow.
The proposed tariff levels prompted analysts to revisit their stock recommendations. Allegheny Technologies Inc. saw upgrades from Bank of America Merrill Lynch and Keybanc as the selloff made its valuation more attractive. U.S. Steel drew a downgrade from Bank of America Merrill Lynch’s Timna Tanners on a limited benefit to 2018 earnings and a potential for steel prices to fall by 2019.
The tariffs may have unintended consequences for planned investments from chemicals producers, if factories “suddenly become costly to build,” said the American Chemistry Council, the industry’s leading advocacy group. The announcement “comes at the worst possible time” as the industry is investing $185 billion in new and expanded U.S. factories, with about half of those investments still in planning stage.
“Tariff increases may convince investors to do business elsewhere,” the Council said. Trump should “reconsider imposing costly tariffs and punishing the very businesses that are helping him grow the economy and create jobs.”Beverages and Packaging
Packaging companies who use steel and aluminum to make rigid packaging or cans may see costs increase if producers pass the import tariffs through to their customers. Analysts at BMO and Wells Fargo cited higher costs as a risk for Greif Inc. in particular. Other can makers that could be hurt include Ball Corp., Crown Holdings, Silgan Holdings and Ardagh Group.
Beverage makers, among the can makers’ biggest customers, are also likely to face increased costs. National Beverage Corp., Monster Beverage Corp. and Molson Coors Brewing Co., are more likely to feel the effects than larger soda companies like Coca-Cola Inc. and PepsiCo, according to Credit Suisse analyst Robert Moskow. The tariff could present another cost headwind in the packaged food sector, with Campbell Soup Co. among the most affected due to its heavy use of steel in soup cans.Construction and Mining Machinery
Concern that the tariffs could strain the supply chain for machinery companies led Robert W. Baird analyst Mircea Dobre to downgrade stocks including Terex Corp., Oshkosh Corp., Manitowoc Co. and Hyster-Yale Materials Handling Inc. The aerial work platforms and cranes seem most vulnerable since pricing can be compressed by foreign competitors with lower raw material prices, Dobre said.
William Blair’s Larry De Maria said that if a trade war ensues, the upside in Caterpillar Inc. shares could be limited. “The biggest concerns for Caterpillar that could derail a potential multi-year upcycle include geopolitical risk globally, political risk in the United States, and a trade war.”
“A real trade war could potentially damage global trade and that would provide a real risk to the outlook,” he said, adding that the scope of potential retaliationn from other countries and trade groups is harder to quantify.Defense and Aerospace
Tariffs are a “negative” for the aerospace group, Bernstein’s Douglas Harned said, although most defense contracts should be protected by escalators and long-term agreements. A secondary risk could be a retaliation from countries that export to the U.S., which could impact the choice of U.S. defense contractors, Harned added.
Buckingham’s Richard Safran defended the sector and said the selloff in defense stocks on Thursday was an “over-reaction.” While defense companies use a great deal of aluminum for aircraft and steel for ships and thus the logic of selling may appear reasonable, in fact, defense companies don’t have much exposure at all to commodity price fluctuations, he said. Metals used for manufacturing defense systems are generally bought under pacts that extend out for at least 10 years, resulting in stable pricing. Similar arguments can be made in aerospace for planemakers like Boeing Co. and General Dynamics Corp.’s Gulfstream. However, the primary risk to Boeing and aerospace suppliers would likely be possible retaliatory measures the Chinese take as a result of the U.S. imposing tariffs on imports.Autos and Vehicles
General Motors Co. and Ford Co. could both see incremental pre-tax costs rise $600 million to $950 million from the tariffs, Buckingham analyst Joseph Amaturo said. Both have significant exposure to steel as a primary raw material, while Ford has additional exposure to aluminum due to its recent transition to the material for use in its F-series trucks and the Expedition and Navigator models, he said, adding that higher steel and aluminum prices could hurt financial results as soon as 2019.
The impacts could spread through the sector, Amaturo added. “If the tariffs are enacted, the effects would also surely be felt by auto suppliers,” he said.
By extension, manufacturers of recreational vehicles and boats, including Winnebago Industries, Thor Industries, LCI Industries, Malibu Boats and MCBC Holdings, may also be at risk for higher costs given their exposure to these materials.
The market has also been fearful of potential retaliation by other countries. Harley-Davidson Inc. immediately fell to session lows after European Commission President Jean-Claude Juncker said the region may respond with tariffs on motorcycles and other American products.Policy Implications
Trade tensions among the U.S. and its trade partners are likely to rise, particularly as it seems likely to apply to a broad group of countries that includes some allies, Goldman Sachs Chief Economist Jan Hatzius said. Indeed, the proposed tariffs drew ire from China and the European Union on Friday. An aggressive tariff could further disrupt trade developments expected over the coming months, including stalled NAFTA negotiations and potential restrictions on Chinese trade and investment.
The widespread implications could extend to U.S. agriculture, which could be targeted for retaliation, Horizon Investments’ Greg Valliere said. He thinks China will particularly retaliate among other “angry countries” including Canada, Brazil and EU members.
Compass Point’s policy analyst Isaac Boltansky said in an email to Bloomberg that it is unclear at this point whether these trade policies will spark a trade war or a skirmish, but it’s undeniable the moves significantly raised the specter of retaliation and protectionism. There is a real concern among some Republicans that these tariffs could ultimately lead to higher costs for consumers, which could have implications going into the midterm elections for candidates campaigning on platforms relating to tax overhaul saving Americans more money.
https://www.bloomberg.com/news/articles/2018-03-02/here-s-what-equities-analysts-are-saying-on-trump-s-tariffs
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Natural Gas, Oil Industry Rips Trump’s Steel Tariff Proposal
Mar 2, 2018 | Natural Gas Intelligence
By Carolyn Davis
The U.S. oil and natural gas industry is blasting President Trump’s plan to impose tariffs on imported steel and aluminum, claiming the decision would destroy jobs by raising the costs and even scuttling infrastructure projects, but the president appeared unwilling to compromise.
Trump on Thursday said he plans to impose a 25% tariff on steel imports and a 10% tariff on aluminium imports, regardless of country of origin, to protect U.S. industry.
The administration plans to use a legal provision under Section 232 of the 1962 Trade Expansion Act that would allow it to take steps with an argument that the imports threaten national security.
The Department of Commerce in February offered options regarding the tariffs, outlining in a report the tariffs could increase U.S. steel industry capacity utilization to 80% from a current level of about 73%.
However, opponents claim the tariffs would not increase jobs and could in fact lead to a global trade war.
The decisions would be “inconsistent with the administration’s goal of continuing the energy renaissance and building world class infrastructure,” said American Petroleum Institute CEO Jack Gerard. “The U.S. oil and natural gas industry, in particular, relies on specialty steel for many of its projects that most U.S. steelmakers don’t supply.
“Consideration must be given to continue the unprecedented and historic energy renaissance that our industry has driven through important investments that have driven job creation and economic growth.”
Implementing the trade policy “could create confusion in supply chains, unnecessary costs and impacts to U.S. capital intensive projects, and threaten high-paying industry jobs,” Gerard said.
The domestic energy industry “relies on these global steel imports for the majority of its operations,” he said, including steel for drilling, onshore/offshore production facilities, pipelines, liquefied natural gas (LNG) terminals, refineries and petrochemical plants.
The Center for LIquefied Natural gas (CLNG) also sharply criticized the tariff plan.
“We are concerned that the administration's plan to impose tariffs on steel could have the
unintended effect of endangering much-needed U.S. LNG export projects,” said CLNG Executive Director Charlie Riedl. “These projects benefit the economy, create jobs, improve our trade deficit and provide global environmental benefits.
“The administration had taken meaningful steps to improve the current permit review process for natural gas infrastructure and it would be unfortunate if their steel tariffs created new and different barriers to projects.”
The Association of Oil Pipe Lines (AOPL) also reacted harshly to the plan.
“We are urging the administration to avoid killing U.S. jobs through a steel tariff that impacts pipelines,” said AOPL CEO Andy Black.
An AOPL study conducted last year indicated that a 25% increase in pipeline costs could increase the budget for a typical project by $76 million. For example, TransCanada Corp.’s proposed Keystone XL expansion would cost at least $300 million more.
Trump’s decision to impose tariffs would buck the advice of senior staff and GOP leaders.
Trump Doubles Down
However, on Friday, he appeared to double down, posting a series of Twitter messages beginning before 6 a.m. EDT, acknowledging that a global trade war could ensue.
The president argued that other countries take advantage of the United States because more goods are imported than exported.
“When a country (USA) is losing many billions of dollars on trade with virtually every country it does business with, trade wars are good, and easy to win,” Trump tweeted. “Example, when we are down $100 billion with a certain country and they get cute, don’t trade anymore -- we win big. It’s easy!”
Trump subsequently threatened to impose “reciprocal taxes” against any country with an import duty on U.S. goods or services.
“When a country Taxes our products coming in at, say, 50%, and we Tax the same product coming into our country at ZERO, not fair or smart,” the president tweeted. “We will soon be starting RECIPROCAL TAXES so that we will charge the same thing as they charge us. $800 Billion Trade Deficit -- have no choice!”
According to the U.S. Commerce Department, the trade deficit in 2017 was $556 billion, not $800 billion.
Trump also tweeted, “We must protect our country and our workers. Our steel industry is in bad shape. IF YOU DON’T HAVE STEEL, YOU DON’T HAVE A COUNTRY!”
Countries around the world took offense at Trump’s plan, including Germany, France and the United Kingdom. Canada, the largest U.S. trading partner, said the move was not acceptable.
Minister of Foreign Affairs Chrystia Freeland reminded Trump that Canada is not only a key ally but also the “No. 1 customer of American steel.” Canada views “any trade restrictions on Canadian steel and aluminum as absolutely unacceptable.
“Any restrictions would harm workers, the industry and manufacturers on both sides of the border,” Freeland said. “The steel and aluminum industry is highly integrated and supports critical North American manufacturing supply chains. The Canadian government will continue to make this point directly with the American administration at all levels.
“Canada is a safe and secure supplier of steel and aluminum for U.S. defence and security. Canada is recognized in U.S. law as a part of the U.S. National Technology and Industrial Base related to national defense.”
The United States, said the foreign affairs minister, “has a $2 billion surplus in steel trade with Canada. Canada buys more American steel than any other country in the world, accounting for 50% of U.S. exports.“It is entirely inappropriate to view any trade with Canada as a national security threat to the United States,” she said. “We will always stand up for Canadian workers and Canadian businesses. Should restrictions be imposed on Canadian steel and aluminum products, Canada will take responsive measures to defend its trade interests and workers.”
Analysts See Unintended Consequences
According to Wood Mackenzie’s He Ming, senior manager, the United States last year imported 35.6 million metric tons (mmt) of steel, around 36% of its consumption, equivalent to about $33.6 billion. China accounted about 2.9% of U.S. total imports, but total volume was only 1.4% of China's total exports at 74.82 mmt.
“Thus, the steel tariffs will not have much impact on Chinese steel exports and China does not have as much to lose as the traditional U.S. trading partners,” Ming said. “The proposed protection measures will have more negative impact on steel imports from Canada, Mexico and Brazil. South Korea, the largest source of U.S. imports from Asia, will be heavily hit if the U.S. imposes steel tariffs.”
South Korea has filed a complaint with the World Trade Organization over five steel anti-dumping duties and countervailing measures imposed by the United States, Ming noted. If Trump were to choose one of the proposed protection measures, it will trigger a wave of similar complaints,” Ming said.
“We think the steel tariffs will not solve the underlying problem of high cost of steelmaking in the U.S., which has forced steel end-users to search for cheaper imports,” said the Wood Mackenzie analyst. “Its intention to protect employees in the steel and aluminium sectors will be offset by more job losses in the metal-intensive industries such as car manufacturers.”
ClearView Energy Partners LLC analysts said, “The prospect of action on steel brings us back to the three energy tensions of ‘Trumpitude’ we outlined in early 2017: ‘rip-it-up’ versus ‘write-it-again’ deregulation; nationalism versus globalism; and upstream production versus manufacturing.
“In our view, action on steel would underscore an already visible uptick in White House economic nationalism,” said ClearView analysts led by Kevin Book. “It also could amount to a notable pivot from oil producers to manufacturers.”
Producer groups have voiced their concerns to the White House, “but they appear thus far to have been unsuccessful in stopping the coming action on steel imports,” said the ClearView team.
That begs the question, “if the president adheres to the Commerce Department’s recommendations for a strict cap that reallocates exemptions and exclusions, will producers and pipeline companies succeed in convincing administration officials to shift the oil sector tariff woes to another sector’s balance sheet? We’re not so sure,” analysts said.
“Ironically enough, the oil sector’s economic success could make its political arguments more difficult than they might have been five years ago.” Domestic oil production has increased to nearly 10 million b/d, with most of the increase in the last five years, according to the Energy Information Administration.
“During the same interval, net petroleum imports fell 74% (from 10.1 million b/d to 2.6 million b/d), energy goods and services as share of personal consumption expenditures declined 27% (from 5.8% to 4.2%) and energy per unit of gross domestic product fell 24% (from 7,466 Btu per 2009 dollar to 5,645 Btu per 2009 dollar),” according to ClearView.
“Just as the supply-side story points to newfound abundance, demand-side impacts appear to reflect the enduring impacts of lessons learned during scarcity.”
http://www.naturalgasintel.com/articles/113559-natural-gas-oil-industry-rips-trumps-steel-tariff-proposal
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Trump Tariffs Open New Front in U.S. 'Economic Nationalism'
Mar 2, 2018 | E&E Energywire
By Peter Behr and Jenny Mandel
Fulfilling a campaign promise to his political base, President Trump said he will hit U.S. allies and rivals with tough tariffs next week on steel and aluminum imports, risking disruptions to energy and other industries at home and escalating trade conflicts abroad.
"Twenty-five percent for steel," Trump said, pinpointing the level of tariff charges he will impose as penalties for what he says is grossly unfair trading practices by China and other nations. "It will be 10 percent for aluminum," he told 15 executives of U.S.-based steel and aluminum producers. "We'll be signing it next week."
The cross-cutting impact of his long-anticipated actions was immediately reflected in the stock market, with the Dow Jones Industrial Average dropping more than 500 points initially before settling down 420 points, or 1.7 percent. The Dow average has lost more than 1,000 points in the week as the president's trade offensive added to investor concerns over future interest rate increases.
It was a cheering session inside the White House in Trump's meeting with steel and aluminum executives. David Burritt, president and CEO of U.S. Steel Corp., said: "We believe that the leadership that this administration has shown on tax reform is simply outstanding. The elimination of bureaucracy is simply outstanding. We trust your judgment on this issue."
His company's stock rose 5.75 percent yesterday to $46.01 a share.
But interests across the oil and gas spectrum were quick to call foul.
"We are urging the administration to avoid killing U.S. jobs through a steel tariff that impacts pipelines," said Andy Black, president and CEO of the Association of Oil Pipe Lines (AOPL).
Trump's commitment to get tough on trade had split the top ranks of his administration, with Commerce Secretary Wilbur Ross supporting restrictions against a pushback from officials concerned about damaging consequences, led by Trump's chief economic adviser, Gary Cohn.
"You have a president who tends toward the extreme option," said William Reinsch, former president of the National Foreign Trade Council and a former trade official in the Commerce Department. "They fought it out. And this is what the president decided," added Reinsch, now with the Center for Strategic and International Studies.
"In our view, action on steel would underscore an already visible uptick in White House economic nationalism," commented the research firm ClearView Energy Partners, just prior to the president's announcement.
The protest from the liquefied natural gas sector — a cornerstone of Trump's "America First" energy campaign — highlighted a conflict of a different kind.
New LNG export terminals, chock-full of steel, "benefit the economy, create jobs, improve our trade deficit and provide global environmental benefits. The administration had taken meaningful steps to improve the current permit review process for natural gas infrastructure and it would be unfortunate if their steel tariffs created new and different barriers to projects," the Center for LNG said yesterday.
Likewise, higher steel prices would raise the cost of a major U.S. investment in infrastructure, just as Congress ponders where that money is coming from.
"Steel plays a ubiquitous role within oil and gas production. The upstream oil and gas sector imports steel pipe used for drilling, processing, gathering and transporting oil, gas and natural gas liquids. The midstream segment of the industry relies on imported pipe and fittings for oil, gas and products transportation infrastructure. The U.S. imports significant volumes of pipe for a variety of energy and non-energy applications," ClearView Energy Partners noted.Anticipating blowback
Next week's action could set off a chain reaction of still unclear dimensions, with likely counterblows by China and other nations, lawsuits against the administration, and complaints to the World Trade Organization by tariff-targeted nations, trade experts said.
"Foreigners get very upset, and they retaliate" when the U.S. moves, Reinsch said. "The smart ones pick not steel [for retaliation], but sectors that maximize political pain in the U.S.," including agriculture and aircraft manufacturing.
"The normal short-term impact is panic; there is an immediately price hike," he added. "Then we potentially spiral downward into a trade war, or our president doesn't react to the retaliation and decides to take it, and we have a new equilibrium, with more protection to steel."
A study commissioned by the U.S. pipeline group last year, shortly after Trump proposed a "buy American" requirement for pipeline projects, laid out potential impacts on the industry. The oil group says that if tariffs translated to a 25 percent increase in cost for pipes, the budget impact on projects could run from tens of millions of dollars for smaller projects to $300 million for the biggest proposals.
AOPL describes pipeline steel — which must be particularly high grade to reduce the chance of cracking — as a specialty product only available from a handful of U.S.-based plants. If those facilities were the only ones supplying the industry, the group says, the result could be wait times of one to two years to fill orders, potentially leading to delays or cancellation of pipeline projects.
The administration envisions tariffs as bringing new manufacturing facilities online in response to an overload of demand on U.S. fabricators. While supply could be pinched in the short term and have an impact on the pipeline industry and its construction jobs, Trump said yesterday that once tariffs bite into steel imports, "you're going to see a lot of good things happen. You're going to see expansions of the companies."
But natural gas industry groups warned of dire impacts.
"Our operations and ongoing maintenance of the natural gas delivery system can be severely impacted if the required materials are not readily available," said American Gas Association President and CEO Dave McCurdy in a statement.
"Our industry has identified a number of specific challenges with obtaining some pipeline materials and equipment that are American made," McCurdy added. "Some pipelines, specifically low-pressure lines, can be replaced with plastic. Almost all of our nation's natural gas plastic pipe is made in the U.S.
"Larger diameter, high-pressure pipelines that carry higher volumes of gas across longer distances, and their components, are typically made of steel," he added. "Additionally, many parts of our industry rely on steel valves that are not currently made in the United States."
The Center for LNG, which speaks for LNG producers, expressed similar concern that higher steel prices could raise the already high cost to build a new LNG export terminal or any dedicated pipelines that feed it, potentially jeopardizing new project commitments.
"These projects benefit the economy, create jobs, improve our trade deficit and provide global environmental benefits. The Administration had taken meaningful steps to improve the current permit review process for natural gas infrastructure and it would be unfortunate if their steel tariffs created new and different barriers to projects," the group said yesterday.
Daphne Magnuson, a spokeswoman for the LNG group, said CLNG has also expressed concern to the administration about the potential for unintended consequences on LNG trade. China has received a number of cargoes of LNG from Cheniere Energy Inc.'s Sabine Pass LNG terminal in Louisiana, and the company recently announced a long-term supply agreement with China National Petroleum Corp. that marks the first such agreement between a member of the fledgling domestic LNG industry and that country.
Cheniere CEO Jack Fusco said last week that the deal was not the end of the company's China ambitions (Energywire, Feb. 22).'They'll strike back at us'
United Steelworkers President Leo Gerard saluted Trump's action. "The economy has grown, but the U.S. steel industry continues to fight a barrage of foreign steel products," he said. "Most of the growth in our market is going to imports — not to our own steel mills and steelworkers."
Rufus Yerxa, a former U.S. trade negotiator who heads the National Foreign Trade Council, spoke for steel users. "These are massive tariff hikes, and they are going to raise costs for many of our world-class industries like autos, machinery and equipment, oil and gas, and construction," Yerxa said. "These are all huge sectors of the economy, and the negative impacts on them will surely outweigh any benefits to the steel and aluminum industries."
Among the groups that were not so eager to speak about the tariff threat: environmental opponents of pipelines, whose side could be helped by tariff-related project delays and cancellations.
While China appears to be the key target of Trump's trade aggression, the network of steel product manufacturers that have been importing cheap Chinese steel and converting it into products for the U.S. market will also be hit.
ClearView Energy Partners points to a side benefit for the administration in the trade hit: Three of the top exporters of energy-related steel products to the U.S. are Canada, Mexico and South Korea, all of which are currently involved in trade pact renegotiations.
"Action on steel could give President Trump and [U.S. Trade Representative] Robert Lighthizer a trade 'two-fer,'" the group said. "Steel tariffs or quotas could remind Canadian, Mexican or Korean counterparties to renegotiations of White House willingness to act."
Reinsch, the former trade council president, said there is an outside chance that Trump, in forcing the issue, would take the long-standing issue of China's overproduction of steel in a new direction.
"If South Korea, Japan and other countries respond to do the same thing to the Chinese — to focus on the problem — that might actually be a good thing, then the Chinese are going to have to eat all the steel" they pour into global markets to maintain domestic employment, Reinsch said. "It was their problem in the first place, and this would prevent them from exporting it.
"They odds are they won't. They'll strike back at us," he said.
https://www.eenews.net/energywire/2018/03/02/stories/1060075259
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(ACC Mentioned) Trade Group Accuses Enviros of Reform Bill 'Misinterpretation'
Mar 1, 2018 | E&E Greenwire
By Corbin Hiar
The chemical industry's top trade group today accused its erstwhile partners in the Toxic Substances Control Act reform effort of intellectual dishonesty.
The claim came after Cal Dooley, the president and CEO of the American Chemistry Council, acknowledged that "we wouldn't have been able to get TSCA reform moved through Congress if it wasn't for the strong relationship and engagement we've had with Environmental Defense Fund and a few of the other [nongovernmental organizations]."
He added, "We totally value that relationship."
But Dooley, in remarks at the opening of ACC's annual GlobalChem conference, went on to say that "we see a little bit of a reinterpretation of some of the provisions of TSCA by some of those groups."
Similar charges have previously been leveled at ACC by the Environmental Defense Fund.
Last month, EDF senior scientist Richard Denison accused the lobbying powerhouse of "doubling down on its revisionist history" of the changes to new chemical reviews under the landmark overhaul of the nation's chemical safety law.
In a blog post citing dozens of comments from lawmakers, Obama administration officials and Dooley himself, Denison claimed the ACC was persisting "in its wishful thinking that the law's provisions on new chemicals are meant to maintain the status quo and that this is what stakeholders wanted."
He was specifically referring to comments ACC gave U.S. EPA earlier this year. The trade group said it believes the agency "significantly changed its previous implementation of the New Chemicals Review Program since enactment of [TSCA reform] in a manner inconsistent with congressional intent."
As a result, there is a "a substantial and growing backlog in the review of premanufacture notices (PMNs) for new chemicals, blocking the ability of businesses to manufacture and bring new chemistries to market in the United States," ACC said.
But, as Denison's post notes, the authors of TSCA reform specifically called for sweeping changes to the new chemical review program, which previously allowed most chemicals to enter into commercial use without regulators verifying they wouldn't harm human health or the environment.
"Our bill gives EPA new authorities to develop testing data and requires a finding of safety before new chemicals — as many as 1,500 a year — enter the market," Sen. Tom Udall (D-N.M.), one of the lead sponsors of the reform package, said upon its passage in December 2015. "The finding on safety needs to be done not like it is done today, but before they enter the marketplace."
Dooley's speech didn't specifically address that potential contradiction and didn't elaborate on how EDF or other environmental groups had reinterpreted TSCA reform.
Instead, he said ACC prides itself "on taking an intellectually consistent, science-based approach to the implementation of TSCA. We are not deviating in any way in terms of what we committed to do when we committed to working with members of Congress on both sides of the aisle."
Dooley also welcomed any groups "who think that we have changed our constituency to bring it to my attention ... and we will work with them."
EDF didn't immediately respond to a request for comment on Dooley's remarks.
https://www.eenews.net/greenwire/2018/03/01/stories/1060075191
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Endocrine Society 'Disappointed' by FDA's Packaging Chemical Stance
Mar 2, 2018 | New Food
By George Smith
The Endocrine Society has called the FDA’s conclusion that BPA is safe for the currently authorised uses in food containers and packaging “premature”.
A global group focused on tackling hormonal disorders has expressed its disappointment at the US Food and Drug Administration’s (FDA) statement claiming a plastic chemical is safe for food container use.
Dr Laura N. Vandenberg, speaking on behalf of the Endocrine Society, said it was “premature” to draw the conclusion that bisphenol A (BPA) is safe base on the evidence the FDA had put forward.
She said: “The National Toxicology Program draft report released Friday included the results of one government study with a partial data set and has yet to undergo peer review.”
There has been concern raised by some global authorities, including the European Chemicals Agency, over BPA due to its potential as an endocrine disruptor – chemicals that can cause a range of health issues ranging from learning difficulties to certain forms of cancer. The FDA bans its use in baby bottles.
The FDA responded last week to the results of a two-year rodent study examining the potential effects of BPA on health conducted the FDA’s National Center for Toxicological Research (NCTR).
For the study, researchers examined the effect of a range of doses of BPA from low doses that would by ‘comparable to typical human exposures’ to much higher level, looking at how they affected growth, weight and tumour development.
The FDA said in its statement: “Overall, the study found “minimal effects” for the BPA-dosed groups of rodents. The report did identify some areas that may merit further research, such as the increase in occurrence of mammary gland tumours at one of the five doses, in one of the groups. But the significance of these findings will be assessed through the peer review process.
But the Endocrine Society said the NCTR study did not examine some key areas of concern, such as BPA’s impact on brain development and simply researchers focused on how BPA affected growth, weight and tumour development.
“The endpoints studied here do not encompass the full effects of endocrine-disrupting chemicals, especially because the whole point of this study was to compare the NCTR’s endpoints with more sensitive effects evaluated by endocrinologists,” Dr Vandenberg said.
“Furthermore, the NCTR’s data does not provide assurance of BPA’s safety. They found certain BPA doses are linked to a higher rate of mammary gland tumours, which is concerning.”
https://www.newfoodmagazine.com/news/65184/endocrine-society-fda-bpa-stance/
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EPA Changes Methane Rule, Pollution-Reduction Guidelines
Mar 2, 2018 | E&E Energywire
By Mike Soraghan and Sean Reilly
The Trump administration made a new change to U.S. EPA's methane rule yesterday, saying that leaks need not be fixed during unplanned or emergency shutdowns.
Trump officials at EPA said requiring leaks to be fixed at those times could cause disruption to natural gas supplies.
EPA Office of Air and Radiation Assistant Administrator Bill Wehrum said the changes were "technical amendments" that are "meant to alleviate targeted regulatory compliance issues faced by affected sources."
The agency said it is finalizing amendments to make the change based on public comments and information received in response to its proposed stay last summer (Energywire, June 14, 2017).
EPA said it learned that requiring repairs during such unscheduled or emergency shutdowns could result in natural gas supply disruptions, safety concerns and increased emissions.
Owners and operators are still required to complete repairs during the next scheduled compressor station shutdown, well shutdown, well shut-in, after a planned vent blowdown, or within two years, whichever is earlier.
EPA also changed leak monitoring requirements to provide a separate monitoring schedule for well sites on the Alaskan North Slope to accommodate the area's arctic climate.
EPA officials said they learned that the technologies specified in the rule cannot reliably detect methane emissions for much of the year because of extremely cold temperatures.
In a related move, EPA Administrator Scott Pruitt also signed off on the proposed withdrawal of "control techniques guidelines" intended to reduce emissions of volatile organic compounds from existing oil and gas operations. Under the Obama administration, EPA had published the guidelines in October 2016.
In sunshine, such compounds react with nitrogen oxides to create ground-level ozone, the main ingredient in smog. The guidelines, or CTGs, are technical recommendations for states to consider for areas deemed in "moderate" nonattainment or worse for EPA's 2008 ozone standard of 75 parts per billion.
They also apply in the Ozone Transport Region, which encompasses 11 Northeastern states, the District of Columbia and northern Virginia. By EPA's estimate, emissions would have fallen by about 80,000 tons annually if all of the affected states had adopted them.
But industry advocates singled out the potential pricetag, particularly for small operators. Repealing the guidelines will save oil and gas companies between $14 million and $16 million from 2021 to 2035, EPA said in a news release yesterday. "We think it's really good that the administration is moving to allow this issue to be addressed in a very thoughtful and straightforward manner," Lee Fuller, executive vice president of the Independent Petroleum Association of America, said in an interview.
Wehrum, whose clients included the American Petroleum Institute when he was a lawyer in private practice, said in the release that withdrawal was needed to avoid unneeded compliance costs and "provide regulatory certainty to one of the largest sectors of the American economy."
Public health and environmental groups denounced the move. "It makes no sense to withdraw oil and gas air pollution standards that help states control pollution that contributes to ozone nonattainment in their communities," Paul Billings, senior vice president for advocacy at the American Lung Association, said in an email.
The public will have 45 days to comment on the proposal once it's published in the Federal Register.
https://www.eenews.net/energywire/2018/03/02/stories/1060075255
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As EPA Prepares First WIFIA Loan, Infrastructure Program Faces Challenges
Mar 2, 2018 | Inside EPA
By Lara Beaven
EPA is expected to issue its first loan under the Water Infrastructure Finance and Innovation Act (WIFIA) program this month, but the novel program, intended to supplement traditional federal financing through the state revolving funds (SRFs), is facing numerous challenges from lawmakers and the Trump administration seeking to expand its scope and create set-asides for certain projects.
The proposals to modify the program, coming just as EPA is implementing it, is worrying to its supporters, especially some drinking water utilities, whose officials are defending it and urging policymakers to give it a chance to get up and running.
The proposals have also split many water utility groups, highlighting divisions over the program.
But efforts to amend the program appear to underscore the limited funds available to policymakers as they scramble to address significant deficits in water and other infrastructure spending.
The most concrete proposal to overhaul the program comes from a bipartisan group of lawmakers that introduced companion legislation in the House and Senate to create a new class of WIFIA loans that would be available exclusively to states to pay for projects listed on the SRF intended use plan.
In addition, the Trump administration's infrastructure plan calls for using WIFIA to fund non-federal flood mitigation, navigation and water supply projects, as well as authorizing brownfield rehabilitation and cleanup of Superfund sites under WIFIA.
The legislation to modify WIFIA, S. 2364 and H.R. 4902, has the backing of numerous infrastructure groups, although not the drinking water utility groups that were a major force behind Congress' original creation of WIFIA in the 2014 Army Corps of Engineers authorization bill.
Sen. John Boozman (R-AR), one of the lead sponsors of S. 2364, touted the legislation in his Jan. 30 floor speech introducing the bill as combining “the efficiency and trust associated with the SRF with the leveraging power of WIFIA.”
And during a March 1 Senate Environment & Public Works Committee hearing on the transportation and Army Corps of Engineers aspects of the Trump infrastructure plan, Boozman encouraged Transportation Secretary Elaine Chao to support the legislation in discussions with the White House.
Boozman called Chao “a major player in the infrastructure package” and said given the breadth of the administration's infrastructure plan, “you can't just think in one way” about infrastructure funding as separated budget items.
The goal of legislation, Boozman said, is to “make it such that we allow the SRFs to bundle multiple projects and submit them for approval” to EPA, noting that every state is Triple A bond rated and thus is a good investment. “I encourage you, as you're putting things together, to look at that” legislation, he told Chao.
“I will bring this back to the White House and also the EPA administrator,” Chao responded.
Groups supporting the legislation include the Council of Infrastructure Financing Authorities, National Rural Water Association, National Association of Clean Water Agencies, Ducks Unlimited, American Public Works Association, American Society of Civil Engineers and Associated General Contractors of America.
Drinking Water Utilities
But the Association of Metropolitan Water Agencies (AMWA), which represents large municipally owned drinking water utilities, and the American Water Works Association (AWWA), whose membership includes both municipally- and investor-owned drinking water utilities, remain critical of the legislation, referred to as the Securing Required Funding for Water Infrastructure Now (SRF WIN) Act.
AMWA and AWWA are concerned that diverting WIFIA money to new projects would prevent the program from addressing the problem it was intended to solve -- providing major water and wastewater infrastructure projects with a source of low-cost, federally backed financing.
Additionally, AMWA has warned that besides providing more favorable loan terms to SRFs and possible diversion of EPA staff resources away from WIFIA, “the bill could conceivably set the stage for the new SRF WIN program to replace WIFIA when the original program's authorization expires after the 2019 fiscal year."
Andrew Sawyers, director of EPA's Office of Wastewater Management, told the agency's Environmental Financial Advisory Board (EFAB) Feb. 21 that the agency is poised to issue its first WIFIA loan March 23, providing $129 million for a wet weather treatment station in King County, WA. He said the agency has plans to close on a couple more loans in the next quarter.
Among the loan applications pending at the agency is one from the Indiana Finance Authority to expand the reach of Indiana’s SRF programs.
AMWA and AWWA have argued that Congress should wait “to see how the Indiana project plays out, and the level of SRF interest in WIFIA generally, before creating and dedicating outsized funding to another SRF program within WIFIA.”
Superfund Cleanups
Meanwhile, the Trump infrastructure plan calls for numerous expansions of WIFIA, including using it to address some types of brownfield and Superfund cleanups; non-federal flood mitigation, navigation and water supply projects; and water resource projects that are started by the Army Corps but turned over to non-federal entities. The plan also calls for using WIFIA to provide credit assistance for water system acquisition and restructuring.
“Brownfield and Superfund programs do not have access to a Federal lending program that requires large upfront funding and repayment based on later development,” the plan says. “Broadening eligibility under WIFIA (33 U.S.C. 3905) to include remediation of water quality contamination by non-liable parties at Brownfield and Superfund sites would enable greater use of the program to address water quality issues. A separate account would be appropriate for individual eligibilities and ranking metrics because new revenues would be more speculative and would lower the leveragability ratio for all WIFIA loans.”
During the EFAB meeting, G. Tracy Mehan, who headed the EPA water office during the George W. Bush administration and is now AWWA's executive director of government affairs, asked Sawyers why the Trump administration's infrastructure plan calls for expanding the agency's WIFIA loan program to pay for Superfund activities. But EPA officials at the meeting did not answer the question.
https://insideepa.com/daily-news/epa-prepares-first-wifia-loan-infrastructure-program-faces-challenges
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Inslee Throws in Towel on Carbon Tax
Mar 2, 2018 | E&E Climatewire
By Benjamin Storrow
Supporters of a Washington carbon tax admitted defeat yesterday, in a stinging blow to Gov. Jay Inslee (D) and greens hoping for a landmark win in climate policy.
The loss represents the second time in two years a carbon tax has failed in the Evergreen State. Voters rejected the idea at the ballot box in 2016 after environmentalists split over how to spend revenues raised by the tax.
No U.S. state has enacted an economywide carbon tax, despite the fact that the idea is widely backed by economists as the most cost-effective way to address climate change. Supporters of the Washington bill had hoped this year would be different, after Democrats took control of both chambers of the Legislature in Olympia. But the bill's boosters in the state Senate said they could not muster enough votes to pass a $12-per-ton carbon tax, even though Inslee made the issue his signature priority of the 2018 session.
"We came close, but there were a handful of votes that kept it from moving forward," said Tara Lee, a spokeswoman for Inslee. "The governor is pleased to see how far it progressed this year. It had broad support from a variety of legislators, and leaders from the business, labor, tribal and environmental communities, as well as people from all over the state."
No sooner had the failure been announced than supporters announced plans to resurrect the idea as a ballot initiative later this fall. Even there, though, questions lingered. A coalition of environmental, labor and minority groups has been promising to unveil a proposed initiative for weeks, but it has yet to appear.
Mo McBroom, government affairs director for the Washington chapter of the Nature Conservancy, said the groups plan to file the initiative imminently. She acknowledged disappointment at the Legislature's failure to pass a bill, but downplayed concerns over its death. The Legislature was in a short 60-day session this year and contending with several other pressing matters, most notably the state budget.
"This was the first real attempt to move a carbon measure forward, and I'm impressed with how far it got and how broad the support was," she said.
The Association of Washington Business, the state's largest trade group, has criticized the bill, saying it would raise energy costs. An AWB representative could not immediately be reached for comment yesterday.
Washington has been at the forefront of states' efforts to prove that the United States could still make progress on climate policy even with President Trump in the White House. With Democratic majorities and an outspoken climate action supporter in the governor's office, it was widely viewed as one of the best chances for a major victory this year.
Instead, it represents a double blow for climate hawks, coming just as a greenhouse gas cap-and-trade proposal in Oregon ground to a halt and leaving greens with no obvious paths for major victories this year (Climatewire, March 1).
Supporters can boast some indicators of forward momentum. This year's bill attracted the support of Washington's largest utility, Puget Sound Energy, and one of its most iconic companies, Microsoft Corp. The proposal passed two Senate committees, further than any previous carbon tax plan has advanced, before its backers ultimately conceded they did not have the votes to pass it on the Senate floor.
"It was a fabulous conversation, a fabulous policy. We had 500 pages of comments, of detailed, technical comment," state Sen. Reuven Carlyle (D), the bill's sponsor, told King 5 News. "But it looks like we fell a vote or two short, and it looks like we will move into plan B, which is around clean energy, 100 percent renewable energy, policies like that."
Meanwhile, there are signs that some of the wounds of the 2016 campaign, which saw greens badly divided, are healing. Carbon Washington, the group that sponsored that initiative, said it would back this year's ballot question. Other groups are expected to take the lead this year.
"We believe it's inevitable that Washington is going to enact public policy on this issue," said Carbon Washington Executive Director Kyle Murphy. "The question is whether it happens on the ballot in a couple months or the Legislature next year. The folks opposing this bill have only bought themselves a couple months."
https://www.eenews.net/climatewire/2018/03/02/stories/1060075263
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N.J. Leaves Legal Fight after Electing Democratic Governor
Mar 2, 2018 | E&E Climatewire
By Niina Heikkinen
New Jersey is officially out of litigation over the Obama administration's signature climate rule.
Yesterday, a federal appeals court approved the state's voluntary motion to withdraw from the case challenging the Clean Power Plan. The regulation would have controlled greenhouse gas emissions from power plants and was meant to be a key piece in the U.S. plan to limit CO2 under the Paris Agreement. The Trump administration is repealing the rule and possibly replacing it with a narrower version.
The decision to leave the case stems from the state's election of a Democratic governor to replace Republican Chris Christie. Gov. Phil Murphy has prioritized cutting carbon emissions by re-entering the Regional Greenhouse Gas Initiative, a 10-state cap-and-trade program from which Christie withdrew.
New Jersey is now the second state to leave the legal fight over the Clean Power Plan. North Carolina also withdrew after the state elected Democrat Roy Cooper as governor (E&E News PM, Jan. 30).
Also yesterday, the U.S. Court of Appeals for the District of Columbia Circuit announced it was extending the freeze on litigation in the Clean Power Plan case for an additional 60 days. The Trump administration had requested an abeyance in the case while it considered withdrawing and potentially rewriting the rule. Last spring, the D.C. Circuit granted the request, but the court still requires EPA to give status reports every 30 days on progress related to the case.
A separate Supreme Court decision has stalled implementation of the Clean Power Plan.
New Jersey's withdrawal comes a day after EPA held a listening session in San Francisco on the agency's proposal to repeal the Clean Power Plan. The agency faced strong backlash from officials in West Coast states.
"We might not prevail, but we believe that we're right, both on the law and on the science, and it's important to make that point because if they do proceed as proposed, then we're going to have to litigate, so it's important to have the record out there," said Mary Nichols, chairwoman of the California Air Resources Board (Climatewire, March 1).
https://www.eenews.net/climatewire/2018/03/02/stories/1060075237
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GAO Expanding Climate Adaptation Work
Mar 2, 2018 | Inside EPA
The Government Accountability Office (GAO) is expanding its climate adaptation work, beginning a study examining the benefits of adaptation and the current federal approach to funding adaptation projects.
The office is also examining the resiliency of local drinking water and wastewater infrastructure, Alfredo Gomez, director of GAO's Natural Resources & Environment Division, told a March 1 event, “Communities in Harm's Way” Addressing Environmental Change and Extreme Weather Events,” hosted by the National Academy of Sciences (NAS).
Gomez told the event, which is intended to address policy and community response mechanisms to climate change and extreme weather, that GAO hopes to determine a good model for federal funding for adaptation projects, and is also working with local utilities on the resilience of their water and waste infrastructure.
The expanded effort adds to the office's extensive work on the subject of climate change, from when it first added the threat of climate change to its list of “high-risk” fiscal threats to the government in 2013.
That report is updated -- to include criteria for progress in five specific areas -- every new Congress, so the next report is due in 2019.
As part of that work, Gomez noted that GAO is urging the government to include climate change as part of strategic planning, and has worked to heighten the need for federal agencies and departments to offer technical assistance to make better decisions to reduce the threat.
He told the NAS event that the federal government has spent $278 billion for disaster assistance between fiscal years 2005 and 2014, suggesting that better planning could lower those numbers.
GAO also wants federal, state and local agencies to have access to the data needed to make better infrastructure decisions. Many times, the funds associated with these projects fall under the federal insurance programs and are likely eligible for federal disaster relief.
A recent report the office issued assessed available climate information systems, and compared the domestic ones to what other countries use.
Another assessed community adaptation priority determinations and a third looked at how standard-setting organizations incorporate climate considerations into their work.
A fourth assessed the potential economic impacts of climate change, and found one estimate of coastal property damages from sea level rise could cost up to $6 billion between 2020 and 2030, Gomez said.
All of that information, while still evolving and imprecise, can provide useful insights into identifying climate risks and are also a first step for deciding how to manage those risks, he added.
https://insideepa.com/daily-feed/gao-expanding-climate-adaptation-work
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