ACC PM 3/6/18

Industry and Association News

1. (ACC Mentioned) Global Chem Production Steady in January, Output by Segment Mixed - ACC

   Mar 6, 2018 | ICIS

   By Tracy Dang
   
   
   Global chemical production was stable in January, following a 0.3% gain in December, the American Chemistry Council (ACC) said on Tuesday in its latest Global Chemical Production Regional Index (Global CPRI).
2. (ACC Mentioned) Coke, Dow, Kimberly-Clark Join Forces to Tackle Ocean Plastics in SE Asia

   Mar 6, 2018 | Sustainable Brands

   Corporate action to tackle the mounting problem of ocean plastics is on the rise with new commitments and cross-industry initiatives cropping up regularly.
3. Trump's Own Budget Office Admits Obama-Era Regulations Brought Billions in Benefits

   Mar 6, 2018 | Environmental Defense Fund

   By Keith Zukowski
   
   
   What do you do when a new report undermines a narrative you’ve used to forcefully promote your agenda? You release it on a Friday evening with minimal media outreach, hoping nobody takes notice.

LCSA News

4. United States: TSCA Inventory Reset Rule: Whats Next for Processors?

   Mar 6, 2018 | Mondaq News Alerts

   By Lawrence Culleen
   
   
   Numerous US businesses that manufacture and import chemical substances breathed a sigh of relief after struggling to meet the initial deadline established by EPA's Toxic Substances Control Act (TSCA) "Inventory Notification (Active-Inactive) Requirements" Rule.

Chemical Management News

5. (ACC Mentioned) The Big Squeeze: Dangers for Public Health Lurk in Recent EPA Re-Org Efforts

   Mar 6, 2018 | Environmental Defense Fund

   By Jennifer McPartland
   
   
   Over the past several months, the Environmental Protection Agency (EPA) has made or proposed a number of distressing shifts in offices or staff that support critical chemicals-related activities and scientific research.
6. EU Publishes Long-Delayed Second REACH Review

   Mar 6, 2018 | Chemical Watch

   By Luke Buxton
   
   
   The European Commission has published its delayed report on the second REACH Review. Originally expected in June last year it sets out 16 actions it wants to improve implementation of the Regulation.

Energy News

7. Steel Tariff Debate Spills into Energy Gathering

   Mar 6, 2018 | E&E Energywire

   By Edward Klump and Mike Lee
   
   
   Sen. Dan Sullivan (R-Alaska) was here yesterday to spread optimism about American energy, but he couldn't escape questions about the implications of steel tariffs.
8. Zinke Says Natural Gas Flaring Is

   Mar 6, 2018 | Houston Chronicle

   By James Osborne
   
   
   Interior Secretary Ryan Zinke said the practice of flaring natural gas from oil wells was "wasteful," during a speech at the IHS Markit CERAWeek energy conference in Houston Tuesday.
9. US Shale Oil Output Is Surging. Here's What Will Keep the Boom Going

   Mar 6, 2018 | CNBC

   By Tom DiChristopher
   
   
   The oil industry is gathering in Houston for one of the biggest energy conferences of the year, and the question that will loom over CERAWeek by IHS Markit is just how fast can U.S. oil production grow?
10. A ‘Major Second Wave’ of U.S. Fracking Is About to Be Unleashed Upon the World

    Mar 6, 2018 | TIME

    By Justin Worland
    
    
    U.S. oil and natural gas is on the verge of transforming the world’s energy markets for a second time, further undercutting Saudi Arabia and Russia.
11. Cove Point Becomes 2nd U.S. Liquefied Natural Gas Export Terminal

    Mar 6, 2018 | Forbes

    By Jude Clemente
    
    
    And so it begins. Friday was a historic day for the U.S. energy industry and our always evolving natural gas business in particular.
12. Six Years Later, Cheniere and India's Gail Kick Off 20-Year LNG Agreement

    Mar 6, 2018 | Natural Gas Intelligence

    By Charlie Passut
    
    
    More than six years after signing a 20-year sales and purchase agreement (SPA) for liquefied natural gas (LNG) supplies, Cheniere Energy Inc. and India's state-owned natural gas utility, Gail (India) Ltd., officially kicked off their SPA on Monday, with a ship expected to depart Cheniere's export terminal in Louisiana by day's end.
13. Port of Corpus Christi to Be Top U.S. Hub by Mid-2020s

    Mar 6, 2018 | E&E Energywire

    By Jenny Mandel
    
    
    The growing importance of the Permian Basin will push Texas' Corpus Christi into the spotlight as the leading export hub for domestic oil, industry analysts predict.

Chemical Security News - There are no clips to report at this time.

Transportation and Infrastructure News - There are no clips to report at this time.

Environment News

14. Carbon Tax, Defeated in the Legislature, to be On The Ballot

    Mar 6, 2018 | E&E Climatewire

    By Benjamin Storrow
    
    
    Third time's the charm. That's what proponents of a carbon tax in Washington state are hoping.
15. State Attorneys to Pruitt: Repeal, Don't Replace

    Mar 6, 2018 | E&E Climatewire

    By Niina Heikkinen
    
    
    The Trump administration is considering a replacement for the Obama-era Clean Power Plan, but a coalition of Republican state attorneys general wants the climate rule scrapped with no substitute.
16. Bloomberg Picked for High-Profile Climate Job

    Mar 6, 2018 | E&E Climatewire

    By Jean Chemnick
    
    
    Former New York Mayor and businessman Michael Bloomberg is taking on another U.N. climate leadership role, this time as Secretary-General António Guterres' right-hand man for a climate summit in Manhattan next year.
17. Lawyers Warn Climate Nuisance Ruling Could Open Litigation 'Floodgates'

    Mar 6, 2018 | Inside EPA

    By Lee Logan
    
    
    Two industry attorneys are warning that a federal judge's decision to assert jurisdiction over a climate change nuisance suit brought by California cities -- a move initially seen as aiding defenses of fossil fuel producers -- could nevertheless “open the floodgates” for a raft of similar suits because the Clean Air Act may not preempt the new actions.

Industry and Association News

1. (ACC Mentioned) Global Chem Production Steady in January, Output by Segment Mixed - ACC

   Mar 6, 2018 | ICIS

   By Tracy Dang

   Global chemical production was stable in January, following a 0.3% gain in December, the American Chemistry Council (ACC) said on Tuesday in its latest Global Chemical Production Regional Index (Global CPRI).

   “All chemical industry segments have improved from the recession, with the most pronounced recovery having occurred in cyclical segments,” the report said.

   “During January, results were mixed on a product basis, with weakness in agricultural chemicals, consumer products, petrochemicals and organics, plastic resins, synthetic rubber, manufactured fibres and coatings."

   Production gains by region were mixed, with growth in Europe, the Former Soviet Union and the Africa-Middle East region offsetting declines in other areas, the report said.

   Chemical production in North America fell by 0.1% in January from December on a 0.3% decline in the US. Canada output rose by 3.7%, while Mexico production rose by 0.9%.

   Year on year, January chemical production in North America rose by 2.6%.

   Latin America chemical production fell by 0.9% in January from December, as output declined in Brazil, Chile and other countries. Year on year, January production rose by 0.1%.

   January chemical production in Europe rose by 0.7% month on month and by 4.5% year on year.

   Output in the Asia-Pacific region fell by 0.2% month on month and rose by 3.4% year on year.

   On a three-month-moving-average (3MMA) basis, the Global CPRI in January was up by 3.4% year on year, the ACC said.

   The Global CPRI measures the production volume of the business of chemistry for 33 key nations, sub-regions and regions, all aggregated to the world total. The index is comparable to the Federal Reserve Board production indices.

   https://www.icis.com/resources/news/2018/03/06/10199929/global-chem-production-steady-in-january-output-by-segment-mixed-acc/
   

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2. (ACC Mentioned) Coke, Dow, Kimberly-Clark Join Forces to Tackle Ocean Plastics in SE Asia

   Mar 6, 2018 | Sustainable Brands

   Corporate action to tackle the mounting problem of ocean plastics is on the rise with new commitments and cross-industry initiatives cropping up regularly. Kimberly-Clark, The Coca-Cola Company and The Dow Chemical Company are the latest to double down on their efforts to drive impact, joining Closed Loop Partners’ Closed Loop Oceaninitiative, which seeks to develop a new funding mechanism to prevent plastic from leaking into the world’s oceans. Partnerships in Environmental Management for the Seas of East Asia (PEMSEA) has also signed onto the initiative, becoming the first intergovernmental organization to participate in Closed Loop Ocean’s efforts.

   The newcomers join the likes of the Ocean Conservancy, the Trash Free Seas Alliance, 3M, PepsiCo, Procter & Gamble, the American Chemistry Council and the World Plastics Council.

   Introduced at the Our Ocean 2017 conference in Malta in October, Closed Loop Ocean is designed to identify, develop and facilitate investments in waste management and recycling solutions in Southeast Asia, with a focus on improving collection, sorting and recycling markets.

   Research indicates that nearly half of the plastic that flows into the world’s oceans each year — an estimated 8 million metric tons — escapes from waste streams in just five fast-growing economies in Asia. The extent of plastic pollution in Indonesia, one of the five targeted countries where around 130,000 tons of plastic and solid waste are produced every day, was recently highlighted in a short video posted on YouTube by British diver Rich Horner. The video, which was filmed at Manta Point, a mere 20km away from Bali, shows a submerged Horner surrounded by innumerable plastic bags, bottles, cups, sachets, straws and other items, which appear to drastically outnumber the fish and other marine life in the area.

   To stem the tide of plastic pollution, Closed Loop Ocean will focus on stimulating investment in waste management and recycling solutions in Southeast Asia and India. Throughout 2018, the initiative will narrow its geographic focus, define investment criteria, build its network of partners and begin to identify potential investments.

   “Solving the problem of ocean-bound plastics will require significant investment and partnership from brands and supply chain leaders. Partnership with our coalition of companies who have operations in these markets and with PEMSEA, a regional intergovernmental body with local knowledge and experience in SE Asia will help us bring in additional investors, understand the local market and supply chain dynamics and develop an investment strategy that unlocks the key bottlenecks holding back the recycling system in SE Asia and India,” said Rob Kaplan, Managing Director of Closed Loop Partners.

   Closed Loop Ocean isn’t the first collaborative initiative to harness market-based solutions to drive change. Environmental NGO Lonely Whale and Dell teamed up late last year to launch the first-ever commercial-scale ocean-bound plastics supply chain called NextWave. Members of the initiative, which include General Mills, Interface, Herman Miller and the New Materials Institute, are working together to develop a sustainable model that reduces ocean-bound plastic at scale, while creating economic and social benefits for multiple stakeholders.

   http://www.sustainablebrands.com/news_and_views/waste_not/sustainable_brands/coke_dow_kimberly-clark_join_forces_tackle_ocean_plastic
   

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3. Trump's Own Budget Office Admits Obama-Era Regulations Brought Billions in Benefits

   Mar 6, 2018 | Environmental Defense Fund

   By Keith Zukowski

   What do you do when a new report undermines a narrative you’ve used to forcefully promote your agenda? You release it on a Friday evening with minimal media outreach, hoping nobody takes notice.

   At least, that’s what the Trump administration did with a recent report discrediting his administration’s claim that federal protections impose debilitating costs on our economy and society.

   The report, written by the White House’s own Office of Management and Budget, showed that federal regulations in place between 2006 and 2016 brought between $287 billion and $911 billion in benefits – dramatically outweighing costs of between $78 billion and $115 billion.

   In sum, the regulations offered a staggering net benefit of up to $833 billion.

   Figures like that would make any prudent chief executive gasp and fawn. Instead, the Trump administration has kept practically mum about the report while continuing to promote a fictitious view of the effect federal safeguards have on Americans.

   That, of course, doesn’t mean the report will go away.Pruitt digs his heels in

   The same Friday evening the OMB report came out, U.S. Environmental Protection Agency Administrator Scott Pruitt gave a speech at the Conservative Political Action Conference, touting the repeal of 22 environmental and public health regulations he claimed would save the nation $1 billion.

   The EPA chief did not mention the benefits of those rules, nor the role they played keeping people healthy and safe. In Pruitt’s twisted calculus, the equation is simple: Regulations are bad, without exception.

   As the OMB report shows, however, such protections provide net savings many times over by limiting health and social costs, while boosting  community and private revenues. Examples of this at the EPA, so often the target of Pruitt’s own deregulatory attacks, are abundant.

   Policies cited in the report for which benefits outweigh costs include heavy-duty truck emissions, cross-state air pollution, landfills, natural gas emissions – and the list goes on. Among the benefits of those regulations: fewer deaths, asthma attacks and debilitating cardiovascular conditions; lower rates of cancer; and healthier, happier American communities.A history of inflated “costs”

   There’s a long history of “sky is falling” claims about costs from environmental and public health protections.

   For instance, a business roundtable of the American CEO Association argued that 1990 Clean Air Act amendments would assert a financial burden of $104 billion. In reality, the actual cost was about $20 billion, not accounting for the remarkable health protections and benefits that the amendments afford.

   Another estimate by the automobile industry claimed standards to address pollution from cars would impose a cost of $432 per vehicle, when the real cost was $88.

   The Trump administration takes a one-sided view of the subject that does not in good faith consider the remarkable benefits that smart polices offer. Interestingly, there’s now a report showing exactly what such policies bring to keep our families and communities safe – even, if for now, Trump’s White House wants to bury it.What happens now?

   The OMB report is now in the hands of Congress, where some members will likely look at it and maybe use it, while others just pretend it doesn’t exist or even question the report’s underlying data.

   Those of us who want to keep our families and communities safe and healthy, meanwhile, can use it as more evidence as we fight back against the Trump administration’s efforts to roll back America’s bedrock environmental protections.

   The facts, validated byTrump’s own budget office, are on our side.

   https://www.edf.org/blog/2018/03/06/trumps-own-budget-office-admits-obama-era-regulations-brought-billions-benefits
   

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LCSA News

4. United States: TSCA Inventory Reset Rule: Whats Next for Processors?

   Mar 6, 2018 | Mondaq News Alerts

   By Lawrence Culleen

   Important Considerations for Companies that Purchase and Use Chemical Substances

   Numerous US businesses that manufacture and import chemical substances breathed a sigh of relief after struggling to meet the initial deadline established by EPA's Toxic Substances Control Act (TSCA) "Inventory Notification (Active-Inactive) Requirements" Rule. Now, entities that purchase and process chemical substances in the US are facing an upcoming deadline under the new rules; those businesses must decide soon how they will respond. For some companies that do not import or manufacture chemicals, but merely acquire and use chemical formulations in their manufacturing and blending operations, this might be the first time they have faced a TSCA reporting rule.Background

   Also known as the "Inventory Reset Rule" or "Active-Inactive Rule," these new EPA requirements took effect in August 2017—approximately one year after the 2016 amendments to TSCA became law. As discussed in our June 2017 Advisory, the final Active-Inactive Rule is intended to permit EPA to clarify which chemical substances currently listed on EPA's TSCA Inventory of chemical substances are actually "active" in US commerce. The rule establishes certain "retrospective reporting requirements" which requiredmanufacturers (including importers) of chemical substances to notify EPA, by no later than February 7 of this year, which chemical substances appearing on the current TSCA Inventory have been manufactured in or imported to the United States between June 21, 2006 and June 21, 2016 (the "lookback period"). The February deadline remained in effect despite litigation in the DC Circuit challenging certain portions of the rule.

   The Active-Inactive Rule also includes certain "forward-looking reporting requirements" obligating manufacturers and processors to provide a forward-looking report to EPA when they intend to commence, manufacture, or processing any chemical substance that is designated as "inactive" on the updated Inventory. (Regulations that were codified by EPA shortly after the statute was originally enacted in 1976 already require notification to be submitted to EPA prior to manufacturing or importing a "new" chemical substance—one that is not listed on any portion of the TSCA Inventory.)

   A list published by the Agency in January 2018 reveals that over 14,700 notices of activity had been received by EPA pursuant to the Rule. These substances, as well as any others reported to EPA prior to the February 7 deadline, will be identified on the TSCA Inventory as "active." EPA intends to publish a "draft" version of the updated Inventory approximately 60 days after the February 2018 close of the manufacturer reporting period. This draft version of the TSCA Inventory is likely to be of particular interest to processors of chemical substances. Although entities that processedInventory-listed chemical substances during the lookback period were not required to submit a notice, they were permitted to do so voluntarily—and may continue to submit a notice to activate a substance until October 5, 2018. Processors who might not manufacture or import chemicals themselves, but who acquire and blend or further react chemical substances, should assume the October 2018 deadline, like the initial February 2018 deadline, will not change. Accordingly, they should monitor the most current lists of "active" substances as they are released by EPA.Important Considerations For Processors

   Although the deadline for manufacturers to comply with the retrospective reporting requirements has passed, a number of potential challenges lie ahead for processors of chemical substances on the TSCA Inventory. First, because processors are not required under the final Active-Inactive rule to comply with the retrospective reporting requirements, they should determine whether they will choose to do so. Processors should make this decision bearing in mind that they may not commence to process a substance which ultimately is designated as "inactive" until an appropriate notice seeking to "reactivate" a chemical substance has been submitted to EPA. Thus, the prudent course of action for processors is to take all possible steps to ensure the continued commercial availability of materials upon which they rely to manufacture the various goods they produce and distribute. Processors who plan to submit "retrospective reports" for substances they processed during the 10-year lookback period must do so by October 5, 2018.

   A few alternative approaches can be considered by processors who did not submit reports voluntarily during the reporting period that culminated on February 7, 2018. First, if this has not occurred already, a processor should identify all of the raw materials required for its continued operations and then seek to communicate with each supplier of those materials to request assurances that all chemical components in such materials have been activated. Unfortunately, seeking assurances does not guarantee timely receipt of an assurance from every supplier, and even then will not insulate a processor from liability if it processes at a later date a substance which is placed on the "inactive" portion of the final Inventory. Second, processors could chose to continue to review EPA's updates to the on-line versions of the active substances designation list and wait to submit notifications only for those substances a processor acquires which are listed on the draft Inventory as inactive. A third alternative is for a processor to simply submit a retrospective report for all important raw materials which it is has been unable to confirm will appear on the forthcoming draft Inventory. For the reasons discussed immediately below, some combination of these three approaches is likely to be necessary.

   As most entities that acquire chemical substances from suppliers have experienced, there often is not complete transparency with respect to the chemical components that comprise any mixture of substances. Considerations of intellectual property and competitive advantages very often make suppliers reluctant to reveal with complete specificity all components in a formulation delivered to a customer. Thus, even the most diligent of processors is likely to find it difficult to verify by CAS Registry number (or EPA accession number) that each component in a product it acquires has been listed on the "active" portion of the forthcoming draft Inventory. Further, many chemicals in the supply chain might be lawfully produced and distributed pursuant to an exemption from the general TSCA Inventory listing requirements. The legal status of an "exempt" chemical (such as certain polymers, or chemicals produced at a low volume under the terms of an explicit exemption granted by EPA) may be difficult to confirm and validate, even if the CAS registry number of the substance is known. Often, a processor might not be aware there are multiple chemicals in a raw material it acquires; frequently suppliers change components (or their own source of supply) in a formulated product without notice to customers of the formulation change. This can alter the product's legal status vis-a-vis the TSCA Inventory. Moreover, many chemical substances are listed only on the confidential portion of the Inventory. Thus, even if a CAS number might be known to a processor, its presence on the Inventory using the CAS number might not be obvious if it was claimed as confidential business information (CBI) at the time of the original listing. Finally, the Active-Inactive Rule makes it possible under certain circumstances for a manufacturer or importer to choose to withdraw or modify a retrospective report previously submitted until the close of the processors' reporting deadline. For these reasons we recommend that processors adopt a proactive and multifaceted approach to ensure that they will not risk interruptions in supply or disruptions to their ability to deliver products to their customers. This approach is discussed further below.

   EPA has advised that it plans to issue a notice announcing the availability of the draft version of the active-inactive TSCA Inventory perhaps as early as April 2018. The draft will reflect all information submitted by manufacturers on or before the initial February 7, 2018 deadline and allow EPA to integrate the reports with the previously released "interim" and "exempt" substances lists. The draft Inventory will include a list of substances that EPA is considering designating as "inactive." Thereafter, processors of chemical substances will have about 6 months to review the updated draft TSCA Inventory before they must have filed retrospective reports they intend to submit. In preparation for the October 5, 2018 reporting deadline, processors should consider taking the following steps.

   First: If they have not done so already, processors should take steps now to identify the raw materials in all formulations they purchase that are used in manufacturing and processing operations for commercial products.

   Second: Prior the publication of the draft version of the TSCA Inventory, processors should take affirmative steps to reach out to suppliers and identify and confirm that components in formulations have been reported or are considered to be exempt from the reporting requirement. Seeking the chemical names, CAS Numbers, or EPA accession number for each component chemical in a formulation will make it easier for a processor to make informed decisions about whether to submit a notice of activity when the draft Active-Inactive Inventory finally appears. If a supplier is reluctant to provide that information, the supplier can be asked to provide assurances in writing that it has verified the active status designation of all components. When a supplier is unwilling or unable to verify that a timely submittal was made to obtain an active designation listing, or that such a listing already is present, or is hesitant to disclose the exact formulation of a product to a processor, a processor and a supplier may take advantage of the "joint submission" process described in the final rule.1 The joint submission process allows processors to submit retrospective reports containing the chemical information that they have in their possession, and then delegate to the supplier the responsibility of providing the specific (confidential) chemical information to EPA.

   Third: Processors should examine the draft Active-Inactive Inventory when issued and then prepare and timely file a notice of activity report for any substances present in formulations that the processor acquired and processed during the lookback period. This will ensure that, going forward, these materials will remain eligible for processing—even if a processor has not received a response from a supplier to its request for information about the chemical formulation of a product. In these cases, processors should, to the best of their knowledge, attempt to identify the chemical substances at issue, drawing from the EPA-developed list of "non-CBI chemical identifiers, EPA accession number(s) and generic name(s)," for retrospective reporting.2

   If a processor knows the chemical substances in a formulation, but cannot find them on the active substances portion of the draft active/inactive TSCA Inventory—either because the manufacturer of a substance did not submit a retrospective report, or because the chemical identity in the retrospective report may have been claimed as CBI and is therefore not available on the public Inventory—the processor can submit its own retrospective report. In instances where the processor believes, but is not certain that, a manufacturer submitted a retrospective report that is protected by CBI, it is in the processor's best interest to submit a retrospective report to gain certainty that commercially important substances remain on the "active" portion of the Inventory. Such reporting also ensures that the decision by a supplier or manufacturer to withdraw or revise a previously-submitted retrospective report for a substance of importance to a processor does not create potential compliance issues if a processor does not learn about the withdrawal or revision until after the October 2018 deadline.Conclusion

   Although processors are not required to submit retrospective notice of activity reports under the TSCA Inventory Notification (Active-Inactive) Requirements Rule, we recommend they do so to protect themselves against potential supply chain interruptions and issues that could adversely affect their relationship with suppliers if the TSCA compliance status of a processor's products should come into question. If a chemical substance used by a processor unexpectedly is placed on the "inactive"portion of the TSCA inventory, a processor might have to halt processing until it can prepare and file a "forward-looking" report to resume processing of the chemical substance, or the processor (and potentially down-stream customers) could risk become subject to steep penalties under TSCA.

   http://www.mondaq.com/unitedstates/x/680042/Environmental+Law/TSCA+Inventory+Reset+Rule+Whats+Next+For+Processors
   

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Chemical Management News

5. (ACC Mentioned) The Big Squeeze: Dangers for Public Health Lurk in Recent EPA Re-Org Efforts

   Mar 6, 2018 | Environmental Defense Fund

   By Jennifer McPartland

   Over the past several months, the Environmental Protection Agency (EPA) has made or proposed a number of distressing shifts in offices or staff that support critical chemicals-related activities and scientific research. The programs affected include the Integrated Risk Information System (IRIS) program, the Safer Choice program, and the National Center for Environmental Research (NCER). Not coincidentally, each of these programs has been in the crosshairs of certain segments of industry and its allies in Congress and the Administration.

   This blog post briefly reviews the proposed or implemented shifts and their implications.  

   EPA’s IRIS program

   EPA’s IRIS program sits in the science arm of the agency, the Office of Research and Development (ORD). IRIS is a non-regulatory program that provides critical information and expertise to support a variety of public health protection needs inside and outside the agency—from establishing clean-up standards at contaminated sites to ensuring clean drinking water. Its assessments of chemicals are considered the gold standard, and the last published review of IRIS by the National Academy of Sciences (NAS) in 2014 gave the program resounding praise. (Another NAS review of the IRIS program is currently under way, see here).

   As I blogged earlier, the Senate Committee on Appropriations majority’s FY 2018 EPA funding bill called for eliminating IRIS and re-assigning a number of its staff to support TSCA implementation. An internal EPA memo for the President’s FY 2018 budget eliminated all funding for the IRIS program (see p. 21 here), although the cut didn’t make the President’s final budget proposal.

   IRIS has long been under attack by the chemical industry and its allies (see for example, this piece by the conservative think tank, Competitive Enterprise Institute (CEI) and recent commentary from the American Chemistry Council).

   Eliminating the IRIS program, or cutting its resrouces, would be devastating for offices across EPA, as well as for other federal agencies, states, regions, and tribes, all of whom rely on IRIS chemical assessments and expertise to help them protect public health. Several state attorneys general and communities affected by toxics like perfluorinated chemicals (PFCs) have strongly opposed eliminating IRIS or cutting its resources. IRIS’ fate remains uncertain.

   There are signs EPA may seek to gut IRIS by shifting its limited staff resources out of the program and into regulatory offices.

   EPA’s Safer Choice Program

   Safer Choice is a voluntary EPA program that recognizes products that use safer chemistry. Products that meet the program’s safer ingredient and disclosure requirements earn the right to carry the Safer Choice label, helping shoppers easily identify products that have put a premium on safer ingredients.

   This program has received significant praise not only from the NGO community (see for example, here, here, and here), but also from industry. In fact, over 180 companies ranging from major chemical manufacturers like BASF and Dow, to product manufacturers like P&G, Seventh Generation, RB and Levi Strauss, to retailers like Walmart and Target, sent a letter of support for the program to Administrator Pruitt early on in the Trump Administration.

   But certain segments of the chemical industry have sought to make Safer Choice go away (see again the CEI piece), and they may just get their way. President Trump’s FY 2018 (see p. 64 here) and FY 2019 (see p. 79 here) budgets propose to zero out EPA’s pollution prevention program, which funds Safer Choice. The Senate majority appropriations bill I mentioned above does as well (see p. 62 here).

   Not content with waiting for a new budget, Scott Pruitt’s EPA took its own big swipe at Safer Choice just over a week ago, shifting five of its 14 staff to support TSCA implementation.

   National Center for Environmental Research (NCER)

   Last week, EPA announced it will consolidate three offices within ORD, including the National Center for Environmental Research (NCER).

   NCER manages the vast majority of extramural research funding provided by EPA, mainly through its Science to Achieve Results (STAR) program. We recently blogged about the STAR program in the context of Scott Pruitt’s directive barring scientists currently receiving EPA grants from serving on EPA advisory committees.

   The STAR program received a glowing review from NAS just last year. NAS noted that the program “fosters collaboration and knowledge-sharing, which have produced research that has supported interventions that may reduce the cost of regulations, protect public health, and save lives.” STAR grants have been awarded to investigators across the country, and have led to the publication of 6,614 scientific articles between 2001 and 2012 (p. 38 of NAS report). Among the many public health benefits resulting from STAR-funded research are the improvement of air quality standards and the imposition of limits on arsenic in infant rice cereal.

   Despite these achievements, funding for the STAR grant program has been in steady decline. In the early 2000s, the STAR program was funded annually at $138 million, but by 2017 funding had fallen to $28 million.

   What does the consolidation involving NCER mean for the STAR program? While that is not yet clear, it certainly doesn’t bode well given everything we’ve seen so far, including this Administration’s proposal to slash ORD’s budget by over 48% in FY 2019.

   Like the Safer Choice program, this Administration has painted a bullseye on the STAR program: President Trump’s FY 2018 (see p. 68 here) and FY 2019 (see p. 83 here) budgets propose to zero out the program. This is all in keeping with this Administration’s broader gutting of funding support for public health and environmental research and the next generation of health and environmental researchers.

   Those who care about protecting public health need to closely watch and push back against these reorganizations, reassignments, and budget cuts, which collectively pose dire threats to our health and that of our environment.

   Jennifer McPartland, Ph.D., is a Senior Scientist with the Health Program.

   http://blogs.edf.org/health/2018/03/06/the-big-squeeze-dangers-for-public-health-lurk-in-recent-epa-re-org-efforts/
   

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6. EU Publishes Long-Delayed Second REACH Review

   Mar 6, 2018 | Chemical Watch

   By Luke Buxton

   The European Commission has published its delayed report on the second REACH Review. Originally expected in June last year it sets out 16 actions it wants to improve implementation of the Regulation.

   However, there will be regret in some quarters that it does not propose any major legislative changes.

   In this, its second five-year review of the Regulation, the Commission says that REACH is "effective" and is "addressing today’s citizens’ concerns about chemical safety".

   However, it added, opportunities for "further improvement, simplification and burden reduction" have been identified.

   According to the Review, which consists of a 12-page communication and a staff working document, the issues requiring "most urgent" action are:

   non-compliance of registration dossiers;

   simplification of the authorisation process;

   ensuring a level playing field with non-EU companies through effective restrictions and enforcement; and

   clarifying the interface between REACH and other EU legislation, in particular that on occupational safety and health (Osh) and on waste.

   Dossier updates

   Top of the Commission’s 16 actions is to "encourage" companies to update registration dossiers. Echa has long advocated reform in this area and the failure to propose any immediate and decisive action will come as a disappointment.

   In June last year, then agency head Geert Dancet said it should be "normal" for companies to do this at least every five or ten years. A change to the Regulation could ensure companies "take their job seriously", he said. And in September an Echa-commissioned report called for "mandatory periodic" deadlines on REACH dossier updates.

   However, in its Review the Commission says that in collaboration with Echa, member states and industry, it will "identify why registrants are not updating their dossiers and make proposals for improvements" by the first quarter of 2019.

   It has also "requested" that Echa significantly increase the efficiency of the evaluation procedures by next year. This, it says, could be done by:

   "developing remedies" for reasons behind non-compliance;

   systematically implementing a grouping approach, where possible;

   improving the way evaluation activities are shared with member states; and

   improving decision-making procedures.

   A recent report on ten years of REACH evaluation has revealed the extent of the problem of data gaps in dossiers – more than two-thirds failed compliance checks.

   Restrictions

   The Commission has listened to NGOs’ calls to improve control on chemicals.

   It has requested that Echa "systematically" considers preparing a restriction dossier before the sunset date of each substance subject to authorisation and present in articles in accordance with Article 69(2).

   It has also asked the agency to identify relevant cases for restriction as part of its regular screening activities, and to consider substances for which national legislation and not EU legislation exists.

   Meanwhile, the Commission says it will continue to identify suitable cases for restricting carcinogenic, mutagenic or reprotoxic substances in consumer articles through a simplified procedure, according to Article 68(2).

   Additionally, alongside the agency it will work with member states to further simplify the submission requirements and increase member state capacities to develop dossiers for new restrictions. Further, the Commission will provide "constructive solutions", such as "encouraging" joint dossiers prepared by several member states in cooperation with Echa.Authorisations

   The Commission has addressed industry’s criticism of the ‘burden’ of the authorisation process. It says it will continue to make it "more workable" for operators, including for SMEs. It would do this, it added, by "simplifying" applications for continued use of SVHCs in legacy spare parts and further considering the case of low-volume applications this year.

   It will "closely monitor and address" difficulties related to applications for authorisation covering multiple operators, it said. It will also reduce fees for applicants in joint applications.

   Reacting to the Review, Echa executive director Björn Hansen said the agency is "already working on many of the areas identified in the report" and that its input "comes at a good time as we are currently shaping our future strategy".

   The first REACH Review, covering the initial five years of the Regulation, since entry into force in 2007, was expected in June 2012 but was not released until February 2013. It called for better registration dossiers and reduced burden on SMEs.

   https://chemicalwatch.com/64578/eu-publishes-long-delayed-second-reach-review
   

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Energy News

7. Steel Tariff Debate Spills into Energy Gathering

   Mar 6, 2018 | E&E Energywire

   By Edward Klump and Mike Lee

    Sen. Dan Sullivan (R-Alaska) was here yesterday to spread optimism about American energy, but he couldn't escape questions about the implications of steel tariffs.

   His answer: The Trump administration's tariff proposal could make it harder for the United States to manage the economic and strategic challenges presented by the rise of China.

   Sullivan said he's reached out to senators and administration officials. The issue is how to address overcapacity of the steel industry that is driven by production in China, he said.

   "To me, the most important way in which we deal with that is having close alignment with our like-minded allies," Sullivan told reporters. Instead, he worries the tariff plan is in some ways "having the opposite impact."

   Sullivan spoke during the opening day of CERAWeek by IHS Markit, the prominent energy conference held annually in Houston. Comments yesterday provided a window into the complicated relationship the oil and gas industry and its free-market allies have with President Trump, who suggested last week that steel and aluminum tariffs are on the way (Energywire, March 2). Daniel Yergin, CERAWeek's main host, said Friday that the oil industry and American business generally have "a mixed view" of the administration's policies.

   Yergin made sure to ask Sullivan and CEO Greg Armstrong of Plains All American Pipeline LP about tariffs and a debate over the North American Free Trade Agreement (NAFTA) during a session here yesterday on North American energy infrastructure.

   Armstrong said "some form of NAFTA" is needed from an energy perspective, though he said an update probably is warranted. The CEO said his company has been examining possible tariffs because it has about $1.5 billion of projects underway that use quite a bit of steel. He described ways the company could be affected.

   "We buy not only pipe, but we buy valves and things that aren't manufactured in the United States," he said. "And so we don't think that it would be appropriate to put a tariff on something that you can't buy here in the United States."

   Armstrong said the issue is "thornier" than headlines suggest after declaring: "We'll survive no matter what."

   Sullivan said an effort to modernize NAFTA may provide opportunities, noting how different the American energy sector was 25 years ago.

   "To update this agreement in a way that really promotes the North American continent to be really in some ways the world's next energy superpower, it provides enormous" opportunities, he said.

   During a media availability in Washington yesterday, Trump was asked about House Speaker Paul Ryan's (R-Wis.) worry about a trade war and whether he would back down on tariffs.

   "No, we're not backing down," the president said. He also suggested tariffs could be part of a renegotiation of NAFTA and said he didn't expect a trade war.

   The American Petroleum Institute has pushed to keep NAFTA intact, and it has historically favored free trade and opposed tariffs.

   Like a lot of observers, the trade group is trying to analyze the tariff proposal and keep up with the administration's approaches, Dean Foreman, API's chief economist, said yesterday in an interview.

   "It's premature to raise a red flag on this," he said. "We'll hope that cooler heads prevail."

   Sullivan took time in Houston to promote Alaska's energy potential yesterday, from possible development in the Arctic National Wildlife Refuge to work toward liquefied natural gas exports. He acknowledged "chaos" in Washington to a crowd here but suggested getting past daily headlines and tweets.

   The senator touted tax reform that he thinks will help spur energy investments and a federal government that sees opportunity and jobs from U.S. energy. He is an advocate of legislation that could shorten timelines in permitting infrastructure.

   "There has never been a more exciting time for the American energy sector," Sullivan said.

   While he appreciates the administration's focus on the steel issue, Sullivan said the approach right now seems to be splitting allies. Many details were missing in the original announcement, he told reporters, and some in the administration seemed caught off guard.

   The senator said the United States will need allies working with it given the long-term economic challenge that China poses.

   "That's the way I would approach this," Sullivan said.

   https://www.eenews.net/energywire/2018/03/06/stories/1060075489
   

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8. Zinke Says Natural Gas Flaring Is

   Mar 6, 2018 | Houston Chronicle

   By James Osborne

   Interior Secretary Ryan Zinke said the practice of flaring natural gas from oil wells was "wasteful," during a speech at the IHS Markit CERAWeek energy conference in Houston Tuesday.

   The Obama administration had cracked down on flaring on federal lands, something the Trump administration is working on rolling back since taking office last year. Zinke said he would look for a solution that would incentivize companies rather than penalize them for flaring, mentioning decreased government royalties as a potential carrot.

   "I don't know what the future is, but just that flaring is a waste," he said. "We want to make sure we incentivize capture, and to do that we need pipelines. The permitting process has to be supportive of infrastructure."

   During his appearance in Houston, Zinke described an administration that considered itself as a partner of the oil and gas industry and thanked attendees for, "making American energy great again."

   The secretary said the administration has been unfairly criticized for being "pro oil and gas" and said he believed in an "all of the above" energy strategy.

   But he added no form of energy was without "consequence," citing the amount of land solar farms required and the approximately "750,000" birds killed by wind turbines each year.

   "And certainly oil and gas and coal have a consequence on carbon," he said.

   President Donald Trump has spoken frequently of the concept of "American energy dominance." And Zinke admitted on stage Tuesday, he'd gotten some questions about what exactly the president meant.

   A former NAVY seal, Zinke said term meant producing energy in an environmentally responsible manner while also driving economic growth for the United States and its allies. There was a "moral" component too, he added.

   "I don't want to see your children to have to deploy overseas to have to fight for energy," he said. "Affordable, readily available energy promotes peace."

   https://www.chron.com/business/energy/article/Zinke-says-natural-gas-flaring-is-wasteful-12731436.php
   

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9. US Shale Oil Output Is Surging. Here's What Will Keep the Boom Going

   Mar 6, 2018 | CNBC

   By Tom DiChristopher

   The oil industry is gathering in Houston for one of the biggest energy conferences of the year, and the question that will loom over CERAWeek by IHS Markit is just how fast can U.S. oil production grow?

   The nation's output has surged to a 47-year high faster than anticipated, topping 10 million barrels a day in November and at least temporarily putting the United States ahead of Saudi Arabia as the world's second-biggest oil producer behind Russia.

   Despite those achievements, investors still worry about the prospects for the nation's shale fields, where drillers have staged a renaissance in U.S. production by using advanced technology, like hydraulic fracturing, to free oil and gas from rock formations.

   Plumbing oil from shale rock is a costly endeavor that depends on expert execution. Even then, production from shale wells peaks quickly and then begins a period of diminishing returns.

   Raoul LeBlanc, vice president of financial services and North American onshore at IHS Markit, said he used to have to tamp down expectations about how much shale reserves could yield. Now he finds himself trying to calm investors rattled by any signs of trouble in drilling results from the nation's frackers.

   "The market seems to veer back and forth between irrational exuberance and undue pessimism," said LeBlanc, who will moderate a panel of frackers at CERAWeek.

   The question of America's oil growth prospects may boil down to logistics, cash and technology, according to LeBlanc.Challenges begin above ground

   The most immediate challenges facing the shale industry are bottlenecks for the services on which frackers rely. The key that unlocks shale drilling is hydraulic fracturing, the process of injecting water, sand and chemicals underground to fracture shale rock and let hydrocarbons flow to the wellbore.

   A sharp recovery in drilling — following a drop in activity after the 2014 oil price collapse — has created a tighter supply of the crews that exploration and production companies employ to frack wells and has taxed the mines that provide sand.

   These bottlenecks will present aggravations that potentially slow production growth over the next couple years, LeBlanc says. However, these are solvable problems and shouldn't impact the long-term growth prospects too much.

   The industry also has to build out new pipelines and other transportation infrastructure to move oil from wells to market. The industry has seen a surge of opposition around megaprojects, like the Dakota Access and the Keystone XL pipelines, but LeBlanc said projects within oil-friendly states like Texas are unlikely to run into significant roadblocks.

   But there is still a longer-term structural problem. Infrastructure companies typically need a roughly 30-year commitment to justify building a pipeline. That can be a risky endeavor in shale fields, where the decline rates of wells or a sudden exit of drillers from a region could impact how much crude is flowing through lines — and the profitability of expensive projects.

   "There's a real mismatch between the risk profile of upstream players and the risk profile of midstream players," LeBlanc said, using industry terms for oil drillers and pipeline operators, respectively.Cash is king

   Over the next five years, the amount of cash that gets put to work in U.S. shale fields will play a major factor in future output.

   Right now few drillers have assets that are good enough to produce cash sufficient to cover the cost of future production. That means frackers remain dependent on debt, equity and other types of outside capital to replenish rapidly depleting wells.

   "It's the secret fuel for the shale revolution — the U.S. capital market and the ability to get lots of money very quickly," said LeBlanc.

   At least some flows could start drying up soon. Last year shareholders began signaling to drillers that they want to start seeing a return on their investments after years of debt fueled growth. Now more drillers are exercising tighter discipline and trying to fund growth with cash generated from operations.

   If drillers start dialing back reinvestment, annual growth rates could look more like 200,000 barrels a day, with better returns for shareholders, rather than 1 million barrels a day, said LeBlanc.

   Still, he believes capital will remain available. For one, private equity firms still have a lot of dry powder to invest. (Dry powder is money raised but not yet invested.) Also, oil giants like ExxonMobil and Chevron have pivoted to U.S. shale fields, and they may increasingly redirect money to those operations from more conventional projects in places like Nigeria and Kazakhstan.Technology drives the drill bit

   While there is still plenty of shale oil to produce, drillers have already burned through the best acreage in some of the nation's shale fields, LeBlanc said. Other regions could soon be headed for what he calls "sweet spot exhaustion."

   This is already playing out in some mature regions, like the Barnett Shale in Texas and the Fayetteville in Arkansas. In the coming years it could be a problem in North Dakota's Bakken and the Eagle Ford in southern Texas, LeBlanc said.

   However, if technology can improve faster than rock-quality degrades, drillers can keep growing production and even lower the cost of extracting oil, according to LeBlanc. But if advances in technology can't keep up with the hollowing out of the best wells, then drillers won't be able to deploy cash efficiently.

   "The thing that delays sweet-spot exhaustion is technology," LeBlanc said.

   "That's going to determine whether you get growth through the 2030s or 2023."

   Drillers weathered the three-year oil price downturn by securing discounts from service companies and moving their rigs to places where they could produce oil at low cost. At the same time, they've improved efficiency by drilling longer horizontal wells and fine-tuning the intensity of fracking.

   The industry still has more levers to pull, and it's probably only in the sixth or seventh inning when it comes to how far the technology can advance, said LeBlanc.

   https://www.cnbc.com/2018/03/06/us-shale-oil-output-surge-depends-on-cash-logistics-and-tech.html
   

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10. A ‘Major Second Wave’ of U.S. Fracking Is About to Be Unleashed Upon the World

    Mar 6, 2018 | TIME

    By Justin Worland

    U.S. oil and natural gas is on the verge of transforming the world’s energy markets for a second time, further undercutting Saudi Arabia and Russia.

    The widespread adoption of fracking in the U.S. opened billions of barrels of oil and trillions of cubic feet of natural gas to production and transformed the global energy sector in a matter of a few years. Now, a leading global energy agency says U.S. natural gas is about to do it again.

    The International Energy Agency (IEA) said in a new forecast this week that growth in U.S. oil production will cover 80% of new global demand for oil in the next three years. U.S. oil production is expected to increase nearly 30% to 17 million barrels a day by 2023 with much of that growth coming from oil produced through fracking in West Texas.

    “Non-OPEC supply growth is very, very strong, which will change a lot of parameters of the oil market in the next years to come,” Fatih Birol, the head of the International Energy Agency, told reporters at the CERAWeek energy conference hosted by IHS Markit. “We are going to see a major second wave of U.S. shale production coming.”

    Republicans politicians and policymakers celebrated the news and sought to take credit for the development. Trump has sought to portray himself as a savior of the U.S. oil and gas industry, opening up federal lands to oil and gas development at a breakneck pace and undoing Obama-era climate regulations.

    But analysts attributed the growth in U.S. production to market factors rather than Republican policy. In the report, the IEA forecast that higher oil prices and increased demand from China and India will trigger increased U.S. output to make up the gap. The IEA also predicts that demand for petrochemicals used in plastic will grow overall demand for oil.

    Still, the White House sent out a press release highlighting the report on Monday. Republican Sen. Dan Sullivan of Alaska told reporters at CERAWeek that Republican dominated Washington has transformed the federal government from being “basically hostile” to oil and gas under President Obama to actively supporting the industry’s growth. (In reality, Obama promoted natural gas as part of an “all of the above” energy strategy and his signature climate change regulation would have benefited the fossil fuel.)

    “There’s never been a more exciting time in the American energy sector,” Sullivan told oil and gas industry insiders. “The American energy renaissance that so many of you in this room are responsible for is now in full swing.”

    A second rise in U.S. oil production comes with significant implications for both the global energy markets and geopolitics more broadly. The U.S. supply of oil and natural gas has contributed to political upheaval in the Middle East, creating new competition for oil exports, and in Russia, a leading supplier of natural gas to Europe.

    Alexei Texler, Russia’s first deputy energy minister, acknowledged that U.S. shale “poses certain risk” Tuesday but said his country would continue collaborating with partners in Saudi Arabia and elsewhere in response.

    “In a shale revolution world, no country is an island,” said Birol. “Everyone will be affected.”

    http://time.com/5187074/fracking-energy-oil-natural-gas/
    

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11. Cove Point Becomes 2nd U.S. Liquefied Natural Gas Export Terminal

    Mar 6, 2018 | Forbes

    By Jude Clemente

    And so it begins. Friday was a historic day for the U.S. energy industry and our always evolving natural gas business in particular. After a series of delays, Dominion Energy shipped out its first LNG cargo from $4 billion Cove Point export terminal in Maryland. This becomes our second LNG export facility following Cheniere Energy’s startup at Sabine Pass in Louisiana two years ago. Cove point started construction back in 2014 and liquefaction started in January.

    There's no immediate word on Gemmata's destination, and officials didn't say where the ship went, but signs point to the Dragan LNG terminal in the UK as colder weather upped prices. Cove Point centers on deliveries to Europe because the journey is three days shorter than from the Gulf Coast, saving Cove Point shippers roughly $0.20 per MMBtu on transport costs. Cove Point has long-term contracts with Gail India and a joint venture involving Japan’s Sumitomo and Tokyo Gas.

    The startup of Cove Point is just another piece to the U.S. LNG export boom that will continue apace. A handful of export terminals are under construction and more than a dozen are being proposed. We could become the world’s great LNG exporter in as soon as five years. LNG might be our largest incremental gas demand market: export capacity could quickly grow from nearly 4 Bcf/d now to 10 Bcf/d by 2020. LNG feed gas averaged 2.2 Bcf/d in 2017, up from 0.6 Bcf/d in 2016.

    The first cargo from Cove Point marks a milestone in the northeast and a new demand outlet for Appalachia producers that now account for 35% of all U.S. gas production. Appalachia price points have remained depressed because production has soared past new demand and pipeline takeaway capacity. Cove Point is a bi-directional facility, offering both import and export capability. And the facility is designed to export 0.750 Bcf/d, but will add 0.850 Bcf/d of feed gas demand in the region, which is about a quarter of Sabine Pass' capacity.

    The possibilities for U.S. LNG are massive. As the fastest growing segment in the energy business, global demand continues to defy expectations, up 11% in 2017 to nearly 40 Bcf/d. It's now widely expected that rising demand will collide with a dearth of positive final investment decisions for new export projects over the last few years to create a global LNG shortage in the early-2020s, right when the second wave of U.S. projects is scheduled to start coming online. This has given more confidence for developers that they will be able to move forward on projects later this year or in 2019. Higher LNG prices — which hit a three-year high this winter — are easing concerns about the persistent global supply glut. Banks have been waiting and can now see the oversupplied market beginning to dissipate.

    LNG buyers seek more flexible, smaller volumes, and shorter-term contracts that have been the exception in the industry. Spot purchases were nearly 30% in LNG trade in 2017, up from less than 20% in 2013. Since 2008, average contract lengths have fallen from 18 years to about 7 years. But, buyers also realize that longer-term, 20-year deals are needed too in order to help export projects secure financing. U.S. LNG industry stands ready to adapt: the $3.5 billion Magnolia LNG export project has created a sample portfolio in which a customer could retain LNG supplies 40% under long-term contract, 40% mid-term, and 20% spot purchases.

    Magnolia's pricing is unique too, offering LNG at Magnolia typically has offered LNG at 113% of Henry Hub prices, compared with 115% offered by some competitors. An FID on Magnolia could come by the end of this year. Headed by LNG legend Charif Souki, Tellurian wants to would sell Japanese customers LNG at a fixed $8 per MMBtu beginning in 2023, compared to the $9 seen for the country's recent pricing. That might end up being a bargain by then. And remember: the lower our prices become, the more attractive international buyers find them. 

    The interest level in U.S. LNG has been rising over time, with obvious potential in Europe, South Korea, Japan, India, and China. But, even more is possible: "U.S. eyes opportunities to sell LNG to Saudi Arabia." Although not having huge incremental demand like some of the others, Europe is more attractive for us than might initially appear: countries there have expiring contracts with Russia's Gazprom that are putting market share in play. For example, Poland, a Russian gas client since 1944, has said it will not renew its contract in 2022. 

    Supply diversification remains the long-term goal for the rapidly expanding LNG importing pool.

    U.S. LNG is a safe bet: global gas demand is expected to rise 50% over the next two decades and LNG is the fastest growing way to trade it. Moreover, we are going to continually produce a load of associated gas that comes along "free" when crude oil gets produced. The center of this, of course, is the Permian basin in West Texas that will be with reach of our mushrooming Gulf Coast export terminals. In fact, gas flows so easily in the Permian that BNEF reports players there have a breakeven gas price of NEGATIVE $2.36 (read that again and check page 52). Some think a 10-12 Bcf/d output surge in the Permian from 2020 to 2025 could keep Henry Hub prices in the $2.75 range. Obviously helped out by the mighty Marcellus shale play (breakeven of $2.15), total U.S. gas production is expected to outpace our demand by almost a 2-1 ratio in the years ahead. Our surplus will be great and help keep gas prices low.

    https://www.forbes.com/sites/judeclemente/2018/03/06/cove-point-becomes-2nd-u-s-liquefied-natural-gas-export-terminal/2/#3a9146a86170
    

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12. Six Years Later, Cheniere and India's Gail Kick Off 20-Year LNG Agreement

    Mar 6, 2018 | Natural Gas Intelligence

    By Charlie Passut

    More than six years after signing a 20-year sales and purchase agreement (SPA) for liquefied natural gas (LNG) supplies, Cheniere Energy Inc. and India's state-owned natural gas utility, Gail (India) Ltd., officially kicked off their SPA on Monday, with a ship expected to depart Cheniere's export terminal in Louisiana by day's end.

    In a joint statement, the companies said a ship was to depart Cheniere's Sabine Pass facility in Cameron Parish, LA, after a ceremony with officials from both companies. Gail Global (USA) LNG LLC, a U.S. affiliate, agreed to purchase 3.5 million metric tons per year (mmty) of LNG from Cheniere in December 2011, when it signed the SPA.

    "The commencement of this agreement marks the start of a long and productive relationship between Cheniere and Gail," said Cheniere CEO Jack Fusco. "India remains an important market for LNG, and one that we hope will continue to show signs of growth."

    Gail Chairman B.C. Tripathi added that with the SPA, "Gail will have a diversified portfolio both on price indexation and geographical locations. This long term agreement [will] go a long way in strengthening the relationship between Gail and Cheniere and reinforcing India-U.S. trade ties."

    Last December, India's minister for oil and natural gas said Gail has been trying to renegotiate separate LNG import contracts with Cheniere and Dominion, with the most recent discussions occurring last November. Dominion, which plans to export LNG to Gail through its Cove Point terminal in Maryland, called the minister's claims a mischaracterization.

    LNG exports from Cove Point began last week, after Friday's departure of an LNG tanker owned by a subsidiary of Royal Dutch Shell plc.

    http://www.naturalgasintel.com/articles/113587-six-years-later-cheniere-and-indias-gail-kick-off-20-year-lng-agreement
    

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13. Port of Corpus Christi to Be Top U.S. Hub by Mid-2020s

    Mar 6, 2018 | E&E Energywire

    By Jenny Mandel

    The growing importance of the Permian Basin will push Texas' Corpus Christi into the spotlight as the leading export hub for domestic oil, industry analysts predict.

    Crude production from the Permian Basin has grown rapidly as oil prices have strengthened over the last year. Domestic crude production is likely to reach record heights later this year if it hasn't already, and the Permian hit a record 815 million barrels or more last year.

    An analysis published yesterday by the International Energy Agency forecasts that U.S. oil production will grow steadily over the next five years, with the Permian making up an ever-increasing share of that supply (see related story).

    An analysis by Wood Mackenzie said yesterday that the Permian would account for nearly 50 percent of onshore production of crude and condensates from the Lower 48 by 2023.

    Driven by proximity to the Permian and the nearby Eagle Ford Shale, John Coleman, Wood Mackenzie's senior analyst for North American crude markets, sees the Port of Corpus Christi eclipsing Houston and Beaumont as the major center for export of U.S. light crude oil within the next two years.

    Two major pipelines, the Epic Crude pipeline being built by privately held Epic and the Cactus II pipeline backed by Plains All American Pipeline LP, are under construction to bring more than a million barrels per day of crude into the port by the end of next year, Coleman said. In addition to pipelines carrying crude from the Eagle Ford, the port should be served by more than 2 million barrels per day of pipeline capacity by 2023, he added.

    The South Texas port has been aggressively spending on infrastructure upgrades to handle a surge in trade. It is being deepened to accommodate bigger ships, and the Oxy Ingleside Energy Center, which is part of the port, is being deepened and expanded to handle fully loaded supertankers. Coleman said some additional marine crude storage tanks have been built, though the port will likely need more over time.

    Sean Strawbridge, the executive director of the Port of Corpus Christi, is set to testify today before the federal House Oversight and Government Reform Subcommittee on the Interior, Energy, and Environment on work on the port by the U.S. Army Corps of Engineers.

    https://www.eenews.net/energywire/2018/03/06/stories/1060075487
    

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Environment News

14. Carbon Tax, Defeated in the Legislature, to be On The Ballot

    Mar 6, 2018 | E&E Climatewire

    By Benjamin Storrow

    Third time's the charm. That's what proponents of a carbon tax in Washington state are hoping.

    A coalition of environmental, labor and minority groups filed a ballot initiative with Washington's secretary of state late last week, paving the way for advocates of a carbon price to make their case to voters this fall.

    If they gather the nearly 260,000 signatures needed to qualify for the ballot, as is widely expected, it will mark the third time Washington has seriously entertained a carbon tax since 2016. Voters defeated a ballot initiative that year. The idea was defeated again last week, when the state Senate declined calls from Gov. Jay Inslee (D) to take up carbon pricing.

    This year's ballot question more closely resembles the failed legislative proposal than the 2016 initiative. That measure called for imposing a price on carbon and using the revenue to offset other taxes.

    The 2018 plan seeks a carbon fee of $15 per metric ton. It would increase by $2 annually until 2035, or until the state is on track to meet its midcentury goal of cutting emissions 50 percent of 1990 levels.

    It contains several notable differences from the 2016 proposal. First, proponents are calling it a fee rather than a tax. The semantics might appear insignificant, but advocates say the new wording marks a shift because it means carbon revenues would be spent on measures to reduce pollution.

    That hints at the second difference. Unlike the 2016 question, this year's measure would use proceeds from a fee to fund a wide array of programs, from clean energy investments to climate resilience and transition assistance programs.

    "It is our belief that the people of Washington are ready for action on climate change in 2018," said Becky Kelley, who leads the Washington Environmental Council. "While it's a shame the Legislature wasn't able to enact a good law, the people can step in and take it on."

    Washington's dalliance with a carbon tax has thrust it to the forefront of the national conversation on climate change. No state has adopted a carbon tax, making Washington something of a bellwether for a national climate policy (Climatewire, Jan. 22).

    Advocates can point to several encouraging signs. President Trump is deeply unpopular in the Evergreen State, and Democrats are motivated to vote in this year's midterm elections. The Seattle-based Elway Poll found that Democrats have a 10-point advantage in the generic ballot, enough to put some solidly Republican congressional seats in play.

    Carbon tax supporters are also quick to note that this year's failure occurred during a short legislative session dominated by talk about the state budget, gun control and open records.

    And where environmentalists and Democrats were badly divided over the 2016 ballot measure due to disagreements over how to spend the revenue, this time they are united.

    The ballot initiative was filed by the Alliance for Jobs and Clean Energy and counts the Washington State Labor Council and Front and Centered, an environmental justice group, as supporters.

    Inslee, who opposed the previous ballot question, also signaled support.

    "While we fell just short of getting a carbon pricing bill through in this short session, the demand for action continues to grow," Inslee spokeswoman Tara Lee wrote in an email. "This initiative is reflective of that momentum, and the governor will continue meeting with proponents and engaged businesses to understand this newest proposal."

    The hurdles are nevertheless daunting. While Democrats might be more likely to vote this year, that doesn't mean they'll support a carbon tax. The idea failed in the Legislature despite the fact that Democrats control all three branches of government in Olympia.

    When the Elway Poll surveyed Washington voters on their legislative priorities heading into the 2018 session, just 7 percent of respondents said environmental issues were their top priority, and 1 percent said energy was their most important issue.

    It also comes as Washington plans to increase property taxes in some parts of the state to fund education spending, though a promising revenue report now has lawmakers talking about ways to curtail those increases.

    "You wonder how much tax people are willing to take, but it depends on how the question is asked," said Mary Catherine McAleer, who oversees environmental policy for the Association of Washington Business, the state's largest trade group and a longtime opponent of carbon pricing proposals.

    She acknowledged a widespread desire in Washington to combat climate change but questioned how much a state with a hydrocentric power sector can reasonably be asked to reduce emissions without affecting its economy.

    "The public will pay this in the form of increased energy prices in the form of what is essentially a gas tax," McAleer said.

    Transportation accounts for 57 percent of Washington's carbon emissions, compared with 17 percent and 13 percent from the industrial and power sectors, respectively.

    The ballot measure would exempt energy-intensive, trade-exposed industries like Washington's steel, aluminum and paper companies from the tax. Providing exemptions makes sense because those industries could simply take their emissions, and jobs, elsewhere, advocates said.

    They argued that the benefits of the plan would outweigh the costs, accelerating the shift to a clean energy economy, bolstering forest and aquatic ecosystems, and directing investment to communities most disadvantaged by climate change.

    "We acknowledge there is a cost, but in the same way we make investments in our homes, to make them great places to live that we can be proud of," said Mike Stevens, director of the Nature Conservancy's Washington state chapter.

    https://www.eenews.net/climatewire/2018/03/06/stories/1060075499
    

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15. State Attorneys to Pruitt: Repeal, Don't Replace

    Mar 6, 2018 | E&E Climatewire

    By Niina Heikkinen

    The Trump administration is considering a replacement for the Obama-era Clean Power Plan, but a coalition of Republican state attorneys general wants the climate rule scrapped with no substitute.

    West Virginia Attorney General Patrick Morrisey (R) is leading a coalition of 20 other state attorneys general arguing that U.S. EPA doesn't have authority to regulate greenhouse gas emissions from power plants because they are already regulated for mercury and air toxics under a different section of the Clean Air Act. Morrisey, who's running for Senate in West Virginia and helped lead the charge against the Obama climate rule in court, was the lead signatory on a letter sent to Pruitt this week.

    The letter — which echoes an argument that has been repeated by many critics of the Clean Power Plan — comes in response to the agency's request for public comment on a proposed plan to replace the rule. EPA has suggested it intends to replace the rule, which cuts carbon emissions from power plants through a sectorwide approach, with a scaled-back regulation that focuses instead on facility-level efficiency improvements.

    If EPA does write a climate rule for power plants, Morrisey and his allies are pushing for an approach where states would have greater authority in determining how they would cut greenhouse gas emissions. They repeat many of the arguments Pruitt also supported as Oklahoma's attorney general when he was suing EPA over the Clean Power Plan.

    The comments by the attorneys general advocate bolstering states' control over developing emissions regulations and what energy sources they use. This includes inserting provisions for exempting certain facilities from regulation and maintaining states' authority to regulate their own power sectors.

    The attorneys general call for states to maintain the ability to submit their own plans for cutting emissions. They note that states should still be able to get their plans approved even if they don't "adopt EPA's guidelines in all respects."

    As Trump's EPA has suggested, they would want a rule that focuses on facility-level efficiency or "heat rate" improvements for electric generating units, or EGUs.

    "[A]ny heat rate improvement [best system of emissions reductions] that EPA adopts must be based on an assessment of the actual heat rate potential of EGUs, not unrealistic assumptions about the technology or control measures that EGUs can implement," the attorneys general wrote.

    They point out that emissions controls should be for a specific source, rather than a "source category" that could include owners and operators or "category-wide" emissions controls.

    EPA air chief Bill Wehrum hinted late last year that carbon capture and storage technology could be considered as part of an approach to cutting emissions (Climatewire, Dec. 13, 2017). But the attorneys general argue that the technology has not yet been adequately demonstrated and would lead to expensive retrofits.

    Crafters of the Obama climate rule say states and other stakeholders already had years of input in developing the Clean Power Plan, and one former EPA staffer called the process the "most extensive stakeholder outreach process the agency has perhaps ever done" (Climatewire, Feb. 21).

    The Trump administration has proposed to repeal the Obama-era rule while simultaneously taking comment on what — if anything — might replace it. Morrisey this week touted his leadership role in bringing down the Clean Power Plan and thus paving the way for the Trump administration to write a new rule.

    "The development of a new rule is credited to the Attorney General's defeat of the Obama-era Power Plan, a sweeping regulation that would have devastated West Virginia's economy," Morrisey's office said yesterday in a press release. "The Attorney General challenged the Power Plan on the day it was published and led the states' legal efforts all the way to the Supreme Court's historic and unprecedented stay of the regulation in February 2016 and beyond."

    The states' letter was released the same day Trump's EPA published a progress report outlining its accomplishments in Pruitt's first year on the job.

    The 37-page document focused heavily on his deregulatory agenda, and among the listed achievements was the agency's work to undo the Clean Power Plan. EPA said that scrapping the Obama-era rule would return the agency's work to its typical statutory authority under the Clean Air Act.

    "With a clean slate, we can now move forward to provide regulatory certainty. It ensures adequate and early opportunity for public comment from all stakeholders about next steps the Agency might take to limit greenhouse gases from stationary sources, in a way that properly stays within the law, and the bounds of the authority provided to EPA by Congress," Pruitt said in the report.

    https://www.eenews.net/climatewire/2018/03/06/stories/1060075505
    

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16. Bloomberg Picked for High-Profile Climate Job

    Mar 6, 2018 | E&E Climatewire

    By Jean Chemnick

    Former New York Mayor and businessman Michael Bloomberg is taking on another U.N. climate leadership role, this time as Secretary-General António Guterres' right-hand man for a climate summit in Manhattan next year.

    The high-profile gathering, which Guterres announced during U.N. climate talks in Bonn, Germany, last November, will bring together heads of state to focus on near-term progress and on ways to make the Paris climate agreement strong enough to avoid the worst impacts of climate change.

    As special envoy for climate action, Bloomberg will "leverage efforts in key areas of the Climate Summit to encourage rapid and enhanced implementation of the Paris Agreement in the context of sustainable development," a U.N. statement said.

    The former mayor has become a regular fixture in U.N. climate circles in recent years. Then-Secretary-General Ban Ki-moon selected him to be special envoy on cities and climate change in 2014, and he's a co-chairman of California Gov. Jerry Brown's (D) climate summit this year in San Francisco, which will focus on non-federal and private-sector efforts to combat warming.

    Bloomberg and Brown also joined forces to lead America's Pledge, a voluntary coalition of state, city and private-sector actors that aims to make good on former President Obama's Paris commitment to cut U.S. greenhouse gas emissions between 26 and 28 percent below 2005 levels by 2025. The duo is expected to say more about the coalition's progress at this year's climate talks in Poland.

    Brown and Bloomberg aim to counter global pessimism over President Trump's plans to pull the United States out of the 2015 deal. Continued U.S. engagement was also the theme of the U.S. Climate Action Center, which Bloomberg funded at November's Bonn talks — a pavilion the State Department usually provides.

    Guterres told reporters yesterday that avoiding climate calamity will fall to local governments and businesses.

    "Very little depends today, in relation to climate change, on central government," the former Portuguese prime minister said at a briefing at U.N. headquarters in New York.

    "What is decisive is the way society reacts," said Guterres. "What is decisive is how companies operate, how cities are managed. This is exactly the bet that Michael Bloomberg is wielding all over the world, to make sure that those that really make the difference, those that really contribute to reduce or to increase the emissions are able to do things in a green way, are able to do things in a climate responsible way."

    Guterres, Bloomberg and other Paris proponents will have to convince countries that the United States hasn't completely abandoned the Paris accord if they are to persuade them to increase their existing pledges to the deal in 2020 for 2030. Guterres is taking a page from Ban's playbook in holding a heads-of-state summit the year before those commitments would be made during the annual U.N. General Assembly meeting. But while Obama attended Ban's 2014 summit ahead of the Paris meeting the following year, it's unclear whether Trump will make an appearance next year.

    Besides convincing countries to increase their contributions to the Paris Agreement, next year's gathering will also focus on progress before 2020. That's a topic that briefly stalled the Bonn talks last year as poor countries charged that richer ones were shirking responsibility for a problem created by 150 years of industrialization.

    Of particular concern was the European Union's failure to make good on its last commitments to the Kyoto Protocol, the 1997 agreement that formally ends in 2020 and that, unlike Paris, asked rich countries alone to make emissions cuts.

    Alden Meyer, strategic director at the Union of Concerned Scientists, said efforts to reduce emissions currently underway support Paris' goals of keeping warming to safe levels.

    "To meet the Paris goals, we obviously need much more ambition," he said. "We need to be doing more on every front as soon as possible, and ramping up ambition between 2020 and 2030 depends on what countries do now."

    https://www.eenews.net/climatewire/2018/03/06/stories/1060075509
    

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17. Lawyers Warn Climate Nuisance Ruling Could Open Litigation 'Floodgates'

    Mar 6, 2018 | Inside EPA

    By Lee Logan

    Two industry attorneys are warning that a federal judge's decision to assert jurisdiction over a climate change nuisance suit brought by California cities -- a move initially seen as aiding defenses of fossil fuel producers -- could nevertheless “open the floodgates” for a raft of similar suits because the Clean Air Act may not preempt the new actions.

    “As a result of this decision, coal, oil, and natural gas producers could face federal common law nuisance claims all over the country,” writes Perkins Coie attorney Brian Potts in a March 1 column for Forbes. “The size and scale of these suits could mirror the tobacco litigation that began in the 1990s.”

    Similarly, Foley Hoag attorney Seth Jaffe in a March 2 blog post says that despite industry defendants' success on the jurisdictional issue in People of the state of California v. BP, et al., “I’m not sure that this is a victory for the oil companies. This might be more of a 'be careful what you wish for' scenario.”

    Both attorneys say the Feb. 27 order by Judge William Alsup of the U.S. District Court for the Northern District of California makes an important distinction with a prior climate nuisance suit, American Electric Power (AEP) v. Connecticut, which the Supreme Court rejected in 2011.

    In AEP, plaintiffs sought to bring nuisance claims against power generators for their emissions of greenhouse gases that cause climate change, but the high court said the claims were preempted because EPA has the authority to regulate those emissions under the Clean Air Act.

    The U.S. Court of Appeals for the 9th Circuit made a similar finding in a 2012 ruling in Native Village of Kivalina v. ExxonMobil, holding that the air law also displaced nuisance claims for climate-related damages.

    However, Alsup in his recent ruling says AEP and Kivalina “did not recognize the displacement of the federal common law claims raised here. Emissions from domestic sources are certainly regulated by the Clean Air Act, but plaintiffs here have fixated on an earlier moment in the train of industry, the earlier moment of production and sale of fossil fuels, not their combustion.”

    San Francisco and Oakland in their suit -- which is similar to litigation filed last year by other California municipalities as well as New York City -- argue that fossil fuel producers should pay nuisance damages because they sold high-carbon products that caused climate change while at the same time making misrepresentations about climate risks.

    Industry 'Regret'

    Jaffe notes that Alsup's ruling upended conventional wisdom following AEP and Kivalina in which it “seemed pretty clear that the federal Clean Air Act had displaced federal common law, leaving only potential state law claims in its place.”

    He added: “I’m not sure that Judge Alsup is right, though I appreciate his creativity. And if appellate courts decide he is right, the defendants may come to regret removing the action from state courts.”

    Potts writes that if the ruling stands, “Those that burn fossil-fuels (like manufacturers and utilities) would still be immune from lawsuits under the Supreme Court’s AEP decision. But those that produce them would not.”

    Another key industry lawyer, Roger Martella, who is a former Bush EPA general counsel now an in-house counsel for General Electric, told a May 2016 event that industry should not dismiss “creative” litigation from environmental groups even if it faces significant legal hurdles. The remarks were made when Martella worked for a law firm that often represented industry groups such as the National Association of Manufacturers.

    “One thing I know about [environmental groups] that I have to share when I'm talking to corporations is how strategic they are. They very much take the long-term view,” Martella said, noting that such groups are “not shy” about trying strategies multiple times until they succeed.

    While Martella said he is not always on the same side of issues as environmentalists, “I do respect and have to not underestimate the fact that even if these theories are seen as creative and novel, over time the groups are very strategic about continuing to take the long-term [view].”

    In his order rejecting plaintiffs' bid to move the litigation to state court, Alsup is allowing the cities to immediately appeal the decision to the 9th Circuit because the issue “is a controlling question of law as to which there is substantial ground for difference of opinion and that its resolution by the court of appeals will materially advance the litigation.”

    In addition, Alsup in a March 1 order asks the Trump administration to submit an amicus brief by April 20 “on the question of whether (and the extent to which) federal common law should afford relief of the type requested by the complaints.”

    Despite the potential litigation risks, one industry group, the Manufacturers' Accountability Project, applauded Alsup's decision to assert jurisdiction, likely due to the belief that fossil fuel companies would have stronger defenses in federal court compared to state court.

    “Precedent shows that similar cases heard in federal court have been unsuccessful for plaintiffs looking to pin the global challenge of climate change on manufacturers,” said a Feb. 28 statement from the project, which is run by the National Association of Manufacturers.

    https://insideepa.com/daily-news/lawyers-warn-climate-nuisance-ruling-could-open-litigation-floodgates
    

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